Analysts Examine Industry Trends for SATELLITE 2021

As the satellite industry comes back together 18 months since the last SATELLITE show, the world has changed. Beyond the impacts of the COVID-19 pandemic, more Low-Earth Orbit (LEO) constellations have been announced, civilians have traveled to space, and many other noteworthy events have taken place in the space industry. Here, industry analysts share what they will be paying attention to at SATELLITE 2021.

Luigi Scatteia, Space Practice leader for PwC, highlights capacity and pricing, and the industry’s ability to cope with ever decreasing price points. He will be tracking COVID recovery plans from both satellite operators and equipment manufacturers, especially flat panel antenna manufacturers.

“There may also be a discussion on the impact of mega-constellations. This time around, as there are already thousands of satellites in orbit, there may also be some concrete data-driven discussions on near miss incidents and how to address the challenge of growing space traffic, especially in LEO,” he says.

Pacôme Révillon, CEO of Euroconsult outlined his four main talking points for the show: “First, the issue of NGSO [Non-Geostationary Orbit] constellations, from the start of services to their future expansion. Second, the rise in New Space financing, and the ability to deliver on expectations. Third, the impact of cloud and tech leaders Amazon, Google, and Microsoft on the space community, as there have been announcements of many new partnerships. Finally, I would add sovereignty and government programs, and the ability to leverage new commercial capabilities here.”

Arun Kumar Sampathkumar, industry manager in Frost & Sullivan's Aerospace & Defense practice, also sees a number of new discussion points this year about small satellite missions and their ability to deliver new and cheaper products and services. With the Space Force now in place, Sampathkumar expects to hear about its impact on dedicated military spending. He also expects the launch market to come under the microscope, particularly as more dedicated launch services come to market.

There will undoubtedly be plenty of talk about LEO at SATELLITE 2021, and whether it is the future of the industry. Sampathkumar says LEO can no longer be considered the future — it is the present. He believes it is already disrupting the space industry in many ways.

“LEO is more complementary with GEO [Geostationary Orbit], [which has] capabilities that can be enhanced alongside LEO. While there could be overlaps where there are low price points, LEO will lead the way,” he says.

Révillon sees different drivers and features combining as NGSO constellations take a large portion of future industry growth.

“They will actually be an enabler for part of that growth,” Révillon says. “This being said, the installed base of user terminals using GEO systems, the low cost of user terminals, and ease of deployment, and in certain cases sovereignty considerations, should continue to make GEO systems the solution of choice for certain segments and countries.”

Change in the 2020s

One of the major questions of the current moment is how the big space and satellite companies will change over the 2020s. On this issue, Scatteia says, “This will be the make or break decade for the space industry, a lot of business models and ventures that have been on the drawing board in the last decade will be tested for commercial prospects and profitability, whether the LEO satcom operators Starlink, OneWeb, and Telesat, or space tourism service providers Virgin Galactic and Blue Origin, lunar markets, etc.”

Révillon says it will be more surprising if there isn’t a shakeup in the coming decade with new investors and massive fundraising, sustained innovation, alongside the global transformation and digitization of the economy. “Having a fixed view on the winning model or on the leaders that should emerge is another story. It might well be a combination of newcomers and of historical leaders having completed a quite large transformation,” he says.

He admits he industry is in that unique moment where innovation has crystallized into new solutions that should fully enter the market in the coming months. “It is obviously also a moment of unbalance between the recent revenue dynamics of the connectivity industry, and the promises of future growth. It can remind us of the concept of destructive innovation, where a challenging transition period has to be managed before a new growth phase,” he says.

Demand for Capacity

With so much capacity coming online over the next few years, one of the questions facing the industry is where the demand will come from, and who will buy all of this capacity. Révillon thinks there will be latent need for connectivity and this will grow over time.

“Massive additions in a short time period shall certainly create an imbalance between usage and demand. A certain latency exists when considering decision making, terminals rollout in various locations,” he adds. “When considering potential anchor tenants, governments and MNOs will have to take a lead role, together with a few large enterprise and large service companies. Direct service distribution to smaller clients shall represent another pillar nevertheless requiring some time to build scale.”

Scatteia points to the fact that the United States, European Union, India, and Bangladesh are poised to develop solutions to reduce the digital divide in rural areas, and additional LEO capacity may find a strong institutional customer base here. He also believes in addition to these, highly ambitious projects associated with the development of smart cities, connected cars, and the Internet of Things will also increase the demand for capacity.

“There are several growth avenues where this capacity can be sold, however, this demand growth for satcom capacity is largely expected to grow at a linear rate, while the supply comes in exponentially. This imbalance is practically eroding the price points of capacity, and this is a major cause of concern,” he says.

Overall, Scatteia says the satellite market is on a growth trajectory, with stronger mindshare going forward: “Space is more and more mainstream, and it is attracting a lot of interest and capital, so I would say the overall prospects look quite positive going forward.” VS