Tom Choi, founder of Airspace Internet Exchange, and former CEO and founder of ABS. Photo: ABS

Tom Choi is one of the satellite industry’s strong characters. A previous Via Satellite Executive of the Year when he was the CEO of ABS, he is now the executive chairman of Airspace Internet Exchange, a company that has big ambitions in the satellite sector. Recently, the company made a high profile acquisition, acquiring a company called NovaWurks which brings futuristic satellite concepts to the table. In an exclusive interview, we talk to Choi about this acquisition and what is next for his latest venture.

VIA SATELLITE: Tell us about acquiring NovaWurks?

Choi: NovaWurks has been working on a new type of a satellite concept called the “HiSat.” This stands for a hyper interactive satellite. Each HiSat acts as a human cell, in that all cells have similarities, but are programmed for different functions. Similarly, each HiSat has the same components, but is programmed to perform various functions for the satellite based on the mission requirements and information from the distributed operating system that determines the loading and actions of each HiSat. The founder of the company, Talbot Jaeger, envisioned that satellites should mimic living organisms. He felt that components of the satellite shouldn’t have only one function, since if it fails, then the entire system dies. In common satellites there are only one or two units of critical components such as flight computers, reaction wheels, batteries, and power management systems. If any of these components were lost, then the satellite would suffer a catastrophic loss.

So, the concept of the HiSat: you make a bigger satellite composed of multiple HiSats, and each HiSat is its own satellite bus. It has its own micro-processor, reaction wheel, power management system, flight dynamics system, batteries, earth sensors, star sensors, etc. They even have their own body-fixed solar panels to generate power for each unit. It is an ingenious way for a satellite to be constructed where any end number of these HiSats are connected to fulfill a mission of any payload. The software that NovaWurks has written allows three to four HiSats to work together as well as 300 to 400 HiSats to work together. So, you have the ability for any satellite to do any mission in any orbit – Geostationary ORbit (GEO)/Low-Earth Orbit (LEO)/Medium-Earth Orbit (MEO). The software takes care of how the satellites take care of one another and run the system.

[HiSat] is one of the most interesting technological evolutions that I have seen, and I felt that it is an ingenious way of approaching technological platforms for space. I felt when I saw it, not only did I want to adopt it for our small GEO satellite Nationsat, but I also saw its potential for other missions in MEO as well as LEO. We have some ambitious constellations initiatives in these orbits. So, it was a platform that could serve all needs. I felt instead of just giving them a contract, I wanted to integrate them into our future. I wanted them to be included in our organization, so they are all committed and we are working towards one single purpose, which is to make the most innovative advancements in space. This is why we decided to go down the M&A route and why Talbot Jaeger agreed to the M&A.

VIA SATELLITE: Was it an expensive acquisition for Saturn?

Choi: We don’t disclose the amount but it is well into seven figures in U.S. dollars.

VIA SATELLITE: Do you think it will be transformative for your business?

Choi: Yes, instead of Saturn itself building a brand-new platform, it is going to take advantage of all the work that has been done at NovaWurks since its establishment in 2011. It received over $50 million in funding from DARPA to make the HiSat platform. In order to create a new platform, you have to spend that magnitude of expenditures. So, instead of spending the money and waiting another five to six years until the platform is ready, it is much better to acquire the company with the technology already in place, so that we could hyper accelerate the development of our plans. That is the reason why we were able to sign a contract with our first GEO customer, because they also believed in the capabilities of the NovaWurks platform. They liked the heritage of the HiSat based on the multiple missions it has already flown in space, as well as the redundancy allowed by the cellular satellite approach. Had I started from scratch in developing our own bus, it would have taken much longer to receive a paying contract.

VIA SATELLITE: That is one customer. Can you give us any update on further customer contracts?

Choi: Over the last six months, the Saturn team has been very busy. They have put together over $1.5 billion in proposals. Many of these customers are taking their time to evaluate them. As we know the Fixed Satellite Services (FSS) industry is going through a tumultuous time now, so they are looking at different options. These potential customers are local operators, regional operators, governments, global operators, end users etc. Out of that pipeline, we believe we will do at least two per year. I really feel we will get one more customer coming in the fourth quarter.

VIA SATELLITE: Is everything on track with Saturn in where you expect you to be in terms of funding, customers, deployments etc?

Choi: In June, we just passed the Performance Development Review (PDR) on the first customer. And by December, we are going to be initiating our incremental system Critical Design Review (CDR). Our digital payload where we gave a contract to Seakr should be ready by Fourth Quarter (Q4) 2019. The entire system design for NationSat is completed.

So, we have also signed a launch contract. The launch window has slipped to the second quarter of 2021. I can’t disclose which launch system supplier we signed, however it is a shared launch. Everything is on track. Could we have had more business? Yes. But the industry is not that great, and at least we have a paying customer which is more than many other smallsat initiatives around in the industry have.

VIA SATELLITE: There have been some contradictory messages in the industry, some doom and gloom, oversupply, broadband constellations potentially struggling. Yet, many are still very optimistic as well. How do you assess the current state of the industry?

Choi: I talk to customers of all forms and all different service chains. I feel there is still a demand for satellite capacity all over the world. Over three billion people are not connected and they need connectivity. Now, do I see a future for GEO satellites in enterprises? I don’t think so. A lot of enterprise applications are moving to the cloud and it seems to be like cloud computing is having trouble dealing with the latency inherent in GEO systems. So, for that application, the industry is going to have to find some other solution. But, for video distribution and consumer broadband, and rural, cellular backhaul, I think the market for GEO satellites will always be there. I think we are trying to lead the way in making satellite capacity much more affordable and now with these announcements with Boeing and Loral, they are getting it too. When we spoke earlier this year, I told you that I don’t think we will own this market ourselves and that other manufacturers will develop their own small GEO systems. The key is to get the design right to optimize the size, mass, payload and costs to hit the sweet spot requested by the customers. We only need to do one to two satellites a year to be profitable.

There is a lot of investment going into the LEO orbit, and I feel like a lot of these investors have not thought through the complex and complicated regulatory, technical, commercial, and financial requirements to get a system like this to work successfully and close a business case. I think many of these systems are going to fail. There maybe one to two systems that ultimately launch. They will find out the market they originally targeted will no longer be there. They will have to find some other niche. The LEO market is very complicated technically. There is no paradigm that exists that will allow a LEO operator that is using 10 to 18 Ghz of Ku-band or 27 to 30 Ghz of Ka-band to have unfettered access to the skies because that it is too much spectrum for a local regulator to authorize to a foreign satellite operator. I see that as being one of the big misunderstood challenges of a LEO system. So, I am not that bullish on the LEO broadband communications systems. We are working on other LEO initiatives that are not focused on providing broadband connectivity but for other killer applications which I do not want to discuss yet. I think there is a big market for small GEO satellites. Also, in the MEO orbit, I think some other opportunities exist as well.

VIA SATELLITE: At some point new markets are going to need to develop for all this capacity to go up. The tone of the conversation does not appear to have changed that much over the last ten years.

Choi: The entire industry is looking for new opportunities. If you look at our industry over the last ten years, it has pretty much remained stagnant. We have had some new entrants come in. We have seen some M&A. We have seen some fail. But, the market really hasn’t changed that much, and that really is because the technology that was deployed in this market hasn’t really changed. There has been some movement in LEO, but I don’t believe there are technologies are ready for service deployments and new markets. If you look at aeromobility, how many aeromobility operators are profitable? Some will soon go out of business. Connexion from Boeing, an early adopter, went out of business. The industry needs new segments to go after. So, I have always been a champion of building new satellites for small countries. There are 150 countries that don’t have their own satellites. They cannot afford to use the satellites that are available to them. They can’t afford transponder lease rates. I think with NationSat, we are able to bring the price of capacity 60 to 80 percent lower than what is traditionally available. By reducing the cost of an existing market, you should then be able to expand the marketshare.

VIA SATELLITE: How many countries have you made proposals to?

Choi: We have made proposals to over 12 countries. If we get one to two per year out of this that would be okay. I think once we introduce a new concept, a small GEO satellite, it will take time for people to grasp the concept. So, once a few innovators take up the position of an early adopter, over time, the market will grow. The fact we have signed a contract is positive. Boeing, Lockheed, Thales, and others have announced smallsat initiatives, but they don’t have a customer yet. That may soon change, and the industry will be better for it. I see a global market for six plus small GEO satellites per year. If we win one to two per year, that would be okay. However, our space initiatives are not limited to NationSat. We have other ambitions unannounced initiatives both in LEO and MEO orbits.

VIA SATELLITE: Where will the initial NationSat customers go from?

Choi: I think the countries will have a certain sufficient level of GDP and the financial capability do this, rather than all countries that are emerging and extremely low on the GDP scale. Even $60 million is a lot for a small and tiny country. So, I would say the more likely countries that would adopt NationSat are likely to be from Asia, even some from Eastern Europe, some from the Middle East, as well as South America.

VIA SATELLITE: Are you looking at further acquisitions?

Choi: We may be looking at one to two smaller acquisitions other than NovaWurks, especially if some aerospace companies are making some critical technologies that we require. We either buy or build. We are not looking for big M&A in the manufacturing space. Instead I am focused on fund raising for service initiatives that will use our technologies from both Saturn and Curvalux. Over the next 6 to 12 months, we are going to announce a MEO and LEO initiatives. These systems will do something different than most of the others in the Non-Geostationary Orbit (NGSO) are working on. Before we make the announcement, we are working with some large organizations around the world to flush out the business case and to line up investors.

VIA SATELLITE: When will Saturn start to make money?

Choi: When we do two small satellites a year, we will be happy. We hope to do that in 2020. In 2018 and 2019, we have done a lot of development work. So, we have done all the things that need to be done for customers to understand what we are doing. It will be easier for us to sign contracts next year.

VIA SATELLITE: What is the ultimate vision for this for you?

Choi: If we are really successful over the next 10 years we could launch 50 new satellites for 50 countries and/or existing satellite operators. By allowing them to save vast amounts of money in launching new or replacement satellites I hope we would have allowed them to cost-effectively deploy satellites to new markets and through that effort they can bring more connectivity to the masses who are not connected now. I don’t want just to be commercially successful. I want to bring connectivity to the rural masses. The nature of bringing connectivity increases peoples’ wealth and knowledge. I believe fundamentally this is a good thing to do. We have one life to live so we should strive for altruistic and commercial achievements.