Google Invests in Satellite Broadband Startup

Google is one of the many investors who together have put $60 million into O3b Networks, a St. John, Jersey, Channel Islands-based startup that is looking to offer Internet services in the emerging world, especially areas that are far away from the sub-sea networks and major backbones. Apart from Google, other investors include HSBC Holdings, Allen & Co. and Liberty Global, according to the Wall Street Journal. It is not clear how much money Google (s GOOG) invested in the company. The company lays out its reasons in a press release, but that I am skipping because it doesn’t really say anything. [digg=]

One thing is clear: O3b Networks will need a lot more than $60 million. The project, the brainchild of Greg Wyler, is going to cost $650 million and will require 16 satellites; the service is due to start by the second half of 2010. Wyler apparently has a lot of telecom experience in Africa. Liberty Global, a company owned, in part, by legendary media mogul John Malone is going to help develop the project.

Given how many of the previous attempts have been non-starters — whether for economic reasons or simple technology constraints — the claims by this company are quite audacious. Here are some facts about their service:

* The service is strictly wholesale and will sell bandwidth to local ISPs, fixed-line and mobile providers for, say, cellular and WiMAX backhaul.
* The company is also going to offer Google Apps to its potential customers.
* They claim speeds of up to 10 Gbps and low latency. They can do that for three reasons:
* They have a dedicated Ka-band satellite and as a result, the large available Ka-band spectrum can help deliver bandwidth at speeds of Gigabit/second and higher.
* O3b Networks uses parabolic antennas, which reduce latency.
* Their birds — 16 of them — are going to be positioned at 8,063 kms from the Earth, which allows them to add new satellites.
* The coverage zone is between +/- 40 degrees of latitude.

I’m intrigued by this startup because it does make sense to offer connectivity in remote areas. It also makes sense because Africa is one of the booming cellular markets and one where there is a need for cellular backhaul infrastructure. In remote areas, voice is going to be the killer app for a long, long time. The problem is that this company will always compete with fiber networks in terms of pricing, and that might put them on the back foot.