OneWeb to Consider Bankruptcy as Cash Dwindles | Hacker News Reader

OneWeb to Consider Bankruptcy as Cash Dwindles

bloomberg.com

Spacex is going to crush all of it’s competitors. It get’s the launches for the cost of a tank of kerosine and lox. It’s manufacturing its own satellites. These are cost advantages that no one else can match.

Once Starlink is operating, the first customer to knock on their door will be the US military. They will spend any amount to get world wide internet/ip availability.

Softbank’s only hope to rescue their investment is to merge OneWeb with another satellite player.

One advantage Starlink has is that the satellites have a fixed lifetime and need to be refreshed. Future generations of satellites can have additional capability added (ADS-B tracking for aircraft, for example)

But in the end, there can only be one.

USAF is already testing starlink and has been for quite some time. They have a $28m three year contract running since 2018.

https://www.nextbigfuture.com/2019/11/spacex-starlink-28-mil...

I don’t think it’s a given that SpaceX and Tesla necessarily have the cash to ride out this crisis. Castles in the middle of two major capital projects and two smaller ones, spaceX is in the middle of two capital intensive projects.

Their odds are much better than any other competitor right now, but they’re still at the whims of the market.

They’ll get a bailout if necessary. From China, most assuredly, from the US maybe a bit less so.

The “advantage” of that fixed lifetime also leads to higher operational costs since they have to be replaced so often.

Also their launch costs are far more than just kerosene, every launch destroys a second stage, and the last a first stage.

SpaceX is using first stages that have already flown - that someone else already paid full price for. Kerosine, lox, fairings and a second stage are a lot cheaper than launching from a comepletely new rocket.

Now the hat trick will be if SpaceX can piggyback starlink sats on regular customer launches...

Fuel is super cheap, only a few hundred thousand for each Falcon launch and a full Starship/Superheavy stack launch is estimated at only a half million. But it's going to be many decades before launch costs come down close to fuel costs.

Right now it's been estimated that SpaceX's launch cost of new Falcon 9 is around $45M, and their cost for launching a re-used Falcon is around $25M, a far cry from the $200k cost of Kerosene & LOX.

Re-use is great, but they are still in the early stages. Their goal for Falcon was ten launches per first stage, but they just lost their first attempt at a 5th first stage launch (albeit after it successfully put it's cargo in orbit), after suffering several major anomalies with it's engines.

Falcon first stage re-use takes over a month because there is still some re-furbishment and re-testing, and that costs money too. The second stage and fairings also cost around $15M together, and they are destroyed every launch (though they keep attempting fairing recoveries, they haven't been very successful at).

SpaceX won't be able to significantly lower launch costs until Starship is successfully completed. Starship gives you have a system designed for up to 100 re-uses, and a re-usable second stage without a fairing. At that point they might be able to lower launch costs to the $10M range, but it's going to be hard to get much lower. There are still a ton of people involved in every launch, and those people need to get paid.

The whole satellites-for-Internet space is like Global Crossing 2.0. I mean, business 101 is that high fixed costs + commodity business + high likelihood that technology that will decrease future fixed costs + no ability to repurpose fixed assets = no profit.

Good for society. Bad for investors.

For the very reasons you mention, I could never understand why anyone would get into this market either.

Unless some deep pocketed government is going to float you for security and intelligence purposes, there is no reason this stuff makes sense right now. When the fixed costs come down, and they will, the new competitors will wipe the floor with you.

The only reason I could think of is VC money. Sell the idea, get funding, use cash. Looking at you, Elon.

On the flip side I would argue that low marginal costs + high fixed costs = a natural monopoly, there is no room for a competitor to step in. A monopoly + lots of demand = lots of profit.

It doesn't surprise me that OneWeb is going bankrupt, but that's because SpaceX is doing it better, and there is only space for one (profitable) company in this space.

For most of the people in the world, Internet is already available through land lines or cellular service. OneWeb has very little ability to extract monopoly rents from them.

But both sides are not relevant to the article - whether the business case is solid or not in the long run, they are running out of money in the short term.

Properties served by land lines and cellular service just aren't potential (highly profitable) customers for oneweb. That's ok, there are plenty of other customers. Ships, air planes, the military, even more remote places, backbone for remote cell towers, and so on.

It is very relevant, if the business is solid they should be able to attract more investment in the short term.

We're talking about the telecom industry-- if any group of competitors can stomach high fixed costs to reap future margins it's them. Launch new satellites, build new towers, lay new lines, whatever-- it's all the same Internet. Really, the story of Global Crossing's failure is instructive-- similar strategy of "low marginal cost, high fixed cost."

The future margins only exist if only one person succeeds in a given area, and the telecom industry is perfectly aware of this. It's the same reason why there are so many places in the US served by only one internet provider. I wouldn't expect there to be serious competition with the satellite provider for customers best served by satellites.

SpaceX isn't necessarily doing better. They had more funding, but the OneWeb technology was better. You can't beat the musk reality distortion field, though.

Why do you say the OneWeb technology is better?

The consumer antenna I consider the most difficult part that could make or break any of these projects. OneWeb claims to have been making the most progress on this front in terms of cost. SpaceX has publicly announced there's would not be cost effective for most end users.

I thought OneWeb wasn't even targeting consumers, and was just planning on acting as basically a backbone for cell towers in the consumer market?

All of them at one point said it was to serve underserved consumers. They changed their tune after the antennas and satellite cost was higher than they thought.

If SpaceX had a conformal antenna, it would open a new market of bizjets and commercial aircraft for them.

I'm not sure about that. Most people on planes use it for streaming media, and the current solutions are good enough for that. Also, it would take them many years to win that business and get certified.

Huh? Starlink satellites are supposed to be capable of something like 20Gbps (per satellite) as of a few years ago. A 4k livestream uses something like 15Mbps, 20Gbps / 0.015Gbps = 1333 livestreams per satellite.

This seems like it should be capable of supporting business jets just fine.

I didn't say they aren't capable of it. I said the existing solutions are already good enough and will be lower cost. You need some kind of differentiator if you want to display streaming media on an airplane. The only differentiator they could have is lower cost, but it looks like their costs will be far higher given the cutthroat industry of the airlines.

Sorry, I misread.

Oneweb's sat's supposedly have incredible bandwidth if you beleive the CNN/CEO hype. "Steckel said they have performed better than expected, 'demonstrating speeds that could rival 5G internet'."

They also have made a number of claims about being the leader in the effort etc (they launched six sat's a year ago.) Not sure I fully buy their hype.

SpaceX has launched 360 sat's and is explicit that speed may NOT be high bandwidth (but may be low latency) which seems a more credible baseline given the theory (one sat covers a reasonable area).

I personally would love 4mbp/s ultra low latency to my parents across the country for video calls.

> is mulling a possible bankruptcy filing to address a cash crunch as it grapples with high costs and stiff competition, according to people with knowledge of the preparations.

Blaming competition in an industry that doesn’t exist is a bit much.

This is a bit of a surprising day for this article to come out. In only a few hours there is going to be the third launch of OneWeb satellites. If successful, it will bring their total launched from 40 (34 of operational design) to 74. As far as I can tell they need 600 in orbit to start offering service.

Why do I frequently see SoftBank in a lot of the bad news these last few months? Do they operate differently than most venture firms?

They were central to WeWork's drama

WeWork is going to be substantially affected by the COVID-19 pandemic too.

Huge amounts of oil-backed money handed over to be managed by folks that don't understand tech.

That would be too bad. Their constellation would have looked pretty cool: https://space-search.io/?search=OneWeb

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