By: Ralph Bernard

On Wednesday November 17, 2016, SpaceX took a step that might change how we access the Internet forever. On this day SpaceX filed an application with the Federal Communications Commission (“FCC”) seeking government “permission to test a massive network of satellites that will beam Internet service down to Earth.”[1] SpaceX plans to start by launching 800 satellites and will work its way up to a fleet of more than 4,400 satellites.[2] Users who choose to utilize the Internet provided from these satellites receive speeds as fast as 1 gigabit per second.[3] The average Internet speed in the US currently is 55 megabits per second and that is with a 40 percent increase, there are a thousand megabits in a gig so I will let you do the math.[4] According to the technical attachment provided with the FCC application, “[t]he system is designed to provide a wide range of broadband and communications services for residential, commercial, institutional, governmental and professional users worldwide . . ..” “Once fully deployed, the SpaceX System will pass over virtually all parts of the Earth’s surface and therefore, in principle, have the ability to provide ubiquitous global service.”[5]

Now, faster Internet is excellent in and off itself but it is not really something to write home about. The key issue about this entire article comes down to one word, “beam,” and the key question is why did they choose to use that word. Beam implies the use of laser light, or Free Space Optics, which is a medium of communication. However, if SpaceX is planning on utilizing Free Space Optics in their satellites, the FCC is going to have some regulatory reworking to do because in its current state the FCC does not have regulatory power over light in accords to the Communication Act of 1934.[6] The issue now becomes how will the FCC respond, if in fact SpaceX plans to utilize Free Space Optics in these satellites or some other form of light base communication. This could be the push the FCC needs to update their regulatory practices and allow companies to move forward with research and development into faster ways to transmit data. This is the major issue, the exciting issue.

However, there lies another problem. If SpaceX is capable of launching an Internet system that can provide speeds up to 1 gigabit for all of their users anywhere in the world, then why would any want to stay with their current Internet provider who averages about 55 megabits per second?[7] In fact, Elon Musk even said “[i]n cases where people are stuck with Time Warner or Comcast, this would provide an opportunity to leave.”[8] Pricing has not been discussed but it is reasonable to postulate that if SpaceX is providing an Internet system that acts as a way for people leave Time Warner or Comcast, that their pricing is going to be at least comparable. If this is the case, Time Warner and Comcast users would be asked to pay the same price for something that is approximately 18 times slower.

This presents two challenges and opportunities for businesses. One, if you are not already researching and developing Free Space Optics, it might be too late and this might be a good time to start. Second, for the big telecommunication players out there, Time Warner and Comcast, they are going to need to create some sort of competitive advantage that will incentivize their current customers to stay with them and new customers to not sign up with SpaceX. At this point, it is only an application with the FCC, trying not to get ahead of ourselves, but this could mean big things for telecommunication companies and even business outside of the industry.

[1] See, Brian Fung, SpaceX Just Asked to Test Its Orbital Internet Service Made Up of 4,400 Satellites (Nov. 17, 2016), https://www.bloomberglaw.com/p/6a7ce81beeee0aa1d06a06919abadb0f/document/OGSLBL3HBS3K.

[2] See id.

[3] See id.

[4] See, Sy Mukkerjee, Americans’ Average Internet Speed Spiked 40% in the Last Year (Aug. 4, 2016), https://fortune.com/2016/08/04/america-internet-speed-spikes (“The typical fixed broadband consumer in the U.S. saw average download speeds greater than 50 Mbps for the first time ever during the first six months of 2016, topping out at 54.97 Mbps in June,”).

[5] See, Brian Fung, SpaceX Just Asked to Test Its Orbital Internet Service Made Up of 4,400 Satellites (Nov. 17, 2016), https://www.bloomberglaw.com/p/6a7ce81beeee0aa1d06a06919abadb0f/document/OGSLBL3HBS3K.

[6] See, Communications Act of 1934 (“According to Sections 1 and 2 of the Communications Act, the Commission was created for the purpose of regulating ‘all interstate and foreign communication by wire or radio . . . which originates and/or is received within the United States . . . as well as to license and regulate all radio stations. . . .’”).

[7] See, Brian Fung, SpaceX Just Asked to Test Its Orbital Internet Service Made Up of 4,400 Satellites (Nov. 17, 2016), https://www.bloomberglaw.com/p/6a7ce81beeee0aa1d06a06919abadb0f/document/OGSLBL3HBS3K.

[8] See id.