[Via Satellite 6-25-2015] Intelsat has joined forces with OneWeb in a key new strategic alliance. OneWeb is planning to launch a Low Earth Orbit (LEO) satellite constellation of more than 600 satellites. The strategic alliance between the two companies will aim to make broadband more accessible to businesses and consumers, wherever they might be, on the ground, sea or skies. This new Geostationary Earth Orbit (GEO)/LEO alliance could be a sign of things to come in the satellite industry.
There were a slew of announcements around OneWeb today. The company revealed that it had raised $500 million of funding from a group of leading international companies. OneWeb has attracted investment from Airbus Group, Bharti Enterprises, Hughes Network Systems (Hughes), which is a subsidiary of EchoStar Corp., Intelsat, Qualcomm Incorporated, The Coca-Cola Company, Virgin Group, and Totalplay, a Grupo Salinas Company, owned by Ricardo B. Salinas. Additionally the company inked launch services agreements with Virgin Galactic and Arianespace, and a ground systems partnership with Hughes. Virgin Galactic’s LauncherOne will conduct 39 launches and has options for 100 more. The Arianespace agreement covers 21 Soyuz launches and has options for five additional Soyuz missions as well as three Ariane 6 missions.
Intelsat CEO, Stephen Spengler talked to Via Satellite about the partnership with OneWeb, why this partnership makes sense for Intelsat and what the operator hopes to derive from such a partnership.
VIA SATELLITE: You became CEO of Intelsat in April. This deal has been announced in June. My question is this: was this a deal that David McGlade was working on before relinquishing the reins or is this something that has taken shape in the last three months?
Spengler: Anything of this magnitude involves a selection of people within the organization to develop a strategic deal like this. But, Dave has been very much involved. This is part of his role as executive chairman to help with some of the strategic initiatives and relationships that we are looking to develop. He was definitely part of it. He was involved, as was I and a few others.
We have known Greg Wyler for years. Greg, when he had his company in Rwanda was using Intelsat capacity for part of that venture. Conversations go back to the latter part of last year with OneWeb.
VIA SATELLITE: Given Intelsat’s already significant global reach, why did you decide to do this deal?
Spengler: We are committed to developing a number of key verticals and sectors for our industry, which we believe are poised for some dramatic growth, things like government mobility, commercial mobility, aeronautical, maritime and connectivity to the un-connected world through partnerships with mobile operators. That has been our Intelsat EpicNG strategy. If you look at what we have said about Intelsat EpicNG, we are building an eco-system. It is not just about building high-throughput, high-performance satellites, and that was it. It was about building relationships, partnerships and making strategic investments where we can enhance the overall service we provide to our customers. Our investment in Kymeta is one example. Our investment with Phasor is another example. Our work with ESA/Newtec is another example. So, this we believe is another step forward. This is a ‘Big’ step forward. We saw the opportunity where OneWeb is developing a LEO system in Ku-band. We have a broadband Ku-band network on our satellites. We saw the opportunity where there could be some interoperability between the two fleets and constellations. Key to this relationship is the development of interoperable ground terminals, whereby we can provide services to our customers and OneWeb can provide services to their customer sets, that can operate both on the OneWeb system, as well as Intelsat EPIC and other Intelsat satellites. It is really a unique situation where we can bring these two orbits together in an integrated package, and offer for the first time pole-to-pole integrated communications through this architecture.
VIA SATELLITE: Your predecessor was quite outspoken, some would say even fairly critical against Greg Wyler’s last vision in the satellite sector. So, why the change now?
Spengler: There is no issue with Greg Wyler. Here is a real entrepreneur and innovator and creative source of energy for our industry. From our perspective, O3b was not a good fit for our company in what O3b was targeting. It wasn’t something that we jumped on at that point in time. This network is a little different. This network is not designed for one particular application, where as O3b was absolutely optimized for point-to-point high capacity trunk applications. The OneWeb network is a broader architecture capable of serving a wider range of applications. It is a global network. There is an interest in serving multiple applications in Ku-band. So, it had a lot of different characteristics than the previous ventures that Greg had been involved in.
VIA SATELLITE: Is there a path to ownership for Intelsat the same way there was with SES and O3b?
Spengler: I don’t want to comment about what is in the future. Our focus is this initial investment and getting the elements of this alliance moving forward as quickly as possible. We have spent a lot of time with OneWeb over the past few months. We have a very good idea in terms of how the network is architected and how it fits together with our network. We have work streams that we have agreed with OneWeb to develop together in the coming months to bring a fully integrated service to a reality. From that point, we see where things go. That is our focus right now.
VIA SATELLITE: What do you expect to happen over the next 12 months with this partnership?
Spengler: We haven’t sat down with OneWeb, or even the other OneWeb partners to map out the timeline. It is interesting that some of the investors are new to us in terms of business engagement. Some are current customers and business partners and suppliers. In addition to OneWeb, I see opportunities to work with some of the other founders. The system does not go into service until 2019. So, there is a little bit of time to develop some of the service offerings and develop some of the marketing strategies. But, we do need to move immediately to do the technical, design and integration work so we can bring the architectures together.
VIA SATELLITE: One of the interesting questions at SATELLITE 2015 was: is history repeating itself and are we going to see a ‘Boom and Bust’ cycle again? Do you think LEO operators are here to stay this time?
Spengler: Firstly, we as a company have been very measured in our comments about LEO and GEO. We have said that we are very interested in looking at it. We think the technological innovation that systems like this bring to the market and industry are really good, and that we wanted to take a close look to see how these systems could complement each other. At the same time, we were aware that there were a lot of things that needed to be solved. There are regulatory, business case and technical issues that need to be solved. We were obviously comfortable enough of all of these that we were prepared to make an investment and strike an alliance with OneWeb. Any time you have a ground breaking approach, there are going to be challenges. But, we do see a path with the partners that are engaged in this to address those and build what is envisioned. Other systems will have to be evaluated on a case by case basis.
VIA SATELLITE: Has this ‘NewSpace’ wave really changed how Intelsat needs to work with others going forward?
Spengler: There is a very good energy in the sector right now. There has been a good wave of innovation within the sector. We think Intelsat EpicNG is innovative on its own and in its approach, but there are others out there who are also doing some pretty innovative things. You have other companies coming from adjacent areas (telecoms/technology), and I think this is really healthy. I think this speaks to the fact there is significant demand that is not being addressed right now. Satellite is now part of the solution, and in fact, a very important part of the solution. So, that is great. The energy you feel externally definitely transfers into Intelsat, and is invigorating people. When these waves happen, it makes us all think more broadly and innovatively about possibilities in the future.
VIA SATELLITE: What will this deal give you that you did not have before in terms of ability to deliver to customers?
Spengler: We are pushing forward with our Intelsat EpicNG strategy. It is a core focus of our business. But, as we go forward, OneWeb will give us some additional capabilities that we don’t have today. It is going to give us pole to pole connectivity. It is going to give us the capability to go to mobility customers and provide an integrated service and take them over the poles, and this is critical. We are already hearing from them today that they are looking for solutions over high lattitudes. It is going to give us the capability to overlay our network or our network may overlay OneWeb with additional capacity in critical marketplaces where there is demand. It gives us the ability to take advantage of demand of the higher look angles of a LEO constellation where some services in urban areas could be more difficult to deliver in urban areas through GEO. This will give us a solution for those kind of situations, as well as leveraging the lower latency of LEO. We think we will be to layer in additional products and services with the integrated terminals and platforms that would be available through the alliance.
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