the rivalry between jeff bezos and elon
musk is heating up again this time over
satellite internet
project kuiper is amazon's plan to
deliver internet from space
using
3236 small satellites in low earth orbit
in many ways it's a response and
competition to elon musk and spacex with
its starlink network amazon is known as
the everything company and it's hard to
have an everything company without
internet so amazon's fastest growing
segment has been its aws cloud service
and in support of that they've built out
a tremendous amount of internet
infrastructure whether it's data centers
or fiber
space is actually a very natural
expansion of one their data business and
two their consumer business providing
goods and electronics and resources to
people around the world spacex's
starlink already has about 2 000
satellites in orbit serving about 250
000 total subscribers but the fcc has
approved spacex to launch a total of 12
000 satellites
amazon has yet to launch any
amazon first reviewed project piper in
2019 but in early april a big
announcement cemented the project's
momentum
amazon recently signed a multi-billion
dollar contract in what is the largest
rocket deal in the commercial space
industry's history
for launches of its kuiper satellites
with three different entities blue
origin jeff bezos's space company united
launch alliance which is the joint
venture of boeing and lockheed martin
and aryan spas which is the european
rocket maker the question now is can the
e-commerce giant catch up to spacex it
is true that spacex has a first mover
advantage and has more satellites
launched than amazon
the advantage that amazon has is they
have the chance to learn from starlink's
mistakes
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amazon's project kuiper is named for the
outermost asteroid belt in our solar
system amazon wants to launch its
satellites into low earth orbit at about
360 to 390 miles above the earth's
surface
in orbit similar to where spacex has its
satellites
the basis for all satellite internet
networks involves three components
a satellite dish a ground station and
the satellites themselves
the goal is to provide connectivity to
remote parts of the planet not served by
traditional internet options like cable
and dsl amazon has been fairly
tight-lipped about the design of its
satellites however they have stated that
these satellites will be much bigger
than those being launched by spacex the
difference or the reason for this is
amazon needs spacecraft that are going
to be much more powerful because they're
going to have fewer spacecraft in the
orbit that they chose and in order to
deliver a powerful signal to the antenna
or user terminal in the ground the
spacecraft has to do all the work
in april cnbc's andrew ross sorkin got
an exclusive first tour inside amazon's
project kuiper facility in redmond
washington
the two buildings that are here in
redmond one is focused mostly on r d to
create kuipers-based satellites and base
stations and
customer terminals the satellite dishes
you'll put in your house and then the
room we're in here is going to be the
manufacturing line at least the first of
the manufacturing lines for the actual
camper satellites themselves an
estimated 37 percent of the world's
population has still never used the
internet with 96 of those individuals
living in developing countries
many people we grew up with connectivity
over modems and things like that that
all ran over copper that was subsidized
here in the u.s in the 40s and 50s and
60s and nobody's upgrading that in rural
america and nobody is upgrading that in
sub-saharan africa and so what's
happening is people are leap frogging to
mobile but it's leaving this gap in the
homes and kuiper if successful is about
bridging that
the
satellite communications market is one
that's valued at a few tens of billions
of dollars
it's not uncommon for tech giants to
support
digital infrastructure satellite
internet being one of those
facebook invested in a satellite project
or purchase capacity on a satellite that
unfortunately blew up but they spent
considerable money looking at space as a
way to extend their own service to bring
more people onto facebook and google has
financed fibers as well to bring more
people online for their service so what
amazon is doing as part of a continued
trend of
tech giants building out infrastructure
that can ultimately support their own
core services which for amazon would be
e-commerce although the payout may be
huge building out such large satellite
internet networks is very expensive
both spacex and amazon have said that
they expect to spend over 10 billion
dollars to develop their respective
constellations
for almost any other company that would
be a mammoth hurdle to get over
but amazon spent roughly 60 billion
dollars on capital expenditures in 2021
alone so compared to the average company
this is a cost amazon could actually get
its arms around and it doesn't threaten
capsizing the program provided they can
keep it within
that cost estimate trying to build this
kind of global satellite internet
network is
much less of an existential threat to
the existence of the business of amazon
versus the business of spacex because
amazon does so many other things whereas
for spacex this is their largest other
project alongside its building starship
rocket
spacex charges 110 per month for its
baseline internet service and customers
have to pay 599 dollars for a starlink
satellite dish amazon has not yet
reviewed how much its internet service
will cost but kuiper will follow a
similar business model with customers
paying for a subscription and a
satellite dish
amazon recently disclosed that its
kuiper satellite antennas which
consumers would use here on the ground
are under a cost of 500 a piece
by comparison
spacex which has been selling its
starlink hardware for about six hundred
dollars a piece has disclosed last year
that it cost the company around thirteen
hundred dollars for each of its antenna
meaning that it's subsidizing roughly
half of the price of those starlink
hardware to deliver the service to
customers on the ground
several constellations starlink not
being the exception have tried first
with the spacecraft in hopes that they
would solve the antenna later and what
ultimately results from this or what has
resulted in the past is the antenna has
remained too costly for the service to
ever be truly widespread another area
where amazon has a head start is its aws
ground station infrastructure the
biggest advantage for amazon
is that they can link their
constellation directly back to the
internet using their own infrastructure
so if you have an amazon
kuiper terminal on your house
it's going to link to the satellite and
then it needs to link back to the
internet somewhere else
for starlink they have to set up those
gateways back to the internet
using
other service providers either other
cloud network service providers or find
ways to stitch starlink back into the
internet
one of those service providers is google
in 2021 spacex signed a deal that allows
the company to install ground stations
at google data centers around the world
aws has a network backbone it's close to
the internet lots of people are hosting
on it so if we can interconnect our base
stations to that aws network we're
automatically
advantaged in that case for customers to
get better bandwidth billing is
something that we do a lot and we're
riding on the shoulders of all that
billing infrastructure manufacturing is
a big hard component of this you know we
have to build
over time tens of millions of customer
terminals but in the device business we
build tens of millions of things every
month and so it gives us the opportunity
to use the expertise of that design and
manufacturing and bring it over here
even with its deep pockets and extensive
experience producing consumer electronic
devices at scale
amazon still faces a number of
challenges in making its satellite
internet a reality one of the biggest
hurdles to
getting such a network up and running
especially when we were talking about
this number of satellites is getting
them into orbit to get its constellation
into space amazon has contracts for 38
launches with united launch alliance 18
launches with aryan spas and 12 launches
with blue origin with an option for as
many as 15 additional launches with the
private venture that's owned by amazon
founder jeff bezos
each of the rockets that amazon is
relying on to launch kuiper are at least
two years behind schedule and on top of
that the challenge most new rockets face
is not just getting to the launch pad
for the first time but scaling to launch
two three five ten times a year our
research shows that for the first five
years of a rockets existence the average
flight rate is around 2.75
meaning they struggle to launch just
three times a year
during their early years and time is not
necessarily on amazon's side so amazon's
self-stated biggest driver is to meet
regulatory milestones set by the u.s
federal communications commission
that body requires amazon to have half
of its constellation in orbit by july
2026 and the full constellation by july
2029
if say they only launched 1 000
satellites by that time
their authorization would be capped at
1000 satellites at the number that they
launched by the time of the deadline
amazon's never put anything into space
so like that's the first challenge which
is we have to get a couple prototype
satellites up
and you know and test them everything
simulates really well and you can it's
coming together really well we've built
a great team but until you're putting
something in space it's just not a
friendly environment amazon plans to
launch two prototypes into orbit by the
end of this year before beginning to
launch operational satellites
apart from spacex amazon will have to
contend with other players in the
internet satellite business including
oneweb and more traditional satellite
providers like biosat and hughes
the good news for amazon is that many
experts don't think satellite internet
is a winner-take-all business
no one in this industry believes that
it's a one-system take-all kind of
environment we expect to see at least
two
and probably more constellations go
forward
serving not only the residential
consumer but
any type of business or organization
that relies on internet connectivity
it's ambitious it's also you know
something that uh five people in a
garage can't do you know so if we are
gonna do good things for society this is
something that because amazon does have
scale we do have a balance sheet that
this is the kind of initiative even
though it's risky it could fail it's the
kind of initiative that we can and
should take on
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