Into the unknown: government bets $500m on satellite company OneWeb

Clever investment or white elephant? Every government project attracts this sort of scrutiny, but it’s latest venture into the space industry is stirring particular controversy.

At the heart of the debate is the satellite company OneWeb, which went bankrupt in March. The government is bailing it out, hoping to use it to launch a new satellite positioning and navigation system. The only hitch is that the satellites were designed with something different in mind – delivering satellite broadband.

In spite of this, the UK will find itself on Friday the proud owner of a roughly 45% stake in the OneWebb if a US court approve its bid. According to sources in the UK space industry, the $500 million rescue deal for OneWebb came after the company’s executives personally lobbied Boris Johnson and his adviser, Dominic Cummings.

Criticism over the government’s rescue deal has been fierce. “We’ve bought the wrong satellites,” declared Dr Bleddyn Bowen, an expert in space warfare at the University of Leicester, in one newspaper article.

Even space industry figures who support the government’s bet have admitted to Reaction that it is “not without risks”. So, what’s driving the decision?

The immediate reason is that the UK, thanks to Brexit, is about to lose full access to the European Union’s satellite system, Galileo. Some services will still be available. But, vitally, the EU and the UK could not agree on a deal to allow the UK to use the system’s encrypted navigation system, the Public Regulated Service (PRS). The only way for the UK government to get what it wanted was to build a new satellite system from scratch.

The easiest solution, which was the initial government plan, would have been to replicate Galileo. The task should have been simple because it was companies based in the UKwhich built large chunks of the EU system. Such a system would also have been tried and tested. Galileo works in the same way as other existing satellite positioning and navigation systems, such as America’s GPS and Russia’s GLONASS.

Nevertheless, the UK government has decided to bet on an entirely new system in the form of OneWeb.

The difference is one of orbits. Nearly all existing navigation networks, as well as those use for broadcasting, rely on medium-orbit geostationary satellites.  Sitting about 20,000km above the equator they orbit the earth at the same speed at which they rotate. This means they hover above the same spot of ground, consistently providing coverage for one area. Global coverage is achieved with about two dozen satellites.

By contrast, the OneWeb satellite constellation, when complete, will be made up of hundreds of small low-earth orbit satellites. Situated 1,200km above the earth’s surface they have to move much faster to remain in orbit. The hundreds of planned satellites will co-ordinate with each other to provide a constant signal as they rush around the earth’s surface.

Adding to the challenge of implementing this new form of satellite network is the aforementioned issue that OneWeb satellites were designed with broadband not navigation in mind. Later models might be adapted but 74 OneWeb satellites, of a planned network of 648, have already been launched and more are being churned out as we speak at OneWeb’s Florida factory.

So why is the government committing to this technological gamble? And will it be able to pull it off?

Part of OneWeb’s allure is its cutting edge technology. This sort of whoosh, bang, crikey factor most likely appeals to Boris Johnson, who has long flirted with ambitious mega-projects, and the technophile Cummings. Boris also flagged up the space industry as a key area for a post-Brexit UK in his first speech as Prime Minister, and has moved to reinvigorate UK space policy. In the opinion of Francis Tusa, editor of Defence Analysis, “There is definitely a little bit of national willy-waving going on.”

Still, being on the bleeding-edge does come with benefits. One senior figure in the space industry commented: “It would be a waste of money simply to copy old systems with the same vulnerabilities and flaws.” Lower-orbit means faster and stronger connections. For broadband purposes OneWeb was planning to reach places which lack fast fibre optic cables like rural areas, planes, and ships. For secure navigation and positioning of the sort the government has in mind – vital for targeting missiles, for example – proponents say its signals are more difficult to jam.

According to Tusa, “even though these systems aren’t quite as robust as some claim there’s an having a back-up to the US and EU’s systems is undeniably useful.” Indeed, US support for an LEO alternative to its GPS system apparently played an important role in shaping UK government decisions.

Cost is another factor. Initial plans for a British version of Galileo stalled as departments squabbled over who would foot the bill. Estimated costs of £3-4 billion rose sharply to £5 billion. The sheer reluctance displayed means Tusa suspects the true costs could have even higher. OneWeb’s price, one-tenth of the official estimate, is very alluring.

Furthermore, while LEO constellations require more satellites that have to be replaced more often, costs could well be lower in the long run. While the price has dropped, especially over the past two decades, launching traditional satellites is extremely expensive. Few enough are built that each one is almost a bespoke commission and launches are expensive. Large numbers of small satellites offer potential for economies of scale and are cheaper to launch.

Finally, OneWeb comes with significant potential side benefits. One is that it offers a way for the UK to build up its space sector. The government is aiming for the sector to capture 10% of the global market share by 2030, as laid out in a 2015 policy paper. To this end, while the UK government has until now invested less into its space sector than its peers, it has targeted money at areas which are most likely to become commercially viable.

If successful, this approach stands to strengthen the UK’s position when it comes to the next-generation of satellite technology. It is also likely that many high-end jobs manufacturing the satellites will move to the UK. Given that McKinsey estimates that there could be 50,000 satellites in low-earth orbit by 2030, this could be a welcome fillip to an economy reeling from the pandemic.

Sources also say OneWeb is still focusing on its mission to provide satellite broadband. This view is reinforced by the fact that telecommunications is a big chunk of the business of the UK’s partner, the Indian conglomerate Bharti. Faster, cheaper satellite broadband would be an enticing way for the government to circumvent its expensive manifesto promise to provide full fibre broadband for the whole country by 2025.

However, these side benefits will be cold comfort for the government if the navigation and positioning system doesn’t work. Broadband and navigation can be offered side-by-side, as demonstrated by Iridium Communications. Still, this is no guarantee OneWeb will be able successfully adapt its satellites to do so as well. That the government believes it will be able to is down to the advice of Satellite Applications Catapult, a small company aimed at commercialising space research.

This company was asked by the government to evaluate if OneWeb could be adapted. SAC gave the nod while CEO, Stuart Martin, claims that they had been looking at the possibility of using broadband for navigation “for some time”.

Others, however, are more sceptical. One industry executive, speaking to the Financial Times, compared combining broadband and navigation services to bolting an F1 racing car to a dump truck.

Part of the scepticism might stem from intra-industry rivalry. One key figure in the space industry told Reaction: “Lots of companies who hoped to make easy money doing the same job they had done for Galileo are distinctly miffed by the appearance of OneWeb.”

There are also fears that Airbus, OneWeb’s manufacturing partner, is using this as a way to boost its bid to be chosen as the operator of the UK’s next generation of military communications satellites, Skynet 6.

Still, even the bullish Martin admitted to caveats when interviewed. He expects that OneWeb’s first generation satellites currently in orbit will only be able to provide timings. This service plays a key role in areas like telecoms and finance but is a step short of positioning and navigation. It will also be six months before Martin expects to be able even to demonstrate this, let alone provide this service commercially.

With sources saying OneWeb is keen to get back on track with its ambitious launch schedule, plus support from the UK government and Bharti, this investment might yet live up to its promise. Copy-pasting Galileo would have made little sense and being an early adopter of new tech could bring real benefits. But OneWeb’s viability for navigation remains unproven, and it is a rare government that enjoys the sensation of betting on a launch into the unknown.