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An artist's rendition of O3B Networks's new GEO satellites, which promise faster, relatively affordable internet to all the world's uncovered regions.  (Source: O3B Networks)

O3B's network will consist of 16 satellites. It will offer download speeds of up to 1.25 Gbps. The startup was heavily financed by Google.  (Source: O3B Networks)
New company will use unique scheme to dramatically cut costs, deliver high speed internet to remote locations

While over 80 percent of Americans are online, broadband adoption is growing slower than expected.  The problem stems from the fiber optics business.  Buoyed by high demand and exuberance, fiber optic companies laid down high speed cables across the oceans to support the data demands of hungry 3G and cable internet networks.

After these cables were laid the demand slacked off predictably, leaving the fiber optic companies with little revenue and high debts.  Many were bought up by larger companies and consolidated.  In the aftermath, over 3 billion people were left without access to high speed networks and new installations reduced to a crawl.  The only alternative was geosatellite, which costs a whopping $4,000 USD per megabit per month

Now a new company is seeking to change that.  The company, O3B, draws its name from the phrase "other 3 billion" to describe the world's population with no internet coverage.  The company, located in U.K.'s Channel Islands, is building 16 satellites thanks to $65M USD in funding from HSBC Principal Investments, a private equity provider; Liberty Global, a service provider for phone and Internet access in 15 countries; and Google.

Greg Wyler, O3B's founder and CEO states, "Usage is growing and the demand is growing, but there isn't the infrastructure to support the demand."

Wireless operators spend up to 40 percent of their costs in developing networks, according to O3B.  This is evident when problems play out, such as AT&Ts recent insufficient 3G coverage to meet bug-exacerbated demand from iPhones.

O3B's unique plan is to launch medium-earth orbit (MEO) satellites, which orbit at 5,000 miles and only have 120 millisecond latency and are less expensive compared to geosatellites which orbit at 22,500 miles, have a latency of up to 600 milliseconds, and cost more.  The new satellites are predicted to cut costs down to around $500 USD per megabit per month, much more affordable.

The company still will have to take out a debt equity loan, as the total cost of the satellites will be $650M USD.  Still, it’s making good progress towards this goal.  O3B plans for its new service to go online in 2010 and provide internet at a data rate of 10G bps (bits per second) and provide service to Latin America, the Middle East, Africa and Asia.  A GEO satellite stays in useful orbit for around 10 to 15 years.

Google says that it is supporting O3B as high speed internet access should be available to all.  It says that its best programs, such as Gmail to Google Docs need such coverage to operate optimally.  And of course, Google hopes that people will use its search engine and browse more pages, pulling in more revenue to its ever-growing advertising stream.

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...Orbit for around 10 to 15 years
By ViroMan on 9/12/2008 8:25:10 AM , Rating: 2
A GEO satellite stays in useful orbit for around 10 to 15 years.

So a MEO sat will stay in orbit for what, 5 years? 650 mill seems like a lot for 5 years worth of time. Although I wonder what they would charge the customer to give this service.

RE: ...Orbit for around 10 to 15 years
By afkrotch on 9/12/2008 8:29:28 AM , Rating: 2
5 - 8 years before they drop.

By Samus on 9/12/2008 8:17:17 PM , Rating: 2
they will be technologically outdated in 8 years anyway, so who cares about a longer service life. they will need to be replaced. you think 1.25GB/sec is ganna be good enough in 8 years.


RE: ...Orbit for around 10 to 15 years
By mezrah on 9/12/2008 10:25:45 AM , Rating: 2
A little math (although it probably won't be as cut and dry as this):

650,000,000 / 5 years is 130,000,000 per year.

Let's say it serves a million people. That's only $130 per year (That's under $11 a month)

Half a million people would be under $22 a month...and so on.

Doesn't seem all that expensive to me.

RE: ...Orbit for around 10 to 15 years
By MrPickins on 9/12/2008 10:49:38 AM , Rating: 2
For "the other 3 billion" even $11 a month is probably well beyond their means.

RE: ...Orbit for around 10 to 15 years
By Tegeril on 9/12/2008 2:28:47 PM , Rating: 3
Let's try this math thing again.

650,000,000 / 5 years is 130,000,000 per year.

Let's say it serves 3 billion people. That's only 4 cents per year (that's a third of a cent a month).

RE: ...Orbit for around 10 to 15 years
By Some1ne on 9/12/2008 5:38:16 PM , Rating: 2
No, let's try it yet again.

$650,000,000 / 5 years is $130,000,000 per year

...but, the construction and launch of the satellites isn't their only cost. The article implies that typically, construction of the network infrastructure (i.e. the satellites) only accounts for 40% of the total costs. Let's assume that O3B's approach is at least twice as efficient, so the satellites represent 80% of their total costs.

$650,000,000 / 0.8 = $812,500,000
$812,500,000 / 5 years is $162,500,000 per year in order to turn a profit, they need to be able to draw in more than $162,500,000 per year, or $13,541,666.67 per month.

Now they claim that there are 3 billion potential customers out there. Instead of trying to guess about how many of those potential customers they'll actually get, let's instead figure out how many they'd actually need to get. To do that, we just need to make a reasonable guess about their subscription rate. As many of their potential customers live in regions where income is measured in hundreds of USD per year, or in the low thousands, tops, I'd say $5 per month is a good upper-bound to use, and $1 per month is a good lower-bound. Now if you run the numbers:

$13,541,666.67 / $5 per month per customer = 2,708,334 customers
$13,541,666.67 / $1 per month per customer = 13,541,668 customers to make a profit, they need to get between 2,708,334 and 13,541,668 subscribers, depending upon their subscription price. Let's consider their estimate of 3 billion potential subscribers:

2,708,334 / 3,000,000,000 = 0.09%
13,541,668 / 3,000,000,000 = 0.45% all they really need to do is get an adoption rate of 0.5%, and they're golden. Considering the broadband adoption rate that exists in countries where it is actually affordable, this seems attainable. Of course, we're ignoring the fact that their subscriber base is actually going to start at 0 and then climb at some nonlinear rate before eventually stabalizing at some upper bound, and we're also not taking into account the interest on the loans that they are taking out to pay for the satellites, but I think it's probably safe to say that if they can get their subscriber rate to even just 1% sometime between year 3 and year 4, they should end up with enough revenue to pay off their debt and replace their satellites before they plummet to earth and bring down the network.

RE: ...Orbit for around 10 to 15 years
By chmilz on 9/12/2008 10:10:00 PM , Rating: 2
What percentage of the potential customer base even has a computer, or access to one? Last I checked, not every back-country village has power, let alone an Internet cafe, Best Buy, or a community computer.

Nobody that I know of pays for services they can't access, government funded programs notwithstanding.

By mezrah on 9/13/2008 10:28:12 AM , Rating: 2
You're acting like the United States alone couldn't pay the bill. Cable doesn't run everywhere, hence there are a ton of annoyed people still on dial-up who don't want to pay the ridiculous cost of satellite internet now. If they could get satellite internet for the same cost (or less) as cable they would love it.

There could even be some bundle deal with DirecTV to push sales.

By Dean364 on 9/13/2008 1:25:41 PM , Rating: 2
If you build it, they will come. Maybe OLPC will finally catch on.

By JediJeb on 9/15/2008 10:45:45 AM , Rating: 2
Actually these satellites stay in orbit 10 years, the name of them are GEO not their position. It's funny that they are called GEO when they are in MEO orbits.

I assume?
By NullSubroutine on 9/12/2008 7:38:52 AM , Rating: 2
So, I like assume they will be not giving each indvidual person a connection, but a town or whatever would get 1 connection then would network and share it?

RE: I assume?
By omnicronx on 9/12/2008 8:22:44 AM , Rating: 2
I would assume it works the same way as current satellite internet. Each person has a satellite and receiver, and each person has his own personal connection.

RE: I assume?
By foolsgambit11 on 9/12/2008 5:11:45 PM , Rating: 2
Well, it will at least work a little different. If the satellite isn't in geosynchronous orbit, you're going to have an omni-directional antenna instead of a dish. It would have to be a little like the GPS system, in that respect. (I guess you could have a sophisticated tracking dish that acquires various satellites as they come in and out of the dish's field of view, more difficult than just the tracking dishes they use on RVs and whatnot) Now the problem becomes upload communications. I imagine their solution is to use a phone line instead of an end-user transmitter. After all, an uplink would have to be omnidirectional, too (therefore very powerful, too powerful for land use without an FCC license, I'd guess).

That tracking dish is starting to sound like a better solution.

RE: I assume?
By mindless1 on 9/12/2008 7:38:17 PM , Rating: 2
It's definitely not going to use an omni antenna.

10Gbps for 3 Billion people?
By dickeywang on 9/12/2008 9:01:31 AM , Rating: 3
That's like 3bps per person, isn't it?

RE: 10Gbps for 3 Billion people?
By ghost101 on 9/13/2008 8:39:10 PM , Rating: 2
If 3 billion people are constantly using it.

Obviously the number of users will only run into the millions if that. If this truly takes off, many more companies will enter the market and the bandwidth available will increase.

Google everything about you.
By Mitch101 on 9/12/2008 9:22:18 AM , Rating: 1
You know this is only going to be google collecting even more information about more people. I would like to think were anonymous but google probably knows more about me than myself.

Hypothetically google could potentially find every dead beat dad and wanted criminal. I don't believe criminals can stay off the internet grid hide in houses and watch TV all day. Staying off the internet would really be tough. Im against criminals I'm actually for using the camera's at ATM machines to feed into the FBI facial recognition systems to find wanted criminals.

On the other hand dead beat dads and criminals are not big money makers and I suspect google would be much quicker to sell information to credit agencies looking for people a payment late or two or looking to send out their next batch of credit card applications.

I am getting to the point where I believe the Gov might need to step in an question what search engines collect on people and regulate who they can sell that information to. There is no opt out that I am aware of on search engines collection information and maybe their should be.

That G-Mail account comes at a price. Might not be totally visible today but tomorrow we might just regret having a free e-mail account.

Big Brother might not be government agencies but your friendly search engine and e-mail account.

RE: Google everything about you.
By icanhascpu on 9/12/2008 5:26:31 PM , Rating: 2
Shut the hell up about the Google bashing already.

I swear to god they could find a cure for cancer and you people would still find a problem with it!

RE: Google everything about you.
By FoxFour on 9/12/2008 11:13:11 PM , Rating: 2
Of course, before receiving the cure, the patient would surely need to sign an EULA stating that, in general terms, "All your cells are belong to us!"

costs, again?
By Visual on 9/12/2008 9:18:05 AM , Rating: 4
Something is messed up with the measuring units of costs that you give in this article.

Dollars per megabit per month, really?

Perhaps you mean "Dollars per (megabit/s) per month".
$500 wouldn't be too bad then, it works out to $1.56 per GB:
If that is what you mean, I wonder why didn't you give the cost in dollars per GB directly? It is much more convenient.

And I hope that is the actual cost of the system, not the price for consumers. End-user monthly fees should be quite a bit lower, counting on the fact that they won't always be maxing out their connections but will still be charged the full fee.

By therealnickdanger on 9/12/2008 7:43:07 AM , Rating: 3
My dad has satellite Internet through WildBlue. Despite being surrounded by new housing developments with DSL and cable, his only other option is conventional dialup. I'll tell ya, WildBlue is definitely faster than dialup, but it's pretty outrageous in price. I believe he pays about $75/month for 12,000MB down/3,000MB up per month. You think Comcast's 250GB limit is bad?

Of course, hitting that 15,000MB limit is difficult given the relatively slow speeds, but I worry about him going over all the time. It's not really "per calendar month", but it's a rolling 30-day usage window. If you hit that ceiling, they throttle your speed back pretty hard.

Latency is pretty pathetic as well. I tried playing some games out there once... anywhere from 500-2,000 ping.

Some time before, my dad had been using a service called RiverNet which was basically one guy that had set up WiMAX out in the boonies. It's not actually WiMAX, but it was a wireless broadband service with about 1Mb up and 2Mb down. My pings using that were around 20-40. However, the guy that ran the service just couldn't keep it reliable. It would go down for weeks at a time. So far satellite has been constant and reliable, even during storms.

Austrialia is like WTF!
By afkrotch on 9/12/2008 8:25:20 AM , Rating: 2
Surprised to see they aren't going to try and hit Australia. Their ISPs are terrible.

Anyways, I'm uncertain as to what these satellites will be doing. Will the individual users connect up or will these satellites be used by ISPs and everything else spammed through ground lines.

It says that its best programs, such as Gmail to Google Docs need such coverage to operate optimally.

As for Google's little statement. It doesn't need more coverage to operate optimally. It needs more coverage to make more money. Only way to make more money is to take over more of the market or make the market larger.

Sometimes it's just easier to go with the latter option.

old news
By tharik on 9/12/2008 10:34:59 AM , Rating: 2
In October 2002 Teledesic suspended satellite construction and laid off a number of employees. Earlier in 2002 Teledesic had contracted with Alenia Spazio to build 2 of the 30 medium earth orbit (MEO) satellites.

[Prior to 2000]
A Saudi Arabian prince with an estimated net worth of more than $11 billion has investmented $200 million in the 288-satellite Teledesic system. Alwaleed bin Talal, who currently owns part of Netscape and Motorola, joins billionaire cellular pioneer and current CEO Craig McCaw and Microsoft Chairman Bill Gates in funding the planned "mega-LEO."

Major shareholders:
McCaw 30%
Gates 30%
Alwaleed 16%
AT&T Wireless Services 12%

Teledesic, which has received authorization from the FCC for it's planned high-bandwidth satellite network, has already launched a test satellite but remains tight-lipped about their technical progress.

They forgot about italy
By Murloc on 9/12/2008 1:35:20 PM , Rating: 2
in italy much people can't connect to the internet other than with 56k modems.
The africa is near.

what's going to happen?
By bobny1 on 9/12/08, Rating: -1
RE: what's going to happen?
By cokbun on 9/12/2008 8:27:00 AM , Rating: 2
there's 3 billion more people downloading porn and have a dead relative with 10 million $ in an african bank

RE: what's going to happen?
By Ticholo on 9/12/08, Rating: 0
"I mean, if you wanna break down someone's door, why don't you start with AT&T, for God sakes? They make your amazing phone unusable as a phone!" -- Jon Stewart on Apple and the iPhone

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