OneWeb's Satellite Plans Attract $500M From Big Names

The battle for the skies is truly on. OneWeb, the satellite communications startup with ambitious plans to provide broadband and cellular coverage to rural and other underserved areas around the world via more than 600 low-earth-orbit satellites, has announced a $500 million round of funding from some of the biggest corporate names in the world.

Here's the roll call of investors: Airbus Group; Bharti Enterprises; Hughes Network Systems Inc. , now an EchoStar Corp. subsidiary; Intelsat Ltd. ; Qualcomm Inc. (Nasdaq: QCOM); The Coca-Cola Company; Totalplay, a Grupo Salinas Company; and Virgin Group. That's a powerful and impressive list. (See OneWeb Raises $500M Funding.)

Qualcomm and Virgin had already been announced as supporters, with Qualcomm keen to be involved in the development of the terrestrial terminals that will connect to the OneWeb satellites and offer 2G, 3G, 4G/LTE and WiFi connectivity to end users and Virgin Galactic acting as a rocket launch partner to put the satellites in space. (See O3B Founder Taps Virgin, Qualcomm for New Satellites.)

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Now the backers include other powerful global brands (some with very deep pockets) and, tellingly, Intelsat, which already operates a network of about 50 geostationary satellites that offer data and video connectivity to multiple industry verticals, including communications service providers, broadcasters and government departments. Intelsat is investing $25 million in OneWeb and has also struck an exclusive partnership that appears to significantly benefit both parties:

    The agreement will also include a firm service commitment from Intelsat for OneWeb services upon commencement of operations, which is currently estimated for 2019. Intelsat's service commitment is in exchange for exclusivity granted to Intelsat for distributing OneWeb’s services within the aeronautical and maritime sector verticals, and for certain U.S. government and oil and gas customer applications. The agreement also includes granting to Intelsat certain exclusive distribution rights for connected car and rail customer applications.

Why this matters
The combination of Intelsat and OneWeb could be telling when satellite service competition heats up in the coming years. Google (Nasdaq: GOOG) is involved in a number of plans for satellite- or drone-enabled broadband connectivity and is an investor in innovative rocket-launch specialist SpaceX, while Facebook is also exploring high-altitude connectivity options.

Of course, getting the satellites in orbit is one thing: Getting user terminals to remote areas and supporting them and then selling services is another. Clearly Intelsat sees an opportunity to support the IoT/connected car services sector that is likely to really take off with the shift towards ubiquitous, 5G-enabled mobile connectivity but which will need backhaul and connectivity outside the small cell-friendly urban areas.

In addition, broadband connectivity targets in Europe, for example, are somewhat reliant on satellite to make up the shortfall that fixed broadband won't be able to deliver. (See Europe Set to Miss Digital Deadline – Point Topic.)

Satellite broadband might just become a key factor in broader, mass-market service provider strategies in the coming years.

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— Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading

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