OneWeb’s US$500m funding announcement revealed it had the backing of some serious international players. Of those, potentially the most significant to its long term success could be the strategic alliance with Intelsat. Airbus, Hughes and Qualcomm are…
OneWeb’s US$500m funding announcement revealed it had the backing of some serious international players. Of those, potentially the most significant to its long term success could be the strategic alliance with Intelsat.
Airbus, Hughes and Qualcomm are key to turning the dream into reality, and Bharti, TotalPlay and even Coca-Cola will provide it with the necessary market access. But OneWeb’s agreement with Intelsat could mirror that of SES and O3b Networks, bringing the knowledge, contacts, customer base and more importantly industry clout of an established global operator.
Speaking to SatelliteFinance, Intelsat CEO Stephen Spengler pointed out that Intelsat has known OneWeb founder Greg Wyler since his days working in Rwanda on fibre optic venture Terracom. He said that talks over working together on this latest project began towards the end of last year, after Wyler had split from Google.
As to how the partnership will work and what benefits it will provide, Spengler said: “The core of what we are doing is that we are going to be working with OneWeb to create an interoperability between our GEO network and their LEO network. What that means is an interoperable terminal on the ground so that we can work with our customers to allow them to move from one network to the other seamlessly. We think this brings a lot more flexibility to the solutions that we are able to bring to market.
“For our mobility customers, this deal allows us to offer full pole-to-pole connectivity, with OneWeb having the capabilities over the North and South Pole for aeronautical services. It also gives another layer of depth for the growth of customer applications in particular market places, which will become more valuable as time goes on.”
With regard to whether this agreement might cause a potential cannibalisation of the markets Intelsat is identifying for Epic, Spengler said: “We have exclusive relationships in our agreement with OneWeb to provide services to the aeronautical and maritime mobility markets as well as the US government. So that gives us the ability to go forward to the marketplace with a very unique solution. There are also exclusivities in others that I cannot disclose.
“We are also going to service the wireless network extension market, the world connectivity market with operators. Depending on the customer’s network an Intelsat Epic solution or a OneWeb solution may be optimal in terms of the architecture, or a combined offering could be very attractive for those customers.”
He added that the two parties have definitions in the agreement over how they would compete for some of these customers.
In addition, Spengler pointed out that, alongside the US$25m investment in OneWeb, Intelsat is making a commitment of capacity on the OneWeb system. “We are not saying what that is at the moment but it is a meaningful commitment of capacity that we will use once it becomes operational in 2019. At the same time, OneWeb is coming back to us and has delivered us some exclusivities in certain verticals,” Spengler said.
“We also think that there are a lot of unidentified synergies that we are going to find as we go along, not just with OneWeb but also among the partners in OneWeb. There are potential opportunities for OneWeb and OneWeb’s partners to commence services on the Intelsat network that eventually could be migrated over, partially or fully, to OneWeb in the future.”
A question that has continually been asked of OneWeb is that, for all its grand ambitions and noble aspirations, how viable is its business plan? As an investor, Intelsat has had to scrutinise that more than most and Spengler remains confident in its future success.
He said: “We are comfortable enough to have made the investment, otherwise we wouldn’t have made the investment. As with any venture there are always things to solve, things to address and to optimise. What we have seen is a path to get there and a path that gave us enough comfort to say ‘OK this is worth making an investment, this is worth making a partnership.’
“We fundamentally believe that this is a different type of technological approach. We love the complementarity with our network in Ku-band and it has great potential for our customers and the types of services we can offer. So it is exciting from that stand point.”
