Japanese telco and serial investor SoftBank wants to use its investment in OneWeb to help it deliver a smarter, interconnected, and automated world.
SoftBank is the tech investor that few have heard about.
The Japanese multinational telco and media player is, according to Forbes, the 62nd largest public company on the planet, and yet was only formed in 1981.
Between 2009 and 2014 it expanded its market capitalisation and value by a staggering 557%, the fourth-fastest increase of any business in the world’s ‘Top 100’ companies.
Part of this staggering growth is down to China, and in particular a very savvy 2000 investment of just $20m in Chinese internet firm Alibaba, often called the ‘Amazon of China’, which grew into a $60 bn holding by 2014, and a 29.5% ownership.
Along the way SoftBank picked up ownership of Vodafone Japan, a 24% stake in internet betting company Betfair and 83% of Sprint/Nextel in the USA.
In July 2016 it acquired British chip-developer ARM Holdings for $32bn, and at the end of last year a SoftBank-led group led a $1.25bn investment in Uber.
It also has a low-profile business called SoftBank Satellite Planning Corp., which is planning for ‘next generation’ satellite communications. Another business was established in Dec 2017 to look at artificial intelligence (AI) and the internet of things (IoT).
This fast-expanding company made its longer-term intentions clear back in February 2017 when it tried to buy satellite giant Intelsat in a massive $13 bn deal that would have merged debt-ridden Intelsat with newcomer OneWeb, of which more in a moment.
The Intelsat deal fell apart, but SoftBank immediately bounced back by making a $1 bn investment in OneWeb, which was topped up in December 2017 to a total $1.5 bn.
OneWeb is a truly fascinating concept. Originally formed in Jersey in the Channel Islands (as WorldVu) and with a chunk of potentially extremely valuable satellite transmission frequencies allocated to an associate company (“L5”) by the International Telecommunications Union.
Its plan was to orbit 648 Low Earth orbiting (LEO) satellites, and initially it was Google which was interested in the business and its aim to reach “hundreds of ms of potential users without broadband access”.
Greg Wyler is the acknowledged visionary behind a number of LEO schemes, not least as the 2012 founder of OneWeb and the founder of O3b Networks (“the Other 3 Billion”), now wholly owned by satellite operator SES of Luxembourg.
O3b initially had a number of well-known investors, including Google.
SoftBank’s original plan was to own Intelsat and tie it into OneWeb and thus girdle the planet with satellite frequencies for just about any wireless – or broadband – use.
While the Intelsat portion of the scheme fell through the OneWeb investment remains firmly in place. And adding to the mix is that Intelsat is – in its own right – an investor in OneWeb, alongside names such as Sir Richard Branson’s Virgin Group, Qualcomm, Coca-Cola, Airbus, Bharti of India and Hughes Network Systems (Hughes is owned by EchoStar of Denver).
SoftBank’s mission for OneWeb is simple enough, and talks of: “fully bridging the global digital divide with global internet access, global knowledge infrastructure, the mission of connecting every school by 2022 “.
The initial concept, of 648 satellites has expanded somewhat.
Wyler says that the company has pre-sold most of its capacity, and thus needed more satellites. The 648 has grown four-fold to a planned fleet of 1972 satellites. That has further expanded with plans for an additional 2000 satellites utilising the underused ‘V-band’.
But the timetable is running.
The US Federal Communications Commission has set a six year deadline to ‘use it, or lose it’ in regard to OneWeb’s spectrum allocation in L-band.
Wyler, speaking in December, said: “OneWeb and our partners have been making great progress. We will soon provide more details of our roadmap, which includes greater than 100x capacity growth from our first-generation system, including Gigabit per second speeds, lower latencies, and affordable self-installed terminals.
“These new capabilities will support both our 2022 goal of connecting every unconnected school and our 2027 goal of bridging the digital divide. At the same time, boundless low latency broadband access will be available for homes, connected cars, trains, planes and cellular backhaul applications.”
That road-map will see 10 ‘demonstration and test’ satellites speedily launched, and with further launches in 2019 start to expand the fleet so that some basic services can be offered – starting with broadband coverage over Alaska.
OneWeb’s recently appointed CEO is Eric Berenger, former head of operations at Airbus Defence & Space, and someone who knows the satellite business inside out.
With its Airbus partner, OneWeb is now building a high volume $85m 100,000 sq ft satellite construction facility at a NASA site (“Exploration Park”) near the Kennedy Space Centre in Florida.
When completed the assembly line will turn out 15 satellites a week, an unprecedented level of speedy construction and at costs of less than $1 m a unit. These will then be launched in batches every 21 days over two years, and from multiple rocket launch sites, starting this Spring on a Soyuz vehicle from French Guiana.
OneWeb has also contracted with Amazon’s founder Jeff Bezos for five launches aboard his Blue Origin recoverable rocket system. Richard Branson’s Virgin Galactic also has launch contracts.
The aims are straightforward, although not without challenges.
Simply put, Wyler wants to be able to offer low-cost internet access to every school on the planet by 2022, and sign up 1 bn subscribers by 2025.
His system should offer more than 1 Petabit/second capacity by 2025. Initial deployments will offer up to 500 Mb/s. Latency will be around 15-50 milliseconds, or “fibre-like” says Wyler. Moreover, the receive/transmit antenna systems are designed to be ultra-simple to install.
As for SoftBank, its aims seem to mirror those of OneWeb.
It has created a potential $100m technology venture fund - The Vision Fund - and seeks to make investments of hundreds of millions of dollars in companies that SoftBank founder Masayoshi Son believes will corner key technologies in a future of smarter, interconnected, and automated devices. OneWeb’s satellites are expected to provide the backbone to those schemes.
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