Tesla founder and CEO Elon Musk is looking at ways to make smaller, less-expensive satellites that can deliver Internet access across the globe, according to a report in The Wall Street Journal, citing people familiar with the matter.
Musk is working with satellite industry veteran and former Google (NASDAQ: GOOG) executive Greg Wyler, the Journal's sources said. Wyler founded WorldVu Satellites Ltd., which controls a large block of radio spectrum.
The two reportedly have discussed launching about 700 satellites, each weighing less than 250 pounds, which is about half the size of the smallest communications satellites now in commercial use, the report said. The constellation would be 10 times the size of Iridium Communications' fleet, currently the largest.
The Journal's sources said Musk's closely held Space Exploration Technologies Corp., or SpaceX, likely would launch the satellites, though it said no agreement is in place. SpaceX launched a dozen of its Falcon 9 rockets in the past five years and plans more than four dozen launches through 2018. In September, the company won a $2.6 billion NASA contract to develop, test and fly space taxis to carry U.S. astronauts into orbit.
Building a plant and testing satellites is a lengthy process, and WorldVu would need to clear the use of spectrum, the report notes. In addition, SpaceX may not have capacity to launch the satellites until the end of the decade, by which time WorldVu risks losing its spectrum.
The report also points out that the venture would face large financial, technical and regulatory hurdles. The project is estimated to cost $1 billion or more, and "the people familiar with the matter cautioned the project is in a formative stage," and it's not a given that Musk will participate.
If Musk figures out a way to get into the market, he will be joining others who struggled in their earlier iterations. Iridium launched its satellite service Nov. 1, 1998, only to plunge into bankruptcy nine months later. Its mission was to deliver satellite-phone service to globe-trotting executives and consumers, but the market for pricey handsets and service didn't materialize. After being bought out of bankruptcy by private investors, Iridium remade itself, targeting markets like maritime, aviation and the military.
Mobile satellite firm Globalstar, which sought bankruptcy protection back in 2002, more recently has been battling an activist investor who claims the company's wireless spectrum is worthless. Globalstar is waiting for a decision by the FCC regarding a request it made to have the FCC alter its existing rules and allow the company to offer mobile broadband service over the spectrum it has in the upper 2.4 GHz band.
The Verge notes that "Internet from above is having a moment," pointing out that in April of this year, Google outbid Facebook for Titan Aerospace, a company that makes drones. Reportedly, Google will use the drones to deliver Internet connections to remote areas. That's in addition to Google's Project Loon.
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