The Internet Space Race Renaissance

Last week, Amazon subsidiary Kuiper Systems officially applied to the US Federal Communications Commission (FCC) for permission to launch a constellation of 3,236 broadband satellites. If the system becomes operational, it would enable Amazon to deliver Internet connectivity services to the US and several neighbouring countries.

The low-Earth orbit satellites are expected to offer lower-latency connectivity than satellite broadband systems, possibly making Kuiper a viable substitute for terrestrial broadband networks in many locations. Specifically, Amazon could specialize in bringing connectivity to the millions of households in rural parts of the US where broadband services aren’t available. Amazon makes this point clear in its application to the FCC, stating that its satellite constellation “will help close this digital divide by offering fixed broadband communications services to rural and hard-to-reach areas”.

The use of satellites to offer Internet access isn’t new. HughesNet and Exede are examples of existing solutions, and about 2 million households in the US now subscribe to such services. However, this satellite-based connectivity is slow compared with most modern broadband solutions including mobile. Some of these services provide throughput of about 10 Mbps — that’s without interference — and they’re also metered, making them very expensive.

A report published by the FCC earlier in 2019 revealed that almost half of the world’s population is still disconnected from the Internet, and a quarter of the US population living in remote areas doesn’t have access to a terrestrial broadband Internet service. So, it’s clear that organizations see opportunity in finding new solutions.

Since Internet access was declared a basic human right by the United Nations in 2016, several major companies have made efforts to provide coverage around the globe, with the goal of connecting the underconnected. Facebook, Google, SpaceX and SoftBank-backed OneWeb are looking for ways to spread the Internet along with web services to more corners of the world. For example, SpaceX has moved ahead with its planned network and already has permission to fly 11,943 small satellites by 2027 as part of its Starlink constellation. It has placed 60 satellites in orbit, so it has a jump on Amazon (see Space Patrol). And Google’s high-altitude balloon-based service, Loon, has recently emerged from a long incubation into commercial operations, starting in Kenya.

To date, the FCC has approved nearly 13,000 satellites. In addition to SpaceX and Amazon, other private companies looking to enter the space-based broadband arena include OneWeb, which also has the support of Airbus and permission from the FCC to launch 720 satellites (six are already in orbit), LeoSat and the Virgin Group.

There are still more unknowns than certainties with Amazon’s plans. The business model, pricing and throughput aren’t firm, and neither is timing. Without much clarity, the company says it can start offering broadband satellite services once the first 578 satellites are in position. Amazon is known to regard space as a useful next area for development in a number of domains, as a way of getting things done without using Earth’s resources or polluting the planet, so its Project Kuiper constellation is likely to be an early step in this direction.

We note that this news comes as cellular service providers AT&T, T-Mobile and Verizon are preparing to roll out fixed wireless services to compete with traditional broadband providers and to bring broadband to new areas in the US. T-Mobile, in particular, plans to deploy its low-band spectrum to pipe Internet connectivity deep into rural areas. In fact, this has been a main argument for its merger with Sprint. So, there’s a growing threat to satellite providers from substitute services, although, in fairness, the carriers have a weak track record of serving rural and poorer communities.

The history of low-Earth orbit satellite projects isn’t favourable, and it’s clear that there are high costs and risks involved with these ventures. The current enthusiasm to put thousands of new satellites up could turn near space into a billionaire’s scrapyard over the next few years.

However, Amazon has demonstrated its ability to disturb other businesses and its satellite plans could turn into a long-term disruption.