Swarm Technologies is back on track this week after the small satellite startup finally erased the one big blemish on its reputation.
The controversy arose back in January when Swarm took the Silicon Valley adage made famous by Uber (“it’s easier to ask for forgiveness than to get permission”) a little too far. Swarm became the first company in history to launch satellites into space without authorization from any government regulator. In fact, Swarm’s application had been rejected by the Federal Communications Commission weeks before the launch.
On Thursday, the FCC announced a settlement with Swarm over the unauthorized launch, unauthorized communications with the four illicit orbiters, and a few other missteps. Swarm agreed to pay a $900,000 penalty, add stricter compliance procedures, and submit pre-launch reports to the agency for the next three years.
The settlement eliminates a distraction for Swarm CEO Sara Spangelo, the aerospace engineer who co-founded the company after working in Google’s moonshot factory, then known as Google X but now called just X, and at NASA’s Jet Propulsion Lab in Pasadena, Calif. It also helps the entire burgeoning field of small satellite startups gain clarity about the FCC’s views on what can—and cannot—be launched into space at this time.
Spangelo emerged from the episode sanguine but focused on the future, including three FCC-authorized satellites Swarm successfully launched on a SpaceX Falcon 9 rocket just two weeks ago. “We accept the decision of the FCC as reflected in its consent decree and appreciate the FCC’s ongoing support for Swarm’s mission,” Spangelo tells Fortune in an email. With the successful launch “we move one step closer to enabling low-cost, space-based connectivity anywhere in the world.”
Swarm’s business model is to create an orbital armada of dozens of it small satellites, dubbed SpaceBEES, in low earth orbit to offer modest Internet connectivity anywhere in the world for a low price. The small satellites, each about the size of a toaster, will offer Internet speeds good for text messages, not web surfing or video streaming. That could allow a sailor to send a text message home from the high seas or help a rural farmer keep tabs on crops via simple water monitoring devices.
Offering Internet service from space isn’t a new or unique idea, of course. Many of billions of dollars were lost by earlier space telecom pioneers like Iridium, Bill Gates-backed Teledesic, and Globalstar. Now, some of the world’s other famous billionaires, including Jeff Bezos, Elon Musk, and Masayoshi Son, are vying to build high-speed, space-based Internet services. Smaller startups like Swarm and rivals Hiber and Astrocast want to build simpler, slower, and much cheaper networks using smaller satellites sometimes called cube sats. Not to mention that two of the original pioneers, Iridium and Globalstar, which both went bankrupt years ago, are back in business now.
The seemingly modest penalties imposed for the unauthorized launch—plus the FCC’s willingness to approve Swarm’s more recent launches—don’t sound like much of a deterrent to future bad actors. But the agency’s significant attention on the unauthorized launch, plus the years of monitoring requirements and all the bad publicity convinces longtime satellite industry consultant Tim Farrar that notice has been served.
“The negative press coverage surrounding this issue is likely to deter other new satellite operators from launching without authorization in the future,” he says. “More interesting is the degree of interest from the full commission in this issue and their desire for a higher penalty to be imposed than was originally negotiated by the Enforcement Bureau.”
The agency’s Enforcement Bureau staff initially recommended a penalty about half of the $900,000 level, one FCC staffer explains. But several commissioners saw the situation as raising unique questions that the FCC had not previously grappled with. They successfully sought a higher-level review involving the offices of the four current FCC commissioners.
“This was the first time the FCC was dealing with a set of facts like this,” the staffer said. “It feels almost like the Uber of space. But it’s one thing if you’re dealing with taxis in New York. It’s another if you’re all the way in space.”
Swarm told the agency that it went ahead with the January launch because its lawyers advised it might be able to get authorization after the fact.
That argument didn’t go over well with FCC staff or the commissioners. Unauthorized launches threaten the stability of the entire satellite services ecosystem, potentially interrupting anything from television and telecommunications transmissions to military tracking, spy photography, and GPS location data. The FCC had rejected Swarm’s initial satellites as too small, believing that they would be difficult to track by radar to avoid collisions with other objects in orbit (it turned out later that the small sats could be tracked).
Swarm has subsequently sought to launch slightly larger satellites. Its initial application was for a device less than 3 centimeters thick, below the FCC’s 10-centimeter-per-side threshold to allow radar tracking (Swarm maintained that its devices were still trackable). Swarm’s more recent applications and launches were for satellites at least 10 cm on every side.