Google´s low earth orbit high throughput (LEO-HTS) satellite program has undoubtedly become the most discussed topic in the satellite industry and with reason: Google is no longer considered a leading Internet player but essentially an ecosystem disruptor.
For the often over-conservative satellite industry, used to the “linear” thinking of the transport business, it could be difficult to grasp the motivations of Google as well anticipating possible long-term implications. While it is too early to arrive to solid conclusions given that Google itself has not yet openly spoken about the program, it is worth exploring some of the possible motivations and implications.
Google is viewed by some as the champion of the open Internet, and by others, as a company seeking world domination. Neither of these two extremes likely define accurately what Google is and what it could become, but it is natural to expect the following behavioral patterns:
- Business Expansion: Dominant players with as much cash at hand as Google often find themselves with the “agency dilemma” of where to invest wisely: Should they invest in initiatives that make the existing pie larger? Should they invest in adjacent markets? Should they expand into new, disruptable environments; and, if so, can multiple sectors be mastered? For Google, all of these alternatives are possible given that focusing on one sector will sooner or later face a new paradigm shift, reach market saturation or regulatory barriers. So, Google may be on the path of becoming a 21st-century conglomerate, if it can successfully master multiple sectors.
- Business Protection: Over 90% of Google´s revenues come from its innovative click-through web-advertising platform. Indeed, judged by its revenue source, Google can be considered world´s largest advertisement agency. Users “eyeballs” and their engagement with online ads are key for the continuation of Google´s business so it is perfectly plausible to expect that Google would do things that guarantee future access to such eyeballs, including investing in last-mile access technologies and networks (e.g. fiber, satellites, drones, balloons).
However, investing in the access directly is not always efficient for Google and one clear example was Google´s development of the Android mobile App platform. Having dominated the web ad business, Google found itself in a tricky situation when the Internet shifted to mobile: Different use context, spectrum scarcity and smaller screens prompted the industry to put focus on “apps”, instead of just “web” access. The Internet then became something very different from the original web where Google ads lived.
Google chairman Eric Schmidt once said: ”If you own a platform, that is valuable, you can monetize it”. Indeed, a recurring behavior characterizing Google is not viewing itself as an end but rather as a transformational vehicle. Google always seeks to “platformize” its initiatives by successfully driving multi-sided networks with distinct user groups that provide each other with network externalities.
Google´s original web-centered success is linked to Net Neutrality, a key ingredient for Internet-driven platformization. Net Neutrality is an Internet principle behind the success of not just Google but most of the largest Internet players because it fosters an environment of “abundance”, unlike many other markets (including satellite communications) shaped by “scarcity” economics. Essentially, Net Neutrality provides Google with “free raw material” for its business given than no matter how big Google is or how many HD YouTube videos it pushes through the network, its traffic receives equal, non-discriminatory treatment.
However, despite being one of the core principles on which the open Internet was built, telecom regulators -including the FCC- have recently been considering modifications to Net Neutrality, influenced by large cable and telecom operators who have invested hundreds of millions of dollars in building or upgrading broadband networks; only to find themselves trapped into the business of “dumb” data pipes.
Should modifications to Net Neutrality take hold, this would lead to a competitive environment modulated by paid prioritization agreements between Internet providers and content companies. This shift threatens to materially modify Google´s strategic framework. What do large, leading organizations do when the very access to such raw material is threatened? They embark themselves on alternatives that guarantee a future access to such raw materials, including classic horizontal and vertical integration strategies.
In a hypothetical future where telecom bargaining power tilts towards last-mile access providers, Google could use a global, high-speed satellite network and play with (multi-sided) subsidies as an access equalizer, which could not just bring broadband access to millions of new users globally, but also induce competition in places where, while having access to broadband alternatives, incumbents exercise excessive price control or traffic discrimination depriving the market from fully realizing its potential. Plus, a fully-owned global high-speed satellite network would not be subject to the tolls that telcos could charge Google for fast-lane access to end users.
To summarize, Google could be considering driving a global satellite broadband constellation for a combination of reasons, including business expansion and long-term strategy. Should such ambitious program materialize, this would likely sparkle a recomposition in a satellite industry already dealing at regional levels with the paradigm shift of high throughput satellites. It is too early to measure the impact of Google´s LEO-HTS program on a global scale, but, when combining this with other residential and business HTS developments, it feels good to believe that, at the very least, satellites could be on the brink of becoming mainstream.
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