Will China Compete with OneWeb and SpaceX for Global Satellite Internet Domination? 

by Blaine Curcio, Founder of Orbital Gateway Consulting

Up to this point, the overwhelming majority of companies looking to launch LEO broadband satellite constellations have come from the United States, and to some extent Western Europe. This includes the two frontrunners—SpaceX and OneWeb—as well as several other serious contenders for regionally focused programs, or programs targeting specific niches, i.e. Telesat, LeoSat, and in the longer-term, potentially players like Boeing.

However, an emerging space power with ambitions spanning launch, satellite manufacturing, further development of its own space stations, and a plethora of other aerospace industries, is likely to enter the LEO satellite broadband race sooner rather than later. The emerging power I refer to is, of course, China.

 

 

 

 

 

 

 

 

China’s space program has evolved rapidly over the past few decades. As the chart at right showing launches per year implies, China’s space program as recently as the early 1970s was about as potent as that of universities such as Caltech. How times have changed, and China is now arguably the second-strongest space-faring nation in the world behind only the United States.

The country has likewise developed a more commercial attitude towards space. No longer simply a scientific research field, the Chinese space industry has, over the past 12 months alone, sold (and also financed) communications satellites worth hundreds of millions of USD each to, among others, customers in Nigeria, Indonesia, and Cambodia. These GEO satellites are increasingly capable and the payloads are increasingly large. Mid-2017 saw China launch its first high-throughput satellite (HTS). Most notably for the LEO players, though, multiple Chinese companies have announced plans for LEO broadband constellations, begging the question of what might a world with a Chinese and a US LEO broadband constellation look like?

China’s LEO Ambitions 

Given that China’s CASIC and CASC (two government-owned companies that combined are basically combination of Boeing, Lockheed Martin, Northrop Grumman, and NASA) have announced plans for a LEO broadband constellation (link in Chinese), it appears clear that the government is in favor of developing this technology. In addition, numerous private companies, most notably Beijing Xinwei—a company best known for having agreed to buy Israel’s Spacecom just weeks before the latter company’s Amos-6 satellite blew up on the launch pad—have announced plans for LEO broadband constellations as well (though admittedly, this is likely more talk than action at the moment). Like most major infrastructure projects coming out of China today (lest we forget, Internet is also infrastructure), these projects have a number of motivations, including financial, geopolitical, technological, and possibly psychological. Also like most major projects coming out of China today, there is likely a fairly well-defined long-term plan, even if that plan is not readily apparent right now. China’s LEO constellation ambitions will likely involve the following:

·       Significant tie-in to One Belt, One Road (OBOR). This highly nebulous phrase is used shockingly frequently in Chinese media, conferences, and everyday conversation. In short, it refers to a massive infrastructure plan across much of Eurasia, however the program ultimately appears open to basically any country except the US, Japan, India, and a few other allies. OBOR has been used as justification for many projects already, and it is likely that any LEO constellation would have OBOR written all over it. An article I published last year goes into more detail on China’s OBOR ambitions as it pertains to space in general.

·       Significant degree of government control. This may make it significantly more difficult for an eventual “winner-take-all” scenario in terms of global LEO broadband services. Even if, as I’ve speculated in this article, SpaceX and OneWeb manage to have some sort of partnership, it’s unlikely that the Chinese government would allow something as sensitive as provision of Internet access involve a foreign entity. China currently heavily censors its Internet, and it’s unlikely to cede market access to western companies in this industry. It should be noted that this is in sharp contrast to the outcome in China’s ride-hailing wars, whereby Didi Chuxing, China’s national champion, and Uber, the US’s national champion, laid down their arms and agreed to cooperate rather than continuing to burn through billions of dollars per year in subsidies. Takeaway: ride-hailing is not as critical as Internet.

·       A direct competition with SpaceX and OneWeb? If China launches a LEO-HTS constellation, it will almost by definition need to be more or less global in coverage, this due to the nature of LEO orbit. Unless China plans on being extraordinarily wasteful and simply utilizing capacity over China while capacity over the other 96% of the earth’s surface is idle, capacity will be sold abroad. If LEO broadband becomes a viable way of connecting the unconnected, look to China to move into many different markets selling this service. The most obvious suspects would be OBOR countries. As the map below shows, many of the countries that fall within OBOR’s scope are the very same countries with poor Internet access. Deep-pocketed China could see a compelling opportunity to provide a hugely critical piece of infrastructure to countries that it is already trying to bring into its orbit. What better way to become an indispensable ally to a given developing country than to provide Internet infrastructure to its unconnected? As anyone reading this article can attest, once you’ve become accustomed to having it, Internet is basically in the same league as food and water as it pertains to daily necessities. Providing Internet to a meaningful percentage of a population would put China in a very strong position in many of these countries, and potentially enable them to control access to the Internet for tens or hundreds of millions of people outside its borders (which might be an appealing/subsidy-worthy goal in itself).

 

Up to now, the LEO broadband constellation plans coming out of China are decidedly more modest than those of SpaceX and OneWeb, with China’s generally numbering in the hundreds rather than 1000+ satellites. However, the rapid growth in China’s space industry in general, and specifically in manufacturing, launch, and HTS capabilities, mean that if LEO broadband starts to look like a viable way to connect tens or hundreds of millions of people, China would likely jump into the ring. Under the guise of the country’s massive infrastructure initiatives, there could be an aggressive land-grab phase for market access across the developing world.  

This should be considered a warning to the SpaceX’s and OneWeb’s of the world—this is a dangerous game to play. If the LEO broadband business model fails spectacularly, then you lose. If LEO broadband looks like a winner, then you will have precious little time to establish a presence across a variety of markets, before China Inc. comes knocking. Just ask Uber in their secondary home turf, Mexico.