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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Tech Titans Start Internet Space Race

Last week, when CNN reported SpaceX planned to start beaming Internet from space next year, it drew attention to a fascinating and potentially extremely lucrative topic: space Internet.

The idea of using satellites to beam Internet to large parts of the planet has undoubted benefits. It can bring the Internet to many of the 3 billion people who currently don’t have access to the Web and cannot therefore take advantage of all the opportunities it offers, whether it’s for job searching, education, or something else.

Yet the challenges and drawbacks are significant as well. For starters, it will be expensive, writes Tali Arbel for the AP. One would need tens of thousands of satellites, and although these are smaller and hence cheaper than other satellites, the sheer number pushes the total cost up. So does the need for extensive and complex infrastructure on Earth: dishes and antennas. SpaceX alone has filed a request for one million so-called earth stations” as part of its space-based Internet project. Because of these high costs, it will be quite a while before this project and others like it start making money, if they are completed at all.

“I would be surprised if something were profitable in 10 years,” an aeronautics and astronautics professor from MIT told the AP’s Arbel. Kerri Cahoy added that space-based Internet is also at least three years from widespread commercial use. Yet SpaceX wants to do it next year, and there’s a good reason for that: competition.

This year, Elon Musk’s space company launched the first group of satellites for what it calls Starlink—the constellation of satellites it will use to beam Internet to Earth. Next year, the company is planning on 24 launches for satellites that will become part of Starlink—an unprecedented number of launches as SpaceX rushes to be the first in a new market that could turn it into a $52-billion company, according to Morgan Stanley.

Its competitors here include Amazon, which undoubtedly has the financial means to stake a claim in the future space-based Internet market, as well as OneWeb, a venture financially backed by Virgin’s Richard Branson, along with Qualcomm, and Japan’s SoftBank. And these are just the large players.

For now, SpaceX and OneWeb are the frontrunners in the nascent race. OneWeb also said recently it planned to start beaming Internet signal from space next year. Its target will be Alaska: one of the places where regular Internet connection is difficult to come by, with only 52 percent of Alaskans enjoying broadband access. Related: ‘’Too Much Too Fast’’ Gas Glut Crushes Shale Drillers

Yet it is far from certain this will happen as planned. The AP’s Arbel notes OneWeb’s original plan had envisaged the launch of its satellite constellation by the end of this year but the company has had to push back the launch date.

Amazon is kind of late to the party. It only recently asked the Federal Communications Commission to conduct tests on a new broadband Internet service and to launch more than 3,000 satellites in orbit. It has the capacity to catch up quickly to its rivals, but ultimate success remains uncertain for all of them.

The satellite constellations will cost billions of dollars to send into orbit. The earth stations will also be expensive: after all, to bring Internet to remote regions you’d need stations in those regions, and in this context, remote means expensive. Finally, your future clients need to be able to afford Internet services, the AP’s Arbel says.

While the main runners in the race have the means to cover the costs of installations and satellite clusters, there is nothing they can do about the wild card: the potential users of their space-based Internet services. True, Jeff Bezos is talking about beaming Internet to the whole world, but only half of this world or even less can actually afford Internet access, and that’s at current prices for the service. Space-based Internet needs to become a lot cheaper to become viable.

By Irina Slav for Oilprice.com

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