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With A Successful Launch, OneWeb Just Joined SpaceX And Others In The Satellite Internet Race

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In the early Wednesday evening on the coast of French Guiana, an Arianespace Soyuz rocket successfully launched. It carried with it the first six satellites for internet startup OneWeb, which is building  a 650-satellite constellation in low Earth orbit, providing telecommunications and internet services around the world.

“I think this is going to be a historic day for the way we use space and technology to provide connectivity and use that spectrum to benefit the world,” OneWeb CEO Adrian Steckel told Forbes.

This marks a turning point in a new generation of communications satellites, which backers say will provide high-speed internet connectivity to the billions of people who still lack access to it. OneWeb joins SpaceX as the second company in this new generation of internet satellite to actually put spacecraft into orbit.

OneWeb was founded in 2012 by Greg Wyler. His prior internet satellite company, O3, had placed 12 satellites around 5,000 miles above the surface, a lower-than-normal distance designed to speed up internet signals. Wyler’s vision for OneWeb, which he serves as executive chairman, is even more ambitious: a constellation of hundreds and eventually thousands of satellites even closer to Earth, as low as 700 miles above the surface, in what’s known as low Earth orbit. That proximity should lead to a more broadband-like experience for satellite internet customers, especially in areas where it’s currently difficult and expensive to connect to the internet. According to Pitchbook, the company has raised over $3 billion to achieve that vision, backed by the likes of Softbank, Airbus, Virgin and satellite telecom provider Hughes.

“We want people to have a premium, best-in-class internet experience,” said Steckler.

The market potential is big. Thanks to growing demand for data and declining costs for rocket launches, satellite internet providers could be generating over $500 billion in revenue by 2040, according to a report Morgan Stanley.

“We believe the largest opportunity comes from providing Internet access to under- and unserved parts of the world, but there also is going to be increased demand for bandwidth from autonomous cars, the Internet of things, artificial intelligence, virtual reality, and video,” Morgan Stanley equity analyst Adam Jonas said in the report.

OneWeb isn’t alone in wanting to serve internet customers from low Earth orbit. For example, SpaceX has its own project, called Starlink, which also aims to have several thousand satellites in orbit providing high-speed internet starting in 2021. U.K.-based startup Sky and Space Global announced last week that it’s raised $12 million for its goal of putting 200 nanosatellites in low Earth orbit to provide internet services along the equator. Several other companies such as Boeing are also looking to build communications satellites in this orbit.

This isn’t the first time there’s been a race for communications in low Earth orbit. There were efforts in the early 1990s as well, with Motorola’s project Iridium successfully getting satellite constellations. But the technology at the time couldn’t keep up with advances in cellphone technology, leading to bankruptcy for some providers while others went out of business before launching a single satellite. The technology has greatly advanced since then, but the history may make some investors skittish—something that Wednesday’s launch might help with.

“OneWeb’s launch of test satellites is important from the perspective that (if successful) it helps to de-risk the story and prime the pump of needed investment flow,”  Chris Quilty, founder of space industry strategy firm Quilty Analytics, told Forbes in an email.

Wednesday’s launch is just the start of a long process for OneWeb to achieve Wyler’s vision. In order to achieve global coverage, OneWeb will need 650 satellites in low Earth orbit by mid-2021. It eventually plans to have over 2,000 in orbit. All of them will be launched by Arianespace; OneWeb signed a contract with the European launch provider for 21 launches in 2015.

OneWeb already has customers ready and waiting for its data. In addition to the launch, the company also announced Wednesday at the Mobile World Congress that it has signed its first two client agreements.

One is with U.K.-based Talia Limited to provide its customers in regions including Africa and the Middle East with consumer broadband internet. The second is to provide telecommunications services to Italian telecom company Intermatica to support its European customers.

“We’re very excited about it. We’re moving from an idea to a project to a company,” said Steckel.

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