How the Law Struggles to Keep Up with Technology

OneWeb Satellite Headquarters, a subsidiary of OneWebHoldings

OneWeb Satellite Headquarters, a subsidiary of OneWebHoldings

The law is arguably the American institution that is most resistant to change. After all, lawyers are the only folks who still officially use Latin in their conversations and writings.1 Lawyers and judges say stuff like “voir dire” and “ipso facto” with a perfectly straight face. Judge and justices belonging to the Antonin Scalia School of Judicial Interpretation (a/k/a/ “Originalism”) interpret law and policy by asking themselves what the authors of the U.S. Constitution would have meant by the phrases used in the Constitution and very early U.S. Supreme Court opinions.2 After all, one of the desirable attributes of the law is that it remain stable and predictable. But being slow to adapt in a time of rapid, dramatic change can be a very bad thing.

So when the U.S. Bankruptcy Courts meet satellite communications, well, it gets pretty ugly.

OneWebHoldings, LLC is the holding company for some nineteen subsidiaries, scattered around the globe. It business goal was to create a satellite-hosted service for cell phone communications. No more cell phone towers; everyone on the planet could connect to one of a projected 720 low-orbit satellites instead.3

We’ll have to get geeky for a minute. The project could have been done with just three satellites in geostationary orbit. But to remain over the same place on the planet all the time, a satellite has to be 26,199 miles above the earth, and on the equator. WC will spare you the details of the orbital mechanics. The problem with geostaionary (also called “geosynchronous”) satellites is latency. Latency is the amount of time it takes for a radio signal, travelling at the speed of light, to get up to the satellite and then back down to whoever you are talking to on your cell phone. In the case of geostationary satellites, that time is about 600 milliseconds each way; 1.2 seconds. Less if you are directly under the satellite on equator. More if you are midway between satellites and closer to a pole. Anyone who lived in Alaska in the pre-fiber optic cable days, knows just how bad it is. Having a conversation with someone meant learning to wait. A lot.

You can avoid the latency problem by having the satellites be in lower orbit. By skimming the satellites right on top of the atmosphere, OneWebHoldings demonstrated broadband speeds of more than 400 megabits per second (Mbps) with latency of 32 just milliseconds. The problem, of course, is that the satellite has to move quite fast in relation to the earth’s surface at the relatively low altitude. In a matter of minutes, the satellite might be below the horizon and you’d be disconnected. You solve that problem by launching lots and lots of satellites – 720 in all – and developing software that transparently hands the signal off from one satellite to the next, without the user noticing. Ambitious. And very, very expensive.

After $3 billion in loans and capital, and an estimated $1.5 – 2.0 billion in unpaid creditors, OneWebHoldings had gotten 74 of its 720 satellites in orbit. If you do the math, you can see the cost of the hole project would make the cost of a phone call hideously expensive. So OneWebHoldings filed Chapter 11 bankruptcy, laid off 85% of its workforce and mostly closed its doors.

If you think about it for a moment, you’ll realize that to the extent the satellites have value, it’s only as part of the whole package: satellites, signal-shifting technology and licenses to the bandwidth. Without the other two pieces, the 74 satellites in orbit are so much space debris. And since the main reason for the Chapter 11 bankruptcy are those breath-taking cost overruns, who wants this economically unfeasible white elephant?4

The broadcast spectrum licenses have separate value. The switching technology may. The satellites? Pretty problematic.

Ordinarily, in a bankruptcy case you sell the assets to someone else in the same line of business and use the proceed to pay some of the creditors. SpaceX, the company run by Elon Musk, has a satellite-based cell phone service system called SpaceLink, and has, at this writing, at least 362 satellites in orbit. But SpaceLink satellites use different orbits and different technology than OneWebHoldings, and are likely useless to SpaceLink.

So what is a bankruptcy judge supposed to do with 74 satellites? See what WC means about technology getting ahead of the law? Will they collide with other satellites? Fall on our heads? It will be interesting to watch. The case is assigned to Bankruptcy Judge Robert D. Drain in the Southern District of New York. WC wishes him luck.


  1. The Catholic and Anglican Churches still use it, but it is unofficial for some decades now. Biologists and botanists use it in the official scientific names of plants and animals, but that is fake Latin, neologisms, the whole lot. 
  2. “Tell me, Mr. Madison, what did you mean by “interstate commerce” in the context of broadband cellular telephone communications?” Or, “Tell me, Mr. Jefferson, what did the constitutional convention mean ‘exclusive right to their respective writings and discoveries’ in the context of software patents”? 
  3. The company was originally called WorldVu, which would at least be easier to write, if a grammar atrocity. 
  4. OneWebHoldings blamed COVID-19 for its failure. At the most, the economic turmoil hastened the inevitable. A $30 billion capital cost would require a truly enormous number of customers to generate a return. Maybe as much as an order of magnitude more than the system can support.