Who Exactly Does Cummings Work For? 2

We're all gradually learning more about the maverick Dominic Cummings, his modus operandi and the fact he's indispensable to Boris because basically he's running things! In addition to hiring and firing at Downing Street, running Covid policy, shaking up the Civil Service and putting a rocket under the Military and Security Services, he's also been satisfying his inner-geek by buying some satellites. Unfortunately it seems they are the wrong kind, rather expensive and his list of enemies grows ever larger. This from the Guardian on June 26th as the story first broke:-  

'We've bought the wrong satellites': UK tech gamble baffles experts

The UK government’s plan to invest hundreds of millions of pounds in a satellite broadband company has been described as “nonsensical” by experts, who say the company doesn’t even make the right type of satellite the country needs after Brexit. The investment in OneWeb, first reported on Thursday night, is intended to mitigate the UK’s loss of access to the EU’s Galileo satellite navigation system.

But OneWeb – in which the UK will own a 20% stake following the investment – currently operates a completely different type of satellite network from that typically used to run such navigation systems. “The fundamental starting point is, yes, we’ve bought the wrong satellites,” said Dr Bleddyn Bowen, a space policy expert at the University of Leicester. “OneWeb is working on basically the same idea as Elon Musk’s Starlink: a mega-constellation of satellites in low Earth orbit, which are used to connect people on the ground to the internet.

“What’s happened is that the very talented lobbyists at OneWeb have convinced the government that we can completely redesign some of the satellites to piggyback a navigation payload on it. It’s bolting an unproven technology on to a mega-constellation that’s designed to do something else. It’s a tech and business gamble.”

Giles Thorne, a research analyst at Jeffries, agreed. “This situation is nonsensical to me,” he said. “This situation looks like nationalism trumping solid industrial policy.” Every major positioning system currently in use – America’s GPS, Russia’s Glonass, China’s BeiDou, and Galileo, the EU project that the UK helped design before losing access to due to Brexit – is in a medium Earth orbit, Thorne said, approximately 20,000km from Earth. OneWeb’s satellites, 74 of which have already been launched, are in a low Earth orbit, just 1,200km up.

Bowen said: “If you want to replace GPS for military-grade systems, where you need encrypted, secure signals that are precise to centimetres, I’m not sure you can do that on satellites as small as OneWeb’s.” Rather than being selected for the quality of the offering, Thorne suggested the investment was made to suit “a nationalist agenda”. OneWeb is nominally a UK business, with a UK HQ and spectrum rights registered in the UK through Ofcom.

“Let’s give the government the benefit of the doubt: if the output the government wants is a UK-branded positioning system, a projection of UK power around the world and supporting the UK satellite industry base, then it is probably quicker and cheaper to smash the square peg of OneWeb into the round hole of a Galileo replacement than it is to do it from scratch,” said Thorne.

On Friday evening a government spokesperson said: “We have made clear our ambitions for space and are developing a new national space strategy to bring long-term strategic and commercial benefits to the UK. We are in regular discussions with the space industry as part of this work.”

OneWeb filed for bankruptcy in March in the US, where most of its operations are located, after failing to secure new funding. Previously, the UK aimed to build its own global navigation satellite system, which independent experts estimatedwould cost £3bn-£4bn.

In December 2018, Theresa May, the then prime minister, said the UK expected to work with the US and other “Five Eyes” partners – a term for the multilateral intelligence agreement – to do so. But in May this year that project was put on hold, just weeks before a feasibility study into the scheme was due to be published, as its estimated cost ballooned to £5bn.

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Today the government published the exchange of letters between the acting Permanent Secretary and the Minister directing the purchase. An extract from Sam Beckett to the Minister:- 

You will recall that following earlier discussions you also asked the UK Space Agency (UKSA) to procure a separate independent technical assessment. It highlights the substantial technical and operational hurdles that OneWeb would need to overcome in order to become a viable and profitable business. Taking that into account, UKSA consider that there is a high likelihood of further investment being required to complete the constellation and encourage user uptake of the services, increasing the risk that further HMG investment would be required in order to realise the potential benefits. As a result, UKSA’s judgement is that the independent technical assessment further illustrates the considerable uncertainties in the modelling done for HM Treasury. 

I completely understand your, the Prime Minister’s and the Chancellor’s interest in wider benefits such as the potential long-term geo-political advantages for foreign policy and soft power that would come with sovereign ownership of a fleet of satellites. Moreover, I do not underestimate the potential opportunity that this investment represents for UK interests globally. It would be the first mega-constellation operator, if it succeeds, and would have the potential to connect millions of people, in particular those in remote, rural locations without broadband access. There are also broader potential benefits that could be realised beyond global broadband. If OneWeb is successful, the UK would have a share in a global space platform, including through possible future research and development, and potentially bringing future manufacturing to the UK. There could be wider, less quantifiable benefits of signalling UK ambition and influence on the global stage. 

That said, the purchase – both in its scale and the fact that the company is early in its journey towards a first-of-a-kind satellite constellation and generating revenue – is unusual for government. Whereas this will form part of a broader portfolio for co-investors, we would be making a single investment, which makes the risks with the investment more stark for us. While in one scenario we could get a 20 per cent return, the central case is marginal and there are significant downside risks, including that venture capital investments of this sort can fail, with the consequence that all the value of the equity can be lost. 

Having reflected carefully on the information provided, I have concluded that whilst there may be a commercial case for investing alongside other commercial investors if you accept advisors’ assessment of One Web’s business plan projections, as a standalone high-risk investment with a possibility that the entirety of the investment is lost and no wider benefits accrued, I cannot satisfy myself that this investment meets the requirements of Value for Money as set out in Managing Public Money. Therefore, whilst I believe the risks around the other Accounting Officer standards of regularity, propriety and feasibility are manageable, Managing Public Money requires me to seek a direction from you. 

In taking your decision, I appreciate that you are able to take into account wider considerations that I cannot bring to bear in my own assessment. These considerations include the unique opportunity of this investment, the potential it has to deliver significant development in the telecommunications field, and the wider strategic case. If you decide that you wish to direct me to proceed, I will instruct officials to commit funds and work with third-party advisors as required to finalise the bid. 

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The FT makes clear who's bright idea it is:-

Under the terms of the deal Bharti Global, a subsidiary of the conglomerate run by billionaire telecoms tycoon Sunil Bharti Mittal, will also hold 45 per cent of OneWeb and the rest will be held by existing creditors, including SoftBank, which has loans outstanding of $913m, according to bankruptcy documents filed in the US. The investment came as the government backed away from a plan launched two years ago to develop its own sovereign satellite navigation system after being forced out of the European Galileo system, which the UK had helped finance and develop, as a result of the Brexit vote. Costs for that proposal had soared to £5bn, from an initial estimate of £3bn to £4bn. 

Dominic Cummings, Mr Johnson’s chief adviser, has been instrumental in pushing the case for the UK government to invest in OneWeb in the face of fierce opposition from supporters of the original satellite navigation project. Darren Jones, chair of the Commons business select committee, questioned the accountability and “lack of transparency” of the investment. He said the committee would hold an inquiry into why the decision was taken. “This near half-a-billion-pound investment using taxpayers’ money seems to have been purely a commercial decision by Downing Street without any assessment of value for taxpayers’ money or agreement from experts about the technical capability that OneWeb offers the UK now that we’ve lost access to European Union satellites.”