Tom Choi on Bending Light and the Death of HTS — Part 1
Tom Choi is one of the most enigmatic (and some would say controversial) figures in the satellite industry. As the former Chief Executive Officer (CEO) of ABS, as well as a former Via Satellite Satellite Executive of the Year, he is one of the most recognizable figures in the industry. Ever since he left ABS, many have wondered what Choi will do next. We can now reveal Choi’s ambitious plan, which if successful, could have huge ramifications for the satellite industry. Choi explains the thinking behind Curvalux (bending light), a new phased array technology system, and why he thinks this will be a true game-changer.
VIA SATELLITE: When did the idea for Curvalux come to you?
Choi: When I was leaving ABS last year, I gave an interview where I expressed that I always wanted to get into terrestrial wireless broadband. While I was in the satellite industry for the past 25 years, the mobile industry grew from $200 million in revenue to $1 trillion per year. During the same time, the Fixed Satellite Services (FSS) industry only grew from $4 billion to $12 billion. I wanted to be part of something much bigger and faster growing so I knew the satellite industry by itself would not be sufficient for me. Even with all the explosive growth in the mobile wireless sector, I felt that there is a lot more room for innovation and a lot more growth left in the terrestrial wireless space that I should explore. Thus post the ABS exit, after examining the existing and planned wireless technologies that are being developed for 5G, I concluded we could achieve significantly more bandwidth availability and dramatically reduced costs if we reshaped and reimagined the way wireless services are being delivered, [compared to] how terrestrial mobile technology companies have been evolving their systems.
If you look at today’s wireless systems, I feel the mobile operators and mobile technology manufacturers are still stuck in the mindset from 25 years ago. It is still a cellular, point-to-multipoint network. The problem with that is whenever you run out of capacity, to double the broadband density (total wireless capacity per square kilometer) of any block of spectrum, a mobile operator needs to expand their number of towers by a factor of eight to get double the frequency reuse over the same geographical area. This is because to avoid frequency interference on a point to multipoint system, one has to avoid using the same spectrum or polarization over the same area. Anyone would agree that increasing the number of mobile tower installations by eight times to double the bandwidth is very inefficient. Thus, other obvious ways for mobile operators to get more capacity for their networks is to acquire additional spectrum in other frequencies. To serve the consumer demand more and more data, the mobile operators have had no other choice but take spectrum away from other services —including from satellite operators. One of the reasons why the FSS industry is losing more and more spectrum to the mobile operators is because their point-to-multipoint system is inherently inefficient for reusing spectrum.
VIA SATELLITE: What are the key differentiators of Curvalux?
Choi: Curvalux will fundamentally reshape this inefficiency and dramatically improve how spectrum can be reused. If we are successful, perhaps we can slow down the methodical frequency loss of satellite networks.
Curvalux, (based on the Latin words for bend and light) is a multibeam phased array technology system that dramatically improves bandwidth efficiency and delivery over a given area. In addition, the patent pending Curvalux system can easily cover users that are hundreds of kilometers away from the main fiber connection, and they don’t require a direct line of sight to the primary tower. We can serve customers that are shaded by mountains, buildings, and other obstacles by bending the radio signals in free space using our system. The level of broadband density that we can achieve per square kilometer can easily be in excess of 100 Billions of Bits Per Second (Gbps) for much lower than existing wireless or satellite broadband technologies. To give an example, the anticipated capex per Gbps will be less than $5,000 vs. the $1 million target for giant High Throughput Satellite (HTS) systems. This is more than two orders of magnitude cheaper than the lowest cost HTS satellite technology — we have no latency, and most importantly, our system can be access by $30 fixed wireless terminals (vs. $300 for satellite terminals). We also believe that we are more than one order of magnitude more affordable for fixed wireless access than the incoming 5G technologies planned by much bigger companies such as Samsung, Huawei, and others. Curvalux is substantially more affordable than anything by terrestrial or satellite and we hope to roll it out everywhere where people live. I strongly believe where and when we roll out, we will be displacing all HTS and other types of fixed wireless systems.
VIA SATELLITE: When will Curvalux be commercial? What are the logistics of this? Will you need further funding?
Choi: The system we showed you in CommunicAsia was a working and fully integrated unit. It went through lab testing in July and field trials in August. After the successful proof of concept demonstrations we will take orders and start producing them in bulk. We intend to start shipping units in October. In terms of funding, angel investors and I funded the development of the technology. For further funding and development, we may not follow the traditional venture capital and private equity route. I have done that before. I have raised more than $1.5 billion in equity and debt in my previous careers and projects, like SpeedCast and ABS. This time I want to take an alternate route by partnering with customers that are going to use the technology. As such we will be signing up with one exclusive partner per country and collecting upfront royalty payments. Our business model is not to make money on the equipment but to take a small percentage of the revenue based on the use of our technology on a recurring basis. We may take the company public to get access to expansion capital when the time is right.
VIA SATELLITE: You said you would be taking orders relatively soon. Do you have a first year forecast of the number of units shipped?
Choi: By 2019, I would be disappointed if we didn’t achieve $50 million in revenue. In five years, it should be substantially more. The market for mobile backbone connectivity itself is $300 billion per year. We hope to play a significant role in that segment.
VIA SATELLITE: Where are the first customers are going to come from?
Choi: I think we need to look at the markets that are not addressed by internet access. The number one market is India. There are 750 million people without internet access. The second largest market is the United States. There are 35 million people without broadband internet to the home in rural areas. The rest are the developing countries of Central Asia, Southeast Asia, Africa, South America, and rural areas of the Organization for Economic Co-operation and Development (OECD) countries.
VIA SATELLITE: Will the United States be a more difficult market for you to crack with this business?
Choi: We are having active discussions with a couple of strong players in the U.S. market. We also have been discussing this technology with the Federal Communications Commission (FCC) and we will soon be going through the qualification testing. I feel confident that we will receive the necessary approvals for this technology. If and when we do, we will manufacture the terminals and the systems in the United States.
VIA SATELLITE: Will this be the death of satellite?
Choi: This is an interesting question. I have always said that 5G will deliver the killing blow to HTS as a consumer broadband play. There is also an evolution going on in LTE as well. Manufacturers have developed LTE to operate in 5GHz unlicensed band where there is up to 900MHz available. This will mean much more capacity will be available to more areas that 5G may not cover. I have stated in the past that Long-Term Evolution (LTE) is faster and more affordable than HTS. We designed Curvalux to defeat the cost structure of 5G for fixed wireless delivery so it is much more competitive than LTE. Needless to say, all terrestrial wireless systems require some form of backbone connectivity within a reasonable distance from the user. There will always be areas where the most remote people live that will not be covered by wireless technologies because fiber is not located there. In that case, I see that Curvalux and 5G and 4G can be complemented with HTS capacity where the satellites act as the backbone (not as an end user access) technology and the wireless technologies are used to service the last mile. Therefore, it is my intention to work with satellite operators of all orbits to bundle their backbone with Curvalux’s where fiber optic cables do not exist. The customers of Curvalux may become perhaps the biggest users of HTS capacity, so I am looking forward to future discussions with companies that have invested in HTS.
VIA SATELLITE: So, you don’t see much hope for a system like OneWeb then?
Choi: I have already made my comments very clear on OneWeb. They will have technical, regulatory and market challenges. OneWeb is not cost competitive to Geostationary Orbit (GEO) HTS so it will not compete with terrestrial wireless systems. Needless to say if they ever do launch and are able to get their ground antennas designed to operate in a manner that is carrier grade, we may consider working with them as a backbone provider for very remote areas. However, for suburban and areas that are within a 100 to 150 kilometers from fiber, they do not stand a chance against terrestrial systems.
VIA SATELLITE: Usually, when something is [too] good to be true, it usually is. I am wondering what the catch is here?
Choi: All terrestrial wireless systems require access to spectrum. We designed Curvalux to initially operate in the five Gigahertz (GHz) unlicensed band. Every country varies in the way they license the use of this spectrum. As such, power levels and how our system will be treated under local regulations will vary based on country to country. In addition, because five Ghz is normally unlicensed spectrum, there could be potentially lots of interference by other unlicensed services. We have designed our system in a way that mitigates interference, but this is one key area of concern for us. Our next generation of Curvalux will be available in other licensed bands lower and higher than five GHz. When we deal with licensed spectrum, which comes with their costs, we will not have interference concerns.
VIA SATELLITE: You have a very strong satellite background yourself. How do you feel about the “death of HTS,” as you put it?
Choi: Satellites still have a very strong role in video distribution, mission critical communications like C-band services for Very Small Aperture Terminals (VSATs), etc. Any kind of wireless system is not going to give you 100 percent coverage. But, a satellite can always give you that. I still see a role for GEO satellite to play in the future and some Non-Geostationary Orbit (NGSO) systems depending on specific application. I don’t see a new HTS consumer market for GEO. That will be taken by terrestrial systems in the United States and Europe where local operators have money to expand into rural areas. The existing GEO business (video distribution, enterprise VSAT) will still be there and HTS can play a role as a low cost backbone alternative where terrestrial alternatives are not available.
VIA SATELLITE: If that is all the satellite industry has, it is not great, is it?
Choi: There are 150 countries that don’t have their own Direct-to-Home (DTH) systems. Why aren’t satellite operators focused on that? That is an opportunity. Look at Thailand — less than 10 years ago, it had less than 30 TV channels. They are close to 500 now. Thailand is an awesome market with 70 million people. There are enough channels to make use of two satellites. How many countries similar to Thailand are there? Myanmar doesn’t have a satellite. Neither does Nepal or the Philippines. Afghanistan could use one to two satellites. Pakistan could use more satellites. Of the 53 countries in Africa, 50 do not have satellites. This is a continent with over 1 billion people. I think the focus should be on what does a country need for satellite communications. The operators should focus on one country at a time and see what their video and data requirements are. I have more reservations about the current HTS investments. The notion of creating spot beams to cover the world, the oceans, and over the Arctic Circle and creating as many as beams as possible — is foolish. The capacity that is worth anything has to cover people. The more spot beams you create, the more you create away from where people live because only five percent of the surface area of the earth has any meaningful population over them. Investments in HTS should be based on what markets you are targeting and how attractive that market will be for an HTS.