More than 2,500 active satellites now orbit the Earth, and amateur astronomers and other observers are seeing more every month. 1 Historically, satellite communication involved geosynchronous (GEO) spacecraft—large systems that have become increasingly capable over the years. But now nongeosynchronous-orbit (NGSO) communications constellations, including low-Earth-orbit (LEO) and medium-Earth-orbit (MEO) satellites, are taking to the skies, and their number could soon soar. If current satellite internet proposals become reality, about 50,000 active satellites will orbit overhead within ten years. Even if the most ambitious plans do not come to pass, the satellites will be manufactured and launched on an unprecedented scale.
The ambitions for the large LEO concepts may recall the 1990s, when several companies tried to provide global connectivity. Globalstar, Iridium, Odyssey, and Teledesic had impressive plans. In the end, however, all but Iridium scaled back or canceled their intended constellations because of high costs and limited demand. All suffered financial problems. After that experience, many industry analysts and investors remain skeptical about the viability of large LEO constellations. The recent failures of LeoSat and OneWeb reinforce that impression.
But much has changed over the past 20 years. Satellite technology has advanced; demand for bandwidth has soared, with no slowdown in sight; and companies have developed creative business models to generate profits from connectivity. Moreover, both tech companies and investors now have much larger stores of capital to invest, making it possible to fund large constellations—although this capital clearly does not have infinite patience.
These changes could well make satellite connectivity 2.0 a success. Our analysis, however, indicates that companies planning large LEO satellite internet constellations still need to reduce a range of costs significantly to ensure long-term viability. Lowering launch costs is one part of the equation, but it will be equally or more critical to reduce the cost of manufacturing spacecraft, ground equipment, and user equipment. If suppliers and constellation providers can achieve these cuts, they could unlock enough demand for large LEO constellations to transform both the B2C and B2B communications markets.
The COVID-19 pandemic will also influence the satellite market’s future, but as of the date of this article’s publication it is hard to say how great the impact will be. In the near term, any company that tries to secure funding will face challenges because of economic uncertainty and immediate public-health concerns. These challenges will affect the progress of the remaining licensed concepts—Kuiper, Starlink, and Telesat—differently because their ownership and funding approaches vary.
While physical distancing and work-from-home measures remain in place, the development, manufacture, and launch of large LEO satellites will slow. But the crisis has also caused a spike in demand for internet connectivity and underscored its importance. Investment in any kind of new connectivity infrastructure will be expensive but will almost certainly be needed. Going forward, large LEO concepts could play an important role in meeting this increased demand.
Traditional communications satellites with GEO orbits have proved their worth since the 1960s. Although costly, they are highly capable and have long service lives. Their altitude—more than 35,000 kilometers from Earth—provides them with a wide field of view, allowing operators to cover most of the planet’s surface with three satellites spaced at appropriate intervals. Recent technological advances, including new high-throughput and reconfigurable designs, have improved both efficiency and performance.
The new LEO-satellite concepts, which orbit 500 to 2,000 kilometers from Earth, offer faster communications (they have lower latency) and often provide higher bandwidth per user than GEO satellites do—even more than cable, copper, and pre-5G fixed wireless. Communication occurs through a constellation of LEO satellites; global coverage requires a large number of spacecraft. These concepts will require major changes in satellite operations, including manufacturing and the supply chain, since they ask more of a satellite and shorten its average life span (estimated to be about five years with Starlink, the SpaceX constellation, for example).
With the demise of OneWeb, SpaceX is well ahead in the race to deploy an operational system. For Starlink, 422 satellites were in orbit as of late April 2020, and the company claims that it can begin offering commercial service this year. Telesat, with a proposed initial constellation of 117 spacecraft and the potential to deploy more than 500, appears to be moving forward with its plans.Amazon, which has filed to launch 3,236 spacecraft in its Kuiper constellation, also appears to be proceeding and plans to move its growing team into new facilities this year.
Why the renewed interest in satellite constellations? Our research suggests that it springs from a convergence of forces that make both the development and the market success of large LEO-communication systems more likely now than in the past: technological advances, the emergence of new business models, better funding, and higher demand for low-latency bandwidth (exhibit). Thanks to these developments, the current situation bears little resemblance to the 1990s, when large LEO concepts failed to gain traction.