Further evolving beyond its origins as an online bookseller, Amazon (AMZN +2.64%) is attempting to offer global broadband access through a new initiative dubbed Project Kuiper. Similar to SpaceX's Starlink, Project Kuiper will use satellites in low earth orbit to provide internet access to a variety of customers located around the world.
Understanding Project Kuiper
In development since 2018, Project Kuiper will provide broadband access to internet users around the world with the help of about 3,200 satellites positioned in low earth orbit. Customers will connect to the satellites using inexpensive terminals that provide high-speed, low-latency broadband service, and Amazon Web Services will be used to provide networking and infrastructure.
With the high-speed connectivity that the low earth orbit satellite positioning offers, customers can use Project Kuiper's service for purposes such as video calls, gaming, and high-definition streaming.
Amazon has not provided pricing for Project Kuiper's service, but the company has said that the overarching goal of the initiative is to make the service cost-effective. The company claims that Project Kuiper's "mission is to bring fast, affordable broadband to unserved and underserved communities around the world."
The importance of Project Kuiper
Many of us don't give much thought to accessing the internet. It's something that's taken for granted -- something as simple as taking out a smartphone or sitting down to work on a laptop. However millions of people around the world lack the same access. Connecting to the information superhighway is either an impossibility or unreliable. Project Kuiper will attempt to remedy that.
If successful, Project Kuiper will help people around the world communicate better and improve their access to a variety of resources, including education and healthcare. Similarly, institutions -- schools, hospitals, and government agencies, to name a few -- will also benefit from the broadband service.
Why Project Kuiper should matter to investors
While the mission of Project Kuiper may seem altruistic on its surface, there's a clear value that the service will provide to Amazon: the potential to greatly expand its customer base.
Acting as an internet service provider for millions of people will increase the company's ability to secure new customers for the various aspects of its ecosystem, from its retail business to Amazon Prime to Amazon Music. Consequently, the company has the capability to grow its top and bottom lines greatly with the successful deployment of Project Kuiper.
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Project Kuiper could be out of this world
Amazon characterizes Project Kuiper as a "long-term initiative," so it will likely be some time before it comes to fruition. Launching two prototype satellites in October 2023, Amazon has achieved early success with the project. According to Amazon, the early mission enables the company to "validate the architecture and design of our satellite constellation and to conduct demonstrations of 4K video streaming and two-way video calls over the network."
Partnering with Verizon as well as other companies, Amazon plans to provide broadband service to its first customers in the second half of 2024. If all goes according to plan, there should be hundreds of satellites deployed in the next few years, as the license Amazon received from the Federal Communication Commission requires that the company deploy at least half of the planned satellites in its network by July 2026. Ultimately, Amazon aims to deploy all 3,236 satellites of the first phase of the project over the next six years.
