Heading into the LEO Revolution
Despite the recent demise of LeoSat, the LEO market continues on unabated, with many ambitious plays still underway. But who is launching what, and when?
For the past seven years, talk of LEO satellites has spread through the industry. 2013 bore a fever of constellation activity. Companies such as OneWeb, SpaceX, LeoSat, and Telesat had all envisioned delivering broadband via hundreds, if not thousands, of LEO satellites. The megaconstellation movement had begun, and LEO was the talk among industry players around the world.
Then, in the first quarter of 2019, Internet shopping giant Amazon announced that it was joining the fray under the name of Kuiper Systems, to revolutionize communications with its constellation of 3,236 satellites. But in the last quarter, Jeff Bezos’ announcement was eclipsed by the demise of LeoSat. The company lost its Series A funding and closed its doors, which came as a surprise to some, considering the support customers had for LeoSat’s network.
But what is the real state of play for LEO, and what do the analysts say? According to Northern Sky Research (NSR), two to three of the megaconstellations currently planned are expected to be successfully launched, even if partially, Shagun Sachdeva, NSR senior analyst says. Over the next five years, more than 4,150 LEO birds are expected to be launched overall. NSR forecasts around 78 Tbps of usable capacity to be brought to the market by the major LEO constellations.
Success has a lot to do with the LEO business model, notes Sachdeva, and as each constellation has a different model, each will face different challenges. The exits for LEO constellations can be expected at three main stages of their product lifecycle. The first exit is prior to getting the system in orbit, mostly due to lack of funding. The second exit is in the early years after launch, due to lack of enough net profits. This can be because of higher-than-expected costs, or a lower-than-expected addressable market. The third exit is in the mid- to long-term, due to challenges in keeping the system sustainable.
In the case of LeoSat, the company falls into the first exit stage, which is unfortunate as it managed to secure around $2 billion in soft commitments from customers, Sachdeva says.
“This emphasizes the fact that strong financial backing is critical for success for LEO constellations. SpaceX and OneWeb both have strong financial support, which will help them get their systems into orbit, even if partially,” she says.
Similarly, Amazon’s project Kuiper is expected to be financially strong, whether from outside funds or from being self-funded. However, questions remain as to whether these companies will successfully bypass the second and third exit stages.
“Overall, the outcome might be that some of these other constellations will follow LeoSat's fate, but that will most likely be for different reasons,” she says.
All of the prominent High Throughput Satellite (HTS) constellations have a different target and, in most cases, a unique strategy to achieve that target. SpaceX, for example, is planning to compete with terrestrial solutions by creating a similar network in space able to offer high throughput services. Its ultimate goal is to be successful in order to fund its Mars project. OneWeb’s primary business strategy has been to connect the unconnected with low-cost Internet. Telesat, on the other hand, plans to go after customers with a higher price tolerance, such as enterprises, government, and military markets, by offering them highly secure, niche services.
The main challenges common to all constellations are the significant amount of Capital Expenditure (CapEx) required, especially in the ground infrastructure costs, and being able to keep the prices low enough to be competitive in their desired markets.
A Look at Telesat LEO
Canadian satellite operator Telesat is developing Telesat LEO, an advanced constellation incorporating next-generation technology. Telesat plans for the network to have hybrid orbits, meaning satellites will be in polar and inclined orbits, balancing global coverage and capacity density. Each satellite will have capabilities, including on-board processing to route traffic which will improve link performance and increase capacity compared with a bent-pipe payload; direct radiating antennas that allow beams to be available where and when as required by customer demand; and optical Inter-Satellite Links (ISL) enabling full global mesh connectivity with a high capacity service anywhere in the world.
The network also has a proprietary System Resource Manager (SRM) to orchestrate all the elements in real time and guarantee contracted service levels, as well as a resilient ground network with 50 Landing Stations and multiple Points of Presence (PoPs) distributed globally that result in a Layer 2 Ethernet Software Defined Network (SDN) supporting the delivery of Ethernet services that are compliant with the Metro Ethernet Forum (MEF).
The company plans to offer services to the Polar Regions, from 55 degree latitudes and above, by the third quarter of 2022. Full global services are planned for launch by the second quarter of 2023. This means that Telesat expects to deploy 198 satellites, in a combination of polar and inclined orbits, by the first half of 2023. After that, an additional 100 will added by the end of the year for a total of 298 satellites in the initial constellation.
“Telesat will launch the polar satellites first, allowing us to complete our system testing and begin offering initial service in the northern and southern latitudes while we’re launching satellites into inclined orbits,” says Michael Schwartz, senior vice president of Corporate and Business Development.
For this constellation, Telesat has priority access to 4 GHz of Ka-band spectrum, which will be used to deliver multiple Tbps of capacity at a global level, hundreds of Gbps to high demand regions, such as the Caribbean or Mediterranean waters, and tens of Gbps to hotspots, including airports and seaports. Telesat has designed its constellation to provide significant amounts of capacity across the globe, with the ability to add more satellites to the constellation to meet additional market demand. “We believe that there is a massive market out there for global broadband connectivity. Some LEO systems intend to focus on consumer broadband applications, while Telesat intends to serve enterprise applications,” Schwartz says.
“There is a vast opportunity to expand 4G and 5G networks with the superior capacity, speed, resiliency and low latency of Telesat LEO. We have conducted successful 5G trials with Vodafone and Telesat’s LEO backhaul technology installed at the University of Surrey’s 5G Innovation Centre. Test results confirmed a network reaction time (round trip latency) of 18-40 milliseconds, among the lowest ever for a satellite connection. The demonstration also supported video chatting, web browsing and the transferring of 4K video to the edge of the 5G network, demonstrating a key 5G future use case,” Schwartz says.
As for government and defense verticals, Telesat has supported several U.S. Department of Defense (DoD) programs during the past year to assess and demonstrate how high-performing commercial satellite systems, such as Telesat LEO, can provide important advantages for DoD missions. In addition to being selected for the Defense Advanced Research Projects Agency’s (DARPA) Blackjack program and the Air Force Research Labs’ Defense Experimentation using Commercial Satellite Internet (DEUCSI), Telesat has also partnered with Ball Aerospace and General Dynamics Mission Systems in separate demonstrations for the U.S. Air Force’s Space and Missile Systems Center’s Commercially Augmented Space Inter Networked Operations (CASINO) program.
A Look at OneWeb's Constellation
In February 2019, OneWeb began to assemble its constellation with the successful launch of its first six satellites into LEO orbit, demonstrating high-speed, low latency capabilities in tests conducted throughout the year. The next launch campaign is now underway. Equipment and satellites were flown to Baikonur in Kazakhstan on Dec. 16, 2019, in readiness for launch in early 2020, with regular launches to follow. The first phase of the constellation will have 650 LEO satellites, following which, it will scale to almost 2,000 satellites, ensuring OneWeb is able to meet growing demand. OneWeb satellites are manufactured in Toulouse, France, and Florida by OneWeb Satellites, through its high-volume satellite production process that aims to produce up to two satellites per day.
Once completed, the constellation will provide customers with information superiority, security, and reliability across air, land, and maritime environments, says Dylan Browne, OneWeb president of Government, Business Aviation and Maritime.
“OneWeb’s LEO constellation can also be viewed as a complementary capability to Medium Earth Orbit (MEO) and Geostationary Orbit (GEO) constellations, with the capability to be integrated into legacy and interconnected networks. In 2020, we will be sending more than 30 satellites per launch on a regular basis, to rapidly scale our constellation to begin delivering coverage in the Arctic in late 2020 and global coverage in 2021,” Browne says.
OneWeb has supportive shareholders and blue-chip partners who have enabled the considerable investment. The last round of funding was completed in 2019, bringing the total up to $3.4 billion.
“This funding is key to our succeeding in our mission because it allows us to invest in the best people and the most advanced and innovative technology. Our investors trust in us and the mission, and know we will deliver,” Browne says.
OneWeb’s goal is to bridge the digital divide. Since there are close to 4 billion people who are unconnected and without Internet access, the company sees half of the world’s population in need of its services. Other areas of focus will be to help customers who have inconsistent connectivity in the air, on land, and at sea.
“OneWeb will be the global communications network everywhere for everyone. We see opportunities in cellular backhaul, connecting rural and remote businesses, as well as in maritime, aviation, railroad, and government sectors,” Browne says.
With OneWeb services, airlines can offer a user experience that enables streaming and access to low-latency, sensitive applications like cloud computing. For the maritime market, OneWeb anticipates interest from cargo shipping, the fishing industry, and cruise ships. With OneWeb’s capability to deliver efficiency gains, it believes maritime companies will be able to future-proof their fleet, implement new technology, and increase crew retention. Better cargo tracking, security, and systems for predictive maintenance will deliver significant efficiency gains in merchant shipping, while flexible, scalable connectivity will facilitate Software-as-a-Service (SaaS) fuelling digital transformation, Browne notes.
“Demand for capacity is growing all the time, so we believe there is ample room and a significant need for a number of players once the pioneering companies like OneWeb begin to highlight their successes. In addition, the speed and latency improvements available to LEO systems are opening up new markets that will significantly increase the size of the market,” Browne says. “We are heading in the right direction, making ever greater strides of progress. We believe we have a market advantage with the progress we have made in satellite production, operations management, and a dedicated team working together to make a world of difference by creating fast, easy connectivity solutions powered by our satellites.”
LeoSat's Fall From Grace: A Brief Recap
LeoSat’s plans once burned bright. The technology company was formed in 2013 with plans to transform the way that businesses transfer information around the globe, by building “the most secure, high performance data network over Earth.” It would comprise a constellation of 78 to 108 Low Earth Orbit (LEO) satellites. These would provide the high-speed Internet solution that would solve the data communications challenges of the world – at least for high-end government and corporate customers. But now it seems that these revolutionary plans may have simply burned to ash.
In the last quarter of 2019, LeoSat announced that it had suspended operations due to a lack of investment. The company purged its workforce in a large scale layoff which included its CEO Mark Rigolle. LeoSat had expected to complete its $50 million Series A funding with investments from Spanish satellite operator Hispasat and Japan’s Sky Perfect Jsat. The two satellite operators had made initial investments previously, with Jsat investing in 2017 and Hispasat in 2018. What followed was management changes, resulting in a reversal of their intent to invest further. In February 2019, Jsat appointed Eiichi Yonekura as its new chief executive while Spanish energy company Red Eléctrica bought Hispasat.
With these investments abandoned and its staff let go, LeoSat is nothing more than a legal entity at present. The company’s founders are in search of a resurrection, however, it seems that LeoSat has more allure with customers than investors. While it had racked up $2 billion in soft commitments from customers keen to use the network once deployed, LeoSat never fared as well with investors. The cost of the cross-linked, Ka-band megaconstellation is projected at around $3.5 billion, and if this figure, which is described as a “hell of a lot of money” by Rigolle himself, isn’t a challenge enough, there is also the issue of the constellation spectrum filing expiring in January 2021. This means that the founders have a shrinking window in which to shift LeoSat’s allure.
LeoSat could keep the frequencies reserved by the International Telecommunications Union (ITU) if it were to launch a satellite, but, to date, none have been built. Expanding this quagmire is that the U.S. Federal Communications Commission voided LeoSat’s market access in September last year, when the company failed to pay mandatory surety bond riders. Then there is also the fact that the constellation spectrum filing with the ITU isn’t just problematic due to its expiration. Thales Alenia Space had made the spectrum filing on LeoSat’s behalf because in the lead up to the filling, LeoSat’s founders had been in talks with Thales Alenia Space as the manufacturer with the most constellation building experience at the time. But this meant that with the Thales Alenia Space spectrum filing, LeoSat was to some extent a captive customer of Thales Alenia Space, and without good grounds for healthy competition between manufacturers, the arena to raise funds is likely harder. VS