OneWeb: LauncherOne too expensive

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In asking that Virgin Orbit’s lawsuit against internet satellite manufacturer OneWeb be dismissed, OneWeb has claimed that their contract allowed for the cancellation of launches without cause, and that they have a cause anyway, which is that LauncherOne is too pricey.

In its court filing, OneWeb said the $6 million price tag for a LauncherOne mission is two to three times current market prices.

…The original contract, OneWeb claims, allowed for termination without cause, and for prior payments to apply to the termination fee. Those contract termination rules, and the fact that Virgin Orbit has yet to conduct any LauncherOne missions, invalidate Virgin Orbit’s revenue expectations, according to OneWeb. [emphasis mine]

Based on my estimate of the launch market, LauncherOne’s price is higher than others, but not by very much. I think the highlighted text is more significant. LauncherOne had announced plans to fly its first mission last summer. More than a year later that inaugural flight has still not taken place.

In the meantime, this decision by OneWeb is a boon to Russia’s space industry, especially its Soyuz rocket, as it will now get the contracts for launching the majority of OneWeb’s 648-satellite constellation.



  • Col Beausabre

    Another Branson failure (Branson has been involved in a number of failed business ventures, such as Virgin Cola, Virgin Cars, Virgin Publishing, Virgin Clothing and Virgin Brides) that his fanboys in the media will ignore. His real products? Hype and stroking his immense ego.

  • Edward

    Col Beausabre,
    Branson has quite a number of ventures, and we should expect some of them to fail.

    The real problem is that no one really knows how to run a rocket launch company competitively. SpaceX makes it look easy, because they are competing with government agencies or launch companies that grew up serving government agencies. Even with the bar set so low, SpaceX only survived because NASA started its Commercial Resupply Services (COTS, at the time) to provide a reliable customer, and Kistler can tell you that survival was not guaranteed. Investors were still hesitant.

    As far as I know, this is the first time that Branson has moved into a new technology, where a right way to do things is uncertain. Some companies have made rocketry look easy, but problems with Virgin Galactic’s SpaceShipTwo reminds us that it isn’t. Many other companies also are taking longer to get their launch services started than they expected it would take.

    I wish Branson luck with his Virgin Galactic and Virgin Orbit companies, but he separated them as a defense, just in case one of them went under it would not take the other with it.

  • Dick Eagleson

    To me, this lawsuit carries a faint whiff of the Iran-Iraq War, another conflict in which I cared not a whit which side prevailed. It may ultimately come to resemble the Iran-Iraq War in another way – neither side will prevail because of countervailing weaknesses/stupidities on the part of both combatants.

    I’m sure, for instance, that OneWeb did not sign a contract with Virgin Orbit in which the price per launch was left blank. If the price was mutually satisfactory then, there’s no obvious legal basis for voiding the contract now simply because Virgin Orbit has subsequently had a change of mind about the price.

    Why might OneWeb have changed its mind? The significant delay Virgin Orbit has suffered anent getting their vehicle into service could certainly be part of the reason. But OneWeb has had its own difficulties with ramping up satellite production. The twin delays largely cancel one another out.

    A more plausible reason would be that OneWeb has subsequently found a better deal elsewhere, specifically from the Russians. The price demanded by the Russians in the original deal, reached some time ago, was doubtless higher than the price ultimately agreed upon recently for additional Russian launches to replace those originally intended for Virgin Orbit. The ESA being involved in at least some of the original batch of launches would be an additional cost factor – probably one of the reasons the ESA will not be involved in any of the launches called for under the new agreement.

    The newer deal is almost certainly much more favorable to OneWeb than its previous one because the Russians, frankly, are in a far worse bargaining position than they were at the time of the original deal. At that point, Russia hadn’t yet lost essentially all its commercial launch business to SpaceX. Now it has.

    OneWeb was, thus, in a position to drive a hard bargain. An additional motivation for doing so might well have been the previous Russian insistence on getting 49% of the profits accruing from future Russian-originated business for the OneWeb constellation, once it was in service. Additional evidence for this being so is the recent Russian cancellation of its previous plan to allow OneWeb to establish a base of service in Russia. The OneWeb-Russia relationship is now officially dysfunctional on pretty much every level.

    So OneWeb now seems to have sufficient committed launch capacity to get its initial constellation up. Perhaps the deal also includes options for additional future launches to keep the constellation current. If so, that will soon constitute Russia’s entire book of commercial business.

    But Russian cancellation of the deal for OneWeb to operate in Russia – even when Russia was to get nearly half the profits of such use – suggests the Russians didn’t foresee total Russian-based revenues as likely being very large. I’d be inclined to agree.

    So OneWeb is now faced with finding additional clients to replace the Russians – and with hoping the Chinese don’t pull a similar Lucy-with-the-football move anent their own potentially much more lucrative domestic market. Which could well happen, given that China has already announced plans for a future LEO broadband constellation of its own.

    OneWeb, which deliberately crippled the architecture of its network by deleting inter-satellite cross-links and on-orbit routing – at the behest of both Russia and China, neither of which wanted their citizens able to access a service that would lie outside the boundaries of their respective Internet firewall/censorship arrangements – might now get shut out by both nations anyway.

    Virgin Orbit’s interest in getting the OneWeb launches back – or at least some financial compensation for their loss – is likely based on both its lengthy delay in establishing service and the comparative difficulty it would face trying to follow Rocket Lab’s path to reusability. Launching from land and recovering boosters at sea without benefit of any boostback to shorten the stand-off distance involved will probably drive Rocket Lab to employment of at least two sets of recovery ships and helos per launch site in order to support the launch cadence it wishes to reach and maintain. With most of Virgin Orbit’s launches intended to take place from a considerable distance at sea already, any notional recovery assets would probably have even farther to go to return to shore with recovered rockets than will Rocket Lab’s.

    Neither Virgin Orbit nor OneWeb look particularly likely to be the leaders in their respective businesses going forward. Both will, in my view, be doing well to stay in business even as secondary players.

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