Steve Collar: Our satellites will be only 8,000 kilometres up,
instead of the usual 36,000 kilometres. Latency is much, much
lower and that translates into performance 
                                 
                                 
In the first few months of 2013 Steve Collar will be watching very carefully as the future of the $1.2 billion company he runs, O3b, is subjected to a planned, controlled explosion.
A Russian-built Soyuz rocket will blast the first four of at least 12 satellites — maybe many more — for O3b’s new space-based internet access system from a spaceport on the coast of South America. Another four satellites are due to follow on a second launch a few weeks later.
The aim is to use the satellites to deliver wholesale high-speed broadband internet services over wide parts of the world that are far away from optical fibre backbones — among them the remote communities up the Amazon in South America, regions of Africa far from the submarine cables that are now connecting coastal areas, and the 900-odd inhabited islands of Indonesia.
“People have tried fibre in Indonesia in the past,” says Collar, the CEO of O3b, “but it’s very challenging environment — not just because of the number of islands but because it’s a very volcanic area and there are deep trenches on the sea bed.”
O3b’s satellite fleet will be increased in 2014 by a further four, and Collar aims for “certainly more than 20” in the medium term. The system can be designed for over a hundred satellites, he notes, but doesn’t yet know what the market will bear. “We’re relatively early” in the project, he adds.
O3b — the initials stand for “other three billion”, the population of the world that the company believes it can help serve with internet services — is backed by investments from SES, the Luxembourg-based satellite operator, as well as Google and cable operator Liberty Global, plus a range of financial investors such as HSBC and Northbridge Venture Partners. “Our mission is to make the internet accessible and affordable to those who remain cut off from the information highway,” says the company. 
                                 
                                 
Cash generation 
                                 
The extra four satellites will be funded through a mixture of debt and equity totalling $137 million from some of the existing funders, as well as a Luxembourg investment company, Luxempart. That is not the total cost of the four: Collar points out that they will be launched a year after the company starts generating income. “There will be cashflow and we will fund them through cashflow. This business will generate significant amounts of cash quickly.”
O3b was founded by a US entrepreneur, Greg Wyler, who several years ago launched an internet service in Rwanda but became frustrated by the poor connections to the world’s networks. He saw the possibility that satellites could help.
But cynics will note that satellites are already used to deliver telecommunications to remote areas. What different about O3b’s planned service?
“Our satellites will be only 8,000 kilometres up, instead of the usual 36,000 kilometres,” says Collar. By putting its satellites in such a relatively low orbit, O3b overcomes one of the main objections to using them for broadband communications: time delay or latency.
Those who remember making intercontinental phone calls in the 1970s and 1980s, before submarine fibre served most links, will remember the pause after speaking, waiting to hear the reply from the person at the other end: even at the speed of light, it took more than quarter of a second for your voice to reach the other person and another quarter for their reply to come back. You got used to it.
But for IP communications it’s more than an irritation, says Collar. “It’s a big problem for anything where you need handshaking.” That impedes use of satellite links for voice over IP, gaming “and a whole number of web 2.0 applications”, he adds. Looking to the future, LTE voice services will not function with a typical satellite latency of 600 milliseconds, says Collar. 
                                 
                                 
Shorter round-trip 
                                 
And that’s the main reason that O3b has brought its satellites down to 8,000 kilometres above the surface of the earth, where the round-trip latency — up-down, up-down, so 32,000 kilometres in all — is 130 milliseconds.
“The great benefit is that this latency is much, much lower and that translates into performance,” he says. Once the satellites are in service by mid-2013, wide areas of the world will have better internet access than they have ever had before, via a set of gateways into the public internet that the company is commissioning. “We’ve selected three and there will be four more,” says Collar. The gateways, to be built alongside existing satellite facilities, will control the satellites and connect them to the net.
O3b will be strictly a wholesale company. Its customers will be telecommunications operators, internet service providers and mobile operators that will install their own satellite stations in order to connect their own customers to the world wide internet and provide them with IP-based services.
O3b will be offering speeds from one megabit a second up to 10 gigabits. “We’ll provide mobile backhaul or a large trunk to a city, where there will be microwave or fibre,” says Collar. “We see ourselves as the middle-mile solution.” Operators will distribute the service “mostly wirelessly, using WiMax or other technology”, he adds. “We’re last-mile agnostic.”
Because they’re only 8,000 kilometres above the surface O3b’s satellites will move across the sky, unlike the traditional satellite which, at 36,000 kilometres, appears to hover in a fixed position above the equator. That makes the base stations more complex that the normal satellite dishes that can be bolted to the wall of a house. O3b dishes will have to move to follow the satellites as they cross the sky “only a little more quickly than the minute hand of a watch”, says Collar.
Nearly 18 months before the service is launched from the first eight satellites, “we’ve already sold and committed a third of our capacity”, he says. “In some parts of the world we have sold out.” That’s why the company has booked four more satellites, to be built — like the first eight — by Thales Alenia Space in Cannes, on the south coast of France. “We didn’t want to find ourselves sold out on the day we launched, and then have to wait three years until the next launch.”
The new four can be added “at a relatively low marginal cost” and that will help keep the cost per megabit down.
Production of the first is on schedule. “We are a good half-way through the construction of the satellites, and there is two months of margin in the satellite schedule,” he adds. “It feels genuinely close at this point, and customers are making commitments.” 
                                 
                                 
Brazilian contract
                                 
In September 2011 a Brazilian operator, Ozônio Telecomunicações, became the first Latin American company announce a contract with O3b. Based at the city of Manaus at the heart of the Amazonas region, it plans to set up a series of micro data centres to provide internet access via O3b’s satellites and local distribution to high-volume customers as well as mobile operators, energy companies, universities and internet service providers.
Earlier in the year a Hong Kong company, Sky Fiber, said it would work with O3b to provide services in south-east Asia; and Mavoni Technologies said it plans to offer fibre-like services in poorly served areas of South Africa. Further north, Netcom Africa will be using O3b to provide internet services to Shell’s exploration platforms in the Nigerian delta.
“We’ve had very good take-up in Africa, the Middle East and south Asia,” says Collar. “We’re recruiting customers in Asia and Latin America. We have a customer in the middle of the Pacific.”
The only limitation is that the satellites, which orbit above the equator, have to be visible above the horizon — which everywhere north of 45 degrees north latitude and south of 45 degrees south is out of range. But the band in between is in range. “That pretty much covers all the emerging markets,” he notes — and more than just emerging markets. O3b will reach most of China and the US as well as all of India and Australia. 
                                 
                                 
Emerging markets 
                                 
“Our intent is that this service is for emerging markets and will be at least 30% cheaper than the satellite alternatives,” says Collar. And, far from competing with ground-based fibre infrastructure, he believes that deploying bandwidth will stimulate demand which will lead to the construction of more.
He expects the services that O3b provides to reflect those on the terrestrial internet. “Video is a key component of the traffic: 80% of the internet is video. It is a huge headache for terrestrial operators and we will be able to offer point to multipoint services, to integrate with terrestrial wholesale providers.”
The first launch is scheduled from the newly built Soyuz launchpad in Kourou, the spaceport in the French overseas province of Guyane. The Soyuz, designed in the days of the USSR, is one of the most reliable launchers in service, but its Russian owners have started operations from Kourou because it is almost on the equator — and the speed of the earth’s rotation gives the rocket much more lift than its usual base in Baikonur in Kazakhstan.
All launches are risky, though. Collar and O3b’s backers — and their customers — will be waiting anxiously until the first four satellites are safely in orbit. And then the next four, as six are needed to provide continuous service — and then, in 2014, the next four.
Global IP traffic is growing at more than 30% a year, which means a fourfold increase in the next five years “and a huge proportion of that expansion will be in the emerging markets”, says Collar. Once the satellites are in service, “we have the capacity to fuel our customers’ networks and position them to respond to the ever increasing demand for bandwidth and connectivity”. GTB 
Further reading:
The right connections 26 Sep 2011 
Satellites to expand broadband to remote areas 02 Dec 2010
Google satellite service gets $1.2bn 29 Nov 2010
GTB 40 under 40: Architecture decisions underpin plans for ... 29 Sep 2011