LEO Satellite Systems – The New Challenge for WISPs
There is a lot of news about how new low earth orbit (“LEO”) satellite projects, particularly front runner SpaceX’s Starlink system, are turning the satellite industry upside down. The Starlink team apparently broke the code on a path to consumer-priced hardware and is rolling out service region by region as it installs gateways around the world. However, little attention has focused on the impact of new LEO systems beyond the satellite industry.
Not So Much About Low-Cost Bandwidth
The critical feature of LEO disruption is not necessarily its low-cost bandwidth that dominates industry discussion. EchoStar and Viasat have been providing low-cost bandwidth on the Jupiter and Excede geostationary (“GEO”) high-throughput satellite services, respectively, since 2012. EchoStar and Viasat have even lower-cost hardware than SpaceX’s $500 upfront cost. Nonetheless, EchoStar and ViaSat but have gathered just over 2 million subscribers between them while the wireless internet service providers (“WISP’s”) have rapidly grown alongside them. The critical difference with LEOs systems is that their low-latency systems allow them to provide fully competitive voice service, effectively competing with the cable bundle and rendering the landline phone unnecessary. Low latency allowed SpaceX to secure $885.5 million in RDOF funding, a prize that largely eluded the GEO operators due to the FCC’s auction rules that increased the weighting of latency and disadvantaged carriers with higher latency.
Ironically, it’s unclear how crucial low latency is to consumers or if consumers even understand latency. Single hop GEO satellite communication is capable of reasonably satisfactory voice service. Moreover, latency is usually not crucial for web browsing, e-mail, or streaming – the most common uses of consumer broadband. Nonetheless, incumbent carriers have effectively exploited higher GEO latency as a marketing issue and as a lobbying point with regulators to slow the progress of GEO high throughput satellite operators.
WISP’s To See More Competition
With the latency issue pushed aside, LEO operators and WISPs are competing are more equal footing, likely to result in increased competition in the rural fixed broadband market. In many situations with new disruptive technology, incumbents can buy time and serve as distributors for services using the new technology. However, Starlink does not leave an obvious role for a local distributor. Starlink uses self-installed hardware it simply mails to customers. WISPs may need to lower prices in many areas or upgrade and focus on enterprise or government applications with high quality of service demands the satellite operators can’t meet. The WISPs’s competitive response will be fascinating to observe. In any event, consumers are likely to benefit.
 Brian Berger, “SpaceX Wins Big Share of $9.2 Broadband Subsidy,” SpaceNews (December 7, 2020). https://spacenews.com/spacex-wins-big-share-of-9-2b-rdof-broadband-subsidy/
 Hughes Network Systems won $1.3 million in RDOF funds in the RDOF Phase 1 auction.
 FCC Factsheet: Auction 904: Rural Digital Opportunity Fund. https://www.fcc.gov/auction/904/factsheet