AEROSPACE

SPACE ODDITY OR SPACE ODYSSEY? BY PIERRE RAZZO

“SPACE ODDITY,” THE 1969 SONG BY DAVID philanthropic overtones are particularly attracting Technological innovation, the reduction in the BOWIE PRECEDED APOLLO 11’S MOON the attention of the media, regulatory authorities, cost of accessing space led by groups such as LANDING. IN THIS, THE FIRST HALF OF THE investors, and markets. Space X, and the interest generated by data2 TWENTY-FIRST CENTURY, WHICH NUMER- has shown the possibility of a lucrative busi- OUS EXPERIENCED OBSERVERS PERCEIVE These two competing projects, Oneweb and ness. Thus, many diverse projects have been AS THE FIRST TRUE SPACE AGE, THIS Starlink (working with Space X), have the com- inaugurated, intensifying the race for internet via MELODY IS STILL RELEVANT FOR SEVERAL mon goal of putting an end to the digital divide satellite or related technologies (solar-powered REASONS, LIKE ELON MUSK’S PLAYFUL affecting close to 4 billion individuals (53% of the drones, helium-filled stratospheric balloons, NOD TO IT LAST FEBRUARY DURING THE global population1), by guaranteeing high-speed rocket-launching airplanes), with initial launches LAUNCH OF HIS NEW FALCON HEAVY internet access for all by 2027. The Solution That expected for the end of the year. ROCKET AND PUTTING INTO ORBIT OF Came from Spaaace! … or Satellite Internet HIS STARMAN AT THE WHEEL OF A TESLA STARLINK ROADSTER. DAVID BOWIE’S SONG ISN’T A previous project named Teledesic was created THE ONLY ODDITY WE’RE SEEING IN SPACE in 1994 with the goal of placing 840 satellites in Although the trademark Starlink was not intro- RIGHT NOW – THE WORLD IS IN THE MIDDLE low earth orbit (altitude of less than 2,000 km) in duced until August 21, 2017, this project, which OF A WILD SPACE RACE BETWEEN NA- order to provide high-speed internet. Although it would provide high-speed internet to all, had TIONS AND, RECENTLY, PRIVATE ACTORS, was led by high-profile, internationally recognized been suggested by Elon Musk in 2015. SOMETHING THAT IS TOTALLY NEW. personalities, such as Bill Gates, Craig McCaw, and Saudi prince Alwaleed bin Talal, was a Like its main competitor Oneweb, the idea con- Amid this nebula of futuristic projects (space failure and was stopped in 2002, after incurring sists of putting several small satellites (850 lbs.) hotels, the conquest of Mars, and the explora- nearly $9 billion dollars in costs and only placing into low earth orbit by launching them from Space tion of oceans in space), two major ones with a single demonstration satellite. X’s Falcon 9 and Falcon Heavy rockets. The low

4 | Mazars USA Ledger altitude guarantees a fast internet connection and On June 15, 2015, Oneweb announced the nal documents. For Space X, this “satellite inter- very low latency – 25 to 30 milliseconds3 – owing formation of a joint venture (JV) with Airbus net” activity could result in revenues of $30 billion to the short distance the signal must travel in Defense and Space to manufacture 900 satellites dollars and operating income between $15 and comparison to geostationary4 satellites. However, dedicated to the project. This JV will have to $20 billion dollars in 2025. Although these dizzy- the decreased altitude limits coverage, creating take into account the two major challenges - the ing amounts, which the company never intended the need for a greater number of satellites. expected satellite manufacturing cost ($500,000 to release, and that might have too optimistic in dollars) and the constellation deployment the past, must be regarded with prudence, this In the next five years, Space X, located in Haw- timetable, which will require the production of 15 activity would represent more revenue than the thorne, California, plans to send 4,425 satellites satellites per week, a true break away from the current core business (launches) in 2020, and into space to form its first constellation, which is current model which could take months to build nearly 86% of the company’s revenue in 2025. nearly three times the number of currently active a satellite or to paraphrase the official project satellites! A second constellation of an additional communication “mass production and satellites Morgan Stanley predicted in October 2017 that 7,500 satellites in low earth orbit (at altitudes have never been used in the same sentence.” overall industry revenues would reach $1.1 trillion ranging from 335.9 km to 345.6 km5) is also ex- The first ten satellites will therefore be manufac- dollars by 2040,10 with the provision of satellite pected in the long term, according to information tured in Toulouse. The rest of the production will internet contributing nearly $412 billion dollars. presented to the U.S. Federal Communication take place at Exploration Park, near the Kennedy This would be nearly three times the space Commission (FCC) in May 2017. Space Center in Florida. industry’s current revenues and satellite internet contribution will be similarly tripled11. To this end, two experimental satellites were put On June 25, 2015, Oneweb also signed a in orbit on February 21, 2018. Space X intends to contract with the French company Arianespace It is not surprising that corporate groups, such begin the launches in 2019 with the objective of to launch an initial subgroup of satellites into as Facebook, start-ups and private equity firms12 completing the first constellation in 2024 and thus orbit on 21 Soyuz rockets (with the option of five have also embarked on the race to provide satel- offer high-speed internet on a global scale. additional Soyuz launches and three Ariane 6 lite internet. Welcome to Space Age 2.0! launches). The first launch is expected August Space X differentiates itself from its main com- 19, 2018 from the Guiana Space Center in Pierre is a Manager in our New York Practice. petitor Oneweb because of its integrated model Kourou (ten satellites should be put in orbit during He can be reached at 646.315.6155 or at Pierre. – the company will manufacture the rockets and this launch, then 32 to 36 satellites during each [email protected]. satellites it will launch – and because the ITU following launch). 1 According to the latest figures from the International Telecommunication has yet to assign the company frequencies for its Union (ITU) from June 2016. This entity is a sub-section of the United signal distribution. Two other launch contracts have been signed Nations, in charge of information technology and communication. 2 “Whoever gets the most data wins” declared in 2017 Masayoshi Son, the with Virgin Group and Blue Origin LL (Jeff President General Director of Softbank, who is one of Space X’s reference ONEWEB Bezos). shareholders. 3 Compared to 600 milliseconds to date based on existing technology (figures from Space X’s presentation on the project to the FCC) The Oneweb Project, initiated under the name Oneweb’s internet design, development, and 4 At an altitude of 36,000 km 5 This is the same altitude as the International Space Station (350 km to “WorldVu” in 2014, pursues the same objective infrastructure manufacturing (software, physical) 400km) of providing high-speed internet access to all at were entrusted to Qualcomm Group, which is one 6 Thus, we speak of a fleet of potentially 2,620 satellites in total 7 $500 million dollars in January 2015 from, In particular, Qualcomm, Virgin an affordable price as early as 2027. To this end, of the project’s shareholders. Group, Coca Cola, Boeing, Airbus and nearly €1.7 million euros raised from the Arlington, Virginia based company plans, Softbank in December 2016 and 2017 8 “The web enables us all to participate. This is not just our mission, it’s according to founder and President Greg Wyler, PHILANTHROPY OR BUSINESS? everyone’s.” (Oneweb official website) to place three satellite constellations in low earth 9 “Exclusive peek at Space X Data shows loss in 2015, heavy expectations 6 for Nascent Internet service” (Wall Street Journal January 13, 2017) orbit between 2018 and 2027 . The space race which the key players are en- 10 Michael Sheetz “ Morgan Stanley predicts space industry will triple in gaged is not simply one of philanthropic activities. size: Here’s how to invest” 8 https://www.cnbc.com/2017/10/12/morgan-stanley-how-to-invest-in-1- 648 small satellites (275 lbs. to 330 lbs.) should Underneath the marketing, the financial stakes trillion-space-industry.html be sent into space as the first constellation couldn’t be higher. 11 Michael Sheetz “ These 90 Private Companies are Reshaping the Space Industry, says Morgan Stanley” between 2018 and 2020. In order to achieve https://www.cnbc.com/2017/12/13/morgan-stanley-spacex-blue- this, the company was structured around the key The Starlink project’s launch cost is estimated to origin-and-other-private-companies-reshaping-space.html?__ players so as to guarantee the project’s financial be $10 billion dollars, but the potential profits are source=sharebar|twitter&par=sharebar stability ($2.2 Billion dollars raised at the end of staggering as shown by the Wall Street Journal December 20177) and technical feasibility. on January 13, 2017,9 based on Space X’s inter-

September/October 2018 | 5