We’ve been told that the space Internet will arrive soon, courtesy of Elon Musk’s SpaceX or a rival effort from Greg Wyler's OneWeb. Both companies intend to surround earth with thousands of satellites positioned in relatively low orbits. Those satellites will beam the Internet down from the heavens and give all people—not just those in well-connected cities—high-speed access to the Web. OneWeb believes this space Internet should arrive by 2019; Musk’s SpaceX would hypothetically deliver a similar service around the same time.
Here’s the thing: It turns out that space Internet already exists. You don’t hear about it that often because the company delivering it, O3b Networks, isn't run by a techno-celebrity named Musk or a radical like Wyler. But sure enough, O3b has operated a network of 12 Internet-beaming satellites for the past few months.
The O3b name stands for “the other 3 billion,” an indication of the company's aspiration to provide high-speed Internet access for the chunk of the world’s population that can't be reached effectively by fiber optic cables. O3b’s satellites sit in an orbit about 5,000 miles from earth—much closer to customers than previous satellites that attempted to deliver similar services—allowing data transfers at near-fiber optic Internet speeds. The end customers, in turn, can use all the Web has to offer, including the latest and greatest cloud services and online games, without suffering through lags.
To date, islands and countries located near the equator have shown the most interest in O3b’s services. The company this week announced deals with Papua New Guinea, American Samoa, and Timor-Leste. O3b also has a deal in place with Royal Caribbean Cruises to provide high-speed Internet on its ships and has just revealed an agreement with Miami-based Emerging Markets Communications that will bring high-speed Internet to offshore and remote oil drilling rigs. All told, O3b has signed up 21 customers and has 20 more deals in the works, says O3b Chief Executive Officer Steve Collar.
Based on the demand, Collar has gone back to O3b’s board to seek approval to add eight satellites to the company’s network. “We have been pleasantly surprised by the take-up,” Collar says. “We have sold about 50 percent of our capacity at this point.”
The pros to O3b’s approach are that the company’s satellites sit in a middle-earth orbit that’s close enough to provide high-speed access but still high enough to avoid interference with a lot of other communications satellites and spectrum. O3b can cover about 70 percent of the planet with its systems, and its sweet spot is around the equator where there happen to be an awful lot of islands and regions in need of faster Internet speeds. The downside is that O3b's market is limited to these customers; the company can’t provide a truly global service to all consumers.
“The real question is how big that opportunity is,” says Tim Farrar, a consultant for the satellite communications industry who runs TMF Associates. “You can see a clear path to it being a $200-million to $300-million per-year market, and then it’s murky.”
SpaceX and OneWeb would be able to cover the areas that O3b misses, although Farrar says they will probably struggle to cover equatorial regions. They’re also looking to sell to consumers instead of focusing directly on large communications providers, as O3b is doing. Under the SpaceX and OneWeb model, consumers—along with hospitals, schools, and just about any other organization—could pay $200 to $500 for a terminal that could pull the Internet down from the companies' satellites. O3b, by contrast, sells larger, far more expensive antennas that telcos buy and manage.
The sudden rush of entrants into the space Internet game has resulted in a brutally competitive battle. Wyler, for example, incubated the OneWeb project inside Google; for a time, it looked as if Google would fund the effort entirely. Google subsequently threw its lot in with Musk—who had also considered backing Wyler's technology—via a large investment in SpaceX, and Wyler went off to find new partners, including Richard Branson’s Virgin and Qualcomm. OneWeb announced this week that it has found another partner, forming a joint venture with Airbus—a SpaceX competitor—to build the satellites for its network.
Farrar finds the business models and some of the technical claims from the space Internet providers lacking, to say the least. “The question for SpaceX and OneWeb is whether there is any business plan here,” he says. “Greg changes his plan fairly frequently, and we still haven’t heard anything concrete from Elon.” Musk has talked about providing Internet service to “the other 3 billion” and providing a backbone for large volumes of Internet traffic. His contention has been that light travels faster in space, so a space-based Internet network could push data between, say, North America and Europe at higher speeds. “To be honest, I think that’s just silly,” says Farrar. “You can’t possibly put enough capacity in space to do that.”
Corrects several instances of the spelling of the name O3b.