Established satellite operators, SES and Eutelsat, joined panelists from SpaceX, emerging constellation provider Mangata Networks and network orchestration player Aalyria, in a lively debate on the viability of constellations businesses, the state of competition, the merits of vertical integration and the role of cloud infrastructure in changing the face of the market.
Moderator Christopher Baugh, founder and partner of NSR, an Analysys Mason company, emphasized that convergence, competition and confusion are dominant themes confronting the industry and challenged the group to define what metrics should be used to measure the success of constellation businesses.
“People focus on the number of satellites, but it’s really the capacity for satellites [that matters]. If you have an architecture to do that rapidly and efficiently, you can replace the old constellation with a fraction of the new constellation,” said Jonathan Hofeller, vice president of Starlink Commercial Sales, explaining that SpaceX’s pace of launch allows the vertically integrated operator to incrementally increase the technology capabilities of its constellation.
Hofeller added that service quality and ease of adoption matter, but the two critical success measures for Starlink are the impact of serving current customers and the success of growing beyond traditional satellite internet services.
Starlink now has over 1 million subscribers and is supporting not only consumer broadband, but also providing connectivity to cruise ships, schools, hospitals, and aircraft, Hofeller said.
Eutelsat CEO Eva Berneke, whose firm is acquiring OneWeb, a Low-Earth Orbit (LEO) operator now with 580 spacecraft in orbit, said the industry needs to get away from the focus on short-term gains, given the upfront CapEx required to build out constellations. Instead, “we need to find strategic investors who are in this for the long term,” she said, observing that connectivity is becoming as essential as running water and electricity in addition to being vital to democracies.
“Connectivity is here to stay and if we as an industry can get satellites out of this niche of being too expensive to be something that is actually competitive in the telecom space, then we’re opening a totally different market,” she added.
Brian Holz, CEO of Mangata Networks, said that the real opportunity isn’t connectivity services, especially once those services reach a competitive price point and become a commodity. He predicts that companies have to move beyond being only a connectivity provider. For Mangata, that means looking at 5G/6G and distribution of the cloud.
Panelists differed on how simple or complex their business approaches need to be to succeed, with SES and Mangata Networks holding firm to their different views of what the market needs.
“We take the view that there are applications like hotspots, enterprise (use cases) and high-reliability that are best for a mix of orbits,” said SES CTO Ruy Pinto. He sees cloud, edge computing, and connected industrial IoT as exciting nascent markets for satellites.
Expressing reservations that the massive LEO constellations can be sustainable long term, Pinto said that SES has adequately differentiated its O3b mPOWER constellation, which will launch two more satellites this month. During Monday’s opening panel, SES noted the strong performance of its mobility business, particularly in areas like cruise and aviation.
Pointing to all the capacity buildouts in the works, Baugh questions if there is an addressable market for all the planned capacity. “We don’t have a demand problem; we have a supply problem,” he said, pointing to the general state of anxiety within the industry today.
Holz said he doesn’t worry about satellite capacity “hitting a ceiling,” since the satellite industry today accounts for only 3 percent of global connectivity capacity, which means there is plenty of room to grow.
According to Holz, the dynamics of the market are changing with the rise of flexible payloads and the ability to manage them. Providers can conceivably offer services in the range of 25 cents per gigabyte per month – a cost that puts satellite providers “in the realm of competing with fiber and … having a responsive service.”
Berneke said she never gets questions on whether the markets are there and whether they will grow. People do ask her about full usage of the network and household pricing of broadband satellite services. High terminal costs are often noted.
“It’s pricing on a total cost of ownership for a customer that decides the attractiveness of the actual offer,” she said.
Telcos increasingly see the satellite industry as competition, said Baugh, questioning, “Is that the right way for the telecom industry to view us?”
Berneke considers the telecom industry as partners, who view satellite services as a means to offer connectivity to as many customers as possible. She added that they need satellite links since no telecom operator can monetize connectivity globally.
Holz said SpaceX, as a vertically integrated provider with direct-to-consumer relationships, could be viewed as a competitor, but providers embracing 5G and non-terrestrial networking standards and integration with telco operators “create a possibility for Tier One operators to bundle satellite as part of their cellular network offerings.”
“We strongly believe in open competition and speed,” emphasized SpaceX’s Hofeller, pointing to Starlink bringing mobile network operators (MNOs) into its reseller environment for mobile backhaul services.
The SpaceX leader attributed the success of Starlink’s constellation over the last two-and-a-half years to that speed. Now the company is investing in intersatellite links on newer launches, which are needed for global coverage for Starlink users in aviation and maritime.
“Continuing to build excellent infrastructure is what we’re great at,” he said.
Holz predicted that in five years, “everything is going to be localized and massively distributed,” adding that the services side of the industry will be “20 times bigger” than the satellite capacity side.
“When you integrate a cloud layer with terrestrial technology and satellite, you can play into that. Your capacity becomes a commodity offering because you’re doing an integrated service,” Holz said.
Berneke and other panelists agreed that satellite industry players embracing different standards have held the industry back.
“It makes sense for the industry to come together,” said Brian Barritt, CTO and co-founder of Aalyria. That is especially true in the public sector.
“In times where there is attrition of resources and infrastructure it would make for a more resilient network if we could make dynamic use of each other’s unused space and ground stations opportunistically and had software and policies that make that all possible,” said Barritt, whose Spacetime orchestration software platform was just selected by Rivada Space Networks to manage the firm’s LEO constellation.
“That is increasingly the way the U.S. government wants to buy capacity in the future — to dynamically transact capacity in an exchange-like model,” Barritt said. He warned that such a transition can’t occur unless there are common APIs and protocols on the data link – “at least across Layer 3 routing and networks.”
“We’re not going to get [there] with vertically integrated, proprietary sats even with the advantage of speed,” he concluded. VS