Softbank’s big investment in OneWeb, taking a 40-percent stake for $1.2 billion, almost assures that the proposed low earth orbit satellite constellation will launch. There are some other direct and potential consequences, especially a change in the business models of some or all other existing internet service providers.
The revenue model for fixed networks has been getting worse for decades, as customers for voice desert, leading to a stranded asset problem that worsens. Also, in most parts of the world, most people get internet access using their mobile phones, not the fixed network.
In the United States, internet access has become a product segment dominated by cable TV companies. Video entertainment always has been a tough business for smaller cable operators or telcos, as they do not have the scale required to drive costs out of the business. And linear TV is, by every estimate, mature and declining.
You might think OneWeb, which plans to blanket every inch of the earth’s surface with internet connectivity, is of primary value in developing, rural or maritime settings. That might be true.
But it also is true that OneWeb also further erodes the business model for rural telcos, cable TV companies, fixed wireless operators and satellite internet firms alike. OneWeb might partner with, or compete with, mobile operators as well, rendering their existing platforms increasingly uneconomic.
For similar reasons, OneWeb might pose challenges for municipally-owned networks as well, providing another option and therefore shrinking the addressable market for a municipal internet operation. You might think that is an issue only in rural areas of developing countries. OneWeb makes clear it is an issue for potential customers in all rural areas.
OneWeb says it plans to market its service both to “rural areas across the United States and emerging markets.”
Even if one argues that 5G networks will not soon provide gigabit speeds to rural users--if ever--one must conclude that if OneWeb launches, it will immediately “overbuild” all rural areas of the United States and elsewhere, offering a new alternative to fixed and geostationary satellite, as well as fixed wireless access.
It remains unclear whether mobile operators will choose to partner with OneWeb, but the OneWeb terminals support LTE, 3G, 2G and Wifi, so the opportunity is there. It is conceivable that OneWeb becomes a wholesale partner for mobile operators, much as it is possible the Project Loon balloon fleet could become a wholesale partner for mobile companies across the United States, as Alphabet has been attempting in Asia, for example.
The point is that OneWeb further undermines the business model, in rural areas, for virtually all other internet access providers, with the possible exception of mobile operators. It also is true that some existing providers might also seek wholesale partnerships with OneWeb as well. The issue there is scale. If multiple suppliers buy wholesale access from OneWeb, what does that do for the existing assets (fixed telephone networks, cable TV networks, geostationary satellite services, fixed wireless, mobile networks)?
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