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Softbank’s Masayoshi Son is pouring $1 billion into satellite internet and the future of data convergence

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Space Business
Obsession
Space Business

Masayoshi Son, the Japanese telecom tycoon who owns Sprint and unveiled a $100 billion tech investment fund earlier this year, said he will put $1 billion behind an ambitious plan to launch hundreds of satellites that would provide faster, cheaper internet connections.

Son’s Softbank Corp. will fund OneWeb, a satellite company founded by entrepreneur Greg Wyler and backed by Airbus Group, the European aerospace giant based in France. Softbank will own approximately 40% of the company after its investment. OneWeb also raised an additional $200 million from its original investors during this round.

OneWeb plans to begin launching more than 640 satellites in 2019 to circle the Earth just hundreds of kilometers above the surface, providing high-speed internet access to consumers in rich and poor countries alike. It’s a feat that would increase the number of active satellites in orbit by nearly 50%. Building the hardware and network behind such a service will be technically challenging—firms attempting similar projects at the turn of the century went into bankruptcy.

Existing satellite internet companies tend to rely on large, expensive satellites that fly tens of thousands of kilometers above the Earth, leading to long lag times for data transmission.

But technical advances have miniaturized components and increased the power of batteries. Investors’ view of satellite business plans have changed as competition in the launch industry drives down costs and demand for mobile data grows.

Now, the race is on to make internet satellites a key provider of bandwidth. Besides OneWeb, Elon Musk’s SpaceX is has made regulatory applications to launch 1,600 satellites for a similar constellation, and Boeing is reportedly developing a major satellite internet constellation as well.

Besides the technical challenges, satellite operators must contend with government regulation of the radio spectrum used to send signals to and from the satellites, ensuring that they do not interfere with other operators. OneWeb holds first priority on the use of key spectrum with the United Nations’ operated International Telecommunications Union, which gives it an advantage. However, in the United States, a key market for anyone contemplating this service, government officials have said they will broker a compromise if other viable satellite services need to share spectrum.

OneWeb appears to be running ahead of its competitors when it comes to building satellites. The company recently began construction of a new factory in Florida to build its satellites faster and cheaper—most commercial satellites are essentially bespoke products, and OneWeb intends to mass produce them for less than $1 million a unit. (The more traditional satellite communications firm Iridium is currently launching a new constellation with satellites costing approximately $27 million each.)

Son’s investment in OneWeb is another bet on the future of data convergence. As more services, from broadcast television to radio and telephone, are delivered via mobile data, the ability to provide it seamlessly will become increasingly valuable. The network could also provide lucrative services to autonomous robots—cars, trucks or delivery drones—or backhaul capacity for Sprint’s cell towers. Wyler has said he hopes to have millions of subscribers by the time the service is fully up and running in 2025.

Two weeks ago, Son met with president-elect Donald Trump, and told him that $50 billion of his investment fund would go towards US jobs. While OneWeb maintains several US offices and will bolster American commercial space efforts—particularly with that factory in Florida and the use of American launch companies like Virgin Galactic—it’s worth noting that the firm, like many satellite companies, is incorporated in the United Kingdom’s Channel Islands.

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