The Westin Vendôme in Paris was packed in mid-September with a completely sold out World Satellite Business Week (WSBW). As the industry is expanding, the show is growing and buzzing with energy. While there wasn’t any show-stopping news during the week, WSBW was a good opportunity to gauge the pulse on the industry more than halfway through the year. Via Satellite shares its 10 takeaways from the conference.
Starlink Dominates the Connectivity Conversation
All of the satellite operators, whether traditional Geostationary Orbit (GEO) or new constellations are trying to position their businesses to stack up against Starlink, which just passed 2 million subscribers. Discussion of SpaceX’s broadband constellation dominated panels on everything from connectivity, regional operators, and ground technology. Everyone is pursuing a differentiation strategy, whether it’s a focus on a particular market, technology, or specific business model. While a few years ago major operators were taking shots at the feasibility of such a constellation, now they are openly admiring how Starlink disrupted the market and insisting there’s plenty of demand to go around.
If You Can’t Beat Them, Join Them
We’ve had questions about SES’s cruise business since Starlink started signing SES’s flagship customers. WSBW brought some clarity on this issue when the two companies announced SES is integrating Starlink’s Low-Earth Orbit (LEO) connectivity into its offering for cruise companies. The solution will be integrated, sold, and delivered by SES. While this is not the first agreement for Starlink to work with an integrator, it’s the first time a major operator is delivering that managed service.
Starlink exec Jonathan Hofeller hinted at growing pains working with integrators in the past year, and limitations to Starlink’s simple business model. Customers want additional services like installation, customer support, and cybersecurity, Hofeller said. Also, the company has had challenges working with service providers because of how quickly Starlink adjusts its offerings. “We have to be smarter at how nimbleness affects our resellers,” he said. While the cruise collaboration seems like a good deal for SES to keep its customers happy, SpaceX wouldn’t do the deal unless it made sense for its business, too.
Stay Tuned for New System Announcements
Operators insist that demand for connectivity will support investment in more satellite systems, and there are a number in the works. Telesat, Rivada Space Networks, and Mangata Networks all confirmed plans are moving forward.
Intelsat CEO David Wajsgras said Intelsat will likely decide whether or not to make a potential investment in a Medium-Earth Orbit (MEO) constellation in about six months, and the operator issued an RFP to the industry this summer. Intelsat is currently gathering market and customer feedback and analyzing the business case.
Yahsat is looking at getting into the direct-to-device market, and recently released an RFI for a Non-Geostationary Orbit (NGSO) constellation focused on direct-to-device. Yahsat is looking for capabilities for texting, voice and some data capability, with the ability to offer broadband in the future. Omnispace, which has two S-band satellites in LEO, recently finished a study with a “major manufacturer” for the design and architecture of an NGSO constellation for 5G non-terrestrial network (NTN) connectivity on a global basis, using mid-band, licensed spectrum. Stay tuned for these potential system announcements.
Just How Big is the Direct to Device Opportunity?
Satellite-to-cell players are making bold projections for the potential revenue and impact of this emerging market. $1 billion is the number that’s being thrown around, but the question is when the industry could realize an opportunity of that size. Lynk CEO Charles Miller projects the direct-to-device industry will be worth $1 billion in less than five years.
Iridium COO Suzi McBride cautioned the industry should temper expectations, arguing it will take 10 years before there is widespread adoption with many satellites on orbit dedicated to this, and service agreements. “We as an industry have to be clear and manage expectations for the customers. … We have to be very cautious that we manage expectations properly so that it is successful long term,” McBride said.
A Tough Capital Environment for Startups
While a number of smaller startup funding rounds were announced during the week, conversations indicate that it’s much tougher for later series (post-Series A) startups to raise capital right now. Investors don’t have the appetite for larger rounds. Mark Boggett, CEO and managing partner of Seraphim Space, said during a panel that the number of rounds is picking up compared to the major dip in investment in 2022, but he confirmed that smaller rounds are the focus, citing a 55 percent increase in seed deals. “Investors are turning up the dial on risk, making smaller bets, but looking for companies that can provide an outsize return,” he said.
That leaves later stage startups in a lurch. Some are either holding off on raising capital, fighting taking a lower valuation, or raising money at a lower valuation than previous rounds. The tanking valuations of many of the SPACs aren’t helping valuation comparisons, either.
Concerns about SpaceX’s Launch ‘Monopoly’
Investment banker Vikram Nidamaluri, managing director of Telecom, Media, and Entertainment at Lazard, made waves when he said SpaceX’s dominance in the launch market is a “huge concern” that could choke out this area of the value chain.
SpaceX’s Tom Ochinero didn’t push back on SpaceX’s dominance, but said that SpaceX has shown it’s more than willing to fly its direct competitors, citing launches for OneWeb and the deal signed last week with Telesat for Lightspeed.
Tory Bruno, CEO of SpaceX competitor ULA pushed back against the idea of SpaceX as a “benevolent” monopoly. “I don’t think you’re a monopoly and I don’t think it’s our plan for you to become one,” Bruno said. Bruno’s opinions aside, SpaceX’s launch cadence compared to other players and the continued delays of next-generation launch systems are an understandable cause for concern.
Spectrum Issues Heat Up Ahead of WRC-23
International Telecommunications Union (ITU) Secretary-General Doreen Bogdan-Martin delivered the opening keynote address, setting the stage for spectrum discussions during the week. She shared that the ITU is working with the European Space Agency on the issue of satellite spectrum interference, which operators welcomed. Eutelsat CEO Eva Berneke said during the operator panel that while spectrum sharing might take a bit of compromise from the operators, it’s an issue that operators need to lean into and address.
Ground Tech Continues to Evolve
Innovations in ground technology are nearly as important as innovations on orbit, in order to fully harness the capacity available and provide the best service to end users. Ground tech was on display during World Satellite Business Week. OneWeb generated buzz with its new terminal rollout — a “person-portable” lightweight user terminal for military operations and emergency response teams, designed to fit in most backpacks. And Comtech announced its Bridge solutions, a new way of bringing together the company’s capabilities to meet the evolving demands of the satellite industry.
John Finney, CEO of All.Space put out a call to the ground tech industry to keep innovating during a tech panel. “The traditional model of a simple antenna serving a basic link, reliant on a single satellite connection, is grossly inadequate,” Finney said. “To guarantee global safety, both the U.S. and NATO require more. They urge us to work jointly and innovate, amalgamating our advanced technology and strategic partnerships to address the evolving challenges.”
Regional Players are Looking for the Right Fit
Regional operators have less money for large CapEx investments, and are looking for the right fit to get the capacity they need, whether that’s partnerships or investing in their own systems.
A group of regional operators including Thaicom, Nigcomsat, ABS, and PSN emphasized how their regional knowledge is key to delivering services. They don’t see Low-Earth Orbit (LEO) as the best solution, either. “LEOs don't actually serve the capacities that we want because they are scattered quite thinly around the world. We need certain capacities in certain areas of certain parts of the country —it's not a total solution,” said Thaicom CEO Patompob (Nile) Suwansiri.
Avanti CEO Kyle Whitehill said there’s an “exponential” need for capacity in the Philippines and Indonesia, but these geographies don’t make sense for a large high-throughput satellite (HTS) investment. Whitehill sees smaller GEOs efficiently filling in the capacity gaps over these regions.
A Global Focus on Display
Space has always been global, but there’s increasing momentum on a global scale. Mark Boggett of Seraphim Space stated that in the first quarter of 2023, Europe invested more money in the space industry than the U.S., for the first time. He cited increased interest in space investment from Europe and Asia, including a new space-focused fund from the European Investment Fund to support space businesses.
Smaller nations are increasing their investments in space as well. Oman, for example, recently launched a national space initiative and is looking to position the country as a destination for downstream space activities and investments. The director general for Policies and Governance and the head of Oman’s National Space Program gave a fireside chat, and Oman and Euroconsult plans to hold a conference to promote space in the Middle East in January. VS