October 31, 2018 / 11:02 AM / 16 days ago

CORRECTED-RPT-INSIGHT-Musk shakes up SpaceX in race to make satellite launch window - sources

 (Remove Kim Schulze from paragraph 15. The company said Schulze
is still employed by SpaceX.)
    By Eric M. Johnson and Joey Roulette
    SEATTLE/ORLANDO, Fla., Oct 31 (Reuters) - SpaceX Chief
Executive Officer Elon Musk flew to the Seattle area in June for
meetings with engineers leading a satellite launch project
crucial to his space company's growth.
    Within hours of landing, Musk had fired at least seven
members of the program's senior management team at the Redmond,
Washington, office, the culmination of disagreements over the
pace at which the team was developing and testing its Starlink
satellites, according to the two SpaceX employees with direct
knowledge of the situation.
    Known for pushing aggressive deadlines, Musk quickly brought
in new managers from SpaceX headquarters in California to
replace a number of the managers he fired. Their mandate: Launch
SpaceX's first batch of U.S.-made satellites by the middle of
next year, the sources said. 
    The management shakeup and the launch timeline, previously
unreported, illustrate how quickly Musk wants to bring online
SpaceX's Starlink program, which is competing with OneWeb and
Canada's Telesat to be first to market with a new
satellite-based Internet service.
    Those services - essentially a constellation of satellites
that will bring high-speed Internet to rural and suburban
locations globally - are key to generating the cash that
privately-held SpaceX needs to fund Musk's real dream of
developing a new rocket capable of flying paying customers to
the moon and eventually trying to colonize Mars.
    "It would be like rebuilding the Internet in space," Musk
told an audience in 2015 when he unveiled Starlink. "The goal
would be to have a majority of long-distance Internet traffic go
over this network." 
    But the program is struggling to hire and retain staff, the
employees said. Currently, about 300 SpaceX employees work on
Starlink in Redmond, the sources said. According to GeekWire,
Musk said in 2015 the Redmond operation would have "probably
several hundred people, maybe a thousand people" after 3-4 years
in operation.
    So far this year, about 50 employees left the company "on
their own accord," one of the SpaceX employees said, though the
reason for those departures was unclear. Overall, SpaceX employs
more than 6,000 staff. 
    As of Tuesday, there were 22 job openings - including a job
making espresso drinks - for the Redmond office, according to
SpaceX's website. 
    SpaceX spokeswoman Eva Behrend told Reuters the Redmond
office remains an essential part of the company's efforts to
build a next-generation satellite network.
    "Given the success of our recent Starlink demonstration
satellites, we have incorporated lessons learned and
re-organized to allow for the next design iteration to be flown
in short order," Behrend said. 
    She had no further comment on the reorganization or the
launch window, but noted the strategy was similar to the rapid
iteration in design and testing which led to the success of its
rockets.
    Among the managers fired from the Redmond office was SpaceX
Vice President of Satellites Rajeev Badyal, an engineering and
hardware veteran of Microsoft Corp          and Hewlett-Packard,
and top designer Mark Krebs, who worked in Google's satellite
and aircraft division, the employees said. Krebs declined to
comment, and Badyal did not respond to requests for comment.
    The management shakeup followed in-fighting over pressure
from Musk to speed up satellite testing schedules, one of the
sources said. SpaceX's Behrend offered no comment on the matter.
    Culture was also a challenge for recent hires, a second
source said. A number of the managers had been hired from nearby
technology giant Microsoft, where workers were more accustomed
to longer development schedules than Musk's famously short
deadlines. 
    "Rajeev wanted three more iterations of test satellites,"
one of the sources said. "Elon thinks we can do the job with
cheaper and simpler satellites, sooner."
    A billionaire and Chief Executive Officer of Tesla Inc
        , Musk is known for ambitious projects ranging from auto
electrification and rocket-building to high-speed transit
tunnels.             
    A Musk trust owns 54 percent of the outstanding stock of
SpaceX, according to a 2016 U.S. Securities and Exchange
Commission filing, SpaceX's most recent.             
            
    JUNE 2019 LAUNCH GOAL
    SpaceX has said it would launch its satellites in phases
through 2024. It goal of having Internet service available in
2020 is "pretty much on target" with an initial satellite launch
by mid-2019, one of the sources said. 
    OneWeb aims for a first launch between December and February
2019, while Telesat was targeting 2022 for broadband services.
            
    SpaceX employees told Reuters that two Starlink test
satellites launched in February, dubbed Tintin A and B, were
functioning as intended. The company is refining the orbital
path of the satellites after the U.S. Federal Communications
Commission, which oversees satellites in orbit, approved a
request from SpaceX to expand Tintins' altitude range, one of
the sources said. 
    The FCC confirmed SpaceX's modifications, which have not
been reported previously, but declined further comment. 
    "We're using the Tintins to explore that modification," one
of the SpaceX employee sources said. "They're happy and healthy
and we're talking with them every time they pass a ground
station, dozens of times a day." 
    SpaceX engineers have used the two test satellites to play
online video games at SpaceX headquarters in Hawthorne,
California and the Redmond office, the source said.
    "We were streaming 4k YouTube and playing 'Counter-Strike:
Global Offensive' from Hawthorne to Redmond in the first week,"
the person added. 
       
    MORE SATELLITES
    In March, the FCC approved Musk's plan to beam down Internet
signals from 4,425 small satellites launched into standard
low-Earth orbit - more than two times the total number of active
satellites there presently. 
    One SpaceX engineer told Reuters the company has studied
plans to add roughly 10,000 additional satellites after its
first array is live to meet bandwidth demand in the coming 20
years. Behrend declined to comment on the plans and referred to
a previous FCC filing, which states an additional 7,518
satellites are under consideration. 
    Such a move would keep it in the race to expand affordable
high-speed Internet access to billions of people in rural or
suburban areas globally. The Satellite Industry Association, a
lobby group, estimates the global market for satellite-based
broadband and television services is worth $127.7 billion,
dwarfing the roughly $5.5 billion satellite launch services
market. 
    McLean, Virginia-based OneWeb is working to provide internet
service from roughly 900 satellites after raising more than $2
billion from SoftBank, the Coca-Cola Company        and others.
    Telesat, backed by Loral Space & Communications Inc
        , said on Oct. 23 it conducted the first-ever live test
of in-flight broadband via a satellite in low-Earth orbit, and
was targeting 2022 for broadband services from a constellation
of some 300 satellites. 
    SpaceX aims to provide Internet service by linking its
satellites to ground stations and mountable terminals about the
size of a pizza box at homes or businesses, according to the FCC
filing. The U.S. market for broadband is already dominated by
several incumbent communications companies, including Comcast
Corporation          . Comcast declined to comment on the
potential new competition.
    While SpaceX's model of reusing rockets has generated cash,
it is not enough to cover the roughly $5 billion cost to develop
its Big Falcon Rocket that Musk wants one day to fly to Mars.
            
    "There had to be a much bigger idea for generating cash to
basically realize the Mars plans," said one of the SpaceX
employees. "What better idea than to put Comcast out of
business?" 

    
 (Reporting by Eric M. Johnson in Seattle and Joey Roulette in
Orlando, Florida; editing by Greg Mitchell and Edward Tobin)
  
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