SoftBank’s Masayoshi Son makes brash claims for OneWeb

February 21, 2017

SoftBank Chief Executive Masayoshi Son reserved a large part of his third quarter earnings presentation for an explanation of the company's $1 billion investment in startup satellite Internet provider OneWeb Ltd. Son said OneWeb's cost and performance metrics are so compelling that the service, to be operational in 2020, might altogether replace cellular backhaul. Credit: SoftBank

SoftBank Chief Executive Masayoshi Son reserved a large part of his third quarter earnings presentation for an explanation of the company's $1 billion investment in startup satellite Internet provider OneWeb Ltd.

Son said OneWeb's cost and performance metrics are so compelling that the service, to be operational in 2020, might altogether replace cellular backhaul.

Credit: SoftBank

 

PARIS — SoftBank Chief Executive Masayoshi Son gave investors a detailed explanation of why he agreed to invest $1 billion into startup satellite Internet provider OneWeb Ltd. but said disbursement of the funds would not start immediately.

The investment, announced in December, will be through a fund that includes $200 million from at least one other OneWeb investor that was among the first-round backers that committed $500 million in June 2015.

SoftBank and OneWeb had said the $1.2 billion deal was expected to close in the first quarter of 2017. Given Son’s extraordinary endorsement of OneWeb in a Feb. 8 presentation, there could be little doubt of his intentions.

But the flow of cash to OneWeb, which SoftBank said would “support technological development and mass production” of satellites, could not start immediately.

$1.2 billion investment not flowing yet

“Our partner is eager to invest from the fund once it is officially launched,” Son said, without naming the partner. “We cannot really invest from the fund at this moment. But we have picked this company [OneWeb] as a first investment from the fund.”

OneWeb is building a constellation of some 720 satellites in orbit, plus another 180 spares, and has started work on a new production facility in Exploration Park, Florida, which will include two separate production lines. Airbus and OneWeb, based in Britain’s Channel Islands, are 50-50 partners in OneWeb Satellites.

 

Airbus and OneWeb are building the first 10 satellites at Airbus’s facility in Toulouse, France. These are set to be launched in early 2018 aboard a Europeanized Russian Soyuz rocket from Europe’s spaceport in South America.

Europe’s Arianespace has contracted with OneWeb to perform 21 Soyuz launches, most from the Russian-run Baikonur Cosmodrome in Kazakhstan, to deploy the full OneWeb constellation.

Service is scheduled to start in 2019 or 2020 from an initial constellation of 648 satellites, according to OneWeb. Most of the initial constellation will be orbited in batches of 32 satellites per Soyuz rocket.

OneWeb officials have said commercial service could start with only about half the constellation in place, to generate early revenue.

With $1.7 billion, ONeWeb’s about half-way there

The entire OneWeb system — satellites, launches, insurance and ground segment — is expected to cost about $3.5 billion. This capex estimate assumes that OneWeb and Airbus succeed in producing satellites at an average cost of $500,000 apiece and weighing about 150 kilograms at launch.

OneWeb’s initial financing round in June 2015 was mainly from suppliers but included major cellular network operators from India and Mexico. The SoftBank investment makes the Japanese telecommunications giant, owner of cellular network provider Sprint of the United States, the largest OneWeb shareholder, Son said.

Son’s address to shareholders was his first public explanation of why a company based in Japan, where fiber links are extensive, wants to invest in a constellation of low-orbit satellites to provide Internet worldwide.

Judging from his comments, Son has endorsed the OneWeb story in its entirety — and then some.

He began by saying that geostationary-orbit satellites are too far from the Earth to provide good voice or data links. OneWeb’s satellites, he said, at 1,200 kilometers in altitude, will all but eliminate the latency that he said is the irredeemable handicap of geostationary-orbit satellites.

SoftBank's OneWeb performance estimate more optimistic than OneWeb’s

OneWeb will give users throughput speeds of 200 Mbps on the downlink, and 50 Mbps uplink, Son said — “almost the same as optical fiber.”

These figures that are far more optimistic that OneWeb’s own data, which says the system will offer downloads at 50 Mbps and uploads at 25 Mbps.

Son said OneWeb’s latency — the time it takes for a signal to make the round trip between the user and the satellite — would be 20-30 milliseconds, “the same as optical fiber.”

OneWeb has used latency estimates of 50 milliseconds.

Son said telecommunications network providers in big countries like China or the United States can spend billions of dollars on deployment, whereas OneWeb’s capital cost for a year of deployment, including fixed costs, would be around 100 billion Japanese yen, or around $884 million, and cover the entire world.

“Why would you need cable anymore?” Son said of OneWeb’s cost and performance advantage. “We are becoming the major shareholder of a company bringing another telecommunications revolution.”

Son brushed aside a question on whether SpaceX of the United States and others that are planning satellite constellations for global Internet links might upset OneWeb’s business model.

“OneWeb is moving faster than anyone else,” Son said. “It made its [radio frequency application] in advance of everyone else, not just in the U.S., but in all nations of the world.”

 

Peter B. de Selding