Amazon is set to significantly escalate its ambitions in the satellite communications sector, filing an application with the US Federal Communications Commission (FCC) for a licence to operate a new constellation of 5,105 satellites. These satellites are intended to provide direct connectivity to mobile phones, with the company aiming to commence launches in 2028. This strategic expansion positions Amazon as a direct competitor to SpaceX, which has largely dominated the nascent satellite internet and satellite-to-mobile services market.
The move follows Amazon's acquisition of Globalstar's satellite operations several months ago. Globalstar is known for providing emergency connectivity to Apple iPhones and various internet-of-things devices. The FCC filing indicates Amazon's intention to utilise Globalstar's existing radio spectrum to broaden these services and integrate them with Leo, Amazon’s existing broadband internet satellite network, also known as Project Kuiper. This integration aims to create a comprehensive satellite communication ecosystem.
This development is expected to intensify the competition with Elon Musk's SpaceX, which has invested heavily in its Starlink satellite network. SpaceX plans to spend an estimated $20 billion on acquiring spectrum from Echostar to bolster its mobile constellation, a key growth strategy outlined in its initial public offering (IPO) filings. The battle between these two tech giants for dominance in space-based internet and mobile services is set to be a costly and protracted one.
However, the ultimate value and widespread adoption of satellite-to-mobile connections are still subjects of debate. Most current satellite-to-mobile offerings provide limited bandwidth, primarily suitable for text messages or critical emergency situations. Srini Gopalan, CEO of T-Mobile, a company that partners with SpaceX for satellite connectivity, noted in May that customer interest has been minimal. He stated that in May, satellite usage accounted for a mere 0.0002% of T-Mobile's total network usage, primarily concentrated in national parks, highlighting the current niche nature of the service.
Amazon also faces an immediate logistical challenge: the absence of its own operational rocket fleet. The company had initially planned to rely on Blue Origin, the space company founded by Jeff Bezos, to launch its satellites using its New Glenn rocket. However, the New Glenn programme has experienced delays and is currently grounded following an anomaly in May that damaged its launch pad. This setback forced Amazon to request an extension from the FCC for its licence deadline to build out its network. Despite these hurdles, Amazon's substantial capital reserves, reported at $255 billion in current assets as of late April, provide it with significant financial muscle to continue investing in its network, potentially giving it an advantage over SpaceX, whose capital needs appear more pressing.