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24 August 2021

SpaceX takes a quality lead in North America’s satellite broadband race

There has been a spate of developments in the North American satellite broadband realm, which cumulatively paint a picture of a market that is threatening to boil over. After all, there is still not an accepted understanding of just how many satellites are going to be needed to serve the region’s customer base. To that end, every satellite launched or ground station constructed that is surplus to requirements represents an investor getting their fingers burnt.

One firm, it seems, is running away with the market. Ookla has reported a significant increase in the quality of SpaceX’s network, according to data collected by its venerable speed-testing service. It shows SpaceX catching up to the available speeds of fixed-line providers in the US, and surpassing France, Germany, New Zealand and the UK.

If SpaceX continues to lead the pack, then the gap between it and the rest is only going to widen with time. Each new batch of satellites launched shuts the door that little bit more, for the competition. Given the way it can in-house these launches, it seems unrealistic that any rival LEO fleet could be installed in a more price competitive manner. As such, SpaceX just has to keep turning the screw on pricing, to put its rivals under immense pressure.

Worse still for the new entrants is that Amazon will not feel the same pressure either. Amazon is supporting Project Kuiper via its monolithic online retail operations, as well as its AWS wing. Amazon can afford to make losses on Kuiper, and the same cannot be said for the pure-play satellite operators. Amazon also recently acquired Facebook’s satellite connectivity team, which had been working on laser-based technologies.

Satellite rivals have attempted to use official channels to slow the SpaceX charge. Viasat had been challenging the FCC, via the US courts, to stay a SpaceX license modification for constellation expansion. This came to a head at the end of July, when the US Court of Appeals for the District of Columbia declared that Viasat had not satisfied the stringent requirements for a stay.

The court then granted the motion to expedite the appeal, setting an October 26 deadline, and Dish Network is expected to add documents to that appeal too. However, bringing the deadline up suggests that the court is confident in its position, meaning disappointment for Viasat.

Separately, Viasat is also lobbying the FCC to review the $900m that SpaceX won in the Rural Development Opportunity Fund (RDOF), which is sure to draw the ire of whichever court has to hear that case.

In something of a response, SpaceX has just acquired IoT darling Swarm Technologies, which has been building a constellation of 120 tiny satellites, designed to collect remote IoT sensor data. Of course, SpaceX’s main interest is in the FCC licenses that Swarm holds, and this might be a nice character fit for SpaceX, as Swarm got in a lot of trouble for its unauthorized launch of four satellites – which drew a $900,000 fine, and a five-year regulatory compliance plan.

So, if SpaceX and Amazon represent a commercial hegemony, which is unlikely to be dethroned by pure-play rivals, there does at least appear to be an option for municipally-supported LEO networks. Telesat agreed an $86.7m investment round with Ontario, Canada, which will see its Lightspeed constellation made available to local ISPs, on a wholesale basis.

The idea is that Telesat will supply the ISPs with 40 Gbps of discounted capacity, which will be used throughout the province to provide consumers with high speed Internet services. Cellular backhaul was also named as an application, and the deal has a five-year schedule.

Ontario has previously invested $20m into Telesat, back in 2018. The Canadian government also signed a separate deal with Telesat in 2020, totaling some $460m, for dedicated capacity on the network. The Quebec government also has a $316m investment, similar to Ontario, but which includes satellite manufacturing assurances within the province.

Ontario also estimates that $20m in capital expenditure will be made in the province, thanks to its deal. However, the satellite network is currently scheduled for the first half of 2024 – meaning that SpaceX is only going to be more entrenched.

With Canada such an important investor for Telesat, you can easily see how it could become a national asset, if its commercial ambitions fall through. The same could be said for OneWeb, in the UK, however, the government is now a minority investor in the firm, after Bharti upped its investment by $500m – holding 38.6%, to the UK and Eutelsat’s equal 19.3% shares.

Alaska was the site of two recent satellite deals. Gilat Satellite Networks won a $5m supplier contract, to support Pacific Dataport’s (PDI) upcoming Very High Throughput Satellite (VHTS) deployments. The first of two satellites is due for launch in Q2 2022, with the second launching in 2024.

This would initially provide 7.5Gbps of throughput for Alaska, one of the most rural states in the US, and later a claimed 100Gbps of capacity. The VHTS units are geostationary, meaning that their latency is still going to be an issue. However, with a population of around 740,000, the two satellites would represent a per-capita bandwidth of around only 0.14Mbps. This only jumps to 0.39Mbps when you divide the 100Gbps by the number of households rather than individuals.

The second Alaskan deal saw local service provider GCI select Intelsat, to provide satellite connectivity for rural homes in the state. The $150m renews the C-band and Ku-band deal between GCI and Intelsat, but now adds Ka-band services too.

We will not know the actual performance of PDI’s and GCI’s networks for a while. In the meantime, SpaceX’s Starlink service now claims, according to Ookla, a median download speed of 97.23Mbps, in Q2. This has improved significantly from the 65.72Mbps that Ookla recorded in Q1, suggesting that the expansion of the fleet is having a profound impact on network quality. Starlink’s median upload speed was 13.89Mbps, with latency at 45ms.

By comparison, Ookla reported a fixed-line median download speed of 115.22Mbps in Q2, with a median upload of 17.18 Mbps, and latency of 16ms. You can see that SpaceX is knocking on the door of the fixed-line operators in throughput, but still has a way to go in terms of latency – although it does claim that 20ms is possible in the future.

To illustrate just how different these LEO constellations are from their GEO brethren, Ookla charted HughesNet and Viasat. In downloads, they scored 19.73Mbps and 18.13Mbps, respectively, but uploads of just 2.43Mbps and 3.38Mbps. Latencies were 630ms and 724ms. It is worth noting that fixed-line operators can score similarly in throughput, if they are still reliant on DSL, and even cable and fiber operators can see their services degrade to that sort of performance.