Amazon To Invest $10B In A Constellation Of Broadband Satellites, Compete With Musk's SpaceX

Amazon.com, Inc AMZN said Thursday it was investing $10 billion to put in place a constellation of low earth orbit broadband satellites — under a plan dubbed “Project Kuiper.”

What Happened

The satellites would provide internet access to areas that are devoid of such facilities. The e-commerce giant acknowledged that a project of such scale “requires significant effort and resources.”

“There are still too many places where broadband access is unreliable or where it doesn’t exist at all. Kuiper will change that," Amazon Vice President Dave Limp said in a statement. "Our $10 billion investment will create jobs and infrastructure around the United States that will help us close this gap.”

The project is to be designed and tested at the company’s new research and development facility opening in Redmond, Washington. The Jeff Bezos-led company said it was hiring for the Kuiper team.

Why It Matters

The annoucement of the investment in Project Kuiper came as Amazon received approval from the Federal Communications Commission on Thursday.

Elon Musk-led Space Exploration Company, or SpaceX, has already launched 500 satellites out of the 12,000 potentially needed to run a similar service, according to Reuters. The company’s Starlink broadband service is expected to become functional in the United States and Canada by the end of 2020.

The SpaceX satellites are also likely to cost around $10 billion, according to the company's president, Gwynne Shotwell.

In March, Musk denied there were any plans to spinoff Starlink or hold an IPO. 

Analysts believe that if the low-latency broadband system takes off, the Musk-led space firm could achieve a $120 billion valuation, but if not it could drop to $5 billion. 

Price Action 

Amazon shares closed 0.6% higher at $3,051.88 on Thursday and gained 5% in the after-hours session to $3,204.60.

Photo courtesy: SpaceX on Unsplash