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Obstacles in OneWeb's Negotiations with Russia

Larry Press

This case illustrates the fact that political, security, and financial negotiations may be as difficult as designing satellites and rockets for a would-be global Internet service provider.

OneWeb is investing billions of dollars in a constellation of low-Earth orbit (LEO) Internet-service satellites.

In 2015 they placed launch orders for 21 Russian-made Soyuz rockets.

In 2017, they formed a joint venture with Russian LEO satellite operator Gonets to develop the project in Russia. At that time, Gonets was a subsidiary of Roscosmos, the Russian State Corporation overseeing and implementing the Russian space industry. OneWeb had a 60% interest in the joint venture.

This week Reuters reported that OneWeb is relinquishing its majority stake in the venture — Gonets intends to increase its stake to 51 percent.

I wonder why.

Speaking at a conference in Moscow, Federal Security Service (FSB) official Vladimir Sadovnikov objected to the project for security reasons. He feared that "Some of Russia's regions would become totally dependent on a foreign satellite service" and added that Moscow had not received any conclusive evidence that OneWeb's satellites would not be used for intelligence gathering.

(He also revealed his ignorance by apparently not understanding the difference between Iridium and OneWeb).

I wonder if the security concern is genuine — OneWeb has decided to forgo inter-satellite links in favor of routing all traffic through a system of 40 terrestrial gateways, allowing a nation to know the path of traffic into and out of their territory. Are they concerned about the possible detection of sources of trolling and hacking?

Sadovnikov added a political dimension saying Russia favored setting up a similar network partnering with India, China and countries which he described as non-aggressive and China has pitched a 1,000 LEO satellite project to Russia.

An unnamed source at the FSB also mentioned politics, saying "OneWeb is an important project for Roscosmos and Russia's space industry, but national security issues come first. There are many doubts regarding that project, especially because of the sanctions against us."

Spectrum is another stumbling block. OneWeb's request to receive a frequency band in Russia was refused and a source at the Ministry for Digital Development and Communications said they would be given permission after legal issues regarding the joint venture were completed. Given Russia's reputation, one can't help wondering whether the hangup has something to do with payoffs.

Another possibility is convoluted economic infighting within Russia. Gonets' Wikipedia page says it began as a Russian Federal Space Agency program, but in 1996 it was privatized and operated by Gonets SatCom, which was controlled by ISS Reshetnev. In 2017 Roscosmos acquired 80% of Gonets from ISS Reshetnev. Wikipedia is not a definitive source and I know nothing of the history of these organizations, but this sounds like it could be the kind of oligarchy-creation manipulation that occurs when state property is privatized. (The ownership of Cuban ISP Etecsa raises similar questions).

Perhaps there were management problems. Initially, launches of production satellites were planned to begin last May, then the date slipped to first quarter 2018. The current schedule calls for the launch of test satellites on February 7, 2019.

Regardless of the motivation for restructuring the OneWeb/Gonets venture, there is a mismatch in the aspirations of a global ISP and nationalistic governments. This case illustrates the fact that political, security and financial negotiations may be as difficult as designing satellites and rockets for a would-be global ISP.

For background on OneWeb and other low-Earth orbit satellite Internet service projects, click here.

Gonets home page, 8/10/2018. It was removed earlier this week.
The Russian home page has also been removed. Last archived copy 4/10/18.

By Larry Press, Professor of Information Systems at California State University He has been on the faculties of the University of Lund, Sweden and the University of Southern California, and worked for IBM and the System Development Corporation. Larry maintains a blog on Internet applications and implications at cis471.blogspot.com and follows Cuban Internet development at laredcubana.blogspot.comVisit Page
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