High speed from low orbit: A broadband revolution or a bunch of space junk?
TMT Predictions 2020
The race is on among satellite broadband providers to enable worldwide high-speed internet access, creating opportunities for new services and business models along the way.
IN 2020, companies’ efforts to bring internet access to the world will take off—literally. We predict that by the end of 2020, there will be more than 700 satellites in low-earth orbit (LEO) seeking to offer global broadband internet, up from roughly 200 at the end of 2019. Though these won’t be enough to connect all of the world’s consumers and enterprises, they may offer partial service in late 2020 or early 2021, likely starting with higher latitudes.
To put this endeavor into perspective, consider that about 8,700 objects have been launched into space since the start of the Space Age, of which more than 2,000 are actively operating satellites orbiting the earth.1 These new “megaconstellations” of orbiting broadband stations will potentially add more than 16,000 individual satellites to that count over the coming years. The world may derive a historic benefit from their deployment—but at the same time, they might make space a much riskier and complex environment.
Satellite basics: A glossary of this chapter’s terms
Constellations and megaconstellations: A constellation of satellites is simply a group of similar satellites working together for a specific purpose, whether for earth observation, communications, scientific research, or global positioning. The term “megaconstellation” has begun to be used to classify constellations that may include hundreds or thousands of individual satellites—a scale being reached by a growing number of broadband internet systems.
Low-earth orbit (LEO): An orbit between 160 and 2,000 kilometers above the earth. Low-earth orbits have a short orbital period (approximately 90 to 120 minutes) and are commonly used for remote sensing, human space flight, and data communication.2 Satellites in this orbit can only communicate with a small portion of the earth’s surface at any given moment, which is why a larger number of satellites are needed for global coverage.
Medium-earth orbit (MEO): A less-popular orbit between 2,000 and 35,786 kilometers above the earth. Satellites in this orbit can see more of the earth than LEO-based satellites, and they enable lower latencies than higher satellites. This orbit is used by both positioning (such as Global Positioning System) and communications satellites.
Geosynchronous orbit (GEO): An orbit at 35,786 km above the earth’s surface. Satellites in this orbit move at the same speed that the Earth is rotating, so they stay in roughly the same place over the earth’s surface. With a much wider view of the earth, this orbit is good for imagery, communications, and weather satellites, because only a few satellites can provide global coverage. To connect with GEO satellites, ground-based antennas can remain fixed at one point in the sky rather than needing to track a moving object.
Frequency: Satellites use a specific portion of the radio frequency spectrum for communication, and each constellation of satellites has an assigned frequency band. These range from the lower-frequency L- (1–2 GHz) and S- (2–4 GHz) bands to the higher-frequency Ku- (12–18 GHz), Ka- (26–40 GHz), and V- (40–75 GHz) bands. Each frequency range has its advantages, disadvantages and specific use cases.3
Latency: Latency can be broadly defined as the time it takes a signal (data) to travel from transmitter to receiver. Latency depends on factors including distance, the type of technology used, and interference. Currently, satellite broadband services have median latencies of around 594 to 612 milliseconds. Latencies for terrestrial broadband (using technologies such as fiber, cable, or DSL) range from 12 to 37 milliseconds.4 The goal for future 5G networks is a latency as low as 1 to 2 milliseconds, although this will likely take years to achieve.5
Conjunction: Generally speaking, a conjunction is when two objects (such as satellites) pass into the same area, raising the probability of a collision. When the probability of collision passes a certain threshold, satellites typically perform collision avoidance maneuvers. This is a real threat, as evidenced by the 2009 collision between the Iridium 33 and the nonfunctioning Russian Kosmos 2251 satellite.6 This was the first time two satellites had collided in orbit.
Bringing the internet to the world
Ever since Sir Arthur C. Clarke predicted and popularized geostationary satellite communications in 1945, the world’s imagination has been captured by the idea of instant global communication from space.7 In the years since, multiple generations of communications satellites, starting with Telstar, Intelsat, and others in the 1960s, have made his prediction a reality. Companies today are deploying “megaconstellations” of hundreds or thousands of satellites linked to each other as well as to ground stations. Both traditional aerospace giants and newer technology companies are entering the market, funding, developing, and deploying megaconstellations with the aim of bringing affordable high-speed internet access to the world.
The profit motive is clear enough. Connecting those in currently unserved and underserved areas can create millions of new customers and enable new business models. In terms of their number, the potential market is vast: Although great strides have been made connecting the world, statistics show that many people are still unconnected or underconnected. The International Telecommunications Union (ITU) says that only about 51 percent of the world’s population was using the internet as of the end of 2018.8 Even many developed countries do not have universal internet access, or at least access at a tolerable speed. A US Federal Communications Commission (FCC) report states that 21.3 million Americans lack access to a broadband internet connection—that is, one with a download speed of at least 25 Mbps and an upload speed of at least 3 Mbps.9 That’s a lot of people to connect, and a lot of potential revenue for companies that can connect them. Morgan Stanley estimates that the satellite broadband market could be worth as much as US$400 billion by 2040—fully 40 percent of the estimated US$1 trillion global space industry that year.10
Organizations creating megaconstellations also point to other, nonfinancial benefits. For example, Kuiper Systems—Amazon’s foray into space—touted three major societal benefits of its planned constellation in its application for operations to the FCC. Beyond the direct benefit of connecting broadband customers in currently unserved and underserved areas, Kuiper claims that increased access will drive general economic development as well as support government agencies, disaster relief organizations, and first responders.11 OneWeb, another new entrant to the satellite broadband business, emphasizes its vision of “internet access everywhere for everyone,” highlighting how their satellites are connecting schools that formerly lacked internet access.12
All of this has happened before … or has it?
Some might wonder how new this phenomenon really is. After all, several commercial satellite internet service providers—Viasat, Eutelsat, Hughes, Iridium, O3b Networks, and others—have been operating constellations across different orbits for years. There have also been a few famous false starts. For instance, the Iridium LEO constellation of 66 active satellites—initially deployed in the late 1990s and early 2000s to provide global voice and data services—never gained the subscriber base to make it commercially successful, although it eventually found a niche market and continues to operate today using a new generation of satellites (Iridium NEXT). Teledesic, which attracted significant funding from luminaries including Bill Gates and Craig McCaw, fell even further short. It planned to deploy a constellation of 288 satellites in low-earth orbit to support global broadband internet connectivity, but only ever launched one test satellite before shutting down.13
So what has changed? Today’s satellite broadband players are seeking to avoid their predecessors’ fates by offering higher speeds, lower latency, and cheaper prices to users. They are being helped in these efforts by three main enablers:
Getting into orbit has become less expensive. Launch and satellite construction costs have decreased dramatically since the turn of the century, thanks to new launch services and heavier competition. Between 1970 and 2000, the average cost of launching an object into orbit was about US$18,500 per kilogram. With the advent of new launch providers such as SpaceX and others, companies can now put a kilo into orbit for about US$2,720, or about 85 percent less.14 Equally important to improving launch economics is the fact that today’s satellites weigh less. For example, the original Iridium satellites launched in the late 1990s weighed 689 kilograms each, while today’s Starlink satellites (from SpaceX) weigh only 227 kilograms.15
Satellites and their manufacturing methods are becoming more advanced. Constellations containing hundreds or thousands of individual satellites couldn’t be built in a reasonable timeframe or at a reasonable cost without mass production approaches. As part of this approach, companies are using a more modular design for these individual satellites, building them on standardized buses, and using smaller, more advanced components. Many are also using electrical propulsion systems which trade strength for reduced weight and lower cost. There are now dedicated satellite factories for many of these megaconstellations, allowing for both cost-effectiveness and speed through mass production: For example, OneWeb Satellites, a joint venture between Airbus and OneWeb, aims to produce two satellites per day.16
The demand for connectivity has increased. Besides the billions of unserved and underserved individuals in the world’s remote or less-developed areas, demand is also being driven by growing expectations. Wave after wave of new technologies have made it easier and easier to say connected. As this ability has spread, consumers, companies, and governments now expect to be able to stay connected no matter where they are—in isolated and rural areas, at sea, in the air, and everywhere in between.
Major players in the internet space race
A number of companies from the United States, Canada, China, Russia, and Europe are trying to establish themselves in the satellite broadband market. As of November 2018, in the United States, the FCC had granted thirteen market access requests and nine satellite applications for broadband internet constellations, to companies including Telesat, Kepler, LeoSat, SpaceX, OneWeb, SES (O3b), Space Norway, and others.17 More recently, in July 2019, Amazon applied for FCC approval to deploy its Kuiper satellite system.
In all of these cases, the number of companies that end up deploying their constellations—as well as the number of satellites that will eventually wind up in those constellations—remains unknown. The key question is: Which companies can prove their capabilities and grab the biggest market share the fastest? Some of the major players are:
OneWeb. In 2017, OneWeb was the first of this new class of satellite broadband internet providers to gain FCC approval to deploy and operate a constellation. The company has raised over US$3 billion in investments from SoftBank, Grupo Salinas, Qualcomm, Virgin Group, Airbus, and others.18 The FCC approval allows OneWeb to deploy 720 satellites using Ku- and Ka-band frequencies, which the company plans to operate at an altitude of 1,200 kilometers. The first six of these were launched in February 2019 on a Soyuz rocket; another 32 satellites are planned to be launched by the end of 2019, and two launches are currently scheduled for 2020.19 OneWeb plans to begin offering limited commercial service in late 2020 to Arctic regions (north of latitude 60°), with broader service available in 2021.20
SpaceX. In March 2018, SpaceX received FCC approval to launch 4,425 satellites using Ku- and Ka-band as part of its Starlink constellation; another 7,518 Starlink satellites using V-band were approved in November 2018.21 SpaceX exerts more control over Starlink’s destiny than many other providers, as the company is using its own Falcon 9 rocket to launch the constellation. The first launch of 60 satellites occurred in May 2019; 57 of those 60 satellites are fully operational. Starlink is planning to offer service in the northern United States and Canada after it completes six launches, and expects to be able to cover the entire populated world after 24 launches.22 SpaceX is still modifying Starlink’s orbital plan, so it is difficult to determine the constellation’s final configuration.23
Amazon. Amazon’s proposal to the FCC to deploy its Kuiper System constellation is still under review. The Kuiper System will consist of 3,236 satellites using Ka-band at altitudes of 590, 610, and 630 kilometers. It is highly likely that Kuiper will use launch vehicles from Jeff Bezos’s other space initiative, Blue Origin. According to Amazon, “Service rollout will begin as soon as the first 578 satellites are launched. Coverage begins at 56˚N and 56˚S latitudes and [will quickly expand] toward the equator as more satellites are launched.”24
Kepler Communications. Kepler is taking a much more focused approach to its satellite broadband endeavor. It plans to launch 140 satellites focused on Internet of Things (IoT) connectivity to support industrial, maritime, shipping, and logistics applications. After completing two small test launches in 2018, the company’s goal is to have the full constellation up and running in 2022.25
Satellite broadband’s anticipated services and markets
The goals and business models of these satellite broadband companies are varied and still a bit opaque. In general, the plan seems to be to open new markets and compete in existing ones by improving the quality of service over what is currently available. Once their constellations are in orbit and operational, providers can easily and quickly add new services on top of these networks as well. Services such as high-speed trading, improved logistics and fleet management, remote maintenance, and more are all potential areas of opportunity.
Some providers are targeting the direct-to-consumer market, competing against traditional telecom players providing cable or fiber-based broadband internet. Others are looking to sell dedicated broadband connectivity to enterprises. A fairly typical use case is providing infrastructure or mobile backhaul for other communications companies, including those offering 5G networks. OneWeb, for instance, is providing infrastructure services for two of its first customers, Talia and Intermatica.26 Another opportunity could be to provide better and faster internet connectivity to the transportation industry—ships, trains, and aircraft.
Many satellite broadband companies have marketed their ability to bring broadband internet to rural areas and other locations with poor or no service. This could enable more of the world to partake in the educational and economic gains from a more connected society. However, one uncertainty is the true size of the unserved and underserved market. For example, the GSMA estimates that as of 2018, only 750 million people are completely uncovered by mobile broadband networks, which is much smaller than the roughly 3.8 billion people in the world who don’t use the internet.27 A hotspot to watch is the world’s Arctic regions, including Alaska, Canada, the Nordics, and Russia. Due to their geographic location and the relatively small number of customers, service in this region has been slower and more expensive than in the rest of the world for years. Multiple companies are looking to specifically address this need.
Other players are pursuing more specialized applications. A major opportunity, for instance, could be to provide the backbone for networks of IoT devices—smart factories, supply chains, utilities, oil platforms, and other systems that require machine-to-machine communication. Companies could also sell satellite broadband to governments for services such as education, emergency response, and others that demand high levels of reliable, dedicated connectivity.
Looking forward, subscriptions alone may not be enough to guarantee financial success. The potential exists for some of these providers to offer a comprehensive suite of services on top of basic connectivity. Instead of selling bandwidth to other service providers, some may opt to create their own new applications deployed through their satellite networks. If this happens, successful satellite broadband providers could end up owning entire value chains in areas such as commerce and communication. For example, Amazon’s Kuiper System could easily offer a whole host of existing and new Amazon services directly to consumer and enterprise customers, bypassing legacy internet services providers.
It won’t be easy
Operating in space and starting a new business are both notoriously hard and offer little room for error, and many of the companies going into the satellite broadband business are attempting to do both at the same time. They face a vast number of technical and operational challenges that could delay or derail their plans, including but not limited to ground station construction and operation, potential radio frequency interference with other satellites, user terminal pricing and availability, battles over spectrum rights, and even concerns about the visual pollution from bright satellites disrupting ground-based astronomy.28 Here are a few of the most important hurdles that companies in this young industry will likely need to clear:
Meeting service expectations. Will a company’s constellation deliver the promised speeds and latency? Will it be fast enough for high-definition video, high-speed financial trading, and near real-time control over vast networks of IoT devices? It’s certainly possible—a recent operational test of OneWeb’s service demonstrated live, full high-definition streaming video with latency of less than 40 milliseconds at speeds of over 400 Mbps29—but only if the technology works as expected.
Ensuring satellite reliability. The advanced satellite buses and manufacturing techniques that are making this new generation of satellites possible are also relatively new. While these techniques are necessary to meet megaconstellations’ short timeframes for construction, launch, and deployment, companies should invest enough in designing and testing the outputs to create robust, reliable systems that will work for their lifetime in orbit. If there is a problem with a satellite, companies should make sure that it can be quickly and safely de-orbited. SpaceX has already lost three Starlink satellites from its first launch of 60 (which will passively de-orbit and burn up in the atmosphere).30
Managing space debris. Many are justifiably worried that introducing thousands upon thousands of new objects into LEO will not only crowd existing orbits, but create a dangerous environment with the potential for exponentially more conjunctions between satellites. No one wants to see a Kessler Syndrome scenario, in which a cascade of collisions ends up creating so much orbital debris that LEO becomes unusable for generations.31
Unfortunately, the prospect of collision isn’t hypothetical. On September 2, 2019, the European Space Agency had to maneuver one of its scientific satellites to avoid potentially crashing into a Starlink satellite.32 It is general practice to do this when the probability of two satellites potentially colliding is greater than 1 in 10,000.
Different commercial and government organizations are currently looking at changing the rules governing how conjunctions are handled, as well as how to safely de-orbit satellites at their end of life. They are also exploring using machine learning algorithms and improving tracking technologies, such as ground-based radar, to manage the problem. International collaboration around this issue is on the rise, and companies themselves are seeking to get in front of it. OneWeb has set up a framework of principles and practices called “Responsible Space” for themselves to follow and to inspire others. Says OneWeb’s founder and chairman, Greg Wyler: “On my tombstone, it should say ‘Connected the world,’ not ‘Created orbital debris.’”33
Addressing economic uncertainties. As Gus Grissom’s character put it in The Right Stuff: “No bucks, no Buck Rogers.” Companies and investors have already sunk billions into satellite broadband constellations. However, little is known about what these services will actually cost consumers and businesses—for subscriptions and user terminals—and if the cost will be competitive with more traditional alternatives. Additionally, many of these satellites have a relatively short life expectancy: less than seven years. This means that companies will need to regularly launch new satellites to replenish the fleet, as well as safely de-orbit old ones—creating ongoing operational costs and a highly dynamic orbital environment.
The bottom line
The biggest impact of satellite broadband constellations and megaconstellations—should they be successfully deployed and activated—can be to bring low-latency, high-speed connectivity to people who currently are not within the reach of cellular towers or connected to high-speed lines. For people like the 138 million in Nigeria with no internet access at all, or the 48 percent of the Arctic population that has no access to broadband, the effect will be revolutionary.34 Just as with the spread of mobile phones, a more tightly connected world could pay multiple societal and economic dividends, benefiting entrepreneurs as well as hospitals, schools, and governments. For businesses and others in need of fast, reliable global communication, satellite broadband could improve current service levels or allow them the advantage of new services entirely.
For satellite broadband to become a vibrant, sustainable industry, however, would-be providers—and the marketplace—will need to answer many open questions. Will satellite broadband provide the service quality needed to be a true alternative to fiber, cable, and cellular services? Will providers be able to meet schedules and satisfy regulatory requirements? Will the unconnected want to connect, and will satellite broadband service be affordable for them? Will average revenue per user be high enough for providers to make a profit? For providers, is it better to be a general-purpose provider or to focus on specific applications and market segments? Will the technology act as an enabler for other new services? If so, what? Will there be too much capacity if more than one of these constellations proves to be successful?
Not all of the current players will likely survive or achieve their original goals. Industry watchers would do well to carefully monitor their entire life cycle to see what might happen in the long and winding path from receiving regulatory approval, securing investors, constructing the satellites, selecting the launch provider, and deploying and operating the constellation. Also, there will likely be accidents, whether launch failures or satellite malfunctions. The way a provider manages these accidents may be critical to its success.
As more satellites are deployed and more is learned, regulations around deployment rate, frequency allocation, and/or orbital debris mitigation will likely be modified. There will also be disagreements and challenges among operators, as well as challenges dealing with regulatory bodies in different countries. Those companies that can better manage such disputes may gain a competitive advantage. The evolution of enabling and component technologies, such as antennas and terminals, can have a significant impact on overall progress. Companies with more advanced and reliable suppliers will likely fare better.
It is unlikely that traditional telecommunications companies and current satellite internet providers will be disrupted at first. However, in time, satellite broadband may prove transformational. Pricing and ground equipment costs are still unknown, and space is not cheap, so low-price disruption seems unlikely—certainly not in the big cities where most of humanity lives. However, Hughes and Intelsat, two traditional satellite providers, are hedging their bets by investing in OneWeb.35 Other telecoms might decide to cede rural and less-developed areas that they do not currently cover to satellite broadband players, since building infrastructure in these areas is often cost-prohibitive. In fact, satellite broadband constellations may actually help telecommunications companies by improving mobile backhaul services.
Will satellite broadband give us a communications revolution or just a bunch of space junk? The race is on, and although it faces significant challenges, this nascent industry should not be dismissed.
Navigating the regulatory maze
Depending on where a satellite company originates and where it operates, it may need to deal with multiple government and international agencies responsible for managing spectrum and approving and licensing satellite services. For example, in Canada, the relevant bodies are Innovation, Science and Economic Development Canada (ISED) and the Canadian Radio-Television and Telecommunications Commission; in the Russian Federation, it is the Ministry of Digital Development, Communications, and Mass Media; in India, the Telecom Regulatory Authority of India; and in China, the Bureau of Radio Regulation.
Two particularly important regulators deserve special mention. The first is the United Nations’ International Telecommunication Union (ITU), the international regulatory body overseeing satellite communications. As the UN agency responsible for information and communication technologies, the ITU assigns global radio spectrum and satellite orbits, develops technical standards, and works to improve access, as well as providing international coordination. By working toward “connecting all the world's people—wherever they live and whatever their means,” the ITU aims to drive social and economic development through telecommunications.36
The ITU has rules regarding spectrum rights and timing for satellite deployment. After it formally files a request with the ITU, a satellite operator has seven years to fill its slot with a new or existing satellite, and it has to remain in that slot for at least ninety days. After rights are assigned, newer systems are not permitted to interfere with existing systems. This can lead to the “warehousing” of orbital slots and frequencies, however, and the ITU is currently considering altering the rules to avoid this.37
The other heavyweight regulator is the United States’ FCC, important because the United States is the largest open market for satellite broadband services. The FCC’s responsibilities cover many areas of direct interest to satellite internet providers, including enabling efficient and widely available communications service, ensuring competition and innovation, and assigning commercial spectrum licenses. In the United States, the FCC is responsible for approving plans for and granting licenses to commercial satellite services—including authorizing services that were approved in other countries.
A key FCC regulation driving satellite broadband providers’ activities is that those seeking to establish satellite systems must launch and operate at least 50 percent of their constellation within six years of authorization, or lose that authorization and forfeit their spectrum allocation. Further, the full constellation must be deployed within nine years; if it is not, the constellation must make do thereafter with the satellites it already has in orbit.38
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