With its storied history of broken promises and multiple bankruptcies, the satellite communications industry isn't exactly one that stands out as an attractive investment. Still, when you've got personalities like Elon Musk and Sir Richard Branson investing in new ventures, you can't help but wonder if they're on to something.
Many industry observers remember what happened in the 1990s to ventures like Teledesic, the satellite venture backed by Microsoft's (NASDAQ: MSFT) Bill Gates and wireless pioneer Craig McCaw. Teledesic initially wanted to launch more than 800 low-earth orbit (LEO) satellites with small antennas to provide uplinks up to 100 Mbps and downlinks up to 720 Mbps. The original proposal cost more than $9 billion, but it was scaled back to some 288 active satellites. In the end, even these stalwarts of business could not make it happen, and it folded. It didn't help matters that fellow satellite companies Iridium and Globalstar also fell on hard times, spooking investors from the space.
Iridium and Globalstar both managed to come back from zombie-land and get a second chance at life, targeting mostly niche markets like maritime and aviation. Iridium's 66-satellite LEO constellation is said to cover 100 percent of the globe, while Globalstar has 32 LEO satellites in orbit.
These existing satellite service providers are trying to remain relevant tech-wise. Iridium is pursuing its Iridium Next program with plans to have it fully deployed in 2017. The company expects to offer newer, faster user terminals for the maritime, aviation and land sectors that will take advantage of the network's enhanced capabilities. Iridium's Next constellation is supposed to provide L-band data speeds of up to 1.5 Mbps and high-speed Ka-Band service of up to 8 Mbps--not exactly near the FCC's 25 Mbps definition of broadband.
Interestingly, Iridium's new network is expected to bring new business through a venture called Aireon, a subsidiary of Iridium that will deliver Automatic Dependent Surveillance-Broadcast (ADS-B) across the planet, so that air traffic management agencies around the world can track aircraft in near-real time, anywhere in the world, including over oceans and remote coverage areas where it's not possible to cover with current radar systems. Aireon could provide global air traffic monitoring as early as 2017. That's the kind of technology that could have played a role in locating the Malaysia Airlines Flight 370 that disappeared last year.
Globalstar itself boasts having completed a (yet another) successful turnaround between 2013 and 2014 and reported in the third quarter of 2014 continued progress in improving its financial results. Globalstar is still waiting to hear the FCC's verdict on whether it can use Terrestrial Low Power Service (TLPS) to relieve crowded Wi-Fi spectrum. Globalstar says TLPS would immediately increase Wi-Fi capacity by more than 33 percent.
Globalstar likes to point out that 75 percent of the Earth's landmass is without terrestrial telecommunications coverage, and 2 billion people live, work and/or play in areas not covered by cellular service. That includes industries that may require presence outside of cellular reach, such as oil and gas, transportation and forestry.
Newer satellite-to-be players say they want to connect the 3 billion people who are not connected to the Internet. Their advantage? Access to newer satellite technologies that bring down the costs of deployment significantly. MIT Technology Review notes that micro satellites don't need to operate at very high orbits, reducing launch costs, and they can deliver performance comparable to larger, older satellites at higher altitudes.
Businessweek suggests that OneWeb, the Greg Wyler-led venture backed by Qualcomm and Virgin Group's Branson, could function as a giant back-up to the Internet. Wyler is talking about offering prices that are affordable to consumers, and he's going after a wholesale business model where telcos would sell to the end-users. It also could deliver faster Internet service to airplanes and be useful in a natural disaster when terrestrial communications are wiped out, Businessweek reported.
OneWeb is talking about starting out with 648 low-earth satellites 750 miles up, with data traveling between space and the surface in 20 milliseconds, which would provide Internet service capable of pretty much any app. Branson has said OneWeb has the capacity to put up nearly 2,500 satellites. The hope is to have OneWeb up and running by 2018 at a cost more than $2 billion for starters.
Musk--he of the famed Tesla Motors, SpaceX and Hyperloop--is talking about a plan estimated to cost much more--at $10 billion using as many as 4,000 satellites at low-earth orbit. While it's believed that OneWeb may have an advantage in that it already has secured spectrum rights with the FCC, some reports suggest Musk might want to use optical lasers instead of radio spectrum. Whatever he uses, Musk is willing to go where he needs to in order to get the engineering expertise he needs to pull it off. Apparently, he thinks there should be two competing high-tech satellite systems rather than, as Branson has suggested, tying the two together for a greater chance at success.
With more satellites flying in the heavens, the newer entrants presumably would connect more people at faster speeds. As GigaOm points out, putting more satellites in orbit is the equivalent of adding more towers to an urban cellular network. With fewer people connecting to the same cells, every user gets faster speeds and there's more capacity in the network.
But there's another pie-in-the-sky project that's intriguing on so many levels, and it's already got a head start. While Google is investing in Musk's endeavor, it's also got its own Project Loon. As crazy as it sounded at the beginning, Project Loon is actually taking shape and might even have some customers in the relatively near future.
Provided the project stays on course, Google (NASDAQ: GOOG)--with its balloons traveling some 12 miles above the earth's surface in the stratosphere--may be able to create a continuous, 50-mile-wide ring of Internet service around the globe this year. It could even have its first customers in rural South America, southern Africa or Oceania potentially signing up for service by 2016.
To be sure, satellite communication networks typically take a long time to deploy--usually longer than their show runners initially envisioned. They require an extreme amount of engineering expertise, as well as financial and political backing, not to mention extremely tenacious leadership.
So far, I haven't heard Google talk about taking Loon to Mars, as Musk has talked about with his satellite venture. Branson even joked during a CTIA show in 2008 (on April 1) about partnering with Google for a trip to Mars. Clearly, these guys have their sights set on outer space. That's awesome. In the meantime, Loon just might be the one project crazy enough to work--and deliver on its promises sooner rather than later.--Monica