As chairman of SATELLITE, I get a year-long peek behind-the-scenes at how our speakers and participating companies prepare for each show and create a framework of what they hope to accomplish. Comparing the objectives to the end-result, the commercial satellite industry can certainly claim that it took advantage of SATELLITE 2017’s focused media attention and sent out clear signals to investors, customers and policy makers. The following is a list of what stood out to me as the boldest of bullet points made during the satellite industry’s “March Madness” week in Washington D.C. — issues and conversations that will likely continue to unfold throughout the year.
In a period of transition, some satellite operators are looking for a new identity. Worldwide high-speed Internet connectivity is and will remain the most lucrative market for commercial satellite operators of all shapes, sizes and regions. High-speed data drives all of today’s media and there’s no simpler and more straight-forward business model than providing bandwidth to data-hungry consumers. But as media consumer habits continue to change, some satellite operators are starting to realize that they have to do more than just making bandwidth available in order to connect to more people and produce any meaningful growth. And that’s the big question — what do they do? Do they reshape and rebrand themselves as telecoms or data companies, treating satellite as a piece of a larger, more diverse infrastructure rather than the defining feature? Do they acquire resources, reorganize and build synergies through M&A? News of the proposed merger of Intelsat and OneWeb dropped right before the show. This is one example of a unique merger of GEO and LEO infrastructure. Will we see one of our big, worldwide satellite operators merge with one of the top 10 terrestrial/cellular companies? Satellite operators need to cement themselves in their identity sooner rather than later. Whenever an ambitious new entrepreneur files to launch a massive constellation, the tech media choir responds with cheers of “here comes free global Internet!” Unfortunately, this message comes as news to consumers, but completely ignored the fact that several operators have been working on realizing those same ambitions for years (as a side note — this is one of the biggest tragedies of the loss of Eutelsat’s Facebook satellite. People forgot about what that satellite was supposed to do). Maybe that new identity is really just a company that is much more effective talking directly to those consumers? I can at least say that direct communication to consumers will be a dominant focus of the SATELLITE 2018 conference program.
Other satellite operators who are much more solidified in their identities and thriving in mobile markets are pushing hard for tech advancements on the ground. Satellite operators that have honed in on fast-growth regions and/or mobile markets like in-flight and maritime connectivity believe that the infrastructure they’ve build in space is only limited by the ability and power of the infrastructure on the ground. They’re not worried about constellations. They want newer, cheaper and more powerful hardware. Not surprisingly, conference sessions about flat-panel antennas and satellite terminal development were among SATELLITE 2017’s most popular and well-attended events of the week. Kymeta, Newtec and dozens of other antenna manufacturers at the SATELLITE show answered a lot of questions about target release dates, scale and price. I admire their own personal capacity to handle the pressure. Believe me, these manufacturers would like nothing more than the ability to walk out on stage side-by-side with the VP of consumer experience from a major car company and answer those questions. Also, those car companies are putting just as much pressure on the hardware community as the satellite operators.
Today’s tense geopolitical climate creates an uncertain and uncomfortable environment for the commercial space community. The SATELLITE crowd is very polite when it comes to politics. Speakers and attendees are very careful about comments on policy. Very few U.S. politicians outside of the FCC and the Congressional Science, Space and Technology are addressed by name and nobody ever endorses a candidate. That’s because Space has been the one area of policy that politicians across the entire spectrum love to say they support. We speak about government budget cuts like it’s a fog that nobody remembers rolling in and nobody knows when it will clear out. This year was different. Trump, Brexit, travel bans and French Elections were on the tip of everyone’s tongue, but were reserved to private conversations and thoughts. Nobody in the commercial satellite industry wants a trade war and nobody wants to travel back in time to a pre-globalized business world. While Mark Spiwak and his fellow Boeing executives are doing their best to explain the importance of the U.S. Ex-Im bank to the Trump administration, nobody knows its fate. The same could be said about the European Union, military spending, or the power/reach of any regulatory body. Nobody likes dealing with the stress of uncertainty. I suspect that these discussions will erupt at SATELLITE 2018 after budgets and more elections have passed.
There’s real opportunity in satellite imagery and sensing markets, but in order to capitalize, satellite providers have to think beyond simple data collection/organization and create the application that consumers demand. This was the thesis of RRE Ventures COO Will Porteous’ keynote speech at the Monday Finance Forum luncheon. Private investors have injected a lot of capital into companies that rapidly build and deploy small satellites that collect massive amounts of imagery and data that can accomplish anything you can imagine. However, these companies are also leaving ROI up to the imagination, as very few seem to be able to explain how they will organize and disseminate this data to the consumer. Even fewer can explain who those consumers are. The leaders in this field — DigitalGlobe, Planet, Spire and a handful of others — are the furthest along and most experienced and have grown at a remarkable pace thanks to low launch costs and enthusiastic, patient investors. Joe Rothenberg, formerly of Terra Bella, which Google just sold to Planet, stated just as much during a presentation at SATELLITE 2017. There’s a lot of potential here for patient investors, especially in applications for agriculture, weather, and resource management. But, you can’t sell “big data” to the average consumer. You have to sell an app that transforms the data into easy consumption. The average person doesn’t care how quickly the satellite that captured that data was built and launched. They just want the visuals.
There is some good news for the government sector. The one shred of political certainty that does exist is that every world leader is looking to increase military and cybersecurity spending, which could bring commercially provided government satcom services back into the spotlight — if we can ever actually move forward with acquisition and regulatory reform. And yes, SATELLITE 2017 continued its role as a host for a military satcom acquisition reform conversation. On the positive side, we had more military uniforms on the speaker stage at least talking about acquisition reform this year compared to the previous five SATELLITE shows.
New entrants need to ante up with definitive business models, now. The new crop of space and satellite companies that we’ve seen emerge during the past few years are led by young, ambitious, innovative and smart engineers with a long list of impressive credentials and an infinite supply of enthusiasm. This is all fine and good for getting seed money, but healthy skepticism and exhaustive market research keeps the tab running and nothing calms anxiety like a fiscal battle plan backed by customers willing to spend, realistic projections and a Plan B through Z. Some new entrants have been hiring on industry veterans as a reality check to develop these aspects of the business model. Others, specifically those that also need help with branding and marketing, are looking outside of the industry for an objective voice that will shake up the echo chamber.
Launchers are still multiplying and getting cheaper and it's still not enough to meet the demand for access to orbit. Commercial launchers get a lot of attention, so I won’t spend too much time here. I will say that it wasn’t too long ago when the four or five launchers we had on stage at SATELLITE actually used to argue with each other. Now, with a mountain of constellation business and a sea of demanding customers ahead of them, launchers are bonding like long-time neighbors, united in lowering costs and risk. Of course, launchers compete with each other, but there’s definitely a group awareness brewing that we are quickly approaching a reality where we need to launch daily, not monthly — and that’s just unmanned missions. Launching is fun and what you lose in sleep you make up with a fair amount celebrity — for better or worse. VS