The New Big 4: Assessing the Race Among the Top Operators

Starlink has proved over the last few years that it’s got what it takes to disrupt. SpaceX’s Low-Earth Orbit (LEO) satellite operator entered the direct-to-consumer market, rushed into enterprise and then made a splash in mobility, all with its fast, cheap, easy-to-install and easy-to-maintain service. Meanwhile, as part of the on-going restructuring, the foremost traditional Geostationary (GEO) operators have paired up – Eutelsat-OneWeb, SES-Intelsat, and Viasat-Inmarsat – into three leaders. With Starlink looking to accelerate, it is a formidable competitor joining the ranks as one of the new big four operators.

Starlink’s journey to the top has been well noted, with the industry at large eyeing its milestones. But when it bagged significant aviation deals in September last year, it earned absorbed attention. Initially, Starlink signed with Hawaiian Airways in 2022. In September last year, Starlink landed a major deal with United Airlines to equip more than 1,000 aircraft, followed by Air France and then Qatar Airways.

A win for standalone LEO services is significant, as GEO is the legacy backbone of in-flight connectivity (IFC). At the same time, while markets across the board are declining, according to data provided by space analysis firm Quilty Space, aviation is still showing growth across GEO. This, in part, had buoyed hopes that aviation would be spared a blow from Starlink’s impact, and the reason the industry was so stunned, explains Chris Quilty, co-CEO and president of Quilty Space.

While it’s harder to see Starlink’s impact at the operational level, Quilty believes that satellite operators are in a high, single-digital annual decline of 7 to 9 percent. He adds that maritime is declining at a 20 percent cadre and consumer broadband is declining at a 25 percent cadre.

“The aviation news was a significant blow,” says Quilty. “There are challenges concerning LEO, and in terms of capacity, GEO is a winner, able to put a ton of capacity in a single location. These challenges made the GEOs feel secure. Starlink was heavily impacting maritime and consumer markets, but in aviation, they thought LEO just wouldn’t have the capacity to be a threat. Then came the big announcements.”

These challenges include non-interference, where a LEO satellite cannot operate when in line with a GEO. This means that at certain times, a LEO network would have to serve a geographical area with a satellite, say within a 40-degree arc, that is not optimally located to deliver ideal service. Additionally, there is the limitation where a LEO operator can illuminate a geographical area only with a single satellite.

“SpaceX found a technical workaround with its different satellite generations. A V1, a V2 – SpaceX can light an area with all these because they’re different satellites from different constellations. Whether it can continue doing this in the longer term is yet to be seen,” says Quilty. “While LEO capacity is rightly questioned, in the two years it’ll take to equip more than 1,000 aircraft, Starlink’s V3 satellites would be online. Each of these has a terabit-per-second capacity – this is 10 times the previous ones.”

Aviation vs Maritime

While Starlink continues to squash capacity concerns, it must also overcome the difficulties unique to aviation. Tim Farrar, president of TMF Associates and specialist analyst for mobility, explains that comparatively, it’s easier to install a Starlink terminal on a maritime vessel than it is in aviation. When looking at Starlink’s impact on mobility as a whole, it’s in maritime where Starlink has made the big splash, he says.

“On a maritime ship, where there is generally enough room to install two antennas, Starlink doesn’t face the same level of regulation associated with aircraft installations. In Starlink’s end-of-year report, it said it had installed about 450 aircraft last year – most of this is business aviation and a fraction is commercial. This is not a huge number of aircraft compared to maritime, where Starlink reported installations on about 75,000 ships,” says Farrar.

Starlink may sign more IFC deals, however, installations will take a significant amount of time. Meanwhile, the number of aircraft fitted with GEO terminals is likely to increase, explains Farrar. Not only are there around 1,400 air-to-ground aircraft in the U.S. that are going to be fitted with satellite, but there are aircraft coming off the Boeing and Airbus production lines every month and, in many cases, airlines chose what connectivity solutions to fit when they ordered the planes years prior.

“In other segments, we’re seeing decreases in spending on GEO capacity and a reduction in the number of ships or sites fitted with GEO solutions. However, in aviation, we’re likely to see continued GEO growth for at least the next year or two, before Starlink really starts to get a large number of installations done and a significant number of aircraft in place,” says Farrar.

It won’t be easy or swift, but there is no question that Starlink will make major inroads into this market, says Farrar, adding that this is by virtue of the thousands of aircraft that have already committed, the number of aircraft that have already been installed, and that customers are happy with the service delivered.

Mounting Pressure

Industry players thought Starlink’s “consumer-grade service” wouldn’t hold up, adds Farrar. “Starlink’s high-quality service has proven much more reliable than people expected. In reality, it’s worked well the vast majority of time. It’s true that there have been some occasional glitches, and there are some countries where Starlink isn’t authorized to operate. However, this is overwhelmed by the fact that you get far more data for your money,” he says.

According to Farrar, Starlink generates a similar amount of revenue per month to other satellite providers but provisions vastly more capacity for every user. In the U.S. consumer market, the average Starlink user consumes around 400 GB of data per month for $120. With Viasat and Hughes, the usage is about 50 GB per month for a similar amount of money, he says.

“In maritime, where Starlink has made inroads, it’s probably five times cheaper than traditional GEO capacity. Now it’s happening in IFC as well. One of Starlink’s offers in business aviation was 20 GB of data a month for $2,000, compared to Gogo’s list price of 1GB of data a month for $1,900,” says Farrar.

Reliable service, hard-to-beat pricing, and very large amounts of capacity coming up – Farrar notes that this puts a lot more pressure on the legacy operators who are unlikely to respond by entering a price war and can’t beat Starlink by simply provisioning more data.

“In practice, this means legacy players, in many areas, are more confined to being a backup. How can they compete? By leveraging their offering of service, relationship with the customer, and ability to handle all the integration. They have other strong capabilities, one of which is decades of licensing to operate in various parts of the world. While Starlink is working quickly to try to catch up, it still has some way to go,” says Farrar.

Competition & Consolidation

Is disruptive pricing from this vertically integrated commercial LEO operator the reason for the industry restructuring? In part, yes, explains Andrew Cavalier, senior analyst at global technology intelligence firm ABI Research. Industry consolidation typically signifies market maturity, and in this case, he says, it’s a competitive response to increase market share and create barriers for new entrants. It’s significant competition from SpaceX together with a general lack of innovation and ability to adapt in the space industry that has led to this point of consolidation.

“SpaceX has demonstrated that vertical integration and a flexible, highly accessible direct-to-consumer online business model are critical in today’s digital economy. This is an area that most incumbents have largely overlooked,” says Cavalier.

ABI Research estimates that at the end of 2024, more than 63 percent of active satellites in orbit have been manufactured by SpaceX, more than 52 percent of orbital launches were conducted by SpaceX, and 67 percent of the satellite broadband market now belongs to SpaceX.

“This business is not entirely driven by net new growth either,” says Cavalier. “A significant portion of SpaceX’s revenue, particularly in the launch and broadband segments, comes from customers switching over from incumbent operators. We see it across the aviation, maritime, residential, and enterprise segments.”

But the restructuring is not on the back of Starlink’s attractive offer only. The antecedents leading to consolidation is technical, says Quilty, adding that it stems from the high-throughput satellite (HTS) technology that GEO operators were developing long before LEO constellations showed up on the scene.

“Back in the day, HTS made it clear that consolidation was in order due to the nature of the architecture. With HTS, GEO operators could no longer be disaggregated wholesalers of transponders, and instead had to start offering a connectivity service across multiple beams. This made talk of consolidation even more relevant. Adding LEO to this forced the inevitable,” says Quilty.

Customers switching over because of VSAT is recurring, says Vishal Patil, senior consultant at Novaspace. Not long ago, we saw customers switching over from L-band to VSAT. Today, customers are migrating from GEO-based to LEO-based VSAT, he says, noting that a declining video market has also led to consolidation.

“We’ve seen migrations in almost every satcom vertical. Operators that anticipate the impact of new capacity and act fast will survive. But selling the existing capacity will not be enough and competing with LEO-based capacity price points will be a massive challenge. Traditional players will have to be innovative at the service level as all of them are service providers or managed service providers,” says Patil.

Opportunities & Hurdles

What opportunities are there? ABI Research’s Cavalier explains that right now, there is a lot of promise around the potential of multi-orbit connectivity, driving differentiation through service level agreements (SLAs), and building value with government and specific markets. This means for GEO operators, there is a trend toward diversifying and customizing solutions to address the specific needs of different use cases as well as their target geographies.

Additionally, adds Cavalier, there are new opportunities for the industry to move toward a standards-based architecture using terrestrial standards (NTN) and connecting mass consumer devices, direct-to-cellular (D2C).

“However, large investment requirements by satellite operators alongside the general lack of success from NB-IoT investment by ground networks has put the industry in a bit of stasis. In this same regard, SpaceX, AST SpaceMobile, Globalstar/Apple, and Iridium are quickly moving on the D2C opportunity. This really reflects the primary hurdles for each operator to grow, the industry is at odds with itself. High-risk aversion or limited willingness to take calculated risks will leave incumbents behind the new companies willing to create the new space industry,” says Cavalier.

Pointing to differentiation in aviation, Shagun Sachdeva, senior analyst at Analysys Mason and head of satellite mobility programs, says there are geographical opportunities where traditional operators could provide services on routes that Starlink can’t offer. Other opportunities for legacy players include value-added services, bundled offerings, and expanded services to offer exclusive content or unique browsing.

“There is something to be said for the SLAs that GEO operators offer. Therefore, there is still room for the traditional GEO players – Starlink is not the complete winner at this point,” she says.

Could further consolidation be expected? It’s possible but unlikely, explains Cavalier. “Market changes can be expected. Starlink is a new player. More LEOs are coming. And, currently, there is still room for other players to grow – particularly for the ‘big three’ consolidated players. So, while possible, further consolidation in the near future among the big three is unlikely.”

Strengths of Consolidation

The correlated motives for partnerships among legacy GEO players are to better position themselves against Starlink and future Non-Geostationary Orbit (NGSO) competitors, and to optimize their offering with hybrid solutions. But what are the pros of the current pairings?

Viasat’s acquisition of Inmarsat gave it a strong foothold in the aviation and maritime connectivity markets, notes Cavalier. Because Viasat and Inmarsat are the two big proponents of Ka-band high throughput, adds Quilty, merging makes them dominant in terms of their position.

“Additionally, when the ViaSat-3 constellation is complete, it will be able to compete with LEO-based operators on price due to the massive amount of inherited capacity,” says Patil.

SES is well positioned for satellite backhaul and reliable fallback connectivity for fiber networks, explains Cavalier. This is because SES has been actively developing HTS solutions, such as the O3b mPOWER system, offering speeds from tens of Mbps to multiple GBs per second.

SES must still bring O3b mPOWER to full strength and provide a plan for the expansion of this capacity, adds Quilty. “Additionally, it must consolidate its assets with that of Intelsat. Here, there is a huge amount of both satellite fleet and ground networks to be consolidated, and this needs to be done in a seamless way. They also have to define the post-consolidation multi-orbit strategy.”

With the acquisition of Intelsat, SES can provide truly hybrid – multi-band, multi-orbit – services, as Intelsat has a partnership in place with Eutelsat OneWeb, adds Patil.

Eutelsat OneWeb is positioning itself as the de-facto LEO partner for GEO connectivity in aviation, maritime and enterprise segments, says Cavalier.

While able to offer hybrid services by combining its existing GEO and LEO capacity, explains Patil, the operator will have to depend on service providers and OEMs as it is not vertically integrated. VS