- August 25, 2021
I have long been of the opinion that satellite services will be a requirement for ubiquitous 5G coverage. This, long before Elon and company and the others jumped into the game and while Iridium was nothing more than homeless space junk. But that was then, and this is now, and without satellites, global wireless coverage will not happen.
This time, it is different. The last 30 or so years have upped the non-geostationary orbit (NGSO) satellite technology significantly – enough to consider it a serious contender in the next generation of wireless. This new world of satellite technology will make it technically able to compete with terrestrial systems, complement them, as well as making it a solution to provide RF coverage for traditionally hard and impossible to cover terrain.
At present, there is a pretty full scorecard of systems or low-Earth orbit (LEO) satellites looking for a piece of the satellite pie. In fact, by the time Starlink is fully operational, there will be tens of thousands of these birds swirling around in near-earth orbits (mind you, most of them will be Musk’s).
At the Satellite 2021 conference, Mark Dankberg, the executive chairman of ViaSat, said that he believes tens of thousands may be just the beginning. He spoke of a future where there could be hundreds of thousands of LEO satellites in orbit. Not tens of thousands, but hundreds of thousands. That, of course, is at least a decade away, and most likely longer. But a more realistic assessment, if current satellite internet proposals become reality, is that about 50,000 active satellites that would be in orbit by 2030.
That, of course, assumes things progress without dramatic changes in geopolitical conditions, the latest iteration of the virus (or maybe a new iteration?) or a cataclysmic event. There is always the harbinger of nation states’ instability around the globe (the Middle East, China and Taiwan). Who know what other unforeseen global events might pop up?
The main reason for this resurgence in LEO constellations is 5G. I get the uneasy feeling that much of this movement is betting on the come. It would be one thing if we already had a reasonably ubiquitous 5G (meaning SA) infrastructure. That is easily between five and 10 years away. That does not mean we will not have the beginnings of a 5G SA infrastructure arriving in the next couple of years. But a working infrastructure where 5G is not just pockets everywhere but a network where 5G coverage is available to most people in most places – reliably. Do not forget 5G in sub-6 GHz is different that 5G in mmWave.
Another unknown is the internet. 5G is said to be the great enabler for the internet’s evolution to the next level. Exactly how 5G and the internet will evolve as a unit is still a bit fuzzy. Therefore, there is not a clear model of the future that the LEO segment can look to with a high degree of confidence. Many are willing to bet on the industry, hoping there are no major hiccups to deflect progress.
This resurgence in LEOs is partially due to the fact that governments are stepping in to help. Without that, the road will be much bumpier (except for Musk, of course). For example, the Canadian government is going to invest $1.2 billion in Telesat Lightspeed to support its LEO satellite network, which is being sold as an alternative LTE, 5G and broadband connectivity option. Under the agreement, the Canadian government will provide a loan of $626 million to the company, as well as make a $515 million equity investment.
In a similar move, the United Kingdom has put together a $1 billion rescue package for satellite operator OneWeb through a consortium of players to keep it moving forward. Even Intelsat seems to be on the road to recovery after its Chapter 11 bankruptcy reorganization last year, with some confidence that its investors will approve its reemergence.
The current frenzy in this segment is hoping to overcome the failures of the past. That is quite possible. There is a high degree of confidence that the latest advances in satellite technology and the emergence of new business opportunities (the IoX, various 5G vectors, the logarithmic deployments of machine communications, edge networks, the work from home segment) will materialize.
There are also new investors with deeper pockets who see the ability to connect where terrestrial networks fall short or do not exist (rural, higher demand for low-latency bandwidth [M2M, the enterprise, and more) as fertile opportunities.
However, much of this is based on speculation. Unless you are Elon Musk, the success of other LEO constellations is far from being guaranteed. The industry is banking on a couple of angles. One is positioning them as the key player to bridge the digital divide. Another is the IoX. There are tangents as well, military, B2B and B2C use cases and industries such as oil and gas, and transportation.
Although the potential opportunities seem realistic, one looming issue is the cost to the end user. Satellite communications are more expensive than terrestrial, and unless economies of scale can be reached, cost will remain a significant hurdle.
Another challenge is the sheer number of players. Musk’s deep pockets have the advantage here, but it is likely that governments or other wealthy investor-types will aid the other players, at least for the near term.
In a different time and place, gauging the success of the emerging LEO market would be much easier. Many reports and opinions point to a rosy future for the segment. Not all prognostications are rosy. There remains a specter of doubt in all of this in vectors I mentioned previously. Some analysts point to the sheer number of constellations and satellites as being a speed bump due to the dilution of economies of scale across this many players.
The most likely scenario, if things do not change radically, is that, over the next few years, the industry will go through a bit of an upheaval, consolidate, and the result will be a few major players.
LEO satellites are here to stay. There is an air of optimism within the industry. There exists a great deal of opportunity if all things remain on course.