NSR’s Top 10 Takeaways from SATELLITE 2020

1. Flexibility is First

It was one of the leading themes at SATELLITE 2020, driving decisions in virtually every market segment. Players are seeking flexible options, either as a means of dealing with current challenges, or future ones. Manufacturers of satellites, rockets, and antennas alike discussed the need for flexible supply chain logistics, to ensure workflows continue even in the face of changing political and economic times, and to leverage competition to derive low-cost solutions. Flexibility of service is also becoming increasingly important, with many seeking options to overcome regulations & policy obstacles, time to orbit/deployment, and wanting more than the standard offering. One example is rideshare options offering a large supply for launch demand but a growing interest for dedicated small sat launchers is also present.

Challenges are many as diverse options can fracture markets, with less standardization in pricing, offer, or quality of service. And scale, both up and out is hard to attain for players diversifying their portfolio with rampant competition, and in the face of rising cost and effort. From the customer perspective, freedom of choice is fantastic, but can be overwhelming, and so a strategic offering and customer education are key paths forward.

2. From Hardware to Software Space Solutions

On top of the need to have more flexible payloads, where operators seek ways to "future-proof" their fleet by changing mission on-orbit when the market changes through software-defined satellites many people present were also asking how software can help negotiate the various and changing uses case in satcom in particular for mobility and government. This trend was also present with the increasing view that cloud-based solutions on the ground segment; integration of satellite with 5G networks; and on-the-move government and military missions on highly mobile platforms will demand more software to enable products and services better adapted to changing market conditions. To enable replacing more hardware modems and boxes, virtualization and/or digitization seems ready, at least in the Telemetry, Tracking, and Control (TT&C) sector with software applications growing in importance. The ability to upload and reprogram Field-Programmable Gate Array (FPGAs) in space are touted as the next enabler in the transition towards true software-defined radios in the future, allowing for multi-mission capabilities.

3. No Insurance for Space Junk

As the risk of debris hitting spacecraft grows and recent events show very close calls could have devastating effects, space insurers are pondering, if not taking a harder look at, insuring what could become a field of space litter. This is particularly true for the Low-Earth Orbit (LEO), where some insurers are no longer insuring risks in the early phase of LEO operations, considering the probability versus the benefits of collision too one-sided.

4. Stable Price per kilogram to Orbit

Launch service providers all answered with a resounding “Yes” when asked if price per kilogram to orbit will drop … but not that much. Indeed, there seemed to be just a few cases where price to launch into orbit was seen to go down significantly, mainly in the rideshare business, but for the rest, the consensus was that it is not about to decline drastically over the next ten years, as the coming supply from new big and small launchers would not reduce the variables in the cost equation by much, unless a very disruptive technology can be tested, qualified and launched (regularly) in the coming years.

5. IPO in Absentia

All the trials and tribulations the global economy is going through in the context of the COVID-19 epidemic is sure to put the brakes on many companies’ entry into public markets via IPOs. According to several investors, there is room for new ventures in the space industry (mainly outside of launch) to raise funds, but as they expect the stock market to be hit hard this year, it leaves little room for New Space companies to successfully offer stocks to a public shy on investing in anything. And if one story is a warning sign, the drop in the stock price of Virgin Galactic, after a meteoritic rise, gave pause to potential investors.

6. Thou Shall Know Thy Market

If you're a space startup, know your market before you seek funding. That’s the message that was heard throughout the discussions around space startups. Not knowing what market and where one is head was noted as a confidence shaker that makes investors second guess funding emerging companies in the space and satellite business. Not only is a lack of market knowledge a big red flag, as one investor noted, but also, if a company pivots to another segment early in its life, it can be a concern that the company has not done its homework. It’s important for New Space startups to have a solid understanding of their markets at the early stage of a company’s life.

7. Does "Virtualized Ground Segment" Mean Fewer Boxes?

As the rest of the terrestrial IT world has embraced cloud-enabled, virtualized network infrastructure, the satellite communications industry is only just now starting that path. Across the value-chain, modem manufacturers, ground segment providers, and satellite operators are all embracing some flavor of flexible infrastructure which includes many of the terrestrial-buzz words like SD-WAN, NFV/NVF, and Software Defined. In the end, value creation and network diagrams in the future are going to look vastly different than today's satcom world — what can get virtualized will get virtualized.

Embracing terrestrial standards enables greater interoperability with not only terrestrial networks, but also with the pool of developers and standards building these networks. While satellite will still require some unique features and functions, extending existing standards rather than building from scratch will be a key component of deciding the winners and the losers going forward. Does that mean everything needs to run on bare metal servers? No. But everything needs to play well with others, respond to a common set of APIs, and offer scalable cost versus performance to best fit the application today and its growth tomorrow.

8. Trouble in the Services Layer?

With the one-two-three punch of potential C-band windfalls, oil pricing collapse, and general financial troubles — the service provider layer was already a trending topic heading into SATELLITE 2020. Recent events haven't helped as the mobility segment faces challenges with flight cancellations delaying potential rollouts, cruise ships in port, and crude collapse hitting right at a time that market looked to be turning around. Perhaps the biggest question is who is right-sized in the emerging satellite communications landscape, whether that be in segments covered, business models, or financial health. Last year and so far, early 2020 has proved to be a transformative time, and we are all waiting to see how SATELLITE 2021's exhibit hall will shape up.

Recent events are likely to be the proverbial straw — stressing those service providers already on the brink, encouraging mergers and acquisitions activities by healthy providers, and pushing back or slowing down aggressive consumption plans. Service providers exposed to the consumer mobility markets like cruise and aero will take a hit — either in delayed rollout plans or lower service revenues. Combine that with an already changing landscape of satellite operators moving into the services layer, falling capacity prices putting pressures on revenues, and other changes to how they do business, and the service provider of 2025 will be fairly different than the service provider of 2019. Expect a focus on flexibility — multi-orbit, multi-band networks will be standard. Value-added services like enhanced cyber security, remote IT management, crew-focused applications, and Internet of Things (IoT) will play a larger role in the revenue pie. And some are likely to be consolidated within larger organizations.

9. IoT Remains in Focus

IoT small satellite constellation representatives at SATELLITE 2020 noted they are continuing their journey into full deployment with new launches ahead for multiple constellations, leading to commercially available service in the near-term following trials and testing over the past couple of years. Further, Eutelsat, which has not traditionally had an IoT play, noted at the satellite operator panel its future will be in IoT moving forward through their ELO constellation – a sign as to how large this market may grow.

Demand is expected to ramp up quickly (albeit at a smaller scale for now), and Mobile Satellite Service (MSS) IoT operators will need to watch out for pricing plans to be announced over the coming months, with the potential for a price war as existing operators may begin to undercut the key pricing advantages from new and upcoming constellations. Legacy operators with their own IoT-focused constellations will also be better placed in the short term with existing revenues to get over the initial lack of revenues as demand ramps up.

10. Connected Car Remains Stalled

While the connected car has been in hype mode for some time, there was much more muted discussion of its potential at SATELLITE 2020. New satcom terminals demonstrated at remained enterprise focused, and destined for maritime, aeronautical, and comms-on-the-pause use cases. One exception was the announcement of Kymeta’s u8 dual-mode terminal which is destined for connected vehicles in the years ahead.

With monthly subscription pricing announced to start at $999 per month, there still is quite a way to go for widespread consumer connected car usage the satellite industry dreams of, especially in an industry where even the modest cost of the European Union’s eCall solution is balked at. However, we’re one step closer to seeing the satcom connected car as a potential reality. Solutions to technical challenges for connected buses and trains however, are still being worked on – something to look forward to at SATELLITE 2021? VS

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