Reaching New (Lower?) Heights in Space
The journey to global satellite communications started more than 50 years ago with the launch of the first geostationary communication satellite Syncom 3 used to telecast the 1964 Tokyo Summer Olympics. Since then, space has become a far more saturated place, with satellites lifting off to low, medium, and high Earth orbits to connect people around the globe. The first race for Low-Earth Orbit (LEO) satellite constellations in the 1990s ended in bankruptcy for most, and nearly twenty years expired before the second race began.
Today, LEO satellite operators are the drivers of “new space” investment. As modern life has gone digital around the world, Big Tech has joined traditional operators to capitalize on the demand for connectivity. Giants from Alphabet, with the Loon balloon project, to Facebook and Airbus, with their Zephyr solar-powered drones, have made forays into providing worldwide Internet connectivity. With OneWeb seemingly at the helm until their bankruptcy announcement in March 2020, LEO constellation plans have attracted impressive levels of capital and served as the satellite industry’s shiny new objects.
While the LEO opportunity window seems to have matured, however, growth and success have been limited by evolving technical designs, underestimated costs, and overpromised capabilities. On the other hand, the “old space” geosynchronous (GEO) satellite industry has remained steady. Although capacity prices have dropped in the last decade, GEO operators continue launching new satellites and expanding their services to new markets, from expanded government commercial SATCOM expenditures to the aviation and telecommunications backhaul markets.
Despite the excitement of LEO/MEO constellation possibilities, geosynchronous satellite operators are still winning in the growing SATCOM market.
State of MEO – Current Solutions
SES’ O3b constellation is the only valid Mid-Earth Orbit (MEO) solution in today’s market. Initially designed with the laudable intention of connecting the “other” three billion people, the company’s business plan and mission have shifted to providing “fully-managed services in the dynamic mobility, fixed data, and government markets,” which sounds a lot like every other successful satellite operator’s mission. The constellation is comprised of thirteen operational satellites providing regional coverage from about 5000 miles away.
Since the acquisition by SES, O3b has offered large-scale links attractive for base-wide government operations and regional telecom operators for backhaul. While economical at the hundreds-of-MHz scale, the offering seems to be the opposite of its original purpose: low-cost, high-volume broadband. With a six-figure price tag on the remote ground equipment, it is simply not an option for individual users. Although the newly branded mPOWER network attempts to capture a user-level market, the details of that service are unclear.
Given the relatively undeveloped state of MEO satellite communications, the geosynchronous industry continues to dominate.
The State of LEO – Where the Companies Stand
Recent news of two promising upstarts – LeoSat and OneWeb – failing to even deliver a complete constellation before entering bankruptcy may have dampened investment prospects for LEO projects. The development of an entirely new satellite constellation from scratch is a highly complex, highly technical undertaking. Announcements of unfathomably low-cost solution elements have been a trend among hopeful operators. SpaceX projected the cost of the Starlink customer remotes, which must be capable of auto-tracking and self-installable, to be in the low hundreds of dollars. Based on existing technology costs, this seems unlikely. OneWeb budgeted for a satellite price of $350,000 and ended up spending just under $1M on each, and these did not include optical technology for Inter-Satellite Links that would have reduced the number of costly ground stations required. With a fleet of about 650 satellites at triple the cost, it is not a shock that the business model did not pan out. The failure of OneWeb prompts the question of whether investors will begin to lose faith in LEO potential and allocate capital elsewhere. The outcome of OneWeb’s sales process is to be determined, and it may yet be revived for national security reasons. Still, the purchase of OneWeb for its frequency licensing and/or national security concerns is unlikely to translate into increased enthusiasm for the LEO concept.
A few other prominent companies competing for space in Low Earth Orbit are at various stages of development. SpaceX has launched 480 Starlink satellites so far, and with its irreverent CEO Elon Musk and recent successful NASA ISS launch, it has been generating a lot of buzz. However, Starlink’s developments seem to be focused solely on launching satellites into the orbit, with no real details on the ground segment infrastructure or end-user solution. Project Kuiper, another mega-constellation funded by Amazon founder and CEO Jeff Bezos, plans to operate a fleet of 3,236 satellites. Amazon has yet to deploy any satellites, nor does it have any launches scheduled. As of early February 2019, it lacked regulatory approvals to proceed with deployment.
Telesat, a global operator in the GEO space, has perhaps more feasible ambitions of launching just over a hundred LEO satellites to fulfill its constellation design. So far, it has launched two prototype satellites into low orbit. Telesat LEO recently completed Phase 1 in-orbit testing, assessing latency and viability of the solution. However, since 2018, the project has been under wraps with no new information on design and manufacturing.
The current LEO satellite projects have many limitations and unknowns that make their execution highly uncharted territory, both technically and economically. The business case for LEOs is still nebulous. The true cost of building and launching the satellites, building a ground segment, and developing the customer terminals seems unclear. Then there is the actual price tag on LEO service, also yet to be publicly discussed, and whether that even leads to profitability at some point. Presumably, the market bearing prices from existing ISPs like Comcast, Verizon, Hughes, and ViaSat will drive pricing as much as cost-based analysis. It is also possible that when and if new LEO constellations are operational, competitors will drive their own pricing down to make LEO operations less profitable and, therefore, less sustainable.
The Quiet Part – Ground Segment
With fanfare and marketing focused on designing and launching satellites, LEO operators have largely left an equally vital component of a successful satellite network out of the discussion: the ground segment. Teleports, or ground system infrastructure, are required to transmit and receive satellite signals and route data traffic from the satellite layer to the Internet. Compared to GEO teleport requirements, and due to the complexity of constantly tracking the NGSO LEO satellites, the required ground infrastructure is more sophisticated, numerous, and costly. Depending on the LEO system, cost estimates for a LEO Broadband gateway, including the associated antennas and Earth station technology infrastructure, are between ~$2-7 million (Quilty Analytics LLC, 2020). Hundreds of these geographically distant ground stations could be needed to provide global coverage for any given LEO constellation. Cost is just one component. The timeline and logistics of actually building these gateways will undoubtedly add to the aggressive timelines offered by operators.
One alternative to reduce the ground segment footprint is to build inter-satellite links (ISL) into LEO satellite design. However, ISL is complex and costly, making it harder to incorporate in Gen 1 constellations, where operators are trying to conserve cash. So far, only two companies, SpaceX and Telesat, are planning to add this functionality to their satellite design.
Let’s not forget about the end-user. To actually take advantage of the LEO bonanza, the customer on the ground must have a VSAT antenna to receive and send their data. None of the LEO operators have discussed the manufacturing and distribution process of end-user equipment. Tracking antennas are required for following MEO/LEO satellites in the sky, making them substantially more complicated and costly than a simple parabolic antenna. Although the talk of the low-cost LEO satellite antennas has begun, it’s not clear how companies are planning to actually achieve and deliver an affordable consumer-based price point. Kymeta flat-panel antennas may play a role in getting LEO customers online. Kepler modem-based LEO test satellites and O3b have both successfully connected with Kymeta u7 antennas. The new u8 MSAT is planned for LEO/MEO adoption by 2022. Questions abound: will complete customer remotes be vertically integrated by operators? How successfully can these be rolled out? Can an average “unconnected” consumer afford and install them?
Without question, LEO satellite constellation projects face significant hurdles as they seek operational success and profitability. In some respects, the completion of a global LEO constellation seems further away now than ever. Following the recent OneWeb announcement, CEO Greg Wyler said, “I think LEO satellites have a long way to go. They are still in their infancy in terms of design and technology… Even though they look like they are supercharged compared to ten years ago, they are still pretty darned inefficient vehicles for communications. Another major problem for the satellite in consumer broadband is the constantly growing uplink speed requirements of consumers.” (Holmes, In the Eye of the Storm: Greg Wyler Breaks Cover to Talk OneWeb, 2020)
GEO – Viable Communications Networks Available Today
GEO operators continue to dominate today’s and tomorrow’s satellite communications markets. Although financial stability remains a struggle, this group has operating satellites in space, landing rights, established ground segment, successful distribution channels, and ever-improving end-user equipment.
The Big Four GEO operators, including Intelsat despite its filing for bankruptcy protection, are still investing in GEO. Each company is purchasing new geosynchronous satellites and investing in next-generation technologies onboard.
Intelsat has a leading presence in geosynchronous orbit with a fleet of over 50 satellites. Combined with High Throughput Satellites and over 30 ground stations, it provides extensive global coverage. SES has over 30 operational GEO satellites and 16 ground stations around the globe. Eutelsat currently operates twenty-five geostationary satellites and is planning to launch five more over the next three years. They also operate several telemetry, tracking, and control stations around the world. Telesat, the pioneer in commercializing Ku-band in the 1980s, operates thirteen satellites and teleport infrastructure concentrated primarily in North America.
In addition to these companies, there are numerous regional and state-owned satellite operators occupying the majority of available orbital slots over the Earth’s landmasses. Nearly all satellite communications used for enterprise, government and military organizations, telecommunications backhaul, and consumer-based broadband are today in geosynchronous orbit.
Unfortunately for the unconnected, mass-market broadband is not the dream for this sector; but the new era of mature low-orbiting satellite solutions has simply not yet arrived.