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Why the coronavirus slowed China’s plan to take on Elon Musk’s internet satellites

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Two state-owned companies are racing to catch up with SpaceX’s Starlink to provide internet from space.

The coronavirus pandemic has shown just how essential the internet has become to modern life. Many people confined at home have relied on it to work, socialize, and order the things they need for daily life. But it’s also something that only half of the world’s population has access to.

Companies in the US and China have been racing to change that by using low Earth orbit (LEO) satellites to drench the world in internet coverage. The hope is to reach areas that land-based cables can’t cover.

In trying to catch up with the US, China has ramped up its efforts to become a major satellite internet provider. To accomplish this, state-owned and private companies in China plan to launch thousands of satellites into LEO.

This year was supposed to be when China accelerated internet satellite launches. Now it looks like the coronavirus might be shifting the timeline.

Why do we need internet from space?

By the end of 2018, 51% of the world’s population was online, according to data from the International Telecommunications Union. That leaves 49% of the world’s population, or roughly 3.8 billion people, without access to a resource many other people have grown dependent on and take for granted.

Reaching everyone on Earth remains difficult for landline networks, which rely on undersea and underground cables. Satellite signals, on the other hand, can more easily reach remote areas. It also lets people go online in places where it used to be difficult or impossible, such as planes or ships in the middle of the ocean.

LEO satellites could be a boon for people who have to work in these hard-to-reach places or live in rural or remote areas. Even a large developed country like the US isn’t able to reach 100% of its population with landlines. More than 2 million people in the country are reportedly only served by satellite internet. But such service today relies on slow geostationary satellites offering up expensive, laggy internet. Hundreds of new satellites in LEO are expected to change that.

Who are China’s biggest players?

While Starlink from Elon Musk’s SpaceX leads the US in LEO internet satellites, similar efforts in China come from both state-owned and private companies. But the two biggest players in China right now are state-owned.

China Aerospace Science and Technology Corporation (CASC) and China Aerospace Science and Industry Corporation (CASIC), China’s two major state-run aerospace companies, both have their own satellite internet programs.

CASIC has a bigger focus on serving the military and national defense. The company will launch two constellations named Hongyun (meaning “rainbow cloud”) and Xingyun (or “running cloud”), which will have 156 and 80 satellites respectively.

CASC’s planned constellation, called Hongyan (or swan goose), will eventually consist of 300 satellites. It’s scheduled to be completed in 2025.

One of the most well-known and well-funded private internet satellite companies in China right now is Beijing-based GalaxySpace. The company started two years ago and launched China’s first commercial 5G satellite in January. It also plans to launch 650 satellites total, more than any other company in the country. GalaxySpace counts Xiaomi CEO Lei Jun as an investor.

But it’s not just aerospace companies that want a piece of the market. Geely, the Chinese carmaker that acquired Volvo in 2010, said last month that it would build a LEO satellite constellation to provide high-speed internet for its self-driving cars. And it appears that the ambitious carmaker also wants to build its own rockets. Postings on a Chinese jobs site this week show the company is looking to hire rocket engineers.

For now, China is about a year behind the US in the development of internet satellites, according to a report by TF Securities. The report says China will have one or two “Starlink-level” companies in the future.

Read this: China’s first rival to SpaceX Starlink satellites completes key test

Did the coronavirus slow China’s progress?

China’s first manufacturing base for commercial space activities is being built in Wuhan, where the coronavirus outbreak first started to spread. As a result, the Wuhan National Space Industry Base had to halt construction for more than two months, according to a report by state broadcaster CCTV.

The base has resumed construction now, CCTV reported last weekend. It aims to have the ability to produce about 120 satellites annually after 2020.

The Wuhan base is responsible for producing satellites for both the Hongyun and Xingyun projects. Some say that while the pandemic slowed things down, the industry is still moving along.

“I would expect 2020’s launch schedule to be ‘pushed to the right’ a little bit,” said Blaine Curio, founder of Orbital Gateway Consulting, a Hong Kong-based consultancy focusing on space and satellite telecommunications. “However, in general, I think Chinese LEO broadband constellations will develop quickly this year.”

Xingyun, for instance, will launch two satellites later this month, including one named Wuhan. They will be carried by the Kuaizhou-1A rocket, made by CASIC subsidiary ExPace. ExPace is also based in Wuhan and halted work during the pandemic.

But the Covid-19 pandemic definitely had an impact on some internet satellite companies outside China. OneWeb, one of the most high-profile internet satellite makers in the world, filed for bankruptcy, citing financial turbulence caused by the pandemic. The lesser known American company Bigelow Aerospace and Australian company Sky and Space Global also ran into trouble.

The bankruptcies have made some in China’s internet satellite industry wonder if similar business models will also fail in their country, Curio said. But others also think it presents an opportunity for China to catch up and become a leader.

“There are companies experiencing difficulties in any industry, and we can’t judge an industry’s trend based on one single company’s development,” a GalaxySpace spokesperson told Abacus, in reference to OneWeb’s bankruptcy. The startup also said that it will keep focusing on innovating its technology and mass-producing low-cost satellites to achieve commercial value.

Will China police its satellite internet?

China plans to eventually offer up its satellite internet to other parts of the world.

For its own satellite internet network, China controls the ground stations (or satellite gateways). These are the stations that transmit data to and from the satellites, so the government could control the entire system.

Foreign satellite network operators hoping to serve Chinese internet users might have to build gateway stations in China or find another way to ensure the government has access to that data.

If companies don’t want a ground station in a country they want to serve, they will need to use intersatellite links, Curio said. These allow satellites to send data to each other, offering lower latency and higher speeds since it reduces how often satellites must communicate with the ground. But this solution is probably less appealing to countries that prefer to monitor internet access.

“Historically, this has meant that some companies, most notably OneWeb, purposely did not [use] ISLs in their system architecture,” Curio said, “because they knew that it would be harder to get access to tough markets like China or Russia if they had ISLs.”

So when can we actually use it?

SpaceX promises that Starlink will be available to American users in 2020, and it’s aiming for global coverage in 2021.

In China, CASC aims for Hongyan to start providing service in 2023. The company plans to have the full constellation completed and providing service globally by 2025. CASIC’s Hongyun is also scheduled to be completely deployed by 2025.

But just having the satellites in orbit doesn’t necessarily imply smooth sailing for Chinese internet users going forward. One important obstacle might be potential conflicts of interest between satellite internet providers and telecom giants, according to Curio.

Like CASC and CASIC, China’s telecom giants are state-owned. And China Mobile, China Telecom, and China Unicom don’t have much incentive to cooperate with new technology that could eat up their market share.

It’s different in the US, Curio said. While American telecom companies Verizon, AT&T, and T-Mobile have a lot of market power, they don’t have so much political power, he said.

Using CASIC and China Telecom as an example, Curio explained, “I guess in this kind of situation, where you have two big, roughly equally powerful state-owned incumbents in different industries, you will get, at best, a really inefficient and badly designed compromise.”

This article first appeared in Abacus News.


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