Keeping Track of Satellites

The topic of satellite broadband has been heating up lately. Elon Musk’s StarLink now has over 540 broadband satellites in the sky and is talking about starting a few beta tests of the technology with customers. OneWeb went into bankruptcy but it being bought out by a team consisting of the British government and Bharti Airtel, the largest cellular company in India. Jeff Bezos has continued to move forward with Project Kuiper and the FCC recently gave the nod for the company to move ahead.

These companies have grandiose plans to launch large numbers of satellites. Starlink’s first constellation will have over 4,000 satellites – and the FCC has given approval for up to 12,000 satellites. Elon Musk says the company might eventually grow to over 30,000 satellites. Project Kuiper told the FCC they have plans for over 3.300 satellites. The original OneWeb plan called for over 1,200 satellites. Telesat has announced a goal of launching over 500 satellites. A big unknown is Samsung, which announced a plan a year ago to launch over 4,600 satellites. Even if all of these companies don’t fully meet their goals, there are going to be a lot of satellites in the sky over the next decade.

To put these huge numbers into perspective, consider the number of satellites ever shot into space. The United Nations Office for Outer Space Affairs (NOOSA) has been tracking space launches for decades. They reported at the end of 2019 that there have been 8,378 objects put into space since the first Sputnik in 1957. As of the beginning of 2019, there were 4,987 satellites still in orbit, although only 1,957 were still operational.

There is a lot of concern in the scientific community about satellite collisions and space junk. Low earth satellites travel at a speed of about 17,500 miles per hour to maintain orbit. Satellites that collide at that speed create many new pieces of space junk, also traveling at high speed. NASA estimates there are currently over 128 million pieces of orbiting debris smaller than 1 square centimeter, 900,000 objects between 1 and 10 square centimeters, and 22,000 pieces of debris larger than 4 inches.

NASA scientist Donald Kessler described the dangers of space debris in 1978 in what’s now described as the Kessler syndrome. Every space collision creates more debris and eventually there could be a cloud of circling debris that will make it nearly impossible to maintain satellites in space. While scientists think that such a cloud is almost inevitable, some worry that a major collision between two large satellites, or malicious destruction by a bad actor government could accelerate the process and could quickly knock out all of the satellites in a given orbit.

There has only been one known satellite collision when a dead Russian satellite collided with an Iridium communications satellite over a decade ago. That satellite kicked off hundreds of pieces of large debris. There have been numerous near misses, including with the manned Space Station. There was another near-miss in January between the defunct Poppy VII-B military satellite from the 1960s and a retired IRAS satellite that was used for infrared astronomy in the 1980s. It was recently reported that Russia launched a new satellite that passed through one of StarLink’s newly launched swarms.

The key avoiding collisions is to use smart software to track trajectories of satellites and provide ample time for the satellite owners to make corrections to the orbital path to avoid a collision. Historically, that tracking role has been done by the US military – but the Pentagon has made it clear that it is not willing to continue in this role. No software is going to help avoid collisions between dead satellites like the close-call in January. However, all newer satellites should be maneuverable to help avoid collisions as long as sufficient notice is provided.

A few years ago, the White House issued a directive that would give the tracking responsibility to the Commerce Department under a new Office of Space Commerce. However, some in Congress think the proper agency to track satellites is the Federal Aviation Agency which already tracks anything in the sky at lower levels. Somebody in government needs to take on this role soon, because the Pentagon warns that its technology is obsolete, having been in place for thirty years.

The need for tracking is vital. Congress needs to decide soon how this is to be done and provide the funding to implement a new tracking system. It would be ironic if the world solves the rural broadband problem using low orbit satellites, only to see those satellites disappear in a cloud of debris. If the debris cloud is allowed to form it could take centuries for it to dissipate.

An Update on LEO Satellites

A lot of rural America continues to hope that low orbit satellite (LEO) service will provide a broadband alternative. It’s been a while since I’ve covered the status of the companies proposing to deploy constellations of satellites for providing broadband.

In March, OneWeb filed for Chapter 11 restructuring when it was clear that the company could not raise enough cash to continue the research and development of the satellite product. In July, a bankruptcy court in New York approved a $1 billion offer to take over the company filed jointly by the British Government and Bharti Airtel. Airtel is India’s largest cellular company. The restructured company will be owned with 45% stakes by Britain and Bharti Airtel, with the remaining 10% held by Softbank of Japan, the biggest original shareholder of OneWeb. Other earlier investors like the founders, Intelsat, Totalplay Telecommunications of Mexico, and Coca-Cola have been closed out of ownership by the transaction.

There is speculation that the British government purchased the company to create tech jobs in the country and that all R&D and manufacturing for OneWeb would immediately shift to England from Florida.

Of more concern for rural broadband is speculation that the mission of the company will change. Greg Wyler, the original CEO of the company had a vision of using the satellites to bring broadband to parts of the world that have no broadband. He chose a polar orbit for the satellites and was going to launch the business by serving Alaska and the northern territories of Canada like Nunavut. I’ve seen speculation that the revised company is likely to concentrate instead on wholesale connections to telcos and ISPs, such as providing backhaul for rural cell sites.

Elon Musk’s satellite venture StarLink was recently in the news when the company said it was going to raise ‘up to $1 billion’ to continue the development of the business. The company still has a long and expensive road to success. The company has raised over $3.5 billion to date before this latest raise, but a recent Bloomberg article estimates that the company will need to raise an additional $50 billion between now and 2033, which is when the company is projected to be cash-positive.

StarLink now has over 540 satellites in orbit, but the business plan calls for over 4,000. Keeping the constellation in place will be an ongoing challenge since the satellites have an estimated life of 5 to 6 years. Starlink will forever have to be launching new satellites to replace downed satellites.

The US government and the FCC seem to be in StarLink’s corner. The FCC is still evaluating if it will allow StarLink to participate in the upcoming RDOF grants auction in October. It would be incredibly unusual to award giant federal grants for a product that is still on the drawing board and for an ISP that hasn’t raised 10% of their needed funding.

StarLink recently made a very-public announcement that it was looking for beta customers – likely as a way to spur fundraising. Early Starlink customers will likely see blazingly fast speeds, which would happen for any broadband technology that could devote the bandwidth from one server to connect to one or two customers. The bandwidth delivered on a fully-subscribed satellite network will be far less – but that won’t stop the company from using a beta test to set unrealistic expectations of future satellite broadband speeds.

The last LEO player that is still active is Jeff Bezos venture that is still using the preliminary name of Project Kuiper. The FCC recently approved the licensing for Project Kuiper to move forward. Immediately following the FCC approval, Jeff Bezos announced that he will be investing $10 billion in the business. This ability to self-fund likely gives Project Kuiper an advantage over other competitors. It was reported that just for the month of July that Bezos’s net worth had climbed by $9 billion.  Funding is going to be a constant hurdle for the other two major competitors, but Project Kuiper might be the fastest to deploy if funding is not an issue.

The FCC approval pf Project Kuiper and the funding announcement by Bezos came at the same time that Starlink is seeking another round of financing and is trying to get into the FCC auction. It’s going to be interesting to see how the battle between two billionaires unfolds – my bet is on Amazon due to easy access to funding.

The FCC Muddles the RDOF Grants

Last week the FCC ‘clarified’ the RDOF rules in a way that left most of the industry feeling less sure about how the auction will work.  The FCC is now supposedly taking a technologically neutral position on the auction. That means that the FCC has reopened the door for low-earth orbit satellites. Strangely, Chairman Ajit Pai said that the rules would even allow DSL or fixed wireless providers to participate in the gigabit speed tier.

Technologically neutral may sound like a fair idea, but in this case it’s absurd. The idea that DSL or fixed wireless could deliver gigabit speeds is so far outside the realm of physics as to be laughable. It’s more likely that these changes are aimed at allowing the providers of satellite, DSL, and fixed wireless providers to enter the auction at speeds faster than they can deliver.

For example, by saying that DSL can enter the auction at a gigabit, it might go more unnoticed if telcos enter the auction at the 100./10 Mbps tier. There is zero chance for rural DSL to reach those speeds – the CAF II awards six years ago didn’t result in a lot of rural DSL that is delivering even 10/1 Mbps. It’s worth remember that the RDOF funding is going to some of the most remote Census blocks in the country where homes are likely many miles from a DSL hub and also not concentrated in pockets – two factors that account for why rural DSL often has speeds that are not a lot faster than dial-up.

Any decision to allow low orbit satellites into the auction has to be political. There are members of Congress now pushing for satellite broadband. In my State of North Carolina there is even a bill in the Senate (SB 1228) that would provide $2.5 million to satellite broadband as a preferred solution for rural broadband.

The politics behind low orbit satellite broadband is crazy because there is not yet any such technology that can deliver broadband to people. Elon Musk’s satellite company currently has 362 satellites in orbit. That may sound impressive, but a functional array of satellites is going to require thousands of satellites – the company’s filed plan with the FCC calls for 4,000 satellites as the first phase deployment.

I’ve seen a lot of speculation in the financial and space press that Starlink will have a lot of challenge in raising the money needed to finish the constellation of satellites. A lot of the companies that were going to invest are now reluctant due to COVID-19. The other current competitor to Starlink is OneWeb, which went bankrupt a few months ago and may never come out of receivership. Jeff Bezos has been rumored to be launching a satellite business but still has not launched a single satellite.

The danger of letting these various technologies into the RDOF process is that a lot of rural households might again get screwed by the FCC and not get broadband after a giant FCC grant. That’s what happened with CAF II where over $9 billion was handed to the big telcos and was effectively washed down the drain in terms of any lasting benefits to rural broadband.

It’s not hard to envision Elon Musk and Starlink winning a lot of money in the CAF II auction and then failing to complete the business plan. The company has an automatic advantage over any company they are bidding against since Starlink can bid lower than any other bidder and still be ahead of the game. It’s not an implausible scenario to foresee Starlink winning every contested Census block.

Allowing DSL and fixed wireless providers to overstate their technical capacity will be just as damaging. Does anybody think that if Frontier wins money in this auction that they will do much more than pocket it straight to the bottom line? Rural America is badly harmed if a carriers wins and the RDOF money and doesn’t deliver the technology that was promised – particularly if that grant winner unfairly beat out somebody that would have delivered a faster technology. One has to only look back at the awards made to Viasat in the CAF II reverse auction to see how absurd it is when inferior technologies are allowed in the auction.

Probably the worst thing about the RDOF rules is that somebody who doesn’t deliver doesn’t have to give back all of the grant money. Even should no customer ever be served or if no customer ever receives the promised speeds, the grant winner gets to keep a substantial percentage of the grant funding.

As usual, this FCC is hiding their real intentions under the technology neutral stance. This auction doesn’t need the FCC to be ‘technology neutral’, and technologies that don’t exist yet today like LEO satellites or technologies that can’t deliver the speed tiers should not be allowed into the auction. I’m already cringing at the vision of a lot of grant winners that have no business getting a government subsidy at a time when COVID-19 has magnified the need for better rural broadband.

Will Starlink be in the RDOF Auction?

Jonathan Chambers of Conexon wrote an interesting blog where he assumes that the FCC has already allowed Starlink, the satellite company owned by Elon Musk, into the top tier in the RDOF auction. If so this would be a disastrous decision by the FCC.

The RDOF auction will be a reverse auction, but with a twist. In a reverse auction, the bidder willing to take the least amount of money to provide service to a given geographic service area wins the auction. However, the twist is that the FCC is giving priority to gigabit broadband providers. If there is still a gigabit provider left in a given area after a few rounds of bidding, that bidder wins if the other bidders offer slower technologies. This twist was added to favor fiber deployment, which the FCC understands is the best broadband solution – when a community gets fiber they are set for the rest of the century and the FCC can scratch fiber-served communities off their worry list. The highest tier also favors traditional cable companies that decide to serve areas around towns where they offer gigabit broadband.

If Starlink is allowed to bid as a gigabit provider then the whole auction gets turned upside down. In areas where Starlink is bidding against fixed wireless or other slower technologies, Starlink would always win by simply staying in the auction for a few rounds. To make matters worse, Starlink could bid against fiber providers until the grant awards get so low that a fiber provider drops out of the auction.

If Starlink is considered a gigabit provider and bids on every RDOF cluster, it could theoretically win the entire $16 billion auction. That would mean no money for fiber networks or cable company networks. It would mean no money for fixed wireless networks or other technologies that promise to deliver 100 Mbps broadband or slower.

A natural question to ask is why worry about this if Starlink can deliver gigabit broadband to all of the rural areas covered by the RDOF grants? The easy answer is to that question is that nobody outside of Starlink has any idea what the company can deliver (and even Starlink probably is only guessing at the bandwidth that will come from a fully-deployed network). It’s certainly possible that Starlink satellites can make a 1-gigabit connection to earth – they have enough satellites already in the sky that the company can probably demonstrate this. We know that the recently bankrupt OneWeb demonstrated a 400 Mbps connection from a satellite to an earth station – but that has nothing to do with the amount of bandwidth that can be delivered to many users at the same time. Networks get slower and bog down as users are added and as bandwidth is oversubscribed.

As Chambers suggests, before the FCC offers any public money to Starlink, the company needs to publicly fully disclose its network architecture and capabilities. We already know what fiber networks, cable networks, and fixed wireless networks can deliver. Before opening the public purse-strings to Starlink, let the whole world see how they plan to deploy, so that smart network engineers can opine if fast speeds are possible with a fully-deployed satellite constellation.

An even bigger worry is that Elon Musk’s SpaceX company looks to be in financial trouble. A recent blog by TMF Associates, a consultant in the satellite industry, provides ample evidence that SpaceX has big financial woes. The company is far behind its original business plan of raising money for rocket launches and is going to spend a lot of resources this year sending up the planned 1,500 Starlink satellites. TMF says that the company is burning through $100 million per month in operating expenses. A more immediate worry for SpaceX and Starlink is the impact of having to send staff home due to COVID-19. What’s going to happen this year in the supply chain for satellites and their components? According to the figures cited by TMF Associates, Elon Musk and Starlink likely must win big dollars out of the RDOF auction just to keep SpaceX afloat.

Just because LEO satellite broadband has big promise is no guarantee that we’ll ever see an iota of bandwidth out of the sky. OneWeb recently declared bankruptcy and blamed COVID-19, but the company was already out of cash before the pandemic. The company needs a buyer to emerge out of the bankruptcy and the company might just evaporate into obscurity.

I have always been hopeful that Starlink can provide decent rural broadband. This might be the only way to get broadband to the most remote customers in the country. But I’ve been troubled that the company has still never made any public claims about the speeds they will be able to deliver after mass launches, or the price they are planning to charge. On March 20, the FCC granted Starlink up to 1 million licenses for earthside connections to the satellite constellation. That does not sound like a network that is going to solve the broadband shortage for tens of millions of rural homes and businesses.

I’ve always guessed that the company hasn’t disclosed any details because the speeds will be unspectacular – at least in terms of attracting the billions of investor dollars needed to complete the satellite constellation. Much of rural America would be thrilled in Starlink can mass-deliver 50 Mbps or 100 Mbps at an affordable price. But those kinds of speeds won’t attract investors and don’t rate a top tier designation for Starlink in the RDOF auction.

If Starlink ends up in the RDOF auction at a top tier designation without the needed public disclosure then Elon Musk will have sold a bill of goods to the FCC – which is badly searching for a big rural broadband win. However, it will be a disaster if most of this money goes to Starlink and they then deliver mediocre speeds, or high prices – or even worse, never fully deploy. There are still plenty of doubters that Starlink and SpaceX can deploy the 6,000 promised satellites for the first constellation, let alone up to 30,000 more that Musk has promised.

My biggest fear is that a lot of the grant money will go to Starlink and they then fizzle or underperform. If so we will have wasted the biggest pile of grant money ever offered to improve rural broadband. Before Starlink grabs billions of taxpayers dollars – money that each of us paid from the fees added to our telephone and cellular bills – the public deserves a full disclosure from Starlink on the realities of their technology, their business plan, and their financial health. Without that they shouldn’t be allowed within 400 miles of the RDOF auction.

Low-orbit Satellite Security

I’ve been watching the progress of the low-orbit satellite providers which are promising to bring broadband solutions across the planet. There has been some serious movement since the last time I discussed their status.

On January 29, Starlink launched its latest round of low-orbit satellites, bringing the number in space to 242. Not all of these will be delivering broadband. The first half dozen satellites were test units to try out various concepts. Starlink will use 10 of the most recent batch to test the ability to ‘de-orbit’ and bring satellites back to earth.

The latest Starlink satellites weigh 260 kilograms, up from 227 kilograms for the first satellites launched in May 2019. The latest satellites are designed to be 100% demisable, meaning they will completely burn up in the atmosphere upon reentry.

Starlink still has a long way to go to meet its business plan. If they meet all of the planned launches this year, they’ll have 1,500 satellites in orbit. They’ve told the FCC that they plan to have 6,000 satellites in orbit by the end of 2024 and 12,000 by the end of 2027. As they add new satellites the company must also replace the short-lived satellites that only have a planned life of about five years. That means by 2026 they’ll have to launch 1.200 satellites a year forever just to maintain the first fleet of 6,000 satellites.

We also saw some progress being made by OneWeb, the satellite company founded by Greg Wyler with backing from Virgin, Airbus, SoftBank, and Qualcomm. The company launched 6 satellites last year. They recently launched 34 more satellites and the company’s goal is to put 200 satellites in orbit this year.

These launches show that the industry is for real and that over the next few years we’ll see big numbers of low-orbit satellites in the sky. We finally heard just last week from Elon Musk that he does not intend to compete with rural ISPs and will only sell satellite broadband in the most remote places. He still hasn’t disclosed prices – but if he doesn’t compete with existing ISPs he’s not going to have to be competitively priced. Starlink hints that it might add some customers by the end of this year, but the serious launch of broadband service will start next year.

It’s starting to feel odd that these companies won’t talk about broadband speeds. Like with any broadband technology, the degree of oversubscription will affect broadband performance. The first customers to use the satellites might see blazingly fast speeds – but speeds will lower quickly as customers are added. One of the biggest temptations facing these companies will  be to oversubscribe the technology.

Like with any new technology, satellite broadband brings a new set of worries. There is a recent article on Fastcompany by William Akoto asking how we’re going to protect satellite fleets from hacking. If the proposed satellite constellations grow as promised, there will be tens of thousands of satellites circling the earth delivering broadband. Akoto points out that the satellite supply chain is far from secure and open to tampering. The satellites are being constructed by a number of different vendors using off-the-shelf components. The satellites are not much more than a router connected to a solar array.

It’s clear that there are virtually no hardware or software system that can’t be hacked by a determined effort. The satellites will fly over every country on earth, giving ample opportunity for hackers to hack into satellites directly overhead. The satellites will be controlled by earth station hubs, which also might be hacked in the same manner that happens to big corporate server farms.

The consequences of hacking for satellites are direr than with land-based technology. Hackers could turn satellites off making them dead weights in space. They could rearrange the solar collectors to make them run out of power. Hackers could direct all satellites to come back to earth and burn up in the atmosphere.

In the worse scenario, hackers could crash satellites together creating a lot of space debris. NASA scientist Donald Kessler described the dangers of space debris in 1978 in what’s now described as the Kessler syndrome. Every space collision creates more debris and eventually creates a cloud of circling debris that makes it impossible to maintain satellites in space. Many scientists think such a cloud is almost inevitable, but malicious hacking could create such a cloud quickly.

Hacking won’t only affect rural broadband. The ability of satellites to connect remote locations into a unified network is going to be attractive to a wide range of industries. It’s not hard to imagine the satellite constellations being used to connect to critical infrastructure like rural electric grids, rural dams, and industries of all sorts that connect to rural or third-world locations.

Industry experts are already calling for regulation of satellite security. They believe that governments need to step in to mandate that satellite constellations be as safe as possible. While this could be done voluntarily by the industry there doesn’t seem to be any such effort afoot. The consequences of not getting this right could be a disaster for the planet.

Starlink Making a Space Grab

SpaceNews recently reported that Elon Musk and his low-orbit space venture Starlink have filed with the International Telecommunications Union (ITU) to launch an additional 30,000 broadband satellites in addition to the 11,927 now in the planning stages. This looks like a land grab and Musk is hoping to grab valuable orbital satellite paths to keep them away from competitors.

The new requests consist of 20 filings requesting to deploy 1,500 satellites each in 20 different orbital bands around the earth. These filings are laying down the gauntlet for other planned satellite providers like OneWeb that has plans for 1,910 satellites, Kuiper (Jeff Bezos) with plans for 3,326 satellites and Samsung with plans for 4,600 satellites.

The Starlink announcements are likely aimed at stirring up regulators at the ITU, which is meeting at the end of this month to discuss spectrum regulations. The FCC has taken the lead in developing satellite regulations. Earlier this year the FCC established a rule where an operator must deploy satellites on a timely basis to keep the exclusive right of the spectrum needed to communicate with the satellites. Under the current FCC rules, a given deployment must be 50% deployed within six years and completely deployed within nine years. In September, Spacelink revised its launch plans with the FCC in a way that meets the new FCC guidelines, as follows:

Satellites Altitude (Km) 50% Completion 100% Completion
Phase 1 1,584 550 March 2024 March 2027
1,600 1,110
400 1,130
375 1,275
450 1,325
Phase 2 2,493 336 Nov 2024 Nov 2027
2,478 341
2,547 346
11,927

This is an incredibly aggressive schedule and would require the company to launch 5,902 satellites by November 24, 2024, or 120 satellites per month beginning in November 2019. To date, the company has launched 62 satellites. The company would then need to step launches up to 166 per month to complete the second half on time.

I’m guessing that Starlink is already starting to play the regulatory game. For example, if they can’t meet the launch dates over the US in that time frame, then some of the constellations might not work in the US. If the company eventually launches all of the satellites it has announced, then every satellite would not need to serve customers everywhere. If the ITU adopts a timeline similar to the US, then it’s likely that other countries won’t award spectrum to every one of the Starlink constellations. Starlink will be happy if each country gives it enough spectrum to be effective there. Starlink’s strategy might be to flood the sky with so many satellites that they can provide service anywhere as long as at least a few of their constellations are awarded spectrum in each country. There are likely to be countries like North Korea, and perhaps China that won’t allow any connections with satellite constellations that bypass their web firewalls.

Starlink faces an additional challenge with many of the planned launches. Any satellite with an orbit at less than 340 kilometers (211 miles) is considered as very low earth orbit (VLEO) since there is still enough earth atmosphere at that altitude to cause drag that eventually degrades a satellite orbit. Anything deployed at VLEO heights will have a shorter than normal life. The company has not explained how it plans to maintain satellites at the VLEO altitudes.

At this early stage of satellite deployment, there is no way to know if Starlink is at all serious about wanting to launch 42,000 satellites. This may just be a strategy to get more favorable regulatory rules. If Starlink is serious about this, you can expect other providers to speed up plans to avoid being locked out of orbital paths. We’re about to see an interesting space race.

Some Problems with the RDOF

The FCC recently published a set of proposed rules for conducting the $20.4 billion broadband grant program it has labeled as the Rural Digital Opportunity Zone (RDOF). While the FCC is to be applauded for redirecting the funding that formerly was used to support the CAF II program, there are still some problems I foresee in the grant program as proposed.

Reverse Auction. Many of my problems come because of the use of a reverse auction. I understand why politicians and policymakers like this idea. The general concept that those willing to take the least amount of subsidy get the funding somehow sounds fair, but a reverse auction is not going to result in the best use of these funds to bring permanent broadband solutions to rural America:

  • Favors Those Who Don’t Need the Money. We saw this in the CAF II reverse auction where satellite broadband won a significant amount of funding. This time around there’s a good chance that a large amount of grant money might go to Elon Musk’s Starlink and the other low orbit satellite providers. By definition, for satellite technology to work they have to cover everywhere – and so they are going to be launching the satellites anyway without subsidy. These companies can easily be the low bidders because getting anything out of the grant fund is still a great result for them. As we going to be happy of the result of the reverse auction results in billions of dollars handed to Elon Musk?
  • Favors Lowest Cost Technology. By definition, those planning to spend less per customer to bring broadband can take accept money from the grants and still be happy. This means the grants will favor solutions the big telcos again tweaking DSL over ancient copper if they choose to participate. This would allow AT&T and Verizon to grab a lot of money to support rural cellular upgrades. While the FCC is planning to weight the bidding to promote faster technologies like fiber, if the weighting isn’t done right, then the funding will automatically favor lower-cost yet slower technologies. Maybe that’s what the FCC wants – to bring some broadband solution to the largest number of people – but the best policy is to bring a permanent broadband solution to a smaller subset of areas.
  • Discriminates Against High Cost Areas. The areas that need broadband the most are where it costs the most to build any infrastructure. Areas like Appalachia and Alaska are high cost because of topology, and anybody applying for grants in these areas likely can’t afford to reduce the percentage of grant funding their receive. The entire concept of reverse auction, by definition, favors parts of the country with the lowest construction costs. Applicants in the wide-open plains of the Midwest have a built-in advantage.

The Sheer Size of the One-Time Award. The grant awards are likely to be about a year away. I wonder if there will be enough ISPs ready to bid in that short time frame? Bidders need to develop an engineering estimate and business plan of sufficient quality to also attract financing. If there are not enough ISPs able to be ready for the auction in that time frame, even more of the money is likely to flow to big companies like the satellite providers who would be glad to take the whole pot of funding. A better plan would have been to break this into several grant years and award some 10-year grants, some 9-year grants, and some 8-year grants.

No Real Penalties for Cheating. Companies don’t get penalized much for lying about the speeds they can deliver. We saw a few wireless providers in the CAF II reverse auction claim they can deliver 100 Mbps broadband to everybody. Unless somebody develops that technology in the next 2-3 years they are going to deliver something less, at least to a large percentage of their coverage area. If a company gets a bidding credit by making a false claim, they should lose all of their funding and have to repay the FCC. The proposed penalties are not much more than a slap on the wrist and encourage companies to claim faster speeds than they can deliver.

Likely Excludes Some Bidders. The rules still seem to exclude entities that can’t get Eligible Telecommunications Carrier (ETC) status – a regulatory designation required to get money from the Universal Service Fund – a status only available to entities that own the network, and which are also the retail ISP. This would preclude entities like the PUDs, the rural municipal electric companies in Washington that are required by law to operate open access networks. It also could preclude certain kinds of partnerships where the retail ISP is different than the network owner – an arrangement we’re seeing a lot in partnerships between telcos and electric cooperatives. Anybody willing to invest in rural broadband should be eligible to participate.

More Details on Starlink

A few months ago Starlink, the satellite broadband company founded by Elon Musk, launched 60 broadband satellites. Since that launch, we’ve learned a few more things about the secretive venture.

We now know more details about the satellites. Each one weighs about 500 pounds. They are thin rectangular boxes like a flat-panel TV. Much of the surface is a solar panel, and each satellite also extends a second solar panel.

Each satellite comes with a krypton-powered ion thruster to use to navigate the satellite into initial orbit and to avoid future debris when necessary. This may sound like a cutting-edge propulsion system, but it’s been around for many years and the tiny engines create a small amount of thrust by shooting out charged ions of the noble gas – not a lot of thrust is needed to move a 500-pound satellite.

It seems the satellites can’t detect nearby space debris, so Starlink instead connects to the Air Force’s Combined Space Operations Center, which tracks the trajectories of all known space debris. The company will direct satellites to avoid known debris.

Probably the most important announcement for readers of this blog is that the company is likely to only compete in rural areas where there are few other broadband alternatives. This was finally admitted by Musk. There has been hopeful speculation in some parts of the industry that the low-orbit satellites would provide a broadband alternative everywhere, thus supplying a new competitor for cable companies. Since widespread competition generally results in lower prices there was hope that satellite broadband would act to make the whole broadband market more competitive.

We already had an inkling that satellite broadband was going to be rural-only when OneWeb, one of the competitors to Starlink, told the FCC that they were likely going to ultimately need about like 1 million wireless licenses for receivers. While that might sound like a huge number, one million satellite connections spread across the US is not creating a major competitor. We also heard the same message when several of the satellite companies talked about eventually having tens of millions of customers worldwide at maturity. Even with multiple satellite companies competing for customers there probably won’t be more than 3 – 4 million satellite broadband customers in the US – that would make a dent but wouldn’t fix the rural broadband gap. This strategy makes sense for the satellite companies since they’ll be able to charge a premium price for rural customers who have no broadband alternative instead of cutting prices to compete with cable companies.

There has still been no discussion from Starlink or the other competitors on broadband speeds or broadband pricing. It’s been nearly impossible to predict the impact of the satellites without understanding data speeds and total download capacity. The physics suggest that backhaul to the satellites will be the critical limiting factor, so it’s possible that there will be monthly data caps or some other way to control consumption.

One of the most interesting unanswered questions is how the satellites will do backhaul. Landline ISPs of any size today control cost and control data volumes by directly peering with the largest sources of broadband demand – being mostly Netflix, Google, Amazon, and Microsoft. As much as 70% of the traffic headed to an ISP is from this handful of destinations. Engineers are wondering how Starlink will handle peering. Will there be backhaul between satellites or will each satellite have a dedicated link to the ground for all data usage? This is a key question when a satellite is passing over a remote area – will it try to find a place within sight of the satellite to connect to the Internet or will data instead be passed between satellite with connections only at a major hub?

Answering that question is harder than might be imagined because these satellites are not stationary. Each satellite continuously orbits the earth and so a given customer will be handed off from one satellite to the next as satellites pass out of the visible horizon. The company says the receivers are about the size of a pizza box and they are not aimed at a given satellite, like what happens with satellite TV – instead, each receiver just has to be generally aimed skyward. It’s hard to think that there won’t be issues for homes living in heavy wooded areas.

One last interesting tidbit is that the satellites are visible to the naked eye. When the recent launch was first completed it was easy to spot the string of 60 satellites before they were dispersed. Astronomers are wondering what this will mean when there are ten thousand satellites filling the sky from the various providers. Elon Musk says he’s working to reduce albedo (the reflection of sunlight) to reduce any problems this might cause with land-based astronomy. But for stargazers this means there will always be multiple visible satellites crossing the sky.

The Impact of Satellite Broadband

Recently I’ve had several people ask me about the expected impact of low-orbit satellite broadband. While significant competition from satellites is probably a number of years away, there are several major initiatives like StarLink (Elon Musk), Project Kuiper (Amazon), and OneWeb that have announced plans to launch swarms of satellites to provide broadband.

At this early stage, it’s nearly impossible to know what impact these companies might have. We don’t know anything about their download and speed capacity, their pricing strategy, or their targeted market so it’s impossible to begin to predict their impact. We don’t even know how long it’s going to take to get these satellites in space since these three companies alone have plans to launch over 10,000 new satellites – a tall task when compared to the 1,100 satellites currently active in space.

Even without knowing any of these key facts, BroadbandNow recently grabbed headlines around the industry by predicting that low-orbit satellites will bring an annual savings of $30 billion for US broadband customers. Being a numbers guy, I never let this kind of headline pass without doing some quick math.

They explain their method of calculation on their web site. They are making several major assumptions about the satellite industry. First, they assume the satellite providers will compete on price and will compete in every market in the country. Since the vast majority of American live in metro areas, BroadbandNow is assuming the satellite providers will become a major competitor in every city. They also assume that the satellites will be able to connect to a huge number of customers in the US which will force other ISPs to lower prices.

Those assumptions would have to be true to support the $30 billion in projected annual consumer savings. That is an extraordinary number and works out to be a savings of almost $20 per month for every household in the US. If you spread the $30 billion over only those households that buy broadband today, that would be a savings of over $23 per month. If your further factor out the folks who live in large apartments and don’t get a choice of their ISP, the savings jumps to $27 per household per month. The only way to realize savings of that magnitude would be from a no-holds-barred broadband price war where the satellite providers are chewing into market penetrations everywhere.

I foresee a different future for the satellite industry. Let’s start with a few facts we know. While 10,000 satellites is an impressive number, that’s a worldwide number and there will be fewer than 1,000 satellites over the US. Most of the satellites are tiny – these are not the same as the huge satellites launched by HughesNet. Starlink has described their satellites as varying in size between a football and a small dorm refrigerator. At those small sizes these satellites are probably the electronic equivalent of the OLT cabinets used as neighborhood nodes in a FTTH network – each satellite will likely support some limited and defined number of customers. OneWeb recently told the FCC in a spectrum docket that they are envisioning needing one million radio links, meaning their US satellites would be able to serve one million households. Let’s say that all of the satellite providers together will serve 3 – 5 million homes in the US – that’s an impressive number, but it’s not going to drive other ISPs into a pricing panic.

I also guess that the satellite providers will not offer cheap prices – they don’t need to. In fact, I expect them to charge more than urban ISPs. The satellite providers will have one huge market advantage – the ability to bring broadband where there isn’t landline competition. The satellite providers can likely use all of their capacity selling only in rural America at a premium price.

We still have no real idea about the speeds that will be available with low-orbit satellite broadband. We can ignore Elon Musk who claims he’ll be offering gigabit speeds. The engineering specs show that a satellite can probably make a gigabit connection, but each satellite is an ISP hub and will have a limited bandwidth capacity. Like with any ISP network, the operator can use that capacity to make a few connections at a high bandwidth speed or many more connections at slower speeds. Engineering common sense would predict against using the limited satellite bandwidth to sell gigabit residential products.

That doesn’t mean the satellite providers won’t be lured by big bandwidth customers. They might make more money selling gigabit links at a premium price to small cell sites and ignoring the residential market completely. It’s a much easier business plan, with drastically lower operating costs to sell their capacity to a handful of big cellular companies instead of selling to millions of households. That is going to be a really tempting market alternative.

I could be wrong and maybe the satellite guys will find a way to sell many tens of millions of residential links and compete in every market, in which case they would have an impact on urban broadband prices. But unless the satellites have the capacity to sell to almost everybody, and unless they decide to compete on price, I still can’t see a way to ever see a $30 billion national savings. I instead see them making good margins by selling where there’s no competition.

AT&T and Connected Vehicles

AT&T just released a blog talking about their connected vehicle product. This blog paints a picture of where AT&T is at today and where they hope to be headed into the future in this market niche.

For a company like AT&T, the only reason to be excited about a new market niche is the creation of a new revenue stream. AT&T claims to have 24 million connected cars on its network as of the end of 3Q 2018. They also claim 3 million additional connected fleet vehicles. They also have over 1 million customers who are buying mobile WiFi hotspots from AT&T.

What does that look like as a revenue stream? AT&T has relationships with 29 global car manufacturers. Most new cars today come with some kind of connectivity plan that’s free to a car buyer for a short time, usually 3 to 6 months. When the free trial is over consumers must subscribe in order to retain the connectivity service.

As an example of how this works, all new Buicks and Fiats come with AT&T’s UConnect Access for a 6-month free trial period. This service provides unlimited broadband to the vehicle for streaming video or for feeding the on-board mapping system. After the trial customers must subscribe to the service at a monthly rate of $14.99 per month – or they can buy a la carte for connectivity at $9.99 per day or $34.99 per month.

In the blog AT&T touts a relationship with Subaru. The company provides a trial subscription to Starlink that provides on-board navigation on a screen plus safety features like the ability to call for roadside assistance or to locate a stolen vehicle. Subaru offers different plans for different vehicles that range from a Starlink trial of between 4-months and 3-years. Once the trial is over the cost of extending Starlink is $49 for the first year and then $99 per year to extend just the security package or $149 per year to extend the whole service. Starlink is not part of AT&T, so only some portion of this revenue goes to the carrier.

I wonder how many people extend these free trials and become paying customers? I have to think that the majority of the AT&T connected vehicles are under the Starlink relationship which has been around for many years. Families that drive a lot and watch a lot of video in a vehicle might find the UConnect Access to be a much better alternative than using cellular data plans. People who want the feature of locating their car if stolen might like the Starlink. However, most drivers probably don’t see a value in these plans. Most of the features offered in these packages are available as part of everybody’s cellular data plans using the Bluetooth connectivity in these vehicles.

The vehicle fleet business, however, is intriguing. Companies can use this connectivity to keep drivers connected to the home office and core software systems. This can also be done with cellphones, but I can think of several benefits to building this directly into the vehicle.

The second half of their blog discusses the possibility for 5G and automated cars. That’s the future revenue stream the company is banking on, and probably one of their biggest hopes for 5G. They have two hopes for 5G vehicle connectivity:

  • They hope to provide the connectivity between vehicles using 5G and the cloud. They believe that cars will be connected to the 5G network in order to ‘learn’ from other vehicle’s driving experience in the immediate vicinity.
  • They also hope to eventually provide broadband to driverless cars where passengers will be interested in being connected while traveling.

The first application of connecting nearby vehicles is no guarantee. It all depends on the technology path chosen to power driverless vehicles. There is one school of thought that says that the majority of the brains and decision making will be done by on-board computers, and if cars connect to nearby vehicles it will be through the use of on-board wireless communication. AT&T is hoping for the alternate approach where that connectivity is done in the cloud – but that’s going to require a massive investment in small cell sites everywhere. If the cloud solution is not the preferred technology then companies like AT&T will have no incentive to place 5G cell sites along the millions of miles of roads.

This is one of those chicken and egg situations. I liken it to smart city technology. A decade ago many predicted that cities would need mountains of fiber to support smart cities – but today most such applications are being done wirelessly. Any company banking on a fiber-based solution got left behind. At this point, nobody can predict the technology that will ultimately be used by smart cars. However, since the 5G technology needs the deployment of a massive ubiquitous cellular network, the simpler solution is to do it some other way.