Renting the Ground: The Growing Future of Ground Segment as a Service

New Space is greedy for ground. Traditional Geostationary Earth Orbit (GEO) satellites are stationary relative to the Earth — they hang at a fixed point in the sky and a single ground station can be in constant line-of-sight contact. But the New Space non-GEO constellations — in Low- or Medium-Earth orbit (LEO or MEO) — move across the sky, requiring multiple ground stations across the globe to stay in touch.

“All these new constellations, these enormous numbers of new space vehicles, all need ground stations to service them, stay in contact, provide direct-to-Earth communications,” says John Heskett, the chief technology officer at Kongsberg Satellite Services ( KSAT).

And it’s not just the orbits. The new services that non-GEO constellations are getting into — like low latency communications, ubiquitous Internet of Things (IoT) connectivity, or near real-time Earth Observation (EO) — also require globally dispersed ground stations, so that data can be downloaded in real time.

New Space companies are moving into the delivery phase, as their constellations come online. And in the delivery phase, the ground is king. Because the ground segment dictates how and how quickly your data can reach your users and what they can do with it when it does.

But most startups don’t have the resources or the time to build out their own ground segment, explains Heskett. “These startups are on a very tight runway. They have six months to a year from the time they get their VC funding until they have to put something on a rocket,” he says. Even if they could afford to build out their own ground station network, they wouldn’t have the time to prototype, test, and integrate the technology.

That’s where Ground Segment as a Service (GSaaS) comes in. Instead of building out their own ground segment, startups can simply rent what they need on the ground — both the command and control links that pilot the satellite and the data links that connect it with its users.

Different GSaaS providers have different business and service models, but most can help startups begin small and cheaply, “You don’t have to worry about maintenance, leasing, building, or running operational costs for ground stations … Our pay-as-you-go consumption model means you are only charged for the time you use,” Azure Space Senior Director Steve Kitay says.

And when they hit the hockey stick growth curve, GSaaS offers “the option to rapidly scale satellite communications on demand when the business needs it,” Kitay adds.

GSaaS, by offering a turnkey, end-to-end solution for the ground segment, gives satellite operators the chance to “focus on the mission and deployment of assets,” he says.

Growing Demand for GSaaS Will Fuel Double-Digit Growth

And it’s not just New Space. The flexibility that GSaaS offers is attracting even the most traditional of satellite players — the military. The U.S. Air Force and the Department of Defense have both contracted GSaaS providers.

Heskett says the ground segment market has been transformed, “For 40 years the market was pretty static,” he explains. Government agencies would issue requirements, “We would put up an antenna for them, and that’s how the market worked.”

Over the past decade, innovations in the commercial space industry have changed all of that, Heskett says, as satellite operators launch constellations of five to 500 satellites, versus single satellites as in the past.

As a result, he adds, the average number of satellite passes KSAT services has risen from 500 a month a decade ago to 50,000 a month now. Heskett says that ballooning demand will create a market growing fast enough to accommodate both traditional players, like KSAT, Viasat, or Swedish Space Corporation (SSC), and it’s already spurring investment in a raft of new GSaaS startups like Leaf Space and Infostellar.

“A rising tide floats all boats, and maybe even makes us want to buy new boats,” he says.

The ground segment was one of the sectors of the space business hit the hardest by COVID, according to Lluc Palerm, a consultant with NSR. He says deployments and new deals were halted due to travel restrictions, challenges with the value chain, and caution with expenditures. Revenues fell by more than 18 percent in 2020 to under $3 billion.

However, the sector is now poised for double-digit growth for the rest of the decade, Palerm says, generating global, cumulative revenues of $138 billion by 2029, according to market projections by Northern Sky Research.

But that growth will be segmented, Palerm says, with much of the demand coming from vertically integrated constellations, beyond the reach of Ground Segment as a Service offerings.

For the large constellation operators like OneWeb and Starlink, both the economics and the technology favor vertical integration — building their own dedicated global network of ground stations. These planet-spanning constellations require constant connectivity with the ground anywhere in the world and are big enough to make that huge capital expenditure worthwhile, Palerm explains.

These large constellations tend to have closed ecosystems, with proprietary technology, Palerm says, “It would be difficult for them to adopt the Ground Segment as a Service kind of business model. It makes sense for them to build their own ground segment.”

Within the ground station marketplace, GSaaS is set for explosive growth in the next five to 10, according to recent research from Euroconsult. The company logged nearly 300 active ground stations owned by GSaaS providers last year, says Euroconsult ground segment specialist Alexandre Corral. He projects that number will almost double by 2030, with the fastest deployment phase being in the beginning of this decade.

But GSaaS does not make sense for every satellite application. Most telecom applications involve too many satellites to monitor to only use Ground Station as a Service Corral explains, whereas Earth Observation is often a good use case for GSaaS.

There are also governance questions, especially as many EO players look to address the defense market, where sovereignty and security issues are critical. Corral predicts that many EO players will opt for a hybrid model, with their own dedicated ground stations “in strategic locations, to address critical applications like defense, but use Ground Station as a Service elsewhere.”

Emerging Internet of Things (IOT) constellations are seen as a great opportunity for GSaaS, and Corral believes it will come down to scale, “If you have a project with hundreds of satellites, they will likely have their own ground infrastructure. But where there are just tens, Ground Station as a Service makes sense for them,” he says.

Barriers to Entry

There are different business models for different GSaaS players, Corral explains.

Some, like Infostellar and RBC Signals, have adopted a model that can be compared to Uber or Airbnb — they are the intermediary, brokering a relationship between the satellite operator and the ground station owner.

“This is not your infrastructure, but you're here in the middle, selling the excess capacity of the ground station owner to the satellite operator and taking a portion of that revenue.” Just as Uber doesn’t need to own any cars, intermediary GSaaS providers don’t need to own any ground stations. Such a model, Corral notes, enables a very large network at very low cost.

Others, like Leaf Space, have eschewed the Uber model in favor of a taxi fleet — they build and operate their own network of ground stations. The Uber model works when customers have multiple single satellite missions, or operate a constellation that needs support when its load peaks, says Leaf Chief Strategy Officer Giovanni Pandolfi Bortoletto. But providing baseline capacity for constellations requires ownership, he says.

“When you need to handle service level agreements [SLAs], high capacity, you need something different. We decided that we needed to rely on our own proprietary network [of ground stations] because otherwise it was really a mess to handle SLAs and third parties and maintenance.”

Owning the ground also makes it possible for Leaf Space to offer solutions even to those constellations with a proprietary ecosystem, Pandolfi says. “You might need a [ground] network that is totally dedicated to your mission, but you can address that need through Ground Segment as a Service.”

Leaf Space was launched, Pandolfi says, because its founders saw a gap in the market — The New Space operators of small and microsats needed on-demand low cost ground services, which the legacy providers weren’t set up for. “We were seeing these huge differences between what the market was actually asking for and what the ground segment providers were actually providing at that point,” he says.

But building out a network to meet that new demand is not a trivial endeavor — leases must be signed; licenses obtained; concrete poured. Leaf Space recently announced that it will install new stations in West and South Australia, British Columbia, Iceland, and Bulgaria, taking the company to 15 ground stations globally.

And any network of ground stations is subject to the tyranny of geography: The network must be global with multiple stations spread across the latitudes. To provide the world-spanning coverage their customers need, Leaf Space has to expand its current network, based in Europe, New Zealand, and Sri Lanka, says Pandolfi. The company is building new stations in Australia, Canada, Iceland, and Mauritius, and is “finalizing” additional sites in the Middle East, Japan, and South America, Pandolfi says.

Even licensing requirements, different in every country, can suck up scarce human and financial resources, according to research from PWC. “Dealing with licensing can be time-consuming, expensive and even sometimes cause delays in business development,” reads a PWC paper on GSaaS published at the International Astronautical Congress in 2020.

Legacy players like KSAT have an advantage here, the paper argues, “as they have long experience dealing with such regulatory [issues.]”

For this and other reasons, including high upfront capital costs of building out a global network, security requirements and sovereignty issues, “the barriers to entry [to the GSaaS market] are expected to remain rather high in the future,” the paper concludes.

Enter the Hyperscalers

What’s really put GSaaS on the map over the past couple of years is the entry of cloud giants Amazon Web Services and Microsoft Azure into the market.

They arrive with a huge global footprint (and the experience dealing with local regulators which goes with that) at the moment when much of the specialized hardware that used to be required to convert the Radio Frequency (RF) signal from the antenna into data — modems and baseband processing — is being virtualized and can be moved to the cloud.

Both AWS Ground Station and Azure Orbital are seeking to leverage their global networks of data centers — adding antennas and signal boosters (equipment that can’t be virtualized), and partnering with existing ground station operators. They aim to provide a ready-made, planet spanning network available on-demand to satellite operators the way their cloud services are available to tech companies.

Virtualization does mean you can break up the ground segment value chain, points out Pandolfi. “Where there is a place for value is really on the different steps of the market. AWS has their own ground station system, I can see other companies providing other solutions, for example, for the baseband processing or for the data transfer, or something like that, or building on top of our own services.”

But while virtualization will allow multiple providers to offer different services, it won’t disaggregate the baseline GSaaS offerings, according to Kartik Seshadri, the vice president for International Systems and Service Delivery at Hughes, which offers GSaaS to telecom providers and other legacy players

Seshadri says he hasn’t found customers eager to assemble their ground segment from an ala carte menu of different providers. Traditional GSaaS providers like Hughes also don’t see themselves as competing with AWS or Azure, he says.

“Our customers want a complete system, end-to-end,” he says, “And that's what they wanted 10 years ago, and they wanted it five years ago, and they want it today. Most of our customers already have data centers, they've already invested in [their infrastructure], they are managing it and what they want is a highly dense, super-efficient, cost efficient system, where they can run X gigabits of traffic. That’s what we offer.”

Indeed, two of the GSaaS players interviewed for this article, KSAT and Leaf Space, say they plan to extend their service offerings to cover the ground segment for launch as well as for orbit — offering a cradle-to-grave service for operators.

AWS Ground Station declined requests for an interview for this article. But earlier this year, retired USAF Maj. Gen. Clint Crosier, AWS’ director of aerospace and satellite solutions, made clear in a previously unpublished portion of an interview with Via Satellite, that although AWS operates its own ground station offering, it will still collaborate with other GsaaS players when it comes to the cloud.

“What we want to do is make sure that all companies, whether they're using the AWS Ground Station or not, can move their data into the AWS Cloud,” Crosier says. AWS’ partnership with GSaaS provider Infostellar, he explains, was one of a series of agreements AWS planned to strike with “other organizations and other companies, to make it easier for them to get their data into the AWS cloud.”

He cites the fact that Netflix and Amazon Prime are direct competitors, “But Netflix runs its entire workload on the AWS Cloud.” Similarly, in the ground segment, “what we're seeing is the same thing. There are companies that offer similar capabilities to AWS, and where it makes sense, we want them to be able to leverage the cloud just like anybody else. Even if they don't use our ground station.” VS