OneWeb filed for bankruptcy in New York on March 27. OneWeb is one of the biggest names in the Low-Earth Orbit (LEO) satellite business, planning to provide high speed internet to the world by 2021. The news came just days after they successfully launched another 34 satellites into their constellation, bringing the total number up to 74. Now, the future of the constellation is uncertain.
In its news release, OneWeb said it intends to use the bankruptcy proceedings to pursue a sale in order to maximize the value of the company. The company said that it had recently been engaged in “advanced negotiations” to fund the company through the deployment and commercial launch of its constellation, but these negotiations fell through because of the financial and market impacts of the COVID-19 pandemic.
The main investors are Softbank Group with 37.41 % equity, followed by Qualcomm with 15.93 %. Other investors include Grupo Salinas and the Government of Rwanda. Softbank is also the major creditor to OneWeb so it has access to all the assets as the senior lender. Perhaps after Chapter 11 OneWeb may be gone but a new “SoftbankWeb” may emerge. Or potential buyers like Amazon or Facebook could emerge. Aside from the satellites and earth stations, OneWeb owns the right to valuable spectrum which could speed up competitors plans. Space Norway and Telesat have LEO plans and thus may be interested buyers.
In the LEO space OneWeb was competing with Elon Musk’s SpaceX Starlink venture and Jeff Bezos’s Project Kuiper. A previous LEO competitor LEOSat failed in Nov, 2019. Does the bankruptcy of OneWeb mean that these LEO constellation dreams are also doomed ? Billionaires like Musk and Bezos have a lot of money and resources but they still need to raise financing. This combined with the pressure of the COVID19 pandemic on markets could dry up VC and debt financing, especially for something as speculative as LEO constellations. This may be the death knell for all these LEO plans.
I remember when earlier global LEO dreams also failed like Teledesic , Celestri and Globalstar. OneWeb, and the constellations like it, are built similar to a model called Skybridge proposed around the same time as the Iridium constellation was launched over twenty years ago (see my book review here). The idea is to be able to connect the 3.5 billion of people on Earth that aren’t currently online. LEO still have not solved the issue of making low-cost ground terminals that could work in harsh environments like the Arctic and rain-forest jungles with low power requirements that can track moving satellites. IT is doubtful that there is enough revenue in those business models to support the projects. Targeted High throughput GEO satellites can target high population density areas that can provide revenue for satellite Internet much cheaper than LEO’s and use existing relatively inexpensive ground terminal equipment. Serving remote locations has tough economics, even for satellites.
Already there were concerns about the volumes of proposed satellites and their potential for collisions and increases in space debris. Without strict regulatory oversight (and who would be responsible for this in space ?) and the non-zero chance of failures and malfunctions, we could see a runaway feedback loop creating tons of space debris, called the Kessler syndrome. These concerns and liabilities have still not been fully addressed for the large volume LEO constellations.
What does this mean for the Canadian market, specifically broadband service in remote ares and the Arctic ?
OneWeb had been planning to roll out Arctic service first, later this year. They had Canadian spectrum licenses from ISED. Telesat hasn’t even begun construction of their proposed satellites yet, although they have received approval of their spectrum and have the support of the Federal government ($85M from the Strategic Innovation Fund). SpaceX has launched 300 Starlink satellites and is expected to launch another 600 this year. They claim to need 800 satellites in orbit to be able to begin offering broadband Internet. It is unknown whether SpaceX has licensed spectrum from ISED to offer service in Canada. Starlink’s mission is also different from OneWeb one and they may be looking at serving the USA first and concentrating on revenue from there. So nothing imminent.
It is a market segment that I will keep a close eye on. Sadly, I don’t think that LEO satellite provision of broadband Internet to the Arctic and remote Canadian regions is going to happen anytime soon demonstrated by this recent bankruptcy. Fingers crossed that I am wrong.
