A New Act in the Space Race

The closing months of 2020 brought unprecedented news and developments in the ever-expanding space race focusing on LEO (low Earth orbit) satellite constellations.

The most prominent development was Starlink’s launch of its “Better Than Nothing Beta” service during the month of October while the deployment of additional satellites continues. Notwithstanding the company’s efforts to manage expectations, the feedback from early adopters has been quite positive.

Beyond the high marks on the connectivity experience, the end-user terminal was a true BHAG (big hairy audacious goal), and Starlink delivered on this front. To use their own marketing lingo, they provided to everyday users a phased-array terminal more advanced than what’s in fighter jets. The net result is a plug-and-play service activation with no technician needed, and a strong experience in terms of bandwidth and latency.

The next worthy development was the re-emerging news around mid-December regarding Europe’s pursuit of its own alternative to the Starlink network. The endeavour is championed by Thierry Breton, EU Commissioner for Internal Markets.

This concept surfaced in the public domain earlier in the year and appears to have gained momentum in recent months. Europe’s goal from this $7.6 billion investment is to acquire the right to compete in the satellite broadband race and pursue its goal of technological sovereignty.

The pursuit of this new European LEO satellite constellation would be funded by the EU along with a group of Europe-based companies combining satellite manufacturers, operators, and launch services provider.

Right at the heels of the EU story, the UK announced few days later in December the successful launch of its first LEO satellites after it had bailed out OneWeb with the help of India billionaire Sunil Mittal earlier in the year.

With this latest launch, OneWeb would have 110 operational satellites en route to its target of 648 and with a view to commence commercial services in 2022. As stated back in July of last year, the government aims to deliver through this acquisition the “first UK sovereign space capability”.

While these developments were unfolding, a blog from the CircleID website in early October stated that China “has filed a spectrum application with the International Telecommunications Union for two LEO constellations with the cryptic names GW-A59 and GW-2” for nearly 13,000 satellites. Technological sovereignty is likely to be one of the goals under consideration.

The space race has largely been dominated news-wise in recent years by the “rocket billionaires” for space transport and communication. The likes of Elon Musk (SpaceX, Starlink) and Jeff Bezos (Blue Origin, Kuiper Systems) are capturing the imagination of the masses as they reveal and bring to life their ambitious plans. Richard Branson is tagging along with his space travel venture (Virgin Galactic). So far, Musk is first out of the starting gate from this group and is already showcasing unprecedented capabilities.

We seem to be entering a new act in the space race, and it is one that could become increasingly influenced by government initiative and participation. While the US appears to be progressing in space with strong impetuous from the private sector, the rest of the world appears to be stepping into the new space race with the governments back in a prominent role. The nationalistic formula may differ for these nations and regional blocks, but their motive of technological sovereignty is comparable.

To put things in perspective, the first act of the satellite industry evolution started with the emergence of government-led national satellite programs. These were followed in the second act by cross-border collaborations through intergovernmental organizations (IGO) for GEO (geostationary) systems. Economic liberalization in the 80s and 90s led in the third act to the market-led development and/or privatization of the main GEO satellite operators. The successes as well as limitations of the established space industry attracted in the fourth act the interest of tech billionaires for NGSO (non-geostationary) satellite ventures, initially back in the 1990s with limited success and more recently with the newer class of successful entrepreneurs. While these acts are presented as a linear evolution, they were also overlapping in few cases. 

Governments are seemingly re-entering this crowded field as a fifth act with a seat at the top of the table. And to be clear, these nation-led and region-led mega LEO satellite constellations aim to address the fixed and mobile broadband market for residential, commercial and government customers.

The reality is that the LEO avenue is quite challenging, and no such constellation has succeeded so far. Even Elon Musk acknowledged publicly that there were “zero” similar satellite efforts “that didn’t go bankrupt,” referring to companies that fell short of building LEO-based networks over the past two decades.

A successful LEO satellite constellation would require four essential capabilities. First, the system should be scalable and adaptive to rapid technology evolution. Second, the industrial model should achieve a Wright’s Law pattern to drastically reduce manufacturing costs as volumes go up. Third, the constellation should be underpinned by a highly efficient integration of space and ground segments up to the end-user terminal along with the underlying management platform. Fourth, this ensemble should achieve an unprecedented level of vertical integration in order to reduces costs and frictions across the value chain. Put together, these capabilities could deliver a sustainable economic model that enables a formidable right to win for the deserving market participant, and conversely disrupts and disintermediates laggards.

It remains to be seen if the above imperatives can be achieved in the emerging space race, and if nation-led LEO mega constellations can meet these high marks. We already have a glimpse of what good could look like with Starlink, and this is pushing nations to pursue their own alternative.