Carolyn Belle, NSR senior analyst and author of the “Satellite Manufacturing and Launch Services, 6th Edition” report, which looks at the market for satellites weighing more than 100 kilograms over the next 10 years, has reason to believe that, while only one or two new Low Earth Orbit (LEO) companies will survive, NGSO satellites will have a lasting impact on the manufacturing and launch market, generating more than half of the $285 billion total market revenue over the next 10 years.
“The total number of satellites in the GEO market is not changing that much in 10 years, but in terms of capabilities, the market could be vastly different in the next decade,” Belle told Via Satellite. “Not looking at the satellites but the operators, in the next 10 years there will be a lot more diversity in operators, especially in the NGSO side because it is becoming so much more affordable and easy to design and put a satellite into orbit for NGSO. Both the number of different operators and different applications will be higher in 10 years than where we are now.”
While she foresees the number of satellite orders hovering below 23 per year over the next decade, she points to advancements in technology and dropping manufacture and launch costs through developments made on NGSO spacecraft.
“There is more diversity now in what you can do and what people are looking to do in the NGSO front than in the GEO front. Advancing technology is feeding that a lot and improving on the value proposition of applications that do exist,” explained Belle.
Within the realm of Earth Observation (EO), for example, legacy players are pushing growth through new and advancing technology on NGSO satellites, by introducing new instruments that can supply higher resolution. This then allows those companies to address new target markets and introduce entirely new applications.
“We are seeing diversity in optical, so not images but different resolutions. Different spatial, spectral and temporal resolutions that diversify what the data product is and how emerging companies are leveraging much more on the software side to provide a more processed product to customers,” said Belle. “There are also a couple of Synthetic Aperture Radar (SAR) constellations that have been proposed by commercial players. Also, space situational awareness has been proposed on the commercial side [and] it is big on the military side as well. Meteorology is another application for NGSO satellites, including climate monitoring.”
Meanwhile, in very small satellites of less than 100 kg, which are not covered in the report, Belle told Via Satellite that new value propositions are arising for applications such as marketing or entertainment, “things that satellites have just been too expensive for in the past.”
She is careful to note that GEO markets will remain a key source of revenue going forward, as commercial GEO communications will continue to be the highest value market segment at a stable $6 billion per year.
Belle also stresses that while NGSO constellations often involve large constellations of relatively inexpensive SmallSats, the constellations that are contributing to the uptick in launch rates are not the same spacecraft contributing to the forecasted increase in revenue.
“Today’s commercial communications and EO constellations are really designed on the premise of a low unit cost for manufacturing and to a lesser extent for launch, but for launch as well because they are smaller. For companies like OneWeb, O3b or UrtheCast — which has proposed a 16-satellite constellation — all of these are looking to leverage a lower cost for their satellites. Because of that they are contributing much more to launch rate than they are to revenue,” said Belle.
This means that while the commercial market is seeing a faster implementation of NGSO satellites, it will be military applications that bolster the revenue boost, as government spacecraft often involve larger and more expensive satellites.
“[Satellite applications] in situational awareness, reconnaissance and technology development especially is a lot of where that non-GEO revenue growth is coming from,” said Belle, noting that the strategic importance of space for the governments of U.S. and China is heating up and driving more room for non-GEO military spacecraft in national budgets. While NewSpace companies are jumping at these new applications and lower price points as a way to enter the satellite market, NSR expects only a few LEO communications companies will survive.
“One or two will reach the point of deploying a new constellation and building it out into a business because there are a lot of challenges along the way. All have to get past regulatory challenges; even if they already have access to spectrum it is a question of coordinating spectrum with other LEO or GEO players. Manufacturing, financing, having access to launch and launching on the right schedule will all present challenges and it’s going to be difficult for any one of these companies to come together and overcome all of that,” said Belle. Non-GEO startup survival is also a question of competition, as GEO players are bringing new HTS capacity online that will challenge a startup’s service value to customers.
Incumbent and new players will likely look to serve different ends of the market across all applications, however, dipping into EO, weather, remote sensing, etc., making room for both to serve customers in the industry. As “legacy” and new companies begin to add capacity to the market, Belle believes this competition can only be good for the industry as a whole.
“The contribution in increased competition is due to more capacity and a different type of capacity that potentially could be lower cost than what we have in GEO, which would exacerbate the pricing pressure that is already in play,” said Belle. “One of the effects that has on the market is pressuring GEO operators and manufacturers to keep advancing their capabilities in terms of the flexibility of the satellite and its being able to alter which coverage areas it has, and even being able to change the frequency of the satellite while it is in orbit … Operators want the flexibility to respond to a change in competition and user demand. I think we continue to see this trend toward more creativity, more innovation, investment and [Research and Development] R&D because of these LEO constellations.”