OneWeb’s Offer to Sell a Share of Their Satellite Internet Service to Russia

By Larry Press
Larry Press

Update: OneWeb has denied that they have offered to sell any stake in the company to the Russian Government and Reuters has now reported that Russia’s communications minister said that "the government has not discussed such a deal with OneWeb."

OneWeb confirmed that they are restructuring their existing commercial joint venture with Russian partner Gonets, to comply with certain Russian regulatory requirements. They reiterated that "the joint venture is solely for the commercialization of OneWeb’s satellite broadband services to customers in Russia" and stated that the joint venture would "not have access to OneWeb's satellite technology or related know-how."

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Number of global satellites (source)OneWeb has a contract to launch Internet-service satellites on Russian-made Soyuz rockets and has a joint venture with Gonets, a Russian satellite operator, as a marketing partner in Russia. However, the Russian government has expressed concerns about security, dragged their feet on spectrum allocation and complained about US sanctions. This led OneWeb to make two concessions — they dropped inter-satellite laser links from their constellation design and they cut their interest in the Gonets joint venture from 60 to 49 percent.

Apparently, that did not satisfy the Russians. Reuters reports that according to three sources, OneWeb has offered the Russian government the option of buying a 12.5-percent stake in the company in exchange for approving its request for a frequency band.

If Russia buys a minority stake in OneWeb, it would be represented on the company's board of directors and have access to the project's technical documentation. One of the sources — a Russian government official — said the government was not satisfied with the conditions attached to the purchase — it wanted access to the technical documentation before committing to the deal.

This offer needs to be put in context:

Active disruption by Russia (source)

Given this context, I am not keen on OneWeb sharing technology with Russia before or after a deal is closed.

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.com.

Related topics: Access Providers, Broadband, Wireless

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