Jeff Bezos’ Amazon internet satellites: ‘4 billion new customers’

It’s a long and difficult road to orbit for any of these satellite ventures. Or, as many executives say: “space is hard.”

One of the key unknowns of Amazon’s proposal is the total cost of the network.

“If they’re pursuing this aggressively then it’s a lot of capital but Amazon’s always been willing to spend for future growth,” Korus said.

Amazon may have already begun the process of building satellites but within its statement on Thursday, the company said it looks “forward to partnering on this initiative with companies that share this common vision.” Industry officials, as well as Korus and Anderson, were split on whether or not Amazon would bring the intensive process in-house. SpaceX is manufacturing its own satellites, while OneWeb is collaborating with Airbus on a joint venture to build its network.

“I don’t know that they would have a manufacturer that builds it for them. Look at how he built Blue Origin,” Anderson said.

Korus estimated that SpaceX has a goal of $1 million per satellite, which is about the same cost of OneWeb’s. Korus and four other space executives believe Amazon’s network would cost between $3 billion to $4 billion altogether, while a fifth executive said it “wouldn’t be a shock if it cost at least $5 billion. Again, Blue Origin may help alleviate those pressures.

“If you happen to also own a rocket launching company then you have a bit of an advantage,” one executive said.

But Korus noted that the total cost is less important, given how space projects are known for cost overruns. Additionally, one executive said that the dollar amount isn’t critical as “Bezos sweats money at this point.”

Time is likely more important and potentially more costly. Estimates from both the analysts and executives ranged from five years to eight years, with many variables in between.

“I would think that about a 10-year timeline is probably what we are talking about here,” George Nield, former leader of the FAA’s space unit, told CNBC. Nield added that the time frame could be shorter because the new generation of space companies “has already demonstrated its ability to accomplish things faster than traditional aerospace programs.”

There’s one variable that may shorten the time until Amazon’s first satellite launch – it’s possible that Bezos’ company may have been working on the project quietly. “Bezos doesn’t announce anything until he absolutely has to,” Anderson said, which means Amazon could be “a couple years” or more into developing the program.

The ground stations may be taken care of with the AWS developments but another looming issue is the ground antenna that will receive the signals from the satellites.

“If you’re’ going to provide internet access to the people that don’t have it right now then there’s got to be some kind of antenna to receive that signal and right now those are fairly expensive,” Korus said.

One executive pointed out that this technological hurdle makes it difficult to provide real coverage in rural areas. Remote African or Alaskan villages may be covered by the network’s umbrella, but “hot-spotting” those areas requires a solution to the ground receiver problem.

“People are working on bringing [the cost and size of those antenna] down right now,” Korus said.

Overall, Amazon is entering into “a dog fight right now” among the proposed internet satellite constellations, an industry official said. There are billions of dollars pursuing these different goals of “space-based WiFi” and making the business case close for even one venture has yet to happen.

“It’s going to be the battle of big financial heavyweights,” another executive said.

Regardless, Amazon’s entrance should be a wake-up call for any business involved in the market, whether it’s traditional aerospace companies, private space ventures or even Silicon Valley tech giants.

“We’re at this inflection point in space history where the barriers to entry are no longer there,” Anderson said.

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