Exclusive: Choi Teases Satellite Business Launch After Saturn
Tom Choi is wasting no time as he looks to make his mark in the satellite industry, post ABS. Having launched Curvalux, an affordable and power efficient wireless broadband platform, Choi has now launched another company, Saturn Satellite Networks (Saturn), a US Delaware Corporation that is building what he claims is the world’s first space qualified small GEO satellite platform named Nationsat. Built entirely in the US with heritage-based payload and bus components, Nationsat features a full-digital payload and 2.5 Kilowatt (kW) bus design that enables complete frequency agility and bandwidth channelization for its users, demanding wide-beam C- and Ku-band capacity as well as a High Throughput Satellite (HTS) version that provides over 80 Gigabits Per Second (Gbps).
Choi may also not be done yet either, and in this exclusive in-depth interview, he teases a third satellite business launch in the future. Here, he talks about Saturn and the reason why he thinks it will be a big success.
VIA SATELLITE: Tell us about your plans for Saturn Satellite Networks, and this other new business you are looking to bring to market.
Choi: The need and desire for a company like Saturn Satellite Networks came to me when I was running ABS. I was really frustrated at the satellites available through the traditional manufacturers. They were just too expensive. When you consider all the parts that go into the satellite, the bus components, the payload components, software, materials, even the labor, there are enormous inefficiencies and overhead that lead to satellites becoming too expensive. I also considered the users of satellites. Most users, greater than 90 percent of users of all satellite capacity are domestic companies using the satellites to reach only within their own borders. They are either television broadcasters, banks, mobile operators, Very Small Aperture Terminal (VSAT) operators and Direct-to-Home (DTH) operators that are only operating within a domestic market. So, if you were to design a spacecraft efficiently to a majority of the users, you would not make a spacecraft that is 10-20 kilowatts seeing half on the world. You would make a satellite that is optimized for a country. That means instead of covering the entire surface of the Earth, you would cover 10 percent surface of the Earth. Based on the reduced coverage, you can scale down the power and the size of the spacecraft by 90 percent. By making the satellite smaller and less power hungry, you can save money. So, I want to make a satellite that is small, efficient, lightweight and low cost. When I was operating at ABS, no-one had that type of a product. I knew if somebody had made it been available, we would have been a lot more successful. So, after I left ABS, I challenged myself to make that product and help everyone in the world who wanted to be in space. I immediately hired an expert team of ex Lockheed and Boeing engineers to design of the payload and bus requirements and identified all the best sub-contractors. We succeeded in creating and designing a spacecraft that we believe is 70 to 80 percent more affordable than anything in the market. Now the entry costs are so low, any country should be able to afford it.
VIA SATELLITE: So, what are those costs? If I am a country and I want my own space-based capability, what is the realistic cost for one of these satellites?
Choi: We are talking about $65 million for a 48 by 36 Megahertz (Mhz) of C-/Ku-band and $85 million for a 85 Gigabits Per Second (Gbps) for an HTS in Ka-band. That will be our published rate. It is similar to what SpaceX does. We don’t discriminate if you are a small country, large country, and we will offer it to you. But, what we won’t do is a lot of customization. We will stick with what we know which is building a very capable C-/Ku- satellite or a HTS. But, they are designed for small nations. We don’t want to compete against Boeing and Airbus making huge satellites. They are probably better equipped to handle that demand. We want to handle the customers with smaller requirements.
VIA SATELLITE: What is the commercial timeline for launching this business? When are you likely to announce your first customers?
Choi: We took about a year to design the satellite. We have hired Stellar Solutions to do an independent technical risk assessment on our design. They gave us a very positive report. There is not much risk with the technology choices that we have made. So, once that report was completed, we started to go to commercial customers to make proposals based on that. At the end of 2018, we signed our first customer. We are targeting the delivery to orbit in 18 months for the first satellite, and we believe after the first year, we should be able to deliver the satellite to orbit within a 12-month period.
VIA SATELLITE: So, if we were having this conversation at the back end of 2019, how many contracts would you have hoped to sign in the first year?
Choi: I believe by the end of this year we will have signed at least two satellites. We are planning to launch four to six satellites each year on a yearly basis. We are pretty confident we will hit those numbers
VIA SATELLITE: So, 12 contracts in total by the end of next year?
Choi: I would say between six and 10 contracts by the end of next year.
VIA SATELLITE: Where will you make the satellites?
Choi: The entirety of the satellite payload and bus will be manufactured in the United States. We are working with several key critical vendors that are building the payload, and one primary, innovative bus manufacturer. We feel strongly today that we have the only bus that exists today that is a lightweight and Geosynchronous capable. This bus has already launched several times in 2018 on some government programs and we are merging that bus with best of breed payload technologies that we designed and that our payload subcontractors are building for us. We strongly feel we will able to reach price targets that are very competitive. In the Saturn core team, we have 10 people and we are supported by our vendors. So, the core management team that we have is doing the high-level system design, finance, and we are managing the sub-contractors that are putting this together. The Curvalux team has a similar number.
VIA SATELLITE: Do you expect staff numbers to go up significantly when you start signing contracts and completing orders?
Choi:One of the biggest cost drivers of traditional satellites is overhead. We want to keep this low by limiting our size to 10 key executives who are managing the subcontractors on a firm fixed price basis.
VIA SATELLITE: What has been the feedback so far on Saturn?
Choi: Before I make a product, I think quite a bit about what the customer needs. It is no good making a product that nobody wants. I am quite surprised at the level of interest that people have expressed. Satellite people are very conservative. They want to do their own diligence. But, I am pleasantly surprised by the reaction I am getting from customers. What is interesting is these customers may have seen me with dread previously because I was competing against them. But, now they see I am here to help them. I want to use my creativity, talent, and efforts to make something that they need and to help them be successful in their business. I am here as their partner, rather than their competitor. I feel a sense of welcome. I am happy to see the people that I used to compete with welcome me through their doors and to share with me their requirements and for me to help them. I respected many of them. I didn’t want to leave the industry. It feels great to work with them. Before it was ABS or Speedcast against the world. Now, it is a technology for everybody. It is a good feeling.
VIA SATELLITE: How many of these deals will you need to do in order for Saturn to be profitable?
Choi: It is quite interesting. We could be sustainable with only 1-2 orders a year. We don’t have a large organization and we are very efficient, and don’t have large overheads. Even though we are not charging much for our satellites and the launch services, we don’t need that many orders to be sustainable.
VIA SATELLITE: Is this a completely separate business in terms of financing to Curvalux? Are they all under one roof? What is the financial structure?
Choi: Curvalux and Saturn are both held under AirSpace Internet Exchange. AirSpace Internet Exchange is a holding company. The name “AirSpace Internet Exchange” is very relevant because we want to provide internet via the air and via by the space, and Saturn is the space component of that name. Curvalux is the air component for that name. They are very complementary. I feel strongly that the lowest cost way to deliver a wireless bit to remote located subscribers is via a Saturn Satellite Networks HTS connected to a Curvalux terminal, providing connectivity to end users having smart phones. We will be able convert very low-cost satellite backbone delivered to the end user, not by a satellite dish, but through Wi-Fi connectivity.
VIA SATELLITE: Given the last interview we did and your comments about the death of HTS, why are you in fact looking to launch a satellite business that involves HTS?
Choi: I said that HTS would have no position in terms of last mile broadband access especially in areas where there is fiber. No matter what, you are never going to have 100 percent coverage with fiber of any country via fiber. Most countries where Saturn will target are emerging countries. So, we are looking at countries in South East Asia, Africa, South America, and Central Asia, where there is no fiber available except in those in the major cities of these countries. Even if you had Curvalux, it wouldn’t work unless you had an affordable backbone. So, Saturn is the low-cost backbone solution to connect people via Curvalux.
VIA SATELLITE: How would you compare Curvalux and Saturn in terms of their growth potential?
Choi: I would say that the market for small Geostationary Orbit (GEO) satellites of our size that we are talking about is no more than 10 satellites a year. It might be wrong. But, we are the first ones to be able to be able to deliver it. We are expecting to have the largest market share but obviously we will end up sharing that market. We are scaling our overheads, we want to have 50 percent marketshare and survive with 10-20 percent. The market for Curvalux which is wireless broadband connectivity, that market is substantially bigger. As long as we are innovating, and being more clever than our competitors in terms of designing a technology and building it, I would say Curvalux will far surpass the size of Saturn in terms of revenue. We are talking to the biggest telcos in Asia which are going to start proof of concept testing in November. Some of them are interested in Saturn’s satellites, some of them are completely oblivious to them
VIA SATELLITE: Can you give us an update on Curvalux and when you hope to have signed contracts there?
Choi: We started testing [a] proof of concept in October 2018. Recently in Las Vegas during NAB when we were demonstrating Curvalux to our U.S. customers, we achieved an incredible 400 Megabits Per Second (Mbps) download to a smart phone that was 800 meters away from the tower. We did another test five kilometers away. We were downloading 100 Mbps from five kilometres away using a Wi-Fi Customer-Premises Equipment (CPE). This is quite incredible. You can have a Wi-Fi access point, with very little power, very little gain and to be able to transmit data at a speed of 100 Mbps from five kilometers away is shocking to me. Our system is even more capable than that. Our link budgets show that similar speeds up to 15 kilometers and 30 kilometers between the systems. Everybody we talk too is so excited by this technology
VIA SATELLITE: Let’s go back to Saturn. Who is your first customer likely to be? Is it likely to be an Asia-based country, for example?
Choi: We have two types of customers. Firstly, you have government and government-based agencies who want their own satellites. National programs, national institutions, government institutions that want their own satellites. The second group are existing satellite operators that are looking for a low-cost GEO solution to either replace their existing satellites, which they find the costs to be high or use our satellites to go into new markets in a low-cost way at a lower risk. We are in close communicationwith both of these groups. Our first customer is under a strict Non-Disclosure Agreement (NDA) so we will not be able to release this information for the time being.
VIA SATELLITE: How would you put 2018 into context for Tom Choi?
Choi: I think it is the year of my greatest achievement. Unlike before when I created Speedcast, I was just creating a services company. I didn’t have to build the satellite. I just had to convince investors to put money into my idea and convince AsiaSat to be my satellite partner. When I created ABS, I had an idea of buying a satellite from Lockheed Martin that they no longer wanted. I just had to convince investors to give me money so we could fund that satellite. Here with AirSpace Internet Exchange, we have set ourselves up a much more daunting task. We said here there are two technologies that are going to be game changing, fundamentally different to what people have been doing before. To be able to say at the end of the first year, that we have been able to create the technology, design it correctly. We are creating it and people want what we have created. To me, this is the most gratifying experience ever.
VIA SATELLITE: They say good things come in threes. Is there is third business you are working on?
Choi: Yes there is. Curvalux is a phased array antenna technology. Saturn is a low-cost satellite platform for all missions. Those two technologies can come together and create a service opportunity that did not exist before. I am trying to create a new type of business that didn’t exist before that will utilize very low-cost satellite and low-cost phased array technology to create a new service that didn’t exist before, that everybody needs. We will announce this later in 2019.