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Q&A LeoSat

LeoSat Enterprises wasestablished in 2013 by Cliff Anders(Chairman) and Phil Marlar (ChiefOperating Officer), two formerSchlumberger executives with along history of working in the Oil &Gas exploration and cruise-linebusiness. Realizing that thesolution they were developingwould also be perfectly suited to anumber of ver tical markets(Finance, Government andEnterprise), LeoSat was formed toleverage proven satell itecommunications technology tomanufacture and launch a new low-ear th-orbit (LEO) satell iteconstellation that will provide a trulyglobal, enterprise grade, high-speed and secure data network.In addition to the two founders,LeoSat comprises a strong team ofseasoned business and technicalprofessionals with a wealth ofexpertise and experience acrossthe satellite, telecom, business andfinance sectors.

Global, low-latencydata networkLeoSat Enterprises was established in 2013 with the intentionof launching a low Earth orbit (LEO) satellite constellation toprovide a global, low-latency, enterprise-grade data network.The unique high throughput satellite (HTS) constellation wasdesigned to serve the enterprise, government, maritime, oil andgas, and mobile backhaul markets, among others. AmySaunders met with Mark Rigolle, CEO of LeoSat Enterprises, tofind out more about the project, its target markets and itsprogress to date.

Mark Rigolle, CEO of LeoSatEnterprises

LeoSat plan to launch two early bird satellites in early 2018. These will besmaller satellites to test part of our technology,

Q&A LeoSat

Question: Can you provide anoverview of the foundation of LeoSatEnterprises?Mark Rigolle: LeoSat Enterprises wasestablished in 2013 by Cliff Anders andPhil Marlar, its current Chairman andChief Operating Officer. They set aboutdesigning a global low Earth orbit (LEO)satellite constellation to serve the oiland gas and cruise businesses, andafter having finalized the designrealized that it would also be well-suitedfor government, telecom backhaul andenterprise applications. Since then wehave put together a team with strongbackgrounds in the satell ite,telecommunications, business andfinance sectors to turn the project intoan operational company.

Question: What can you tell us aboutthe LeoSat constellation design?

Mark Rigolle: We’re developing a newconstellation that has been designedfrom the ground up to offer anenterprise-grade service, which makesit different from all of the other satelliteconstellations that have been launchedor announced. Our design will provideas much uplink as downlink bandwidth.

The constellation will feature 78satellites in polar orbit in six planes,providing total ubiquity. We’ll have bettercoverage in the higher latitudes thanany other system, including GEO andMEO satell ites. The data will bedelivered point-to-point via a fully-redundant mesh network that workswith inter-satellite laser links and apatent-pending routing protocol. Eachsatellite will have four laser links, andwill be connected to the satellites aheadof it and behind it in the same plane asitself, as well as to the adjacentsatellites in the two adjacent planes. Assuch, every spot on the globe will becovered by at least two satellites. Datawill be uplinked from the customer’s site,and if the destination is not in view ofthe first satellite, the data will beforwarded to the next satellite in thenetwork and so on until the finaldestination is in view, where it will bedownlinked to the client’s device.

As traffic increases, we have theoption to add more satellites, up to atotal of 108, into the planes. In terms ofcustomer-facing capacity, each satellitewill have 10 Ka-band steerableantennas with up to 1.6Gbps ofthroughput each. There will be on-boardprocessing, but in a simpler form thanterrestrial networks. We will provision

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Q&A LeoSat

primary, secondary and tertiary circuitsfor all of our customers in case of aproblem somewhere in the network toensure full reliability.

Each of the satellites will weigh 1.5t;essentially, they’ll be very similar to theIr idium Next and O3b satell ites.However, we need a little more realestate on the payloads, an extra 20cmon either side, to allow for the inter-satell ite laser l ink hardware. Theelectronics on the satellites will bedesigned for a 10-year lifespan, butbased on my experience so far, that’sjust the guaranteed life. In all likelihood,we’ll be able to squeeze considerablymore out of it in reality.

We think that at least 90 percent ofour business will be point-to-point. Assuch, prior to the launch of theconstellation, we’re looking to establishjust two gateways to cover the globe,which we can grow as required. TheIridium Next network is very similar,although it’s more narrow-band and isoptimized for voice. As we won’t be

competing with Iridium due to ourdifferent target markets, and becauseof the similarities, we may be able toco-locate with them.

Question: What can you tell us aboutthe progress and expected timelinefor the constellation?Mark Rigolle: Right now, we’vecompleted the design, selected ThalesAlenia Space as the vendor, andcompleted a feasibility study with them.We’ve done our market research andidentified our verticals as enterprise,Internet and cellular backhaul, oil andgas, maritime and government.

We plan to launch two early birdsatellites in early 2018. These will besmaller satellites to test part of ourtechnology, and also to provide certainservices to some customers who don’twant to wait for the full constellationlaunch. With these early birds, we’ll alsosecure our frequencies by bringingthem into use. While this isn’t an urgentrequirement as our filings are good until

2021, it will be nice to know that they’reours. In parallel, we’ll be building our78 satellites plus six spares, which we’llstart launching in 2019. We plan to havethe full constellation up by 2020.

For the launch, we’ll be able to puteight satellites into orbit at once on aFalcon 9 vehicle, using the samedispensers as other operators.However, we plan to use a selection oflaunch service providers. As we’ll have13 satellites in each plane, if we launcheight at once, the math doesn’t work,so we’ll probably have to do one Falconlaunch and one Soyuz launch per plane,for example.

In terms of funding, our cash-flowmodel is typical of most satellites. It’llturn cash-flow-positive very quickly afterthe constellation is fully launched,because the bulk of the cost is capex,which is all completed by the launchdate. Better still from a cash-flowperspective, in our case, we’ll also gainrevenues as we build out theconstellation, activating a partial service

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Q&A LeoSat

that will improve with every launch.We’re looking at a total funding

requirement of US$3.5bn. In December2015, we launched our round A offunding, which will raise US$100m. Thisis faring well so far, and we’ve got agroup of purely financial investorsinterested. Once round A is completed,we can move onto phase B, whereThales Alenia Space will detail out thedesign to the sub-component parts.That should take less than one year,and, when it’s completed, we’ll beginconstruction.

Question: With so many satellites inorbit on Ka-band, will interference bea concern?Mark Rigolle: The InternationalTelecommunication Union (ITU) isfacilitating a coordination processbetween Ka-band LEO, MEO and GEOoperators to protect the businesses ofthe users of this spectrum. They’vedecided to license up to five LEOconstellations in Ka-band. Our filing isnumber two, so we’re well-positioned.

To tackle potential adjacent satelliteinterference (ASI), our antennas will begimbaled. We’ve set up our constellationsuch that, when one of our satellitescomes within 3° of another satellite, thetraffic will switch to the next satellite toavoid interference. It’s an addedcomplexity in the algorithm to provisionthe link, but it can be fully-automated.

Question: How will the LeoSatconstellation compare withcompeting technologies?Mark Rigolle: We don’t think that wehave any true competitors in the satellitesector. We are unique in the attributesthat we will be able to deliver over ournetwork. It ’s symmetrical andubiquitous, which fibre will probablynever deliver, and we can direct beamsto enable immediate coverage – there’sno waiting for two or three years forcable to be installed.

Our network is different from others,which have always been gap-fillingideas. The problem with any gap-filling-based strategy is that gaps tend to goaway over time. If there are a sufficientnumber of satell ite customerssomewhere, telecommunicationscompanies can justify installing fibreinto that area, and satellite gets phasedout. We are set up to compete with andeven exceed fibre on its own turf.

One of the greatest benefits of ournetwork compared with alternatives isthe low latency. As light travels faster infree space, thanks to our inter-satellitelaser communication system, we’llreduce our latency to the bare minimum.We like to quote New York to Tokyo,which takes 200ms via fibre: We will beable to do it in 100ms.

The low latency means that ournetwork is ideal for people with time-sensitive requirements. Latency usuallyisn’t that important for contributing videoacross the globe, but when it comes tolive sports, a second of latency canmake all the difference, especially whenit comes to betting. Trading, enterprise,banking and government applicationsall benefit from the reduced latency. Inthe oil and gas sector, if a customer isdrilling in the wrong location, or the drillhead is malfunctioning, that informationcan be relayed faster with our network,providing massive cost savings. ForUAVs, the lower latency makes all thedifference to reaction times andmission-critical data relays.

Question: What are the keydifferences between the LeoSat

constellation and other constell-ations?Mark Rigolle: This par ticularconstellation is extremely capacity-efficient. In other LEO constellationswithout inter-satellite links, the satellitesover areas of the globe with nopopulation are literally doing nothing.This is a sub-optimal use of capex, asthe satellite is still aging during that time.In our network, when a satellite is notbeing used at full capacity for data goingup or down, it can instead be used toprovision other routes, enablingproductive use of all satellites andadding to revenue generation. Theresponse that we’re getting suggeststhat investors are very keen on thataspect.

No other satellite constellation hasbeen set up to do precisely what we do.Our constellation has a very clearlyidentified target market, which can bereached without having to makecustomer installations at millions ofhomes. With business-to-consumer(B2C) models, the effort required toreach millions of homes is enormous.In contrast, in our business-to-business(B2B) model, we’ll probably have less

A new constellation that has been designed from the ground up to offer anenterprise-grade service.

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Q&A LeoSat

than 1,000 customers when we’re full.The fact that we don’t need all of the

78 satellites in orbit to start generatingrevenue also sets us apart. As soon aswe have 13 satellites in one plane,which is how we’re planning ourlaunches, we’ll have coverage from thePoles to something like 72° North andSouth, which will provide a fully-continuous service in that region. We’llalso have batch coverage globally,which means that every day, each ofthose satellites will see every part ofEarth twice, which allows data transfersfrom oil rigs and such. As we add thenext 13 satell ites to a secondperpendicular plane, continuouscoverage expands to around 60° Northand South. As soon as we have 54satellites, we’ll have a fully-continuousservice over 100 percent of the globe.Increasing that to 78 providesredundancy at the equator, with twosatellites in view of any location, theequator being a difficult area for usbecause of the spacing between theplanes.

Question: What observations can youshare about your target market?Mark Rigolle: Even with the explosionof data usage that we’ve seen in thepast 5-10 years, people don’t realizewhat that explosion will mean if itcontinues further down the line. It’sdown to increased consumption peruser, and also the growing number ofconsumers, both at the individual leveland the enterprise level.

With the advent of 4G and 5G,people haven’t even started to realizewhat that means for their systems.Cellular backhaul via GEO satellite, forexample, is sub-optimal due to thelatencies involved. In addition, all of thedata packets have to be split into theircomponent parts and then recomposedat the other end, which again is notideal. In contrast, the LeoSatconstellation has been designed basedon a function of real needs that alreadyexist and which continue to grow. Its lowlatency and ability to relay data in itsnative form makes it an ideal solutionfor the roll-out of 4G and 5G networksin the future.

There’s also been questions ofovercapacity and market demand.Nobody says that there’s only room forone or two GEO satellites, that wouldbe ridiculous. But when you talk to

people about LEO and MEOconstellations, they say, “Surely thereisn’t room for that many?” I respond,“Why not?” Satellites don’t carry evenone percent of the data being relayedaround the world. If you compare ourcapacity to all of the satellites in orbittoday, we’re not adding capacity that willcompete with them. We’re addingcapacity that will address existing andgrowing needs that would otherwise befilled terrestrially and will prefer LeoSatfor reasons of speed and/or security.

The security issue is growing moreimportant each day, as threats become

ever-more sophisticated and pressing.When we do a data transfer from, forexample, a bank in the UK to a bank inHong Kong, that data doesn’t touchanother network. In contrast, with fibre,the data might be transported to asubmarine cable landing point inSouthampton, and then to somewherein the Suez Canal or Dubai, and then onto another exchange on another fibrecable across the Indian Ocean, beforereaching Hong Kong and beingtransferred to yet another network. Thereare so many places where that data canbe intercepted or tampered with.

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