Issue 240: 2020 07 02: View from the Cotswolds

2 July 2020

View from the Cotswolds

Backfilling Brexit:  Pie in the Sky

By Paul Branch

As Boris soars breathlessly on his laudable mission to avoid austerity and spend, spend, spend our way back to economic stability (any comments, Dave/George?), a small item on his shopping list is “1 satellite system, slightly used, cheap”.  He and Rishi Sunak, prompted apparently by a senior government adviser, want to invest in a failing satellite venture which is now mired in bankruptcy proceedings in the USA:  half a billion quid for a 20% stake in putting a lot of oomph into our broadband internet and mobile phone connectivity, plus filling a large gap in the UK’s satellite navigation capabilities as we sail away from the EU.

The satellite system is OneWeb, headquartered in London but with extensive development and manufacturing facilities in the US.  It had started to launch the first batch of a planned fleet of very small satellites a few of months ago when two issues caught up with it:  firstly realization by its major investors that the business plan was looking a trifle optimistic so further money was not forthcoming, and then this was made all the more dangerously risky by the arrival of Covid-19 and the expectation that the world will probably need to spend bucketfuls of money on other necessities.  To cap it all, it was in the same competitive space as Elon Musk’s SpaceX.  These conclusions aren’t exactly rocket science:  financial uncertainty has long been a defining characteristic of the satellite communications industry.

There can’t be many industries where you try to raise many hundreds of millions to develop and build complex devices over 3-4 years, invariably spending more money and more time than originally planned, then putting the first one atop a huge firework, lighting the blue touch paper, retiring to a concrete bunker and waiting for the relief that comes with the magic words from the launch controller: “everything looks nominal, orbit achieved, over to you sunshine” (or words to that effect).

In parallel to building and launching the spacecraft you have to implement the ground infrastructure that supports the control of the satellites and the distribution around the world of the communications links (much more money), and the user terminals which have to be cheap or no one will buy them (even more development money), add a lot of back-up and redundancy, test the whole network over and over again to ensure reliability, market and sell the service, and finally wait for the paying customers.  Not many commercial satellite companies get to anywhere near the end of that little sequence, let alone make a good return for their investors which is not necessarily a requirement on the smaller scientific satellite outfits that we excel at.

Not only has the government promised to provide us all with reliable mobile phone coverage and ultra-fast Gigabit/s internet capability (heaven only knows what we’ll do with it, but whatever it is it will be fast), but they also need to fill one of the many previously unheralded gaps left by Brexit.  In this case we don’t appear to have (yet) negotiated as part of our new EU trade agreement continued access to the Galileo satellite navigation service, although strangely Canada has long been a partner of the European Space Agency including the Galileo project.  We need access to something similar at least as back-up to using the US Global Positioning Satellite system (GPS) for our cars, trucks, ships, aircraft, machinery and especially our military applications.  Galileo was designed to help make Europe less reliant on US technology, and joined similar satellite navigation projects from other major countries, notably Russia and China.

In the months before Boris, his predecessor announced that we would go it alone and splash out around 3-4 billions on our own bespoke navigation satellite system, but that idea was quietly dropped when the projected costs ballooned (shades here of a recurring theme with track and trace).  Now OneWeb’s financial problems have thrown up an interesting and much cheaper lifeline – pick up the pieces for a tenth of the cost of starting from scratch, so as to fulfil the universal broadband internet promise, then pop on a new satellite navigation payload to overcome the other problem.  Easy peasy, job done, let me know when it’s ready.  Oh, and while you’re about it Rishi, for the icing on the cake and in return for our investment, get all those OneWeb jobs currently being done in the USA to just transfer over here to the UK’s aerospace industry, there’s a good chap.

At first blush the scenario seems fanciful.  OneWeb’s satellites are in a very low earth orbit (around 1200 km) compared to the optimum intermediate orbit (20,000 km) for satellite navigation, so many, many more satellites are needed to provide useful coverage (in the thousands, compared to a mere 20 with GPS and other systems).  And the satellites need to be tracked by user broadband terminals as they whiz round in orbit.  Orbital pollution would be the least of our problems.  The frequencies used by GPS, Galileo and the rest are in the L-band spectrum (1500 MHz), whereas OneWeb works at Ku-band (12 GHz) where fading due to rain is an issue (as with your Sky TV antenna).  Hence the need to add a complete satellite payload for navigation which is neither trivial nor inexpensive, and design new user navigation and broadband terminals which have to be cheap although the market will be relatively small being a UK-only venture.  And finally, Mr Trump will not be pleased to lose all those jobs so good luck with the US/UK trade agreement discussions.  In conclusion, with the benefit of a second blush I’m still not impressed.

The ambition of many start-up satellite companies has been to attract as big and as wide a customer base as possible to pay for the huge up-front costs and deliver an ongoing commercially sustainable profit.  One particular lesson the industry has learnt over the past 40 years or so is the need to tailor the orbit of the satellites and the frequency bands they use to particular commercial market applications, and not to rely on the one-size fits-all way of doing things, which is what our government seems to be relying on.  The ultimate Holy Grail objective has always been to extend the customer base down to being able to stay in touch by phone and internet with your local pizza delivery man bringing you your piece of pie, and knowing where the pie is. Technology is certainly accelerating apace, but the laws of physics and economics remain stubbornly immovable.

Most companies that tried failed miserably and ended up in bankruptcy, with one notable exception which has been propped up by US taxpayers for quite a while.  I used to work for one satellite company that did succeed commercially and is still prospering – they’re next to the silicon roundabout in London EC1, but I doubt any special government advisers with their heads in the sky would be particularly interested to know that.


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