Neil Masterson was new to the satellite industry when he joined the revamped OneWeb in November 2020 after more than 20 years at Thomson Reuters. Nearly a year later, Masterson just made his first appearance at SATELLITE, where OneWeb announced a distribution partnership with AT&T for the United States. OneWeb is far from the company that filed for Chapter 11, and is now preparing to start initial service.
Masterson spoke with Via Satellite before and after SATELLITE 2021 to talk about the operator’s progress, the recent deal with AT&T, and his views on why industry collaboration will be key to OneWeb’s success.
Masterson: I feel like I have joined at a very exciting time, not withstanding the COVID situation. The opportunity is unparalleled. I would say the OneWeb mission of connecting the un-connected resonates so strongly with customers, and also with governments around the world. Our proposition to deliver fiber-like connectivity to places where there is no fiber resonates strongly across the world during all of my conversations.
The opportunity is very significant, and actually larger than I expected coming into the role. While we see a strong opportunity, the key to unlocking that is having a strong execution focus, and that is what we have been doing over the last 10 months. We have raised more than $2.7 billion which is more than enough to deploy the constellation. So, we have a bit of dry powder. We have deployed [322 satellites], more than enough satellite coverage to turn on the network later this year. We are on track to deliver global coverage by the end of next year.
We set Alaska as a test base. We are using terminals in Alaska right now, and we figured out if we can deliver, operate, and support a network in an Alaskan winter, this is a great test case for us to deliver global service.
We see competition as a good thing for customers. It means they have choice. They will have resiliency, which is absolutely crucial for certain customers. But, also we like the competition. It will make us better. It is a difficult, highly competitive market out there, which is good.
Increasingly, collaboration is going to be key. I think collaboration at an operational level but also collaboration more broadly with the industry. Based on my background in other industries, collaboration with other technologies is crucial, and is a requirement. Innovating together to develop the best possible solutions for customers at the lowest possible cost is the way forward, and this is our mantra.
Masterson: We see this as a very significant deal. AT&T is a huge company, with an incredible reputation. It is not just for us in the context of the United States and AT&T, but we see this as replicable in other parts of the world. Our sweet spot is in regions where there is no fiber. But, obviously, AT&T operates in many parts of the U.S. where there is fiber. In addition to being a primary use case, we can also be a secondary use case in terms of backup, redundancy, and to help B2B customers fill in the elements of their network. It both hits the sweet spot of our strategy of being part of the solution, and not the solution. We are here to support AT&T.
Masterson: It makes us bonafide in other parts of the world. AT&T is well known for technical prowess. It is significant for us economically. It is significant for us in terms of the U.S. market. But, it is possible to replicate it in other parts of the world. That is why we are excited by it.
Masterson: This is not an exclusive deal. We are confident there will be other conversations in the U.S. with telcos.
Masterson: What is somewhat unique about OneWeb is that our major shareholder comes from a telco background. So, we have people in our organization that speak telco. They also understand the technical solutions that are required to be successful with a telco. In this case with AT&T, to be able to speak the same language and understand the needs of the customer has proven to be quite helpful.
Masterson: There is no doubt that Sunil has an incredible rolodex of telco CEO contacts, and he knows many of the CEOs of the large telcos around the world personally.
In addition to Sunil, we have individuals in our organization that are of the telco world. In many cases, we use a combination approach. Sunil will give an introduction, but it is the account teams that do the hard work. There is no such thing as an overnight success. These things take quite a lot of time. It has been a significant team effort, particularly the accounts and technical teams. Now, the service teams will also get heavily involved. It is a full court press.
Masterson: On the demand point, when you get into some of these remote communities, dealing with business people in fairly remote areas, the demand for connectivity is not just at an emotional level, it is almost visceral. We think we have this incredible opportunity to level up this digital divide and help close it. We are looking forward to working in these communities to make a difference. We firmly believe we can do this.
Secondly, the use cases we are seeing are much broader than we thought before. As we talk to customers, we are seeing different use cases, whether community Wi-Fi, corporate Wi-Fi, cellular backhaul. So, we are seeing a multi-terminal strategy. In some cases, they will be on an industrial scale, so bringing a ton of low latency capacity to as big an area as possible, to having small ESA [Electronically Scanned Antenna] based terminals. We are working with the industry to unlock those opportunities and making sure we have multiple user terminals for different use cases. This is what customers want.
Masterson: I mentioned fiber-like connectivity where there is no fiber. I need to be cautious here, but what we are finding is there is a lot of demand for fiber-like connectivity even where there is fiber. The cost of having an outage on business is so high that there is a lot of interest in instantaneous backup, as we head into different parts of the world.
Masterson: The funding round is over for now. You never want to turn down money, but for now, we are done. I like the fact we have some dry powder. Veteran observers in any business will always tell you it is good to have a cushion. It gives us the flexibility to go faster if we want. It means we have some optionality to do some acquisitions if we want. We have announced one acquisition already, we may do others. Right now, we don’t see the requirements to raise any more capital. Because our capital structure is entirely debt free, it means we have opportunity to add capacity if we need more funding to meet a strategic objective.
Masterson: The answer is ‘yes,’ but not enough. As I mentioned before, you need user terminals that feed specific use cases. The lower the price for the user terminals, the bigger the market opportunity for those use cases. It is not just about us, it is for the industry as a whole. The faster we can lower the cost of these user terminals, the bigger opportunity for all of us. It provides greater benefits for customers. They want connectivity, and they want it integrated with the technology they have. They want it to be able to have access at any point.
Masterson: I would say ‘open’ is better, and if it is not open, you are essentially restricting customer choice. The more you open up customer choice, the better it is for everyone in the long-term, because you grow the size of the pie. Our network is essentially an LTE network. We are gearing it to meet the Metro Ethernet Forum [MEF] standards. So, it hooks into telco networks. The more interoperable it is, the better it is for customers.
When customers, vendors, or providers have invested very large amounts of capital in the systems they have, it does not change overnight. Essentially, because we are a new player we can work with as many players as we can. That is to the benefit of customers, but also to existing providers. We see ourselves as part of the solution, but we are not the solution. With others, we can provide an incredible solution to customers.
Masterson: It is customers who decide on the pace of adoption. It doesn’t matter what I say or what anyone else says, it is what the customer wants. Based on the discussions we are having, it is clear there is a lot excitement within aviation about the potential to provide low latency, high throughput capacity. However, technologies need to be interoperable and I am beginning to learn about the aviation and mobility segments. There are different use cases for different parts of the airplane. So, actually you have to make sure the offering you are offering is interoperable with existing solutions already on aircraft. Then there are practical elements. Terminals have to be certified. These things have to be linefitted.
I hope Jonathan is right. But, rather than saying it is 90 percent of what it is today, we should be seeking together to grow the size of the opportunity. It is not a winner takes all thing. Having the right technology solution is going to take a collective and collaborative effort across the industry, rather than just one technology wins over the other.
Masterson: We think aviation and mobility will be very important markets for us. But, the pace of adoption will be slower. It is difficult to get these things tested. In the short-term, telco revenues will be the majority of our revenues. But, in time mobility will drive significant revenues and grow really fast.
Masterson: I would say it is not necessarily about technology innovations, but more about the customer and collaboration. I think collectively we have a real opportunity. The market is developing so rapidly, it is very important to listen to customers and understand what they want, and their evolving requirements, and how best we can solve them with technology.
Let’s start with the customer first. As we start thinking about those requirements, to start collaborating across the industry to develop the best solutions. By collaborating together, I think we have a better chance of growing the overall pie. We will deliver better solutions to customers, at a much better cost.
Then, you get into the technology solutions to do that. User terminals are incredibly important. We need to make them cheaper, easier to use, easier to install, and open in terms of being configurable for different satellite systems. All of this becomes important. Capacity is incredibly important and making sure that capacity is flexible in nature and cost-effective, but deployed in a way that is market accepted. If you don’t get landing rights for example, it doesn’t matter how good the technology is, you won’t be able to commercialize it.
Masterson: I would be cautious as I am new to the industry. I have been encouraged by the conversations that we are having. Look at our share structure. That is an example of collaboration. We have Eutelsat investing in us. We have Hanwha, which is a very sophisticated industrial conglomerate which has investments in Phasor and Kymeta. You are beginning to see it. We can bring the industry together to meet customer needs. I am very optimistic about this. This doesn’t mean we can’t compete fiercely in the marketplace because we will. But, we can do two things at the same time. We can compete, but we can also collaborate.
Masterson: I have a background in M&A in general in my previous roles. I would say there is not substitute for execution focus. If we think an acquisition can accelerate our execution, we will do it. Generally, the preponderance is focused on execution, and that is largely organic execution.
Masterson: The customers will decide what the size of the market is, and which companies survive. We have so much to do. I can’t control the destiny of others. But, I can to an extent control the destiny of OneWeb. I would say the market opportunity is larger than expected. So, I think it can support multiple players. But I just don’t now how many that is at this point of time.
Masterson: We set ourselves some internal goals and some execution priorities. The first of those is about delivering the network, the second is about monetizing the network, and the third is about rebuilding trust in OneWeb. The fourth is about scaling up the team. Finally, the fifth one is how we shape the future over the next generation of technology. We are sticking with these. We will see where we get to by the end of the year. The team has done a tremendous job but there is still a lot of wood to chop. We remain very focused. VS