Analysts Assess the Industry Landscape for SATELLITE 2024

After a seismic year in 2023, will 2024 be equally as thrilling for the satellite industry? Ahead of SATELLITE 2024, we talk to some of the leading analysts’ in the sector to talk about what they see as the main talking points at SATELLITE.

This roundtable features Arjun Sreekumar, global consulting director, growth advisory, Aerospace & Defense, Frost & Sullivan; Pravin Pradeep, industry analyst and consultant, Aerospace & Defense, Frost & Sullivan; Chris Baugh, partner, NSR, an Analysys Mason company, and Andrew Cavalier, senior analyst, ABI Research.

VIA SATELLITE: Do you think 2024 will be as seismic as 2023 was for the satellite industry?

Pradeep: Looking ahead to 2024, the landscape is ripe for continued seismic shifts, influenced by a complex interplay of factors including heightened interest rates and diminishing costs for space access. The arena of space is increasingly recognized as strategically significant, prompting a reconfiguration of the industry landscape. Established entities are strategically overhauling their portfolios, while smaller, fragmented players are seeking consolidation to strengthen their market position. As valuations stabilize, reflecting more grounded assessments of worth, the environment becomes conducive for strategic acquisitions. This climate favors incumbents, private equity, and new space firms eager to enhance their capabilities and spur innovation by integrating differentiated technologies with sustainable business models at fair valuations.

Baugh: Yes, it could. With Starlink and Kuiper posing deeper threats, the Geostationary (GEO) camp will have to respond with seismic deals in order to compete.

Cavalier: 2024 will be a significant year for the satellite industry, as it will mark the entry of a new Low-Earth Orbit (LEO) megaconstellation player, Amazon’s Project Kuiper. The emergence of these large-scale Non-Geostationary Orbit (NGSO) constellations will be a challenge for the GSO industry, both in competition for spectrum and market share. With Project Kuiper set to launch early customer pilots in the latter half of 2024, this rapidly advancing technology giant, backed by plenty of capital (like Starlink), is set to usher in an era of surging LEO space operations activity. ABI Research anticipates that up to 98 percent of satellites deployed in the next decade will be in LEO.

VIA SATELLITE: Out of the traditional big operators SES, Intelsat, Eutelsat, and Telesat, which do you think is best placed for the rest of the decade to compete against the likes of Amazon and SpaceX?

Pradeep: Telesat, with its Lightspeed project aiming to deploy a LEO satellite constellation, stands out as a pivotal competitor against SpaceX's Starlink and Amazon's Project Kuiper. Unlike traditional GEO operators SES, Intelsat, and Eutelsat, Telesat's direct leap into LEO technology positions it strongly for delivering high-speed, low-latency internet services globally. This move strategically aligns Telesat closer to the innovative approaches of Starlink and Kuiper, potentially offering comparable broadband services.

Baugh: Any of these players can compete and be best placed with a multi-orbit strategy. Some of these players may even or should actually merge in order to achieve efficiencies, synergies and scale to go up against Amazon and SpaceX.

Cavalier: Telesat’s upcoming Lightspeed network has significant potential. The system is fully funded, and the payload will feature many of the hallmarks of a competitive LEO network, on-orbit processing, beam hopping and phased arrays, and optical inter-satellite links (OISLs). With a focus on enterprise markets, and the ability to support multiple Gigabits per second data links, the network will be an option for customers looking for high data-rate satellite links. There will be much to look forward to in 2026 for the launch campaign and when the network enters service in 2027.

VIA SATELLITE: What do you think will be the three main talking points at SATELLITE 2024?

Pradeep: Firstly, you have satellite and telecom industry convergence. The convergence between satellite and terrestrial telecom industries is rapidly accelerating, underscored by innovative collaborations and substantial financial investments aimed at bridging the connectivity divide.

Secondly, LEO as a national security priority. The strategic emphasis on LEO for national security is evidently observed through significant investments from both the U.S. and Europe. The U.S. Space Development Agency's (SDA) allocation of over $8 billion towards the Proliferated Warfighter Space Architecture (PWSA) underscores the shift towards a layered network of military satellites designed for enhanced communications and threat detection. In parallel, you have Europe's commitment to the IRIS2 project in 2023, with a budget nearing 6 billion euros ($6.5 billion).

Thirdly, you have generative AI and edge computing. The integration of generative AI with edge computing enables satellites to perform complex data analysis on-the-fly, significantly reducing the latency associated with data transmission to Earth for processing. This leap forward is crucial for applications requiring immediate insights, such as environmental monitoring, disaster response, and strategic defense initiatives.

Baugh: The current threat of SpaceX/Starlink and the impending threat of Amazon Kuiper; the response of GEO and traditional operators to SpaceX/Starlink and Amazon Kuiper. Multi-orbit strategies, new markets such as EO and direct-to-device (D2D), divestiture of assets and partnerships are all on the table; and Satellite D2D and telco integration. This could potentially take the industry at a higher growth trajectory; however, technical, regulatory and the business case are all still unclear.

Cavalier: LEO is here and it is disrupting the industry. The gains by NGSO in WRC-23 and what’s to follow in WRC-27 and 31 should be sending a clear signal to the rest of the industry. Likewise, multi-orbit is a strong strategy for GSO operators to diversify and tap into the growing LEO market. The ability to split traffic between latency-sensitive and high-throughput applications, even simultaneously, is a strong differentiator for satellite service providers.

Finally, AI will be a hot topic for the satellite industry. Google recently announced a partnership with the EDF (Environmental Defense Fund) to support MethaneSAT, backed by AI from Google Cloud for Earth Observation. Additionally, Chinese firms have begun to launch satellites with AI payloads (AI-powered brains), like the WonderJourney A1 developed by Dicelsus Space Technology (Hangzhou) Co., Ltd.

VIA SATELLITE: Starlink has won deals with the likes of John Deere, Norwegian Cruise Line, and a number of airlines. Is this deeply ominous for a number of the traditional big players?

Pradeep: Starlink's agreements with sectors like agriculture, maritime, and airlines highlight its expanding reach and introduce new dynamics into the market, particularly in terms of high-speed, low-latency connectivity. While these developments are noteworthy, suggesting an ominous future for traditional satellite operators like SES, Intelsat, Eutelsat, and Telesat might overlook the resilience, adaptability, and strategic advantages these established companies hold. The broadening of the satellite communications sector encourages traditional operators to accelerate their innovation cycles and explore new service models and technologies. Furthermore, the market is vast, with enough room for multiple players to specialize in different niches, from global broadband to specific commercial applications, government contracts, and developing markets.

Baugh: Yes, it is. As mentioned previously, a seismic response has to be undertaken by the traditional satellite operators to stave off the immediate threat. Starlink will target everything and over time, Amazon Kuiper will as well.

Cavalier: The maritime and aviation markets are still mostly supported by traditional big players. This will not change anytime soon, but the LEO service providers are targeting their market share. The fact that some airlines and maritime cruise operators have moved to LEO is certainly showing that there is an appetite for these solutions. With the rise in user data demands in these segments, we could see why lower latencies would be enticing.

Given the latency and capacity potential of these future NGSO networks, ABI Research predicts that LEO connectivity for these segments could become a sizable slice of the overall satcoms market. The GSOs do offer a robust and comprehensive coverage solution for a number of maritime, aeronautical, and land mobile use cases. New use cases are coming to the fore. GSOs such as Intelsat have started to target the heavy machinery and industrial IoT sectors.

VIA SATELLITE: What three companies that aren’t SpaceX or Amazon really excite you for the future?

Sreekumar: One that stands out in the launch segment is Skyroot Aerospace. Towards the end of 2022, the company made history by being the first Indian private company to send a rocket to outer space. They aim to be 50 percent cheaper than competitors like Rocket Lab. The second company to keep an eye on is Nortac Defence. Their solution is a point-to-point Iridium satellite-based network for low signature military communication and improved battlefield awareness. As seen in Ukraine, there’s a whole new generation of highly effective jamming equipment deployed in the battlefield and spectrum is now a more contested resource than ever before. And finally, Capella Space. The market is abuzz with their analytics products, encompassing change detection, anomaly detection, vessel tracking, and more. These offerings have garnered favor from both the private sector and military users alike.

Cavalier: The Chinese market is going to be interesting. There are several projects and companies from here that are interesting, China Satellite Communications is responsible for China SatNet/Guo Wang and Shanghai Spacecom Satellite Technology (SSST) is responsible for G60 Starlink (not to be confused with Space X’s Starlink). From what our team at ABI Research has seen, Chinese satellite operators are going to be influential in this industry, driving competition and evolution in satellite-based services. AST Space Mobile is another interesting company. They have demonstrated 5G cellular connectivity from space to an everyday smartphone, which is very impressive.

VIA SATELLITE: Outside of agriculture, maritime, aviation, what mobility market would you highlight for satellite?

Sreekumar: The military is a high mobility market segment. Recent engagements in Ukraine and Syria have taught us that over reliance on conventional GNSS is a dependency trap. In the presence of strong and often AI enabled jamming guidance systems on platforms and smart munitions are compromised. This needs to be redressed urgently. So, the market is ripe for solutions that improve the resiliency of Positioning, Navigation, Timing (PNT) systems.

Cavalier: EVs and IoT connectivity for connected cars will be a growing market for satellites. Starlink is well-positioned with this for supplying connectivity to Tesla, but the rollout of EVs from China, like with BYD, will introduce a new wave of potential connectivity. ABI Research anticipates new vehicle shipments with V2X technology will reach 20.9 million shipments in 2030. While the wireless technology supported is anticipated to be mostly cellular, the introduction of open standards for NTN presents an opportunity for satellites to gain market share.

VIA SATELLITE: Can you share one prediction of something that you think might happen in our industry over the next 12 to 24 months?

Sreekumar: We think 2024 will be a pivotal year for space. There are a few segments that will witness shake ups but if we had to pick just one, it would be the satcom sector. The new wave of competition by Starlink and other non-GEO players has conventional satcom market incumbents perturbed. Some of the activity we saw in 2023 – the M&A of Viasat and Inmarsat for example, were a response to this new wave of competition. As Starlink, Amazon Kuiper, OneWeb, further expand into the market creating excess supply that demand situations, we expect more consolidation in the satcom value chain for industry incumbents to compete better and hold on to their market share. It will be an interesting chess match to watch.

Baugh: We would like to offer three: A seismic M&A deal, Starship will launch regularly to orbit, and sovereign constellations (IRIS2 and from other nations) will become sources of disruption in the satcom ecosystem.

Cavalier: Fragmentation surrounding the use of IMT (mobile) or non-terrestrial network (NTN) frequencies will grow increasingly contentious. Despite this, the industry will see more standards-based NTN devices gain traction in the market, with terrestrial chipsets focusing more on satellite communications and AI. VS