OneWeb SpinFest

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Greg Wyler has arranged an impressive PR stunt on the OneWeb project today. But it doesn’t take much peeling below the surface to realise that it is a continuation of business as usual.

Partnerships have been announced with a variety of companies in a “$500m Funding round” with a plan to launch service in 2019. If, of course, the $5bn system cost could be raised.

Nowhere is it disclosed whether this funding round involves any real cash being injected or how that valuation of “funding” is achieved.

What does appear certain, is that in the mode of the LEOs of the 90s, these companies are all suppliers:

  • Intelsat sells satellite control services to other satellite operators
  • Hughes sells ground Earth Station equipment and may wish to be paid to design the tracking modems required by users
  • Qualcomm sells it chip designs
  • Bharti sells data centre services and ground earth station sites
  • Virgin wishes to sell its yet-to-be-developed launch vehicle (The Galactic plan goes to 100 miles and does not yet work, recently killing its test pilot. To launch satellites you need a bigger plane to go 500 km.)

These companies have almost certainly “invested” sweat equity services not real cash.

Airbus employees have already discussed quite widely in the industry their intention to put a team of only a couple of dozen people onto the project to build the first 10 satellites in Toulouse. The full extent of any real investment would be in building a jointly-owned factory in the USA.  The Intelsat announcement (Intelsat IS a public company, deliberately skirts around the notion of “Cash” so we presume it is not).

It is amazing that apparently sensible companies sign up to a press release announcing that service will start in four years time. To do this, they have to raise $5 billion, find a location for and build and staff a brand new factory, overcome many technical and regulatory hurdles, AND spend TWO YEARS launching satellites before the constellation is all working. It is really very silly indeed.

Interesting no silicon valley players are there – Google, Facebook et al did their due diligence and realised it would not work.  Equally there is no financial investor here, so no-one who believes in it enough to actually put net cash IN and have it all at risk.  None of this changes the list of five impossible things OneWeb has to achieve (www.satelliteindustrynews.com/airbus-flight-of-fancy-ii). In the 1990s, suppliers like these started firms like Iridium, Globalstar, Teledesic etc. The suppliers got paid, the Wall Street Investors lost their shirts. Wall Street doesn’t have a short enough memory to make the same mistake again to the tune of $5 billion. So these “partners” may not be risking cash, but they ARE putting credibility on the line with sceptical investors. The real customers of Airbus, Hughes, and Arianespace who ACTUALLY pay for services and equipment (SES, EUTELSAT, INMARSAT etc.) must also be thinking hard about where their supply contracts get placed this year.

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