Jeff Bezos Explains Amazon’s Bet on Project Kuiper Satellites

Geek Wire has the details

For the first time in public, Amazon CEO Jeff Bezos explained the rationale for his risky Project Kuiper satellite broadband venture, during a fireside chat that was interrupted when an animal rights activist jumped on stage.

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When Freshwater asked Bezos to name a “big bet” that Amazon has taken recently, he focused on Project Kuiper, the plan to put more than 3,200 satellites in low Earth orbit for global broadband coverage. The project came to light in April, and seems likely to be based in Bellevue, Wash. Here’s how Bezos explained his bet:

“The goal here is broadband everywhere, but the very nature of [having] thousands of satellites in low Earth orbit is very different from geostationary satellites. … You have equal broadband all over the surface of Earth. Not exactly equal, it tends to be a lot more concentrated toward the poles, unfortunately.

“But you end up servicing the whole world. So it’s really good. By definition you end up accessing people who are ‘under-bandwidthed.’ Very rural areas, remote areas. And I think you can see going forward that internet, access to broadband is going to be very close to being a fundamental human need as we move forward.

“So Project Kuiper has that. It’s also a very good business for Amazon because it’s a very high-capex [capital expenditure] undertaking. It’s multiple billions of dollars of capex. … Amazon is a large enough company now that we need to do things that, if they work, can actually move the needle.”

Amazon has already turned on its global satellite control networks, mostly located at it’s Global Data Centers strategically placed around the globe. As a significant provider of cloud services, LEO satellite delivery systems makes good business sense. It is the last link to providing cloud services to every business on the planet, at a highly competitive rate, compared to competitors like Microsoft Asure, IBM Cloud and lesser-known cloud companies relying on existing fiber network infrastructure. Amazon will be able to reach more global customers faster with competitive cloud service rates. More HERE.

The top ten cloud service companies are:

Kamatera.
phoenixNAP.
Amazon Web Services.
Microsoft Azure.
Google Cloud Platform.
Adobe.
VMware.
IBM Cloud.

After Amazon, only Google has made a move toward having an LEO satellite distribution system, partnering with Telesat and adapting Project Loon to LEO applications

Loon adapting connection routing ‘network brain’ from balloons to low Earth orbit satellites

While I admire and root for SpaceX, who is building a top-down system, Amazon is taking a bottom-up approach, building on existing reliable infrastructure and capping it with a fleet of LEO satellites has a higher probability of succeeding.  The open question is can Amazon catch SpaceX and OneWeb who have birds in space.

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Broadband Speed and Unemployment Rates: Data and Measurement Issues

 

Study finds high-speed internet reduces Unemployment. Justification for making sure your community has high-speed access.

Abstract

We examine the effects of broadband speed on county unemployment rates in the U.S. state of Tennessee. We merge the older National Broadband Map dataset and the newer FCC dataset in lengthening our broadband access data over the period 2011-2015. Extending the dataset improves the precision of the estimates. Our panel regressions control for potential selection bias and reverse causality and show that broadband speed matters: unemployment rates are about 0.26 percentage points lower in counties with high speeds compared to counties with low speeds. Ultra-high speed broadband also appears to reduce unemployment rates; however, we are unable to distinguish between the effects of high and ultra-high speed broadband. We document beneficial effects of the early adoption of high speed broadband on unemployment rates. Better quality broadband appears to have a disproportionately greater effect in rural areas.

The full report can be downloaded HERE.

 

Beyond Fast Internet The True Value of Broadband

The value and importance of broadband is quite high and rising. It impacts the everyday life of consumers by enabling life-changing experiences in education and professional development, healthcare and wellness, lifestyle, and entertainment, among others. Simply put, broadband significantly improves the quality of life for the average consumer.

But it’s important to recognize that broadband’s impact also extends to
the larger community. Broadband has become an essential utility, on par with, or potentially even exceeding the importance of electricity and water. We’re in the early stages of realizing the impact and potential broadband has on the overall community. There are applications to come that we can’t even comprehend today. To remain relevant and thrive in the future, robust broadband networks are now required for any community, regardless of size and location.

Full Report is at the Industry Tab.

Will Amazon’s Flywheel Consume the Rural Broadband Advantage?

What is the Amazon Flywheel? It is best described in a Bloomberg article examining Amazon’s Market Reach.

As Amazon grew, the company adopted a business school concept called the flywheel, loosely defined as a sort of self-reinforcing loop. Where possible, projects were to be structured to bolster other initiatives underway at the company.

Here is an example of the flywheel in action:

By the time Amazon began breaking out the revenue of Amazon Web Services in 2015, the cloud-computing unit had reshaped how businesses used technology. It was also Amazon’s biggest money maker, churning out billions of dollars a year in profit that the company could put to work investing in new services and expansion of its core retail business. Once again, the flywheel in action.

With the announcement that Amazon will be launching 3,236 low earth orbiting satellites to provide broadband internet services from space the potential competitors SpaceX, OneWeb, Telesat and LeoSat took notice. The most vocal was Elon Musk who claimed Amazon was copying SpaceX.

Perhaps those that Amazon’s broadband network will impact the most, the mom and pop stores across the nation, may not have given the announcement a passing thought.

While the Amazon LEO satellites will be providing high-speed internet access to 14 million rural US citizens who do not have access now, they will also be providing these rural consumers access to Amazon’s e-commerce kingdom. While Amazon can offer cloud services to small business in rural communities at the same time, they could be stealing those small business customers with their lower cost e-commerce options.

Screen Shot 2019-04-16 at 5.50.09 AM

According to the Foundation for Rural Service study current rural broadband users account for $1.4 Trillion in an online transaction, 14% of all internet driven transition, or 7% of GDP. However, they’re 19 million users that do not have Internet access or have access too slow for effective e-commerce. Amazons LEO network will provide easy access to these unserved broadband customers and at the same time adding them to the Amazon e-commerce customer base. The flywheel in action.

While SpaceX, OneWeb, Telesat, and LeoSat are planning to provide broadband services, Amazon will be providing broadband service, but the primary goal is the creation of marketing and sales infrastructure, which is a far different business model than the service based competition.  The depth of Amazon’s offerings gives them an advantage.

The problem remains, will Amazon’s space-based broadband access be an advantage or detriments to rural communities? Given Amazon’s market penetration so far, it appears that a ubiquitous internet will transform communities, there will be more information based businesses and fewer street side shops selling commodities that Amazon can deliver for less.

Your thoughts?

A Cyber Economy: The Transactional Value of the Internet in Rural America

The above title is from an iGR White Paper on internet transaction and spending, including the spending by rural internet users. The details are in the study HERE and the Foundation for Rural Service infographic which provides an excellent summary if you are in a hurry.

From the website with links to the white paper and infographic.

This report examines the nature and quantifiable value of online transactions, and draws comparisons between online usage habits among urban and rural consumers. The report was produced by iGR, a market strategy consultancy focused on the wireless and mobile communications industry, and commissioned by the Foundation for Rural Service (FRS).

Major findings include:

  • Internet usage among urban and rural consumers is largely similar.

  • Rural consumers are responsible for approximately 15% of all consumer, internet-driven transactions annually, which equates to more than 10.8 billion online transactions altogether.

  • Internet-driven transactions make up nearly 50% of U.S. gross domestic product (GDP) or $9.6 trillion annually. These transactions are estimated to grow to more than 65% by 2022, to $14 trillion per year.

  • The estimated value of rural online transactions is nearly $1.4 trillion—or 7% of GDP.

This is an impressive study with some interesting numbers, but it only looks at the transaction made by those with a broadband connection, what about the potential of the 14 million rural citizens that do not have any broadband connection?

I predict these 14 million unserved are future users of satellite broadband.

Unlocking the Digital Potential of Rural America

Unlocking the digital potential for rural small businesses across the country could add $47 billion to the U.S. GDP per year. This new study by the U.S. Chamber of Commerce and Amazon estimates the economic impact of digital technologies on rural small businesses based on official statistics and a survey to more than 5,000 rural small businesses across the country.

There are 37 million working-age adults and 18 million households in the rural U.S. While accounting for close to 15% of the adult population and nearly 75% of the country’s land mass, annual revenues of rural businesses represent only 3.7% of total gross revenues in the U.S. economy.

Despite some improvement in the adoption of digital tools by rural businesses over the past decade, this new research shows how increased use of digital technology in rural America could help drive faster growth in the rural economy.

Key findings:

  • Increased adoption of online tools and digital services for businesses across rural America could create more than 360,000 jobs in the next three years.
  • Increased adoption could grow annual revenues of rural small businesses by more than 21% over the next three years – the equivalent of $84.5 billion per year – with states in the South seeing the greatest benefit
  • Online tools and technology have the highest potential impact on rural small businesses with revenue under $100,000

Read the full report HERE, including additional insights and interactive graphics.  Select California for a breakdown by state. 

Hat Tip to barberadvisors.com blog for the link to the Chamber Report.

Bridging The Digital Divide In Nevada County

The Union has the details HERE.

Race Communications’ mission is to “bridge the digital divide in California,” and this project has the potential to do just that for Nevada County. Local businesses are severely limited by what they can accomplish with copper internet speeds. Businesses and professionals looking to relocate to Nevada County won’t even consider doing business here without a fast, reliable internet connection. The Fourth Industrial Revolution, which is changing the way we do everything through the internet of things, requires the same. Technology is changing fast, and everyday activities increasingly rely on the internet. Our county and our local businesses will soon be at a severe disadvantage without fiber internet. We’re all glad it is finally here.

Nevada County High Speed Internet
The Green shading is the Race Communications coverage for Phase 1.