Will LEOs be Mobile Partners or Competitors?

Once before, the shocking growth of mobile services essentially killed the business hopes of low earth satellite providers. Iridium, Globalstar and Teledesic are among the ventures that failed to gain traction because mobile services suddenly satisfied the demand the satellite providers hoped to supply.

Round two now is coming, as several proposed new low earth orbit satellite constellations (LEOs) prepare for commercial operations, in addition to O3b, which already is in business.

O3b already is supplying 2 Gbps of backhaul for mobile operators, according to David Burr, O3b VP.

To be sure, at least a couple of the ventures hope to escape danger by holding themselves out as potential partners for mobile operators. But not all.

At least one business plan, and possibly two,  aim to provide Internet access directly to end users, perhaps globally. That will provide new competition for mobile service providers and others who provide Internet access on a retail basis to consumers and businesses.

But the retail Internet access might not be the only business segment to be challenged if the LEO constellations are successful.

As crazy as it might sound, LEOsat believes it can relay traffic, satellite to satellite, with latency lower than undersea backhaul on fiber networks. That could make LEOsat, and possibly also SpaceX, a competitor to long haul undersea networks.

LEOsat, for example, proposes to launch a new constellation of low earth orbit satellites to provide backhaul for a number of customer segments, ranging from maritime communications to enterprise private links for high speed trading.

The new wrinkle is that LEOsat proposes to do so entirely using its space segment, with latency lower than undersea optical fiber. That is something Elon Musk at SpaceX also has said could be a use for the LEO constellation it proposes to launch, as well.

But some, including OneWeb, plan to sell Internet access directly to end users. “Our value proposition is capacity, low investment cost and coverage of  every inch of the globe,” sys Dave Bettinger, OneWeb CTO. “Our prime mission is residential connectivity,” but O3b also sees opportunities in the maritime, aeronautical and mobility segments, also.

O3b expects to be fully operational in 2019.  

So the issue is what mobile operators will do. One might expect they will begin to move faster with their own plans to bring Internet access to hundreds of millions of potential users, not waiting for LEO constellations to serve them first.

And that, in turn, could pose grave dangers for LEO providers. Mobile operators destroyed LEO business plans before. Will they do so, again?
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