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OneWeb files for U.S. license, will debut as B2B broadband wholeseller before expanding to world’s poorest

Matt O'Connell, CEO, OneWeb. Credit: SpaceNews/Kate Patterson.

PARIS— Internet satellite constellation startup OneWeb LLC on April 28 said it had submitted its license application with U.S. regulators as part of what likely will be a multi-year slog through the world’s capitals as the company seeks global operating rights.

OneWeb has opened an office outside Washington, D.C., and is based in Britain’s Channel Islands and its home regulatory agency is Britain’s Ofcom.

But getting a license from the U.S. Federal Communications Commission – among the world’s most public and sophisticated of radio frequency regulators – has important symbolic value to OneWeb, said Kalpak Gude, the company’s legal and regulatory vice president. He said that realistically it may take until mid-2017 for the FCC to grant the license.

OneWeb made its filing under its originally incorporated name, WorldVu Satellites Ltd., and has hired Milbank, Tweed, Hadley & McCloy LLP  and Wiley Rein LLP as legal counsel for the procedure.

OneWeb’s newly announced Florida satellite facility is scheduled to be starting high-rate production to meet the company’s schedule of launching 720 satellites between early 2018 and the end of 2019.

To meet that schedule, OneWeb is working on multiple fronts.

OneWeb Chief Executive Matt O’Connell said the company had begun preparing a second around of financing and had hired Deutsche Bank and Barclays to sound out investor interest in OneWeb’s project, whose ultimate goal is providing broadband access to the most isolated of rural communities.

OneWeb in June 2015 raised $500 million from mainly strategic investors, meaning companies whose financing was in part done to guarantee them a role on OneWeb’s contracting team.

But the investors also included cellular network operators Bharti Enterprises of India and Grupo Salinas of Mexico – companies that can be of help to OneWeb as it seeks regulatory approval in each nation in which it plans to operate.

O’Connell said the absence of financial investors from the first round was not a concern.

“It makes more sense for strategic investors to get things going,” O’Connell said. “When I was in venture capital our pitch was: Anyone can give you money. What you want is a smart investor with skin in the game, who can offer you more than money.”

OneWeb’s constellation consists of 720 satellites – 40 spacecraft in each of the 18 orbital plans – in low Earth orbit, covering every corner of the globe.

The track record of other satellite operators seeking approvals in nations such as India and China – the biggest and among the most difficult for foreigners to enter – suggests that the OneWeb regulatory battle will be long.

But O’Connell – who was hired perhaps as much for his investment banking background as for his former role as chief executive of geospatial imaging provider GeoEye — said the company would begin as a business-to-business offer to small and midsize companies. Much of the legwork in securing licenses will be done by OneWeb’s local partners.

O’Connell said OneWeb founder Greg Wyler’s vision of broadband for every poor village is as valid as ever, but will be realized only after OneWeb secures a place in the market.

“Greg’s vision was: Let’s bring the Internet to the unserved all over the world,” O’Connell said in an interview. “I’ve said since I got here that we still hold that vision and we will achieve that.

“But we’re going to start by serving small and medium-size enterprises in the underserved markets because that’s the way you build up cash flow and revenue,” O’Connell said. “Then at the same time you work to bring the terminal cost down so you can roll it out and serve the truly unserved. So we focus on a business-to-business strategy. A lot of the heavy lifting on the regulatory side will be done by our partners, and by the partners of those partners. That’s the way business-to-business works, and it will make it easier to roll out business faster.”

By “underserved,” O’Connell meant rural areas in developed nations that remain off the broadband grid and are unlikely to be connected by 4G or 5G cellular, or terrestrial broadband. “Unserved” is a term reserved for less-developed nations’ markets where a much wider swath of the population outside the major cities remains unconnected.

Gude said regulators should view OneWeb as a typical fixed satellite services provider that happens to be launching 700-plus satellites into low Earth orbit.

“From a regulatory perspective there are a lot of similarities between what we do and what FSS operators do,” Gude said. “There are established rules for [market] entry in many places and, where we can, we’ll be following that path with our partners. Predominantly, we expect our customers to be getting those licenses where necessary.”

India for years has been a special headache for fixed satellite service operators because the Indian Space Research Organization (ISRO) is both market-access regulator and the national space agency responsible for building domestic telecommunications satellites.

ISRO decides on what terms, and with what pricing, non-Indian satellite operators can do business in India. It is mainly because ISRO has been unable to launch enough satellites to meet surging demand for television that India has begun to open its market to foreign satellites.

“Is it going to be easy? No,” said Gude. “But the fact that Bharti is a partner of ours will help with the ISRO relationship.”

 

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OneWeb files for U.S. license, will debut as B2B broadband wholeseller before expanding to world’s poorest

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