As SpaceX charges ahead with more than 1,700 Starlink satellites launched so far for a consumer broadband service that’s already connecting some 100,000 beta users across 14 countries with better than fixed-broadband speeds, early mover OneWeb and more recent contenders are developing megaconstellations targeting higher paying enterprise and government customers.
U.K.-headquartered OneWeb, which emerged from bankruptcy last year under new ownership, had deployed nearly 300 satellites to low Earth orbit by the end of August, or 44% of its planned constellation. The venture was founded in 2012 to connect schools and provide consumer broadband to underserved regions, before pivoting to governments and businesses in maritime, aviation and other verticals that promise more revenues.
Neil Masterson joined OneWeb as CEO in November as the venture was exiting Chapter 11, after spending the previous two decades at Thomas Reuters, the global news, information and software provider where he was most recently co-chief operating officer.
Drawing on his background in finance, Masterson helped OneWeb secure more than the $2.4 billion the venture said it needed to fully fund its constellation, and without any debt. This funding is coming from an international mix of strategic investors, including the British government, Indian conglomerate Bharti, Japanese internet giant Softbank, French satellite operator Eutelsat, U.S.-based antenna specialist Hughes Network Systems and South Korea’s Hanwha, which has been growing its space industry presence.
After focusing the first third of your constellation’s rollout on the Northern Hemisphere, you’re now launching satellites to the south. Walk us through the rationale behind your deployment road map.
First of all, our mission is to connect the unconnected, and our proposition is very straightforward: we provide fiberlike connectivity where there’s no fiber. That said, we’re also very clear that we’re only part of the solution — we’re not a standalone solution in its own right. To fulfill that mission, it’s going to require all sorts of different providers and vendors to participate. So when we think about markets and market entry, we look at them through three lenses:
First, is it a strategic market for geopolitical reasons? Second, is it infrastructure-rich or infrastructure-poor? Markets that are strategically important and infrastructure poor are our sweet-spot, and in many ways gears our go-to-market efforts.
Thirdly, and most importantly, once we’ve selected those markets, it’s really about listening to our customers about how they want to deploy. So if you think about our deployment process, we’re going through the Northern Hemisphere — 50 degrees north, it’s strategically important, resource-rich but infrastructure poor. That’s essentially where we’re starting off from.
It also follows to the Southern Hemisphere, where similar rules apply. Then we will rapidly fill in the rest. We have enough satellite coverage deployed now to turn on service by the end of this year from 50 degrees north to the North Pole. We expect to complete the Southern Hemisphere coverage by next summer, and complete global coverage by the end of 2022.
So it was more strategically important to fill out the top part of the Northern Hemisphere first, because that’s where you see most demand?
Yes, and also frankly because of our polar orbit structure, it also consolidates the capacity we have first.
With Hanwha’s recent strategic investment, OneWeb has $300 million on top of the $2.4 billion it said it needed for the initial constellation. How are these extra proceeds being used?
Actually, I think we have some wiggle room in the first $2.4 billion. We’ll know more as the year proceeds. I would also add, we have no debt, which means we have quite a lot of flexibility in our capital structure.
It’s always good to have dry powder in any business, and particularly these sorts of businesses. But in terms of how we deploy it, we’re going to listen to our customers pretty carefully and be directed by them.
Whether it’s about accelerating market penetration, about doing further acquisitions — we’re waiting for regulatory approvals on the acquisition of TrustComm — or whether it’s actually accelerating the deployment of the second generation, all of those are on the agenda. But we want to make sure we’re very focused on delivering and deploying the first-generation constellation and listening to our customers to see what they really want from us.
After you launch services in the Northern Hemisphere later this year, what does the ramp-up look like in terms of revenue?
We’re alpha testing right now and those tests are going well. We will then move into beta testing later this fall, and we’re on target to turn the network on for paying customers by the end of this year.
But I want to make sure that we feel very good about where we are on that, and our ability to have the right level of service personnel in those markets and so on and so forth before we do that.
Based upon what I’m hearing from customers in those markets — and I spent [a week in August] in Alaska — the ramp-up I think will be quite rapid. Faster, actually, than we had anticipated, which is why I want to make sure we have the right level of resources deployed in those markets to meet that demand.
Why is it faster than expected?
I had not anticipated the end-market demand, frankly, as being as strong as it is. We knew the demand was there, but actually being on the ground, it’s visceral. You can feel it. And so I think we have an opportunity to participate in that — as I mentioned, part of the solution — and I think that will follow in many of the Northern Hemisphere markets.
When does work on the second-generation start?
It’s already started. We’ve been running innovation competitions to stimulate the industry, understand what’s out there, and bring the industry along with us. We see ourselves as being part of the ecosystem, so we want to stimulate the ecosystem to meet this mission. We’ve been very encouraged by the responses we’ve had, both in terms of volume of responses but also just the absolute innovation that’s out there.
We will issue an RFI to the industry toward the end of September. We’re asking for ideas and information from the space industry and that includes NewSpace, and also from some sectors outside of the space industry as well.
We see an opportunity to leverage broader, ancillary industries to stimulate the ecosystem and understand and share what is the art of the possible. We’re surveying the industry now and we’re excited by the opportunities.
What will the secondgeneration constellation bring to the table?
I don’t want to get into the specifics about what the technology offering will be. I can say that I really want to make sure we get feedback from customers before we make any decision. Commercial customers but also government customers. It’s really important we have a clear understanding of what folks want, rather than focus on what is technically possible.
I can say this, and you would expect me to say this: it’ll be much more capacity, much cheaper, and we also expect that it’ll be a much more replenishable network as well. It means we can scale it up or down over time, without having to do a further generation. The idea is for it to be much more modular in nature and, of course, backwards-compatible with our existing generation.
Where is OneWeb in potentially adding a global navigation service, and how could that complement your connectivity services?
We recognize it is strategically important. We have done a lot of technical evaluation work and we know we can do it, and we will do it. Now, for the specific timings about that, I don’t want to get drawn on them at this point, but yes we will do it.
I would also say that, particularly from a U.K. perspective, based upon the engineering work that we have done, the studies that we have done and various partnership discussions we have had, we think it’s possible to provide a [navigation] service with LEO, and we can get some way there with our existing generation of satellites and technology.
It could be added to the first generation?
We think we can provide something with the first generation, and then complete it with our second.
For this RFI you expect to issue in September, when would you need to go ahead and find a manufacturer?
We don’t need to make a decision on that, actually. We really want to understand what capabilities are out there, and then essentially the economics around that. What is the art of the possible and at what price? We will blend that information with what we’re hearing from the market, from customers about what they want. It’s the meshing of the two.
Candidly, once I’m satisfied that we have really understood the market needs and the customer needs — and we also understand what the art of the possible is — at that point, we’ll pull the trigger. I think it’ll be sooner than was initially envisaged.
But you can’t tell me when that was?
No.
SpaceX is acquiring Swarm to add an Internet of Things layer to its constellation. Is the IoT market of interest to OneWeb?
The answer is, sure, but our starting point is very much what we’re hearing from customers, and they’re asking us questions about it. They have a very keen interest in it. We’re having these discussions particularly with some of the very large telcos. We think it’s a very interesting market. We think we can provide a solution for them today. Our general strategy is first make sure we deliver the network, and second, make sure we penetrate our markets rapidly. Then once we’re there, provide further solutions to further embed our position, and clearly IoT is one of them.
We’ve done quite a lot of work and thinking on that. But I think one of the challenges with this industry, and all technology-based industries, is it’s very easy to get excited by the next thing. I’m very, very focused on making sure we deliver this thing and get it done.
One more question on the next thing: Is the plan to fund the second-generation with revenues from the first, or will you look to raise more funds?
Let me answer the question this way: We have no plans to raise any further equity. We are debt-free right now, so we have capacity to, if necessary, do borrowings. Depending upon the pacing of when we pull the trigger, we should be able to fund it from existing cash flows. That may change depending upon what point we pull the trigger and how rapid the market uptick is on the Gen 1. Short answer is I don’t know.
OneWeb is so far unique in being able to fund its constellation without debt. What kind of strategic advantage does that give you over the megaconstellation competition?
For my team and myself, we don’t spend any time now on that. If you’re trying to fund and deliver a very technically complex product, and engage your customers, it’s pretty hard to do all of that simultaneously. So we can be very single-minded about executing our strategy. Single-minded in delivering and looking out for customers and listening to their needs. I think that’s the advantage. Particularly, as we roll out globally, that enables us to basically participate in those markets quickly, because we don’t have any other distractions.
How will Inmarsat’s plans to enter the LEO mobility market affect the landscape? Is there room for everyone?
I don’t tend to think too much about our competitors. I can’t control what they do, I can only control what we do. I focus on making sure we are executing as rapidly as possible. I welcome competition. It’s good for customers.
Talking to customers, some of the consistent messages I hear are that they want resiliency, interoperability, and they want choice. Having a competitive environment will make us better. It’ll make our competitors better, because we’re going to compete furiously with them, and that’s going to be good for the market as a whole.
One of the downsides of the market becoming increasingly crowded is the growing potential to harm the sustainability of space. Businesses and governments are increasingly concerned about that. What needs to be done to ensure space is sustainable?
Commercially, it’s very, very important for the market as a whole, and for customers as a whole, that we compete. But it’s also incredibly important for our customers that we collaborate, particularly on these operational issues. From our perspective, starting from OneWeb and working upward, we take responsibility in space very, very seriously indeed. We’re fortunate that in our system we don’t actually have to launch that many satellites. It’s a lot, I mean 648 is a lot, but having fewer from my perspective is better.
The second thing is we pride ourselves and operate in a very responsible manner. There’s enough fuel in those satellites to de-orbit them at the end of their useful life.
But also, and I think this is a very important message I’d like to get across to your readers, we collaborate with other operators. John Guiney, who runs our flight management group, knows his counterparts at SpaceX and others in the industry. At an operational level, these people under John understand the responsibility that we have. I would say for our competitors it’s exactly the same. They understand the responsibility they have, and they coordinate very well together with governments. That should absolutely continue.
Do you foresee more sustainability regulations?
Yeah, possibly. First of all, we should be responsible. We shouldn’t devolve our responsibility to somebody else. We ought to be responsible, and I believe we are and I think there’s more we can do … but I also understand, if regulation comes, then I welcome it. We’re all in this together, and it’s so important that we work together and collaborate. Whether that’s in the form of a regulatory framework or not, I don’t think that would change what we’re doing. I think we’re working very much toward that.
How do you think the megaconstellation market will shake out?
What I’ve been positively surprised about over the last 10 months, since I joined the company, is that there is a very strong market demand there. We see ourselves as part of the solution, not the solution, and I think the potential for us to transform people’s lives in these remote areas, to provide better security, to enable businesses to be on a level playing field with other businesses that are located in different places, is extremely powerful. I hope that, together, we can make a real difference for people’s lives, and that the connectivity challenges that people experienced in some of these areas will become something of a thing of the past.
Equally, I also hope that we can come together and provide resiliency for the existing systems that are out there, because I think that’s increasingly important. Now, does that mean that all these various players will be able to be successful? I don’t know. My obligation to my shareholders, to my stakeholders and to my staff is to make sure that we’re successful.
The best way I can do that is making sure that we execute on our mission, and be really rigorous about it, and listen to our customers, anticipate their needs and get back to them with solutions where they can be successful with their customers. If we do that, then I think we will be successful, and I think in time we’ll see how the industry shakes out.
This interview, which has been edited for length and clarity, originally appeared in the September 2021 issue of SpaceNews magazine.