The LEO Satellites Market

by Elisabeth Tweedie

 

Los Angeles, Calif., March 1, 2023--Given the media attention that it gets, you could be forgiven for thinking that Starlink is the only game in town, when it comes to low earth orbit (LEO) constellations for communications.  Nothing could be further from the truth.  There are many others, some of which remain on the drawing board and others that have at least got as far as flying demo satellites.

 

Obviously, this puts Amazon squarely in competition with Starlink, which is already claiming one million subscribers and 3,600 of the 4,408 first generation Ku-Ka band satellites launched.  Starlink also has FCC authorization to launch 7,500 (of the 29,800 requested) of its second-generation satellites.  

 

At the end of December 54 “mini” second-generation satellites were launched.  “Mini” because a full-size second generation satellite needs to be launched on SpaceX’ Starship which isn’t yet available.  At the end of 2021, users in North America were getting download speeds of over 100Mbps from Starlink, this had been cut in half by the end of last year as the number of subscribers increased; indicating that Starlink really does need those additional satellites if it is to continue grow.  This will become increasingly important as Starlink is now entering into agreements to provide commercial service in some sectors; maritime for example.

 

Telesat

 

It remains to be seen whether Telesat can secure the financing it needs to continue with Lightspeed, its LEO constellation.  After a promising start with investments from Canadian federal and provincial governments, fund-raising has stalled, although CEO Dan Goldberg, is reported to be “bullish” about the chance of success and has been quoted as saying that “tangible progress” is being made.  Last year, inflation led Telesat to reduce the size of the constellation to 198 satellites from the planned 298, and pandemic related supply chain issues, that Thales its manufacturer was dealing with, forced it to push the launch date out a year to 2026.  By reducing the number of satellites, it was hoped to keep within the original CA$ 5 billion, but this is now looking unlikely.  Unlike Starlink and Amazon’s Kuiper, Lightspeed’s target customers are enterprises and governments.

 

A demonstration satellite is in orbit and recent tests carried out by Spacecom showed an average latency of below 30 milliseconds and data rates of over 50 Mbps.

 

OneWeb

 

OneWeb has nearly 80% of its 648 first generation constellation in orbit.  The remaining satellites wil be launched early this year, and full global service should commence towards the end of 2023.  

 

One company to watch is Amazon's Project Kuiper--which is a very vertically integrated company with the capacity not only to  manufacture satellites but also to launch them and provide ground segment services. The company has procured  a  dedicated, 172,000-square-foot satellite production facility in Kirkland, Washington.              (image courtesy of Project Kuiper).

OneWeb has five main target markets: carrier and enterprise, government, maritime, aviation and land mobile.  Several agreements have been signed to support these markets.  For example, working with Intelsat for aviation, airlines will be offered a multi-orbit solution for inflight connectivity.  OneWeb is also working with Marlink to offer service to several sectors: including energy, maritime, enterprise and humanitarian sectors.  The companies will work together to deploy, test and demonstrate several types of user terminals and connectivity services.  OneWeb’s LEO constellation will be integrated into the hybrid network services that Marlink provides to its customers.   

 

Last year Eutelsat and OneWeb agreed to merge, and although the merger still has to be approved by shareholders, it is expected to go through.  For OneWeb the key benefit is to be able to use Eutelsat’s revenues to support the Capex required to build the second-generation satellites.  The aim is to create a hybrid GEO-LEO network, which could mean a fewer satellites in the second generation, as when latency is not an issue, traffic could be offloaded to Eutelsat’s GEO satellites.  The second-generation LEOs are expected to have 5 times the capacity of the first generation and a lower cost per bit.  They are also planned to be very flexible and modular, so that they can follow market demand. 

 

IRIS²

 

In order to reduce dependency on other nations, the EU already has its own earth observation satellites (Copernicus) and satnav system (Galileo).  So it should be no surprise to learn that last November the European Commission announced the formation of Europe’s new Infrastructure for Resilience, Interconnection and Security by Satellites (IRIS2).  Essentially this is Europe’s answer to Starlink, Kuiper, OneWeb, Lightspeed and planned LEO constellations by China and Russia.  The objective is to provide a totally European space-based broadband infrastructure.  The guidelines for IRIS2 include:

 

• It being a sovereign constellation, which imposes strict eligibility criteria and security requirements.  Therefore it is highly likely that Eutelsat will be excluded, as China Investment Corporation holds a stake in the company.  Also, OneWeb, with which it is in the process of merging, counts the British government, Indian based Bharti Enterprises, Japan’s Softbank and South Korean based Hanwha among its investors.

• It will be a constellation focused on government services including defense applications.

• It will provide connectivity to the whole of Europe and Africa.

• It will be a “new space” constellation integrating the know-how of major European space industries, but will also have 30% of the infrastructure built by startups.

• It will be a multi-orbit constellation, capable of creating synergies with the existing Galileo (SatNav) and Copernicus (Earth Observation) constellations.

• It will be a vector for innovation, aiming to give Europe a lead in cutting edge technology.

 

The initial budget is 2.4 billion Euro, but the total cost is estimated to be around 6 billion Euro.  Further investments will come from ESA and private investments.  Interestingly, the UK is still a member of ESA.

 

Although IRIS2 will provide many government services including: defense, border surveillance and security, crisis management, control of smart grids and other infrastructure services, it will also provide mass market mobile and fixed broadband for unserved areas.

 

Rivada Space Networks

 

Rivada Space Networks (RSN) is another fledging LEO constellation.  It is based in Germany, with filings through Liechtenstein and a US based parent company, RSN aims to build a 600 satellite LEO constellation to provide end-to-end secure communications.  The satellites will be in 24 polar planes providing complete global coverage.  The satellites will be interconnected by 2,400 laser intersatellite links, creating a mesh network, so data will travel directly from one user to another, or to a cloud insertion point, with no other terrestrial touch points, so providing enhanced security and latencies equal to or better than terrestrial fiber.  

 

The constellation is expected to cost US$ 3-4 billion.  Initial funding and financing is largely coming from investors in the parent company,  RSN, however is putting together a Series B round for this quarter.  In February 2023, the company has signed a contract with Terran Orbital’s wholly owned subsidiary Tyvak Nano-Satellite Systems, Inc. to manufacture 300 low-earth-orbit (LEO) satellites.

The company will leverage the unique terrestrial wireless technologies of its parent company to optimize network utilization and facilitate the buying and selling of broadband capacity.  

 

Security of data has always been important, but is becoming even more so, with the increase in data breaches and cybercrime.  One of RSN’s key attributes is its focus on this.  Obviously, providing an end-to-end space network with no terrestrial touch points, is fundamental to this security; in addition Quantum Key Distribution (QKD) provides a very important additional layer.  Rivada Space Networks is partnering with SpeQtral to demonstrate the technical compatibility of adding a QKD encryption layer to the satellite network.

 

RSN’s target markets are diverse government and enterprise segments, specifically: secure networks for government; cellular backhaul; global LANs for enterprises; real-time connectivity for the oil and gas industries; global flight and engine monitoring for aviation and similar tracking and connectivity for maritime; high throughput connectivity for media and e-sports; and cost-efficient connectivity for diverse mining sites.  An ambitious target for a startup, however, Rivada Space Networks will be the wholesaler not the retailer, so not as challenging as trying to address all these at once at the service provider level.

 

One issue that is yet to be resolved is the question of a launch date.  Currently 10% (60) of the satellites need to be launched by September this year.  RSN, through the Lichtenstein license regulator has asked the ITU for a waiver to delay this; citing Covid and supply chain issues as reasons for a delay.  Its first application was denied, and so far no decision has been issued on the second application, which gave an assurance that its “bringing into use” obligations would be met.  This means that 50% of the constellation will be in orbit by June 2026.

 

E-Space

 

No article on LEOs would be complete without a mention of E-Space, Greg Wyler’s latest venture.  Although still very much in the early stages, he has assembled an impressive team including Karim Michel Sabbagh former President and CEO, SES.  Details about the business model and constellation are still very high level.  There are filings for 100,000 satellites, but several reports indicate that ultimately there could be several hundreds of thousands.  Orbital debris is a very real problem and the potential for more debris rises with each satellite launched.  Wyler aims to counter that and claims that the design of e-Space’s satellites means that rather than potentially adding to debris, they will actively help remove debris.  Attributes that contribute to this, include: 

 

• Self-destruction at the end-of-life.  E-Space satellites will burn up on re-entry.

• Automatic de-orbit if a satellite fails.

• Entrain and de-orbit: if a collision occurs, E-Space satellites are designed to capture the other object and immediately de-orbit.

• Size: E-Space satellites are smaller than many of the existing LEO satellites and have a small cross-section, so that only a small section is exposed to the orbital path.  They also have fewer parts, so are less likely to release components in the event of a collision.

 

Unlike Wyler’s previous two ventures (O3b and OneWeb) both of which started out with the altruistic mission to connect the unconnected, the target markets listed on the website all have a commercial basis.  These include: defense, critical infrastructure, asset tracking, connected vehicles, forestry, digital agriculture, governments and earth observation.   

 

Conclusion

 

There have already been some casualties in the LEO space.  Leosat,failed to raise the required financing and OneWeb, which was bailed out by the UK government and Bharti, had to file for Chapter 11.  Whether the systems mentioned here – and there are filings for plenty of others – will all succeed remains to be seen.  It would appear that the demand for bandwidth is insatiable, but it will take more than that to ensure commercial viability.  

 

Although the barriers to entry have fallen considerably in recent years, space remains a risky business.  Success depends on many factors; obviously basic economics is one, can the service be provided at the right price point?  But, beyond that there are a myriad of licensing and regulatory issues, including meeting deadlines for getting satellites launched and operational, and obtaining appropriate landing rights.  Distribution and maintenance for a global system is major task, frequently dependent on a network of in-country independent contractors.  I don’t have a crystal ball, so I’m not going to make any predictions as which of these will still be around in five years’ time, but I would be surprised if it is all of them.

 

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Elisabeth Tweedie has over 20 years experience at the cutting edge of new communications entertainment technologies. She is the founder and President of Definitive Direction (www.definitivedirection.com), a consultancy that focuses on researching and evaluating the long-term potential for new ventures, initiating their development, and identifying and developing appropriate alliances. During her 10 years at Hughes Electronics, she worked on every acquisition and new business that the company considered during her time there. She can be reached at etweedie@definitivedirection.com