So Bert seems to think that the cable guys have a monopoly on high speed
broadband, while he is taking a "wait and see" attitude about potential
competition from fixed wireless broadband from the telcos, Google, et al.
You might think that Bert, who works for Boeing, might have a clue about what
his own company is doing to add another competitive broadband technology to the
playing field. And it's not just Boeing; Elon Musk's Space-X, Facebook, and
Google are working on technologies including low earth orbit satellites,
balloons, and in-flight aircraft, to deliver wireless broadband from the sky.
Wonder if Bert is skeptical about what Boeing is doing?
Boeing, Apple Could Build A New Internet In Space
Here's a match made in heaven, or at least low Earth orbit: Boeing's aerospace
expertise combined with Apple's consumer-product savvy.
If the two form a partnership to provide broadband access via thousands of
satellites, it could transform how you – and the machines that surround your
life – will connect to the internet.
Boeing already has a plan to develop, launch and operate a constellation of
3,000 satellites in low Earth orbit. Apple is reportedly in talks with Boeing
to be an investor-partner in the project. With Apple on board, hundred-year-old
Boeing could beat out the likes of Facebook, Alphabet's Google and Tesla
co-founder Elon Musk's SpaceX in the race to create a new internet in space and
capture hundreds of billions of dollars. In the process, Boeing also could
upend the telecom market and enable emerging technologies, ranging from smart
devices to self-driving cars, that are expected to send the appetite for
"We are seeing an almost insatiable demand for commercial communication
bandwidth," Boeing CEO Dennis Muilenburg said at a conference earlier this
At first glance, the satellite business may seem like a stretch for Apple. But
consider that the company has sold more than a billion iPhones globally,
sometimes with troublesome connections, and is looking at opportunities further
afield such as mobile payments and autonomous driving, which will rely on
access to robust, widespread wireless capabilities.
Meanwhile, Boeing has been in the business of building and launching satellites
for decades, but isn't in the mass-market consumer game and is seeing slowing
demand for its commercial jets and military planes. Boeing won't comment on a
possible Apple collaboration, but Bloomberg reported in April that Apple hired
two Google satellite executives for a new hardware team.
Josh Sullivan, director and senior equity analyst at Seaport Global Securities,
doubts that Boeing would work directly with consumers or that Apple would
develop rocket technology.
"The most likely arrangement would be for Boeing to supply the satellite
delivery and operation expertise and for Apple to handle some of the satellite
hardware but more focused on the consumer side," he said.
Hardware is needed on the ground as well as in space.
The maker of iPhones and iPads would not only provide mass-market expertise,
but could offer know-how on miniaturizing technology so that personal gadgets
can connect to satellites without bulky equipment. Technology would also be
required to prevent data links from rapidly draining the charge from devices
that fit in pockets and bags.
'The Large Prize'
Even if an Apple partnership fails to materialize, Boeing will forge ahead with
its satellite plans. It has a sprawling factory in Southern California that
produces satellites and is retooling it to churn them out faster. Also, Boeing
already makes broadband satellites, and last month launched a fourth
Boeing-made Inmarsat-5 satellite for Inmarsat's Global Xpress mobile-broadband
Last year, Boeing applied for a Federal Communications Commission license that
would help the aerospace giant "contribute to the public interest by injecting
new competition and expanded capabilities into the broadband satellite services
industry." Boeing also said in a filing that new satellites would "foster the
widespread availability of broadband services, including to unserved and
underserved regions and populations."
Sullivan said Boeing has been reluctant to say how much it will invest in the
project and is looking for investors like Apple to keep its
research-and-development spending profile low.
But Boeing isn't the only company that sees the market potential.
Satellite-internet company OneWeb is looking to build a network for global
broadband access and is working with Boeing's European rival Airbus to develop
satellites that cost less than $1 million each. That compares with the $130
million price tag for a fifth Inmarsat satellite, which is being built by
Europe's Thales Alenia Space. OneWeb plans to launch the first of its 700
satellites next year and start providing broadband access a year later.
Another rival looming is SpaceX. After disrupting the rocket market, in which
Boeing is a dominant player, Musk's company has plans to build its own
constellation of satellites with launches expected to start in 2019.
In November, the company filed a request with the FCC to launch 800 satellites
to create a system "designed to provide a wide range of broadband and
communications services for residential, commercial, institutional, government
and professional users worldwide." Eventually, SpaceX plans to have more than
4,400 satellites in orbit and has put the price tag at up to $15 billion.
"The only reason you would pursue it would be if there was the large prize of
the global communications industry in your sights worth hundreds of billions,"
In fact, Musk sees so much revenue potential from the business that he said in
a video leaked to the Wall Street Journal earlier this year that he wants to
use the money from satellites to fund the development of a city on Mars.
Silicon Valley Blasts Off
The stakes are high for today's dominant providers of internet service, such as
Verizon Communications, AT&T, Comcast and Charter Communications.
While existing satellite-based connections are often slower than land-based
ones, Boeing, SpaceX and others plan to offer improved speeds by putting
satellites at altitudes of less than 1,000 miles vs. more than 20,000, and
create overlapping coverage with their massive fleets. Musk wants to capture
more than half of long-distance internet traffic.
"Connectivity will evolve away from terrestrial-based connectivity to
satellite-based connectivity," said Ivan Feinseth, chief investment officer for
Tigress Financial Partners, noting a satellite constellation's ability to cover
more areas with high speeds.
So far, telecoms like AT&T and Verizon have been quiet on the subject of
satellites, while Silicon Valley has taken steps to enter the space.
Eventually tech firms will want to provide their own wireless services,
Feinseth said, pointing out that tech giants have plenty of cash on hand and
could use it to further their business models by increasing connectivity and
access to their products online.
Facebook built its AMOS-6 Satellite with France's Eutelsat Communications to
help bring the internet to remote locations. But it was destroyed last year in
a launch accident involving a SpaceX rocket. And while not a satellite effort,
Google's Project Loon uses balloons to expand internet coverage to rural areas
across the globe. Google has also invested in SpaceX's venture.
"The providers of connectivity aren't even looking at alternative sources of
connectivity, but the ones that use the connectivity are," Feinseth said.
The challenge from the tech sector is also coming on the launch side. After
seeing Musk succeed with SpaceX, his billionaire peers are jumping in too.
Microsoft co-founder Paul Allen's Stratolaunch and Orbital ATK have partnered
to build the world's largest plane, with a wingspan of 385 feet and six
engines, designed to carry rockets to the edge of space that will deliver
1,000-pound satellites into orbit.
Blue Origin, Amazon.com founder Jeff Bezos' space company, is building its own
New Glenn launch vehicle to deliver satellites for OneWeb.
Not to be outdone, Boeing is working with the Pentagon's secretive Defense
Advanced Research Projects Agency to build the XS-1 Phantom Express, an
experimental reusable space plane that would be able to launch satellites. The
plane is expected to fly five to 10 times the speed of sound.
How To Connect 20 Billion 'Things'
To be sure, the explosive growth in the Internet of Things will likely leave
plenty of demand, especially in local traffic, for land-based providers of
internet connections, which may have to form a hybrid network with satellites
to accommodate the sheer volume of data. OneWeb even plans to partner with
Market-tracker Gartner estimated earlier this year that the number of connected
"things" will jump by 31% this year vs. 2016, to 8.4 billion, then more than
double to 20.4 billion by 2020.
Automotive systems, smart TVs and digital set-top boxes are driving the
consumer side, while smart electric meters and commercial security cameras are
driving business demand, Gartner said in February.
"Connectivity services and consumer services will grow at a faster pace," said
Denise Rueb, research director at Gartner, in a statement. "Consumer IoT
services are newer and growing off a small base. Similarly, connectivity
services are growing robustly as costs drop, and new applications emerge."
In addition to finding cheaper ways to launch satellites, the costs of the
satellites themselves must come down. One way is to mass produce satellites the
size of a golf cart rather than custom build a satellite the size of a bus.
Boeing, which has streamlined its satellite operations, is looking at 3D
printing and automated testing to optimize manufacturing and follow methods
already used in making small satellites, according to the Wall Street Journal.
While the segment that includes satellites accounted for just 7% of Boeing's
total revenue last year, CEO Muilenburg said in April that the satellite
business is a "growth area" that "thrives on industrial partnerships."
Moreover, it could be key to Boeing's long-term future as the era of the
space-based internet approaches and looks to eclipse the land-based internet.
"The large industrials have to change their business models," Sullivan said.
"They've been around for 100 years and their business models had evolved
slowly, but now they need to evolve more quickly."