The recent beta launch of SpaceX’s Starlink service and the reemergence of OneWeb from bankruptcy has continued to fuel excitement into Low-Earth Orbit (LEO) constellations. In addition, Telesat will be merging with its major shareholder Loral Space Systems to accelerate fundraising for its own LEO constellation to bring a third competitor into play. I believe in 2021, more details will emerge on Amazon’s Kuiper project which will be a formidable and the most well-financed player in what’s becoming a multibillion-dollar LEO space war.
There are a number of technical, regulatory, market and financial challenges for these LEO systems but what stands out to me are three main problems. First is Earth fade which I wrote about a couple of years ago in Via Satellite magazine. Earth fade is the term I coined for objects on the Earth that come between fast moving LEO satellites and user antennas. Starlink beta testers are complaining of constant outages, which SpaceX has stated will improve over time with more satellite launches, but they already have nearly 1,000 satellites in orbit. While this will not be an issue for delivering broadband for aircrafts, it will be a major deployment issue for terrestrial networks.
The second problem comes in the form of broadband density. LEO systems have to spread their capacity across the entire surface of the Earth while people only live on about 10 percent of it. This means there will be too much capacity where there are no users, and insufficient capacity over the areas that need it.
The third problem — which I see as the biggest challenge — is the cost of the user terminal. At a cost of well above $1,000, they are too expensive for most rural users in emerging markets who do not have $99 of monthly disposable income. Regardless of how many billionaires enter the LEO broadband market, they will all face these same fundamental challenges if they are to address the 3.5 billion people without broadband connectivity.
This brings us to the Geostationary Orbit (GEO), the backbone of our fixed satellite industry, which the new LEO entrants are trying to make redundant. Is GEO really disposable? GEO satellites do not suffer from the three main challenges faced by LEO networks. The ‘fixed’ satellite means that the position of the GEO satellite doesn’t move so the user can install their antenna once and count on the link working continuously, without interruptions nor mechanical failures of pointing systems. Because the user antenna can be made for less than $20, these user terminals including the radio, feeds and modems are available today for about $300. I see no reason why this price will not drop to $100 per unit.
A recent YouTube video showing the tear down of Starlink’s beautifully designed user antenna revealed hundreds of beamforming Application Specific Integrated Circuits (ASICs) attached to over 1,000 radiating elements. While a technical marvel and an engineering masterpiece, an antenna with this amount of silicon will never reach $100, and it will be difficult to hit under $1,000 per unit.
Finally, GEO satellites can be designed in a way that all of its capacity can be custom tailored to be over where people need capacity. Instead of wasting 90 percent of the bandwidth of LEO systems, GEO systems will be 10 times more efficient. It’s now feasible to purchase a small GEO 100 gigabits per second satellite for $100 million. Since none of this capacity is wasted over the arctic circles and vast oceans, the price per megabits per second, per month achieved by the small GEO operator is under $10 which translates to a gigabyte price of 3 cents. In the near future small GEOs operators will be able to provide broadband connectivity services to the 3.5 billion people with a $100 terminal at $10 per month and 100 gigabytes per month while achieving significant profit margins for themselves and their distributors.
Over giant swaths of territory in the Amazon, Sub Saharan Africa, Central Asia, and Southeast Asia, there are billions of people who are on the wrong side of the digital divide and their children are starved for education, information, and knowledge. The LEO space war being waged by billionaires will do very little to solve their problems because the orbit they chose to wage their battles in will only benefit wealthy people who fly on jets and take holidays on cruises where Earth fade isn’t an issue and user terminal costs are not barriers.
On the other hand, small GEO satellites can now be obtained by even the smallest countries because the investment is so affordable. Due to U.S. EXIM bank and other export credit agencies supporting the export of satellite systems with up to 85 percent financing, enterprises and sovereign nations need less than $20 million of equity to become satellite owners. The existing GEO satellite operators can easily now afford to expand their businesses in 100 Gbps increments. The business case closes for small GEOs, while it is uncertain for LEOs.
Over 65 million years ago it took a city-sized meteor to end the age of the dinosaurs ushering the age of smaller and smarter mammals. Only time will tell if this multibillion-dollar LEO space war being waged by billionaires will find a market niche but it reminds me of giant dinosaurs with big mouths to feed. It wasn’t the impact of the meteor that killed off most of the dinosaurs, but lack of food which was brought on by the post-impact winter. If these LEO constellations do not quickly create a new market exceeding the current size of the fixed satellite market, they will be starved for cash as investors head for the exits.
I like the business case for small GEOs far more. Small GEOs are a much lower risk and a smarter investment. Small GEOs are capable of addressing the 3.5 billion digital divide which translates to unending demand. The fog of the LEO space war will soon be upon us — but the case for small GEOs is strong and the future bright. VS
Tom Choi is the executive chairman of Airspace Internet Exchange, Curvalux, and Saturn Satellite Networks.