The Coming Communication World - From Space
LEO, Low Earth Orbit, satellite internet constellations are here. We need to understand their impact on political economy and the world. I will showcase what is happening now in the US and China and use it as a mechanism to demonstrate the power of government intervention and private companies impact on their nation and the world.
There are over 7.5 billion people on Earth and only 50% of those people have access to the Internet. This leaves around 3.7 billion people without the ability to watch the world’s favorite cat videos or learn from Khan Academy on YouTube. Fortunately, there are many large companies and startups that have started to dedicate time and resources to solving this problem. These include companies like SpaceX, OneWeb, Blue Origin, Facebook, Google, and many more. These companies are dedicating billions of dollars (collectively) to create satellite communication networks that can easily cover any part of the world and connect them back to internet servers in more modern areas to allow for a global internet. Recently both OneWeb and SpaceX have demonstrated their technology through initial test satellites and are scaling up production very fast over the next year.
Simultaneously, we are also seeing China propose satellite-based internet exclusively for China’s use to reach 40% of their population that does not have internet access along with military applications worldwide. The story in China is a bit swept under the rug; sources that report exclusively on the Chinese space industry indicated that there were a few companies, such as Galaxy Space, LaserFleet, Linksure, MSI, and a government based project Hongyan/Hongyun (which strangely means wild goose since there is an old tale that goose use to go around delivering messages to people while the other means rainbow cloud). However, about a week ago, there was speculation that these companies have been acquired by the government and all fall under project Hongyun/Hongyan. This implies that the Chinese government has complete control on what satellite-based internet their population will have access to and a monopoly on their satellite-based internet.
To be extremely clear, Hongyun and Hongyan are different satellite constellations, where Hongyan is being led by CASC, Corporation China Aerospace Science and Technology Corporation, while Honyun is being led by CASIC, China Aerospace Science & Industry. CASC is China’s top space contractor whereas CASIC is the second-best space contractor.
I believe this contrast of US-based vs Chinese-based satellite internet companies will be the new norm for the future. Developed countries with capitalistic tendencies and under-developed countries will utilize a global satellite constellation whereas developed countries with tighter government control will propose their own constellations to control resources for their population. This polarizing difference leads to a conversation on capitalism vs “communism” (communism is in quotes as communism is used more loosely today than its exact definition).
Global internet, where all 7 billion people have an affordable connection to the internet, has large implications in advances in science, modifications in technology, changes in organization, and the introduction of new rules of behavior. As a result, new waves of consumption, technology, and socio-economic organization will emerge. This reorganization prompts us to look for previous thinkers on innovation. An initial contender is Schumpeter’s Trilogy of ‘Invention-Innovation-Diffusion’. Schumpeter divides the technological change process into three stages. The first stage is the invention process, encompassing the generation of new ideas. The second stage is the innovation process, encompassing the development of new ideas into marketable products and processes. The third stage is the diffusion stage, where new products and processes spread across the potential market. (Sommariva, Andrea)
We are currently in the final stage of diffusing satellite-based internet to the masses. Previously, according to Schumpeter’s Trilogy we have been in a prolonged incubation period for satellite-based internet to be invented and innovated. History shows us that this prolonged period of invention and innovation are often fueled by governments and then private capital is infused into the technology when it is time to go to the diffusion stage. This is exactly what we are seeing in both China and the US. This means that within the next few years, we will have large socio-economic shifts worldwide to prepare for.
What’s happening now in space
Geosynchronous earth orbit (GEO) satellites have been around since the 1970s. An internet connection anywhere in the world requires these satellites to be strategically placed for a specific region. GEO orbit is extremely far away from Earth this results in GEO satellites being extremely large and extremely expensive to send up to space and thus limited in bandwidth capability. This dramatically increases the price and accessibility of GEO satellite-based internet, which limits the use to the extremely rich or to governments. In order for all people around the world that come from a wide variety of socio-economic status, satellite-based internet cost needs to dramatically decrease to enable everyone to have internet.
Let’s dive into the history a bit more. In 2015, the dominant space launch contracts for rocket companies had been GEO based satellites. However, around this time GEO satellite companies were not buying anymore rocket launches, due to the fact that GEO satellite companies optimize their technology to the point that rendered new satellites useless for many years to come. Simultaneously while GEO satellites stopped signing rocket launches, the rate of small satellite launches were trending upward. (1) So, at the same time, investments in these commercial rocket companies started to rise as the industry was looking strong for small satellites. (2) This lead to inflated growth for rocket companies as they were utilizing the previous market size, which included GEO satellites, to determine their future growth as well as market size. This inflated growth has led to ~100 rocket companies to form worldwide.
In the background of all of this, in 2013, some companies started to propose LEO satellite internet constellations. This furthered the prospects of small rocket launching companies. Unfortunately, the dominant players in the up and coming LEO satellite internet space were larger rocket companies themselves, or companies recently acquired by governments. This consolidation in LEO satellites by rocket companies and governments has left room for only a few rocket companies to take up the bids of other LEO constellations. This has already resulted in further consolidation in the number of rocket companies and even the number of satellite constellations. Two major players, rocket company Vector Launch and LEO satellite company LeoSat both filed for bankruptcy in the past year due to loss of venture funding. Consolidation in China has also been rumored with LEO satellite companies like LaserFleet and Galaxy Space being absorbed into government-backed projects Hongyun/Hongyan. I suspect this same thing will happen with other Chinese rocket companies that have formed in the past few years.
China vs US Space Race Strategy
China has utilized a mix of capitalism and communism throughout their new age of growth. Rather than completely relying on government R&D for new growth, they have allowed private equity to infuse money into various R&D areas while knowing the government will eventually provide capital support if that company starts to work out. This idea is highlighted with the term, “GuoJiaDui, which means “National Team” and is the phrase used by the Chinese private space industry to refer to the state-owned incumbents. The phrase can at times be endearing or inspirational (i.e., “we private sector can work together to help our Guojiadui industry succeed”)” (Curcio, Blaine) This has allowed competitive innovation that capitalism allows for, but have it be done in and for a communist government. It has been said that the LEO constellation Hongyan is part of a five project series by CASIC that has ~$14B allocated to it. Another startup Galaxy Space has also stated that it has raised $100M in funding from an elite VC in China.
The United States has more or less done something similar. Initially, from 1960–1980’s the government lead the space race due to the international space race with Russia. Once that was over the government, i.e. NASA, focused primarily on R&D and space companies were contracted to do the engineering. This is largely still the case today, however now a lot of space companies have been digging more into R&D than NASA and are leading the front in many areas and NASA is more utilized as advisors. The funding in the US for space is much more transparent and we have seen there has been a cumulative of $10B poured into space verticals across 180+ companies since 2000 (Space Angels Q2 investment Report). Today for LEO constellations we have a pure market-based competition for a grab at the satellite global internet market. While there are a lot of startups, the major US companies are SpaceX, OneWeb, and Blue Origin. Each of these companies has raised between $500M — $2B to build out there networks.
While each country takes a different approach to LEO satellite internet, it is important to highlight this difference, but the “winner” does not determine the best economic ideology. Instead, we can utilize this specific scenario as a mechanism to compare and contrast the difference.
The US LEO space industry is defined by a market-based approach whereas the China LEO space industry is defined by a centrally planned economy. Neoclassical economist focus primarily on the market economy. All economic action is motived by the desire of economic actors, both individuals and organizations, to maximize their own share of the benefits of production. The rewards of these actions are appropriated to consumers and producers according to their desired benefit of profits or of acquiring goods. Neoclassical economics does not want to take an ethical stance on the distribution of economic output, rather, it depends on the market to produce the most efficient allocation of resources. It follows the simple assumption that the most basic form of optimal efficient allocation is one of pure competition.
Looking deeper we turn to Hayek, he believed that the centrally planned economies which stem from Marxism don’t work due to the lack of knowledge that is rooted in the individual. The individual holds knowledge about markets that one collective group or person could never possibly understand. This sort of individual knowledge is connected to our collective individual freedom. If the government was centrally planning our economy we would lose this freedom as it is not possible to separate one part of human life from the rest for Hayek. While Keynes wanted absolute freedom for the individual as he believed it is the best safeguard of personal liberties, he did however think a laissez faire environment was an over simplification of how to protect personal liberties as they would not produce the best social outcome for all. This critique on the idea of limited government intervention allowed Keynes to draw a conclusion that government stimulus in the economic market doesn’t hurt our natural liberty, but rather helps the general social wellbeing of the nation.
This idea that government can help optimize social outcome better than markets is where we get into the China approach to the space industry. For Harvey, neoliberalism strives to get class power back into the rich elite hands and create an economic monopoly purely for companies and the elite. While China has an extremely strong government that doesn’t allow its people to decide their fate, the government does step in and not allow corporations to maintain control of any one industry. This is where Hayek would say that the government should be this strong to better allocate resources to optimize the social outcome of corporation’s innovations and profits. Marx, would not take China as truly communist as the people within the country are not owning their modes of production. However, Marx would say that the Chinese government is allocating to all of its people better than if corporations were determining all economic investments from their exploitation of labour.
Market based economies vs centrally planned economies is one of the most sought after debates in political economy. Analyzing the outcomes of each will be a direct product of the LEO satellite internet constellations. It will be exciting to see the outcome of US based companies vs China based project as their outcomes will draw direct correlations to the outcomes of neoliberalism and communism!
Why Satellites and not the ground?
While the cost for transferring 1 Gbps has fallen drastically over the years, it is important to question if satellite is cost-effective. The cost data above comes from highly developed countries, which have internet service provider (ISP) infrastructure already established. This skews the dataset because the cost to provide internet is significantly lower with preexisting infrastructure. The major factors that induce higher cost for ground based internet is the continual operational cost (which satellite constellations will also have) and the major construction cost to lay the fiber-optic cables across oceans and land to connect a new location. For example, setting up a new submarine cable network connection between Europe and Africa costs around $500 million. The figure below showcases how much it has cost to construct one of these networks to connect only half our human population. This means it could cost upwards of $50 billion to connect the rest of the world. There are of course advances in technology that make bringing internet to the rest of the world on the ground much easier, but if a global satellite constellation could cost a fraction of $50 Billion then it will be in a good place to beat ground based providers. For example, SpaceX has stated that to achieve a global network of 30,000 satellites, it would cost upwards of $10 billion.
Imperial Capitalism Risks
Netflix single-handedly accounts for a third of all internet traffic. YouTube is the second largest source of internet traffic on fixed and mobile networks alike the world over. Altogether, the big five internet giants account for roughly half of all “prime-time” internet traffic, a phrasing that deliberately reflects the fact that internet usage swells and peaks at the same time as the classic prime-time television period, that is, 7 p.m. to 11 p.m.
The majority of the front-facing layer of the internet is dominated by US-based tech companies but that does not hold for the internals and mechanics of the internet. ISP’s and internet providers span many countries and companies with no obvious monopoly. This has lead to many major tech companies around the world to start setting up internet cables for various regions of the world while also setting up their own private internet cables. This has allowed them to bypass charges for leasing bandwidth from other providers. While tech companies build out their submarine cable networks, countries around the world continue to put up capital to connect their regions in the same way. When the US declared over a decade and a half ago that cyberspace is the fifth frontier of war (in addition to land, sea, air, and space) it has not helped in the least when it comes to limiting privative companies and governments from collaborating on a global equal internet. Since this declaration, Russia, China, South Africa, and Brazil have responded with plans to build their own submarine cable network — the BRICS Cable — in a bid to bypass what they still perceive to be the US-dominated internet. These are the nascent lines in the struggle for control over the global internet in the twenty-first century.
Similar to submarine cable networks connecting the world, I fear that with US capitalist companies bringing global internet online faster than all other nations/corporations we will see a similar line of events unfold for space-based internet. Another major issue to consider is that if US companies will be providing this global internet coverage they will hold the power of information over all countries. Some governments with a strong hold on their people’s internet usage may be extremely cautious about US companies providing internet to their people as it will result in that government loosing control over what their people see online. A certain dichotomy could arise among the people within a country that do not have access to internet and a government that is blocking a US company to transmit over that country. This could lead to an uprising or revolt as people want access to affordable, open internet. Thus, it is important to start working with various governments on a political level so that everyone feels incorporated into the design and creation of this global internet network.
The Coming Communication World — Human Impact
Even though companies have started to scale up their production of global LEO satellite constellations, there is a big part of the puzzle that needs to be figured out: how do we adapt and design methods for bringing people online if they have never utilized the internet before? Do we simply direct them to google.com and say “look, you can learn anything!” This will be a more nuanced problem than simply giving people a computer, internet access, and google.com. Thinkers and leaders around the world have to prepare their respective nations for this wave of technology that is about to be unleashed on their people and come up with a defined roadmap for introducing it into everyday life.
As shown in the World Banks 2016 World Development Report, 60% of people in developing countries do not have access to internet. Even in the US, 60 million people still are not connected to the internet. The impacts the internet has are massive; it provides access to jobs, education, entertainment, and other life enriching benefits. However, some of the poorest people are the ones without the internet. On top of that, disparities in gender access are largest in developing countries, especially in Africa. The Economist Intelligence Unit Index reveals that only 11.6 percent of women access the internet in Africa, while 88 percent of women access the internet in Europe. While woman around the world in developed countries have been able to provoke major change within their nations over equality, there are many women left without this knowledge of global current affairs to know it is possible. In the US, children’s assignments are becoming increasingly dependent on technology and connectivity at home. While 94% of the US is said to have access to internet, many low-income houses are using mobile hot-spots or dial up internet. The problem with mobile hot-spots are that they are extremely slow and cause a major bottleneck when utilizing the internet. If we look closer at the data provided by Vikki Katz at Rutgers University, “the trend is particularly pronounced among families headed by Hispanic immigrants, where 10 percent of families have no Internet access at all, compared to 7 percent of Hispanics born in the US, 5 percent of whites, and 1 percent of black families, the study found. It surveyed nearly 1,200 parents of children aged 6–13 by phone.”
Bringing internet online for those that have no means of any coverage will be a major milestone in human history. As we can see in the US, many low-income people still do not utilize the internet that they do have access to because it is either too slow or too expensive and global internet providers will face the same challenges. It is important to explore how to best bring the internet to this underserved group of people.
Environmental Impact
Surprisingly, submarine cable networks have very limited environmental impact on the ocean and land as per a few research studies. The majority of the impact of the internet comes from the electricity costs to maintain ISPs and data centers. The internet is accessible by 50% of the world population and yet it emits 2% of CO2 emissions of the entire planet. This stems from the fact that we store data in the cloud, which costs energy to preserve these data centers. As more information and people get online, this issue will only get worse and there are currently no regulations or plans to limit this. We can start to minimize this impact by moving a lot of the internet infrastructure to space. LEO satellite constellations are only a first step in solving this problem. The next major step will be to integrate data centers in space as energy is extremely cheap and conversion of solar energy in space is very efficient.
The End
Overall, as a citizen in a developed country with a plethora of internet connection services and technology, it is easy to forget about the other 50% of the population because it is so isolated away from our everyday lives. That is why it is important for us to help other countries reap the benefits of technology and internet. Implementing this transition to global internet in a sustainable and mindful matter will help avoid global conflict and maintain the empowerment of all people. The effects of internet in the US, China, Europe, and more have been staggering. We have seen IoT medical devices, advanced robotics, driverless cars, and many other amazing technological achievements, similarly human academic growth has flourished as collaboration barriers have been reduced and communication over text, phone, and video are all near real time. When we bring this communication barrier down for our entire human population, it can hopefully lead to tremendous solutions to our most major problems that we face today like world hunger, global warming, and equality. A connected human population has a vast array of positive outcomes and I am excited to see them come into fruition in the coming years!
Bibliography
Chowdhry, Amit. “Google Invests In $300 Million Underwater Internet Cable System To Japan.” Forbes, https://www.forbes.com/sites/amitchowdhry/2014/08/12/google-invests-in-300-million-underwater-internet-cable-system-to-japan/. Accessed 30 Jan. 2020.
Individuals Using the Internet (% of Population) | Data. https://data.worldbank.org/indicator/IT.NET.USER.ZS?end=2018&start=2018&view=map&year=2016. Accessed 3 Oct. 2019.
Joan Ganz Cooney Center — Opportunity for All? Technology and Learning in Lower-Income Families. http://joanganzcooneycenter.org/publication/opportunity-for-all-technology-and-learning-in-lower-income-families/. Accessed 3 Oct. 2019.
“Lack of Internet Access Holds Rural Communities, Students Back.” Connected Nation, https://connectednation.org/blog/2019/09/26/lack-of-internet-access-holds-rural-communities-students-back/. Accessed 3 Oct. 2019.
Mathi, Sarvesh. “The Future of Undersea Internet Cables.” Medium, 6 Mar. 2019, https://blog.usejournal.com/the-future-of-undersea-internet-cables-f3e5f77de019.
Potential Environmental Impact of New Undersea Fiber Optic Cable. http://www.michaelmschofield.com/potential-environmental-impact-of-new-undersea-fiber-optic-cable/. Accessed 30 Jan. 2020.
Project, Borgen. “Internet Access: Reducing Global Poverty.” The Borgen Project, 25 June 2016, https://borgenproject.org/internet-access-reducing-global-poverty/.
Sandvine. Global Internet Phenomena. https://www.sandvine.com/phenomena. Accessed 30 Jan. 2020.
Say, My. “How Internet Access Can Boost The Economy And Social Equality.” Forbes, https://www.forbes.com/sites/groupthink/2014/04/25/how-internet-access-can-boost-the-economy-and-social-equality/. Accessed 30 Jan. 2020.
Sommariva, Andrea. The Political Economy of the Space Age: How Science and Technology Shape the Evolution of Human Society. United States, Vernon Press, 2018.
“States Struggle to Bridge Digital Divide.” US News & World Report, https://www.usnews.com/news/best-states/articles/2017-03-16/internet-access-a-staple-of-american-life-yet-millions-remain-under-connected. Accessed 3 Oct. 2019.
Student Access to Digital Learning Resources Outside of the Classroom. https://nces.ed.gov/pubs2017/2017098/ind_11.asp. Accessed 3 Oct. 2019.
Sullivan, Mark, and Mark Sullivan. “This New Wave Of Satellite Broadband Could Challenge Cable And Fiber.” Fast Company, 13 Mar. 2018, https://www.fastcompany.com/40542241/this-new-wave-of-satellite-broadband-could-challenge-cable-and-fiber.
The Great Firewall From Low Earth Orbit (Part 1 of 2) | West East Space. https://westeastspace.com/2019/06/17/the-great-firewall-from-low-earth-orbit-part-1-of-2/. Accessed 30 Jan. 2020.
“UN: Majority of World’s Population Lacks Internet Access.” UPI, https://www.upi.com/Top_News/World-News/2017/09/18/UN-Majority-of-worlds-population-lacks-internet-access/6571505782626/. Accessed 3 Oct. 2019.
West, Darrell M. Digital Divide: Improving Internet Access in the Developing World through Affordable Services and Diverse Content. p. 30.
“Why Many Low-Income Families Have Internet Access, but Remain ‘under-Connected.’” Christian Science Monitor, Feb. 2016. Christian Science Monitor, https://www.csmonitor.com/Technology/2016/0203/Why-many-low-income-families-have-Internet-access-but-remain-under-connected.
Winseck, Dwayne. “The Geopolitical Economy of the Global Internet Infrastructure.” Journal of Information Policy, vol. 7, 2017, pp. 228–67. JSTOR, JSTOR, doi:10.5325/jinfopoli.7.2017.0228.
— -. “The Geopolitical Economy of the Global Internet Infrastructure.” Journal of Information Policy, vol. 7, 2017, pp. 228–67. JSTOR, JSTOR, doi:10.5325/jinfopoli.7.2017.0228.
