In a world divided between digital haves and have-nots, billionaires Elon Musk, Jeff Bezos and Richard Branson are trying to close the gap. The three entrepreneurs separately aim to launch thousands of small satellites to zip around the globe in what’s known as low-Earth orbit, or LEO. Their plan is to prosper by offering high-end data services to stock traders and others willing to pay richly to shave a few milliseconds off their transmission times. The satellites should also deliver high-speed internet coverage for regions too poor or remote to attract it on the ground. Neither result is certain. Startup costs in the billions of dollars are.

1. How low is low?

LEO satellites operate from 500 kilometers (310 miles) to 2,000 kilometers above the Earth’s surface. Traditional communication satellites are stationed far higher, at roughly 36,000 kilometers: They travel in so-called geosynchronous orbits, moving at the speed of the Earth’s rotation and appearing to float motionless above a fixed point.

2. What’s the advantage of a lower orbit?

A shorter trip is a faster trip, so the time needed for data to be sent and returned -- what’s known as latency -- is lower for LEO satellites than for those farther out. And because signals can travel more rapidly through the vacuum of space than through fiber-optic cables, LEO satellites have the potential to rival or possibly exceed the fastest ground-based networks.

3. How fast is fast?

OneWeb, a London-based company backed by Branson’s Virgin Group that’s begun launching washing machine-sized LEO satellites, recorded an average latency of 32 milliseconds in July 2019 on transmissions between space and South Korea. Musk, the founder of Space Exploration Technologies Corp., has said that his Starlink satellite system is aiming for a latency of 20 milliseconds initially, which he hopes eventually to cut in half. Talk like that has sparked interest among financial firms that have spent billions to speed up their terrestrial securities trading operations. High-orbit systems, by contrast, have a median latency of nearly 600 milliseconds. That’s adequate for broadcasting but is a barrier to real-time two-way communication.

4. What’s the downside of a low orbit?

The speed needed for stable orbit -- achieved by balancing an object’s inertia with the Earth’s gravity -- diminishes with distance. High-flying geostationary satellites travel at about 11,000 kilometers per hour to avoid falling back to Earth, while LEO satellites must travel at about 27,000 kph, completing a full circuit of the planet in 90 to 120 minutes. That means each individual satellite is only in direct contact with a ground transmitter for a brief period and is why LEO projects involve so many satellites: OneWeb says that in its system, signals are handed from one satellite to another, via laser, every 3 minutes or so.

5. Are LEO satellites new?

No. Most of the Earth’s approximately 2,000 active satellites are already in LEO, where a network belonging to the U.S. company Iridium Communications Inc. that allows voice and data communication from hand-held satellite phones has been operating since 1998. Previous efforts led to bankruptcies by Iridium and Globalstar Inc., also a U.S. enterprise. What’s new is the sheer scale of recent proposals, with the big firms planning to launch satellites in the thousands. The new ventures are counting on savings from smaller, cheaper satellites and reusable rockets, along with more powerful software capable of tracking all those hand-offs.

6. When will this start?

In May 2019, a single SpaceX rocket launched 60 of a planned 12,000 satellites; in October, the company sought permission for 30,000 more. Both Musk and Branson’s OneWeb have said that partial networks could go into service in 2021. China’s state-owned Aerospace Science and Industry Corp. is proposing a network of 156 satellites by 2022. Bezos’s Amazon.com Inc. has requested permission to launch 3,236 satellites. Meanwhile, traditional operators like ViaSat Inc. and Eutelsat Communications SA are continuing to invest in more powerful geostationary satellites, collaborating with companies such as Facebook Inc. and Deutsche Telekom AG to beam broadband to rural areas and airplanes.

7. Are they going to make money?

Many satellites never have. SpaceX has said completing Starlink may cost more than $10 billion, though Musk estimates it could bring in $30 billion to $50 billion per year once fully operational. (He says the satellites will produce the money needed for his ultimate goal of settling Mars.) To reach the four billion people on Earth who now lack high-speed internet access, the satellite companies aspire to sell their services to governments, nonprofits and telecommunications providers. OneWeb has signed contracts it says could lead to Wi-Fi hotspots connected to its satellites.

8. Who regulates LEO?

In a sense, no one. But satellite operators have to get approval for their launch and orbit plans from their national communications regulators, and anyone planning to sell services to the U.S. needs to go before the Federal Communications Commission. The International Telecommunication Union coordinates the allocation of frequencies for communications.

9. Is there room up there for all these satellites?

No one knows how close existing satellites are to triggering the Kessler Effect -- named after NASA scientist Donald Kessler, who raised the possibility that if space becomes too crowded, there will be collisions that create more debris and more collisions. The U.S. Air Force is developing a ground based radar system known as the Space Fence that’s meant to track satellites and debris; in September, the European Space Agency moved a space probe after being warned it could come too close to a Starlink satellite. Another worry is that a more crowded sky will ruin the view. Astronomers complained after the SpaceX launch about sunlight they suspected was reflecting off the satellites, and Musk has asked his team to make them less reflective.

(An earlier version of this story corrected number of Iridium satellites currently in orbit in fourth answer.)

To contact the reporter on this story: Greg Ritchie in London at gritchie10@bloomberg.net

To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, John O’Neil

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