Jeff Bezos and Elon Musk to compete for 5G backhaul business

Some of the world's most visible and wealthy entrepreneurs are preparing to compete against each other in offering satellite-based backhaul services to wireless network operators.

Mike Dano, Editorial Director, 5G & Mobile Strategies

July 9, 2019

4 Min Read
Jeff Bezos and Elon Musk to compete for 5G backhaul business

Two of the world's most wealthy and visible entrepreneurs -- Jeff Bezos and Elon Musk -- are now competing directly against each other to sell backhaul services for 5G in remote areas.

It's unclear though whether that's going to be a viable business model.

Bezos is behind Amazon's Kuiper Systems, which last week laid out its plans to eventually launch 3,236 low-Earth orbit (LEO) satellites to offer broadband Internet connections across much of the globe. One of the markets that Amazon is targeting with the planned effort is backhaul for fixed and wireless network operators in remote and rural areas.

"The Kuiper System will help bridge gaps in coverage by complementing the efforts of terrestrial fixed and mobile carriers and reaching some of the most remote and hard-to-reach areas -- where it is often geographically difficult or cost-prohibitive for terrestrial service providers to operate today," Amazon wrote in a lengthy filing with the FCC requesting government permission to launch its satellites, as detailed in an article in Ars Technica.

Starlink, a similar effort from Musk's SpaceX that includes a total of 12,000 satellites, filed its application with the FCC in 2017. The agency approved Space X's Starlink plans in April, and the business raised $1 billion in financing and launched its first satellites a month later.

"We think this could be really helpful to telcos by providing connectivity that they need for the most difficult-to-serve customers, as well as providing data backhaul services so that a telco could put down a 5G cell tower somewhere instead of digging a fiber trench over potentially hundreds of miles," Musk said during a press briefing in May, according to Spaceflight Now. "That 5G cell tower could do data backhaul through our satellite system."

SpaceX's Starlink and Amazon's Kuiper System are two of the most visible companies that are planning to launch thousands of LEO satellites to offer Internet services across the globe. Other players range from Telesat to LeoSat to Boeing to OneWeb, which is backed by Japanese billionaire ­Masayoshi Son's ­SoftBank and in February launched the first six of at least 648 planned satellites.

The LEO difference
As Wired noted, today's crop of LEO players aim to offer cheaper and faster satellite connections than the current options. In the US, Hughes Network Systems and ViaSat are the main satellite Internet providers, and collectively, they count roughly 2.5 million customers. However, their offerings are powered by a handful of giant, expensive satellites that orbit 20,000 miles above the Earth and stay in the same place relative to the ground, whereas the LEO providers want to launch thousands of relatively inexpensive, small satellites around 800 miles above the Earth that won't stay in the same place relative to the surface of the Earth. But perhaps the biggest difference between the two space-based approaches are the speeds: Today's standard satellites can take up to half a second to transmit data at relatively slow speeds, while the LEO players generally promise much faster speeds and latency of around 20ms.

Those specifications could appeal to 5G providers looking for backhaul options, particularly in remote areas. Although most wireless network operators prefer to connect their cell towers to fiber for backhaul, they also use other options like microwave or satellite when fiber isn't available or economically viable. Of course, those remote cell towers must also generate enough profits to pay for such backhaul connections -- a difficult proposition considering remote areas often don't contain a lot of paying customers.

And that's the rub. It's not cheap to get thousands of satellites, even small ones, into space. And it's also not cheap to build and distribute the necessary receivers that customers will need to receive LEO signals. As noted by SpaceNews, SpaceX President Gwynne Shotwell said last year that the company's full 12,000-satellite constellation could cost around $10 billion to build, though SpaceX's Musk said that the business needs just 1,000 satellites to become "economically viable."

"My view is that these LEO constellations are totally uneconomic," Roger Rusch, president of satellite consulting firm TelAstra, told Wired.

Indeed, satellites aren't even the only game in town when it comes to 5G backhaul in remote areas. For example, companies including Elefante Group, Altaeros and SoftBank have proposed backhaul solutions ranging from tethered balloons to blimps to drones. And startup UbiquitiLink promises to connect today's smartphones directly to satellites, removing the need for satellite backhaul completely.

Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

About the Author(s)

Mike Dano

Editorial Director, 5G & Mobile Strategies, Light Reading

Mike Dano is Light Reading's Editorial Director, 5G & Mobile Strategies. Mike can be reached at [email protected], @mikeddano or on LinkedIn.

Based in Denver, Mike has covered the wireless industry as a journalist for almost two decades, first at RCR Wireless News and then at FierceWireless and recalls once writing a story about the transition from black and white to color screens on cell phones.

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