OneWeb's offer to sell a share of their satellite Internet service to Russia

Update: OneWeb has denied that they have offered to sell any stake in the company to the Russian Government and Reuters has now reported that Russia’s communications minister said that "the government has not discussed such a deal with OneWeb."

OneWeb confirmed that they are restructuring their existing commercial joint venture with Russian partner Gonets, to comply with certain Russian regulatory requirements. They reiterated that "the joint venture is solely for the commercialization of OneWeb’s satellite broadband services to customers in Russia" and stated that the joint venture would "not have access to OneWeb's satellite technology or related know-how."
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Given the context, I am not keen on OneWeb sharing technology with Russia before or after a deal is closed.

Number of global satellites (source)

OneWeb has a contract to launch Internet-service satellites on Russian-made Soyuz rockets and has a joint venture with Gonets, a Russian satellite operator, as a marketing partner in Russia. However, the Russian government has expressed concerns about security, drug their feet on spectrum allocation and complained about US sanctions. This led OneWeb to make two concessions -- they dropped inter-satellite laser links from their constellation design and they cut their interest in the Gonets joint venture from 60 to 49 percent.

Apparently, that did not satisfy the Russians. Reuters reports that according to three sources, OneWeb has offered the Russian government the option of buying a 12.5-percent stake in the company in exchange for approving its request for a frequency band.

If Russia buys a minority stake in OneWeb, it would be represented on the company’s board of directors and have access to the project’s technical documentation. One of the sources -- a Russian government official -- said the government was not satisfied with the conditions attached to the purchase -- it wanted access to the technical documentation before committing to the deal.

This offer needs to be put in context:

Active disruption by Russia (source)

• There are four competing global satellite navigation systems: GPS (US), Galileo (Europe), GLONASS (Russia) and Beidou (China).
• University of New Brunswick professor Richard Langley, who has worked extensively with the Global Positioning System since the early 1980s says that "while the GLONASS service level has dropped below acceptable levels, it is now a dependable system and, with announced improvements, will be a contender in the future world of multi-GNS.
• Russia has been accused of jamming and spoofing the GPS.
• Russia has used the Internet to foment social unrest and influence election results in Europe and the United States.

Given this context, I am not keen on OneWeb sharing technology with Russia before or after a deal is closed.

Obstacles in OneWeb's negotiations with Russia

This case illustrates the fact that political, security and financial negotiations may be as difficult as designing satellites and rockets for a would-be global Internet service provider.

OneWeb is investing billions of dollars in a constellation of low-Earth orbit (LEO) Internet-service satellites.

In 2015 they placed launch orders for 21 Russian-made Soyuz rockets.

In 2017, they formed a joint venture with Russian LEO satellite operator Gonets to develop the project in Russia. At that time, Gonets was a subsidiary of Roscosmos, the Russian State Corporation overseeing and implementing the Russian space industry. OneWeb had a 60% interest in the joint venture.

This week Reuters reported that OneWeb is relinquishing its majority stake in the venture -- Gonets intends to increase its stake to 51 percent.

I wonder why.

Speaking at a conference in Moscow, Federal Security Service (FSB) official Vladimir Sadovnikov objected to the project for security reasons. He feared that “Some of Russia’s regions would become totally dependent on a foreign satellite service” and added that Moscow had not received any conclusive evidence that OneWeb’s satellites would not be used for intelligence gathering.

(He also revealed his ignorance by apparently not understanding the difference between Iridium and OneWeb).

I wonder if the security concern is genuine -- OneWeb has decided to forgo inter-satellite links in favor of routing all traffic through a system of 40 terrestrial gateways, allowing a nation to know the path of traffic into and out of their territory. Are they concerned about the possible detection of sources of trolling and hacking?

Sadovnikov added a political dimension saying Russia favored setting up a similar network partnering with India, China and countries which he described as non-aggressive and China has pitched a 1,000 LEO satellite project to Russia.

An unnamed source at the FSB also mentioned politics, saying “OneWeb is an important project for Roscosmos and Russia’s space industry, but national security issues come first. There are many doubts regarding that project, especially because of the sanctions against us."

Spectrum is another stumbling block. OneWeb's request to receive a frequency band in Russia was refused and a source at the Ministry for Digital Development and Communications said they would be given permission after legal issues regarding the joint venture were completed. Given Russia's reputation, one can't help wondering whether the hangup has something to do with payoffs.

Another possibility is convoluted economic infighting within Russia. Gonets' Wikipedia page says it began as a Russian Federal Space Agency program, but in 1996 it was privatized and operated by Gonets SatCom, which was controlled by ISS Reshetnev. In 2017 Roscosmos acquired 80% of Gonets from ISS Reshetnev. Wikipedia is not a definitive source and I know nothing of the history of these organizations, but this sounds like it could be the kind of oligarchy-creation manipulation that occurs when state property is privatized. (The ownership of Cuban ISP Etecsa raises similar questions).

Perhaps there were management problems. Initially, launches of production satellites were planned to begin last May, then the date slipped to first quarter 2018. The current schedule calls for the launch of test satellites on February 7, 2019.

Regardless of the motivation for restructuring the OneWeb/Gonets venture, there is a mismatch in the aspirations of a global ISP and nationalistic governments. This case illustrates the fact that political, security, and financial negotiations may be as difficult as designing satellites and rockets for a would-be global ISP.

For background on OneWeb and other low-Earth orbit satellite Internet service projects, click here.

Gonets home page, 8/10/2018. It was removed earlier this week.

The Russian home page has also been removed. Last archived copy 4/10/18.

Update 11/15/2018

Kommersant, a prominent Russian newspaper, reports that Russia’s Federal Security Service says OneWeb’s low-Earth orbit Internet-service constellation would pose a national security threat and wants it banned. If OneWeb service were banned in Russia it would mean the loss of a market for them and their Russian partner Gonets and would also jeopardize Russian space agency Roskosmos’ contract to launch OneWeb satellites. At the very least, that would probably delay OneWeb's plans.

The article says the issue has been raised "at the level of the President" in a Security Council meeting and a decision will be made no earlier than December. The English-language edition of Kommersant has a shortened version of this article. (I have based this note on a Google translation of the original article).

Update 12/26/2018

For the latest development in this ongoing negotiation, see this post.

Trump's "would/wouldn't" comment on Russian meddling in context

Whether he meant to say "would" or "wouldn't," trump clumsily tried to dodge the question of Russian interference in our election by falsely attacking the FBI and taking a shot at Hillary Clinton and a "Pakistani gentleman."

The news has focused on Trump's response when Associated Press reporter Jonathan Lemire asked whether he believed Putin or "every U. S. intelligence agency" on the question of Russian interference in the 2016 election. Trump and the media have focused on this quote:

I will say this: I don’t see any reason why it would be, but I really do want to see the server.

The next day, Trump claimed to have misspoken, that he meant to say "wouldn't" instead of "would," but let's look at that sentence in context. It turns out he tried to artfully dodge the question by attacking the FBI. Here is his answer:

So let me just say that we have two thoughts. You have groups that are wondering why the FBI never took the server. Why haven’t they taken the server? Why was the FBI told to leave the office of the Democratic National Committee? I’ve been wondering that. I’ve been asking that for months and months, and I’ve been tweeting it out and calling it out on social media. Where is the server? I want to know, where is the server? And what is the server saying?

With that being said, all I can do is ask the question. My people came to me — Dan Coats came to me and some others — they said they think it’s Russia. I have President Putin; he just said it’s not Russia.

I will say this: I don’t see any reason why it would be, but I really do want to see the server. But I have — I have confidence in both parties. I really believe that this will probably go on for a while, but I don’t think it can go on without finding out what happened to the server. What happened to the servers of the Pakistani gentleman that worked on the DNC? Where are those servers? They’re missing. Where are they? What happened to Hillary Clinton’s emails? Thirty-three thousand emails gone — just gone. I think, in Russia, they wouldn’t be gone so easily. I think it’s a disgrace that we can’t get Hillary Clinton’s 33,000 emails. (Source).

He used the word "server" nine times and managed to attack Hillary Clinton and a "Pakistani gentleman" along with the FBI.

We know what he was getting at when he mentioned Hillary Clinton and "the Pakistani gentleman that worked on the DNC," but what about the server?

I listened to the press conference live and was struck by his rambling reference to servers. I didn't know what servers he was talking about and also wondered whether he knew what a server is. (It turns out he repeated the word nine times).

I did a quick search and it turns out that the fact-checking site Politifact has concluded that "Donald Trump's 'missing' server comments get all of the details wrong" and the Pakistani gentleman is Imran Awan, who emigrated from Pakistan as a youth, has been a U.S. citizen since 2004 and did not work for the DNC.