PARIS — Startup broadband mega-constellation operator OneWeb’s recent change of CEO and its continued lack of debt financing is feeding concerns among industry officials of the consequences for the commercial space sector if the multibillion-dollar constellation is seriously delayed, downsized or worse.
OneWeb, founded by Greg Wyler and backed by Softbank and a half-dozen OneWeb suppliers that have purchased equity, is the showcase mega-constellation. It is the only one that has selected an industrial prime contractor — in this case, a joint venture between Airbus Defence and Space and OneWeb, and has named most of its supply chain.
The first 10 OneWeb satellites, each expected to weigh about 150 kilograms, are under construction at Airbus’s Toulouse, France, facility and scheduled for launch around February — a year late, but a delay OneWeb and Airbus officials have said is not a major worry.
Two other production lines at a facility under construction in Exploration Park, Florida, are supposed to build the rest of the 900-satellite constellation. But that facility’s exact status is uncertain.
OneWeb has raised somewhere between $1.2 billion, $1.7 billion and “more than $2 billion, led by Softbank and is Vision Fund, depending on which OneWeb-related statement is to be believed.
But it’s unclear how much cash Softbank has made available to OneWeb, and how much will be parceled out only once the company’s satellites begin to launch.
OneWeb on Sept. 7 announced that CEO Eric Beranger, an Airbus veteran named to the OneWeb post in July 2016, had been named chief operating offer and that Adrian Steckel, up to now CEO of crytocurrrency trader Uphold of San Francisco, would be OneWeb’s new CEO.
Industry officials said privately that Beranger is a better fit for OneWeb as COO, a position that will allow him to focus on the service’s development rather than having to beat the hustings to raise capital.
At a panel discussion here Sept. 11 during World Satellite Business Week, Beranger said he was happy with the new management structure and with Steckel’s arrival to take over fundraising responsibility.
OneWeb officials had expected to secure their debt financing from France’s Bpifrance, formerly named Coface, which is France’s export credit agency. Bpifrance typically obliges its commercial banking partners to assume part of any project-finance risk that the agency takes on, with the agency guaranteeing the rest.
Industry officials have said in recent months that Bpifrance wants to see more customer commitments to the OneWeb system, which is designed to provide broadband connectivity worldwide to a wide swath of consumer and and industry users.
These same officials said Bpifrance was now setting fresh conditions on OneWeb in return for financing and that these are proving difficult to meet.
OneWeb’s total system costs are also an issue. The company began by talking about a system with a price tag of $3.5 billion to $5 billion. In its Sept. 7 announcement, which was curiously worded for a company losing its CEO, Uphold referred to OneWeb as a $6 billion system before removing that figure 48 hours after issuing its first statement.
The question now is whether financing pressures will force OneWeb to review its orbital architecture to reduce the number of satellites to limit system cost, a change that likely would mean a change in orbit that could constitute a “major modification” under U.S. Federal Communications Commission (FCC) rules and threaten OneWeb’s operating license.
OneWeb is not the only mega-constellation that has generated a lot of press but has not demonstrated much beyond a design idea and an FCC license. Established GEO satellite fleet operator Telesat of Canada is planning a multibillion-dollar system and has pitted Airbus Defence and Space against SSL and Thales Alenia Space in a competition to be prime contractor.
The presence of Airbus as a candidate for the Telesat system is one reason speculation has developed over whether Telesat and OneWeb might not merge their systems — one in Ka-band, the other in Ku-band, with multiple other system specification differences — into a single industrial effort.
This would give OneWeb an opportunity to correct the deficiencies of its current design — no inter-satellite links, for example, making ocean coverage difficult — and join forces with Telesat to seek funding sources. Telesat is a long-established operator of conventional GEO-orbit telecommunications satellites and is well-regarded in the industry. But to date it has demonstrated no financial backers of its system, even among its shareholders.
SpaceX’s announced constellation of thousands of satellites in low Earth orbit, also for global broadband connectivity, has never demonstrated the level of financial credibility beyond the considerable pull of SpaceX founder Elon Musk.
Because of that, the project is considered a question mark.
In the early 2000s, the bankruptcy of mobile satellite services LEO constellations Iridium and Globalstar, and the end of a SpaceX-type project called Teledesic after well over a billion dollars were spent, was a headwind for the entire satellite telecommunications industry despite the fact that the industry had a solid operational and profitability record.
Operators of low-cost, narrowband IoT/M2M constellations as well as startups planning higher-bandwidth services, were unanimous in saying that a major issue with OneWeb or Telesat or SpaceX would have a negative effect on their business plans.
One difference between the early 2000s and now: the presence of multiple venture capital companies that have backed much of the New Space startups. Venture capital tends to spread its bets over numerous companies, meaning the failure of one should not cause a general retreat from the sector.