EU Gives Old Boys Club European Consortium 6 Billion Euros for LEO

EU Gives Old Boys Club European Consortium 6 Billion Euros for LEO

Every major world power bloc wants its own LEO satellite constellation. The EU is no exception. It has agreed to give a European consortium consisting of SES, Eutelsat, and Hipasat, 6 billion Euros to develop and deploy by 2030 a total of 290 LEO and MEO satellites. Obviously the EU wants the security and privacy of a homegrown communication system to be called IRIS that could back up terrestrial and subsea cables. I understand the impulse. The Europeans face an aggressive Russia and a surveillance happy US government with a President who is more comfortable with dictators than the democratically elected. 

At the same time it is clear that there will be glut of low lying satellite capacity in the near future. Starlink has obviously a huge lead over the European project. In addition, marketing juggernaut Amazon began deployment in early 2024 of its 3,236 satellite system. Customer acquisition costs often determine the success or failure of a new business undertaking. No company is as well poised as Amazon to disrupt the satellite service provider industry. So does this new European satellite network end up costing the EU a lot of money, but remains largely empty? Is it another European technological turkey? If there is really unquenched LEO demand here in Europe, why do European operators need 6 billion Euros in free money from the EU? The EU and EU member governments will be undoubtedly anchor tenants, but the free market dictates that this system must compete on equal terms with formidable digital giant competitors. Government customers will not suffice to cover operating expenses let alone yield a satisfactory rate of return. 

Amazon has a huge set of European customers to whom it can market its LEOs at low incremental cost. Furthermore, a 35,000 Chinese satellite deployment is slated to begin soon. It is unlikely the EU home team of SES, Eutelsat, and Hispasat has the marketing and sales acumen to succeed. None of them have any experience in serving mass markets; indeed, they appear to be lethargic big companies accustomed to charging huge sums of money. SES wants millions per month for a 10G dedicated private line link on its MEO system. As far I am concerned, these folks are from Pluto. 

What is particularly annoying to me is how the EU always end up subsidizing industry incumbents. Where are the new, innovative European LEO companies? The old European economic elite always gets preferential treatment and blocks new players. In contrast, Microsoft, Google, Amazon, SpaceX, Apple, and other US tech giants were all startups. For more details. 

Generic global map of communication satellites



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