More Money for O3b




More interesting news for O3b Network: $1.2 billion in funding. As reported by the WSJ

 Satellite communications company O3b Networks said Monday it has raised $1.2 billion from a group of investors and banks, its final funding round before the launch of its global satellite broadband network.

O3b, which is backed by Google Inc., plans to launch its fiber-quality Internet service serving emerging markets in the first half of 2013, after securing $770 million of debt financing and $410 million of equity investment.

The firm’s name refers to the “other 3 billion” people in the world currently without access to broadband Internet.

“We are looking to connect the unconnected, now we can start to do that,” Chief Executive Mark Rigolle said in an interview.

The company already has around 10 customers for its service, who have signed deals valued at $500 million to $600 million to use its infrastructure, Mr. Rigolle said.

O3b is selling capacity on its network on a wholesale basis to Internet service providers and telecom companies. Mr. Rigolle said he expects the strongest long-term demand to come from mobile phone companies in emerging markets, which lack the fiber-optic infrastructure to offer their subscribers high-speed Internet access. O3b’s network will be able to offer “backhaul” connections in place of a fiber network.

Chicken & egg contingencies aside, this is a positive step for O3b. Or is it?

Yes, they’re fully funded for design, build and launch, but will it work well enough to really get some cash coming in? We’ll have to wait another two years to see whether that question will be answered. In real “Internet time,” two years is a very long time and things could change materially — especially in high-risk space-based ventures.

Curiously, this venture is still referred to as “backed by Google,” while SES will increase its ownership to 34%. And they only have to contribute US$75 over the next two years. Judging by the composition of its board of directors, SES seems to be in control here.

Considering the utter lack of connectivity in the regions where “the other 3 billion” people are situated, this is still a good idea. 100-millisecond latency is good enough. Add the possibility of micro-payments via mobile Internet, this could prove to be a real winner. Now hurry up and launch the spacecraft!

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