Telstra Partners With OneWeb to Compete With Starlink

Telstra partners with oneweb

Telstra could launch satellite Internet service soon

Telstra has announced its partnership with OneWeb, a UK-based broadband satellite Internet service provider (ISP). The partnership marks the first time one of Australia’s major telcos will likely enter the broadband satellite Internet market, competing directly with Starlink.

Recall we reported last year that Starlink, Elon Musk’s satellite ISP, launched in Australia. Starlink came as a breath of fresh air to rural Australians who had a hard time connecting to the web given the sparse mobile network coverage in the bush, and the laggy performance of Sky Muster, the NBN’s broadband ISP.

While Starlink’s launch created significant competition for Sky Muster in regional Australia, Telstra’s recent partnership will bring even more competition to the satellite ISP market – more specifically Starlink, which is the only other ISP in Australia that uses LEO (Low Earth Orbit) satellites as opposed to the traditional geostationary satellites used by Sky Muster.

In this article, we’ll tell you all about Telstra’s partnership with OneWeb, as well as how the telco could compete with Starlink and Sky Muster.

What’s the big deal about LEO satellites when compared to geostationary satellites?

Traditional communications satellites are geostationary – that is, they remain in a fixed position over 35,000 km above Earth. This far distance presents their most significant problem when used for broadband Internet solutions – extremely high latency.

Latency refers to the speed it takes for data to travel from Point A to Point B and back to Point A – in this case, from Earth to the satellite in space, and back to earth. If the latency is too high, the user will experience lag – slow, sluggish Internet usage. The lower the latency is, the smother your Internet experience.

Low-Earth orbit (LEO) satellites solve the latency problem by orbiting the Earth at a shorter distance. LEO satellites are positioned around 500 km to 2,000 km above Earth. These satellites have to be in constant motion to avoid succumbing to the gravitational pull at such low altitudes, moving at around 27,000 km/h compared to 11,000 km/h for traditional satellites.

Because of how close to earth LEO satellites are, they are capable of significantly reducing latency to 20 to 40 milliseconds, compared to traditional satellites which can be as high as 600 milliseconds.

For rural Australians who can barely get any coverage from mobile and fixed networks, LEO satellite Internet is a great idea. The nature of satellites in orbit means that they have worldwide coverage. This is also great for other sectors that find it hard to access Internet services, such as mining, aviation, or even IoT technology in remote areas.

Telstra and OneWeb to bring broadband satellite Internet to Australia

Telstra CEO Andrew Penn has announced a Memorandum of Understanding (MoU) with OneWeb, a broadband satellite Internet service partly owned by the government of the UK. This makes Telstra the first and only major Australian telco to tackle the satellite Internet market.

OneWeb uses LEO satellites for its Internet service. The company has already launched 428 LEO satellited into orbit, which is around one-third of their targeted 648. OneWeb plans on becoming a worldwide satellite Internet provider, and this recent deal with Telstra brings them closer to that goal.

OneWeb claims that their average latency is 32 milliseconds, which is a clear improvement from traditional satellite services like Sky Muster. With such low latency, users can expect lag-free browsing similar to some mobile networks.

Note that the deal is not final yet, but we can expect it to be at some point this year. At that time, Australians in the bush will have a more competitive environment for Internet service, with a choice between Sky Muster, Starlink, and Telstra/OneWeb.

Can Telstra and OneWeb compete with Starlink and Sky Muster?

For Telstra, this move seems to be in direct competition with Sky Muster, although we can see that the more competitive opponent in the market is Starlink. When it comes to the NBN’s Sky Muster, Telstra is not holding any punches. The telco’s general counsel Lyndall Stoyles told ABC that, “We have not been referring customers to the NBN Sky Muster service.”

Sky Muster is easy prey for Telstra. The satellite service was the NBN’s answer to lack of Internet service in rural Australia. However, because they chose the geostationary option, Sky Muster’s service is riddled with lag. Australians in the bush have complained endlessly about the service to no avail, leaving room for LEO satellite Internet providers.

Unfortunately for the NBN, the two geostationary satellites in launched in 2015/2016 had a life span of 15 years, which means almost they have only gone through less than half of their lifespan. With Starlink (and now Telstra) stepping into the market, Sky Muster clearly has a lot to worry about, but the challenge has come quite early given the many years ahead before their satellites exhaust their lifespan.

Starlink is a tougher opponent for Telstra. The service belongs to billionaire Elon Musk, who plans on launching more that 30,000 LEO satellites, dwarfing OneWeb’s 648 goal. And so far, Starlink already has 1,469 LEO satellites in orbit, again dwarfing OneWeb’s 428.

Starlink’s advantages don’t end there. While Telstra and OneWeb are simply in the MoU stage, Starlink already launched in Australia last year. The satellite provider is currently available in NSW, Victoria, Western Australia, South Australia, Tasmania, and Queensland.

Starlink has already gained 2,000 Australian customers in its short young life, causing disgruntled Sky Muster customers to flee. Sky Muster has seen significant declines in subscriptions ever since Starlink came to Australia.

Telstra, however, will likely have a better chance than Sky Muster when facing Starlink. Telstra will likely have to offer competitive pricing, given Starlink’s exotic price tag of $139 per month in addition to a one-time cost of $709. That is quite expensive for Internet service, so perhaps a more budget friendly option (if Telstra chooses that strategy) can really shake the market.

Final words

Australians who don’t live in urban areas don’t have a lot of options when it comes to Internet service. Mobile infrastructure costs too much for telcos to install in such areas, because there just aren’t enough customers there to recoup the investment. 

Broadband LEO satellite Internet has emerged as the logical answer. Not only does the service provide great coverage, but it also offers fast download speeds and low latency. Starlink, for instance, offers speeds between 50Mbps and 150Mbps, with an average of 100Mbps. For Australians in the bush, such numbers are a dream come true.

With Telstra and OneWeb stepping into the market, perhaps we could see some pricing competition. Starlink is quite expensive, leaving room for Telstra to compete at a lower price point – if they go that route. However it goes, regional Australians can expect to have more options for Internet service than they did just 2 years ago.

Neil Aitken

Having worked in 3 countries for 4 telcos on both voice and data products, Neil is in a position to give you the inside track. Get beyond the marketing messages to the best plan for you.