How Cheap Internet Access Could Be SpaceX's Secret Weapon

Jan 18, 2017

Elon Musk is not one to let setbacks slow him down, even when setbacks involve the explosion of a rocket containing cargo precious to fellow tech billionaire Mark Zuckerberg. As of this week, SpaceX, where Musk is CEO, is back in the business of launching rockets. And Musk is pushing ahead on his outsize ambitions for the company.

After 17 successful launches between 2012 and 2015, SpaceX initially planned to launch 20 rockets in 2016. Largely because of the aforementioned explosion — the company's second rocket loss in two years — it managed only eight. On Twitter, Musk called the Sept. 1 incident “the most difficult and complex failure we have ever had.”

But if last year ended on a sour note for SpaceX, 2017 is starting off with more promise. After spending months investigating and resolving the issues that caused the September explosion, the company launched a Falcon 9 on Jan. 14, deployed 10 satellites, and successfully re-docked the rocket booster at sea. The satellites are a portion of the 70 such units that SpaceX is putting into orbit for Iridium, which is upgrading its satellite network offering phone and Internet broadband service.

The launch was doubly important for SpaceX, which has been quietly harboring its own Internet satellite plans. Musk wants to bring space broadband to the world — not just to the legions of Americans who are unhappy with their Internet providers, but to the 3 billion people around the world who have poor or no Internet access.

The catch? That goal has long been a costly, not to mention risky, venture. Internet broadband by satellite has been a longtime dream for telecom companies, but early efforts faltered. About 20 years ago, Teledesic planned to launch 824 satellites backed by an investment from Bill Gates, but suspended the project in 2003. Early efforts by Iridium and Globalstar led to bankruptcies.

More recent Internet satellite ventures like HughesNet and Exede have fared better, while others are trying to deliver on Teledesic's early promise. OneWeb has raised money from Virgin Group, Qualcomm, Softbank and others to deploy 648 satellites aimed at bringing fast, cheap access to hard-to-reach places. Musk's goal, however, aims to dwarf them all.

In November, SpaceX filed an application with the Federal Communications Commission to launch 4,425 satellites into orbits between 690 and 825 miles above the Earth. “Once fully deployed, the SpaceX System will pass over virtually all parts of the Earth’s surface and therefore, in principle, have the ability to provide ubiquitous global service,” SpaceX said in its application. “Every point on the Earth’s surface will see, at all times, a SpaceX satellite.”

To put this project's ambitions into context, there are currently 4,256 satellites orbiting the planet. Only 1,419 of them are working. The rest are effectively space junk. So Musk wants to put three times as many satellites into the sky as there are in operation right now.

SpaceX will first deploy 1,600 satellites to offer Internet access in the U.S., and the rest to expand coverage around the world. It's not clear whether SpaceX will offer access directly or through other companies like Google, which in 2015 participated in a $1 billion investment in SpaceX to help it build satellites.

Musk has said the Internet project will take more than five years and $10 billion to complete. Some calculate it could cost twice as much. Analysts once forecast that Google's plans to build out fiber optics to U.S. cities could also cost $10 billion. Google wants to offer cheap access to support its ad-centric business, but has been scaling back its Fiber plans. Satellite Internet could offer a more cost-effective alternative.

For SpaceX, satellite Internet could be highly profitable. A recent report in the Wall Street Journal cited company figures that projected revenue from the initiative would top $30 billion by 2025 — six times that of its rocket business — while the company's operating profits could rise above $20 billion. That could offer Musk the capital he needs to push for SpaceX's ultimate goal: a colony on Mars, complete with satellite-powered Internet access.

In other words, setbacks aside, Musk is pushing as hard as ever to attain his big dreams. In the meantime, SpaceX is pushing to increase its rocket launches to 27 this year and 44 next year. So far, it has one of those launches completed. For now, building a wired colony on a planet 34 million miles away still seems more like science fiction than a practical goal. But to paraphrase an old saying, a journey of 34 million miles begins with a single rocket launch.

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