The e-commerce giant filed paperwork with the Federal Communications Commission (FCC) last week, requesting approval to launch 3,236 satellites into space, reports Gizmodo .
In April, Amazon asked international spectrum regulators to provide spectrum rights for this constellation of satellites, dubbed the Kuiper System. The aim is to launch a constellation of Low Earth Orbit satellites that will provide low-latency, high-speed broadband connectivity to users around the world, according to Amazon.
In its FCC filing, Amazon said that that 3.8 billion people around the world still don’t have reliable access to broadband internet, and that 21.3 million Americans don’t have access to fixed broadband.
“The Kuiper System will deliver satellite broadband communications services to tens of millions of unserved and underserved consumers and businesses in the United States and around the globe,” wrote Amazon in its application. The system will offer “fixed broadband communications services to rural and hard-to-reach areas.” The application also states that Project Kuiper will provide “high-throughput mobile broadband connectivity services for aircraft, maritime vessels and land vehicles.”
Amazon’s project joins other similar ventures, including Airbus-backed OneWeb and Elon Musk’s SpaceX. In February, OneWeb launched its first six satellites. The SpaceX project, dubbed Starlink, has approval from the Federal Communications Commission (FCC) to launch 11,943 satellites, according to CNBC . (SpaceX had initially planned for a network of 4,425 satellites but got FCC approval for more). In May, SpaceX launched 60 satellites.
With plans for so many satellites, the FCC and other regulators have their hands full making sure that there is enough space (pun not intended) between each. Companies that file for approval need to demonstrate that their constellations won’t physically interfere with other satellites. In its filing, for example, Amazon provisioned for a 40 kilometer-wide (25 miles) buffer above the orbital layer occupied by Starlink.
The commercial space race looks set to continue heating up. Chief Investment Office (CIO) analyst Carl Berrisford forecasts that the “combination of declining space launch costs and advances in satellite technology will raise the value of the space economy from USD 340bn currently to nearly USD 1trn over the next two decades. And while traditional satellite, government, and military applications in space will continue to grow, in our view, the space economy will start to have major spillovers across several industries.” He sees satellite broadband internet as a clear example.
There is a global internet penetration rate of 52%, notes Nielson Online. Three quarters of the remaining unconnected population are located in just 20 countries. With the falling costs of satellite launches, the potential to offer affordable and competitive internet access via satellite is becoming a real prospect.
According to Ibis World, the provision of internet services currently has a global value of USD 620bn. Based on the simplistic premise of doubling the existing number of internet users, halving the current cost of access suggests a market worth at least USD 300bn, says Berrisford. This does not factor in the additional USD 720bn in revenues from internet advertising, e-commerce, social media and others. “Compared to the current estimated value of USD 340bn for the space industry, according to the Satellite Industry Association, the enormity of the business opportunity for satellite internet becomes apparent,” points out Berrisford.
Additionally, “the rising demand for bandwidth over the next couple of decades, due to new applications like the Internet of Things (IoT) and automated cars, suggests to us a wider role for satellite broadband, particularly as connectivity costs fall,” adds Berrisford.
Space is a CIO Longer Term Investment theme. Investment exposure at this early stage is best gained via existing listed companies in aerospace, satellite and communications segments. New space start-ups may offer investment opportunities in private markets, according to CIO.
Read more in Longer Term Investments: Space , 30 Nov 2018.
Main contributor: Wendy Mock