SpaceX satellite dream is throwback to 1990s

January 21, 2015

By Robert Cyran

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Elon Musk’s satellite dream is a throwback to the 1990s. Google is investing in SpaceX, one of the overworked billionaire’s companies, which along with its commercial rocket launches is planning a broadband network of 4,000 satellites. The pioneering Teledesic tried something similar around two decades ago but ultimately failed. The question for SpaceX is whether the equation has yet changed enough.

Thanks to Moore’s Law of increasing computing power and the falling cost of technology, a reboot of Teledesic’s effort – supported back in the day by Bill Gates and cellphone pioneer Craig McCaw – would come much cheaper now. The demand for broadband is far stronger and more universal. It’s also still expensive to lay fiber-optic cable, especially so in the rural and poor areas where today’s internet connections are slow or non-existent. A global network operating at the speed of light in space would eventually be more efficient than today’s infrastructure.

Yet many of Teledesic’s challenges still exist. To avoid transmission delays, satellites must be in low orbit, which means they have to move at high speeds to stay aloft. That requires a lot of them to maintain coverage – Teledesic planned 800. The cost of rocket launches and developing antennas to track the satellites did the project in.

Musk’s satellite company is pushing down the price of launches dramatically. A new rocket debuting this year could slash the cost from the current $2,000 per pound, already far less than established government contractors charge. Musk’s estimated price tag for his network of under $15 billion could be in the ballpark, with hope of making money if it grabs even a modest slice of the $4 trillion-a-year global communications market.

Yet even the less ambitious Iridium, with 66 satellites in low orbit, went bust in its first incarnation in the late 1990s in the face of high costs and the rapid march of terrestrial technology that made its phone service less valuable. OneWeb just announced a competing satellite project, and entrepreneurs everywhere are still cooking up new earthbound ways of providing connectivity all the time.

Musk may also be wishing away the political difficulty of securing transmission spectrum and licenses in multiple jurisdictions. Then again, his ambition and Google’s support are powerful forces. SpaceX’s plan isn’t premature like Teledesic’s was – but it may still be unprofitably early.

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