In the last ten to fifteen years, we’ve been observing a revolution in the space industry. All the buzz around new ‘space launch’ ventures such as Space X, Virgin Galactic and Blue Origin - led by charismatic, deep-pocketed entrepreneurs like Elon Musk, Sir Richard Branson and Jeff Bezos - and the advances in nano-satellites made possible by the miniaturisation of electronics and standardisation initiatives - like the CubeSat - are bringing the focus back to the space industry, forgotten by investors since the constellation flops of the late 1990s.
We’re seeing technological advancements, disruptive business approaches, a new race for global constellations and a decrease in the costs of accessing space. Although this revolution is mostly led by private companies, national space agencies are playing a fundamental role, by fostering competition on launchers and by granting cheap access to space to test new technology in orbit. This approach is also contributing to reducing the space industry’s barriers to entry.
History and the ‘Iridium Moment’
It hasn’t been an easy journey to reach this point, however. Some of us still remember the spectacular failure of Iridium and Motorola in the late 1990s. The plan to deploy a constellation of 77 satellites to provide mobile, satellite-based communications at a cost of $5bn, simply missed the ‘threat of substitutes’, popularised by Porter's Five Forces Model: namely, the cell phones we all use today. Before the decade had passed, between the original business plan and the deployment of the satellite service, the exponential evolution of mobile phone technology and the expansion of the ground network of base stations made the satellite business case economically unfeasible. In 1999, less than a year after the first Iridium call was made, the company filed for Chapter 11 bankruptcy. Salim Ismail, in his excellent book Exponential Organizations, coins this as the “Iridium Moment”.
Globalstar followed a similar path in 2002, after deploying a constellation of 52 LEO satellites. Teledisc planned to launch a satellite-based broadband internet service with a constellation of 850 satellites but subsequently reduced the number to 300, and then suspended the project altogether in 2002. Although both Iridium and Globalstar managed to restructure and get back to successful business, these failures did much to scare potential investors at the time.
The Communications Constellations Race - Take 2
More than twenty years later, the advances in the technologies behind satellites and launchers have reinvigorated the constellations race, this time for space-based broadband internet services. Giants such as Virgin, QualComm, Space X, Google, Airbus and Samsung are placing big bets on new mega-constellations.
OneWeb - backed by Virgin Group, Qualcomm, Airbus, Intelsat and cellular network operators Bharti Enterprises of India and Mexico’s Grupo Salinas - plans to provide a global broadband internet service through the deployment of 650 satellites, weighing 125kg each. The investment needed is estimated at somewhere between $3bn and $7bn, and the service is planned to be operational in 2019. The need to prove the business model in wealthier geographies as a means to secure further funding seems to have taken precedence over the original vision of OneWeb’s founder Greg Wyler, which centred around providing broadband to those that couldn’t afford it.
Elon Musk’s Space X has an even more ambitious plan to launch 4000 micro-satellites into low earth orbit in order to solve the same type of problem - internet connectivity in remote or underserved areas. Some news reports suggested that this was being backed by Google and Fidelity, although this hasn’t been confirmed. After the initial announcements, SpaceX is now holding back on its plans, stating the project remains “very speculative” and needs a deeper assessment of its business case.
More recently, LeoSat, backed by Thales Alenia Space, announced a plan for deploying a 78 satellite constellation in order to provide “the most secure, high performance data network over Earth”. Even Samsung presented a plan for a 4600 micro-satellite constellation, although for now it seems nothing more than just a plan. The signs of a satellite ‘gold rush’, as described by Peter B. de Selding, are also evidenced by the number of filings for satellite constellations at the International Telecommunication Union (ITU), responsible for regulating broadcast frequencies, a scarce resource in today’s climate.
But the communications constellations fever doesn’t end with these new mega-constellations. Historical players Iridium and Globalstar also made recent investments renewing their fleets: Iridium Next is deploying 66 Low Earth Orbiting (LEO) satellites and Globalstar completed the deployment of its second generation constellation in 2013, including 24 LEO satellites. Iridium Next uses an interesting concept of ‘hosted payloads’ for providing a global, spaced-based Automatic Dependant Surveillance - Broadcast (ADS-B) for aviation, commercialised by the Aireon consortium. The business model consists of sharing the installed capacity for providing secondary applications that increase the return on investment. Traditional players are also trying to protect their positions in the market, with geostationary satellite operator SES taking control of O3b Networks and Intelsat partnering with OneWeb as a way to de-risk its own business model.
Dave Majumdar, in his MIT review article, explains why he thinks now is the right time for space-based internet services, identifying as key factors both the miniaturisation of technology – with “toaster-sized micro-satellites” able to deliver performance capabilities similar to that of previous generation large satellites – and the reduction of launch costs.
Remote Sensing and Geo Analytics Made Simple
In the imaging and earth observation domain, we’ve also been seeing some disruptive approaches, particularly with the appearance of Skybox Imaging in 2009, tackling an underserved demand for high-resolution images. During a period where access to remote sensing images was both difficult and expensive, SkyBox Imaging introduced two novelties to the industry. First, the delivery of ‘the right data at the right time’ at a lower cost and secondly, a new approach for data exploitation by allowing third parties to exploit the unsold images through its platform to extract insightful information for different businesses - for example, geoanalytics made simple. After $91M in three rounds of investment, the technology was eventually acquired by Google in 2014 and renamed Terra Bella.
Planet Labs, founded by former NASA employees, is also addressing the geoanalytics market, relying on a constellation of Flock satellites based on the popular 3U Cubesat. Twenty Flock-2d Cubesats, weighing 4kg, were launched on a single Atlas V flight in March 2016. Founded in 2010, the company already operates several dozen micro-satellites. In order to support its rapid expansion, Planet Labs has secured $158M in 4 rounds of investment.
Urthecast takes a slightly different approach to geoanalytics. Leveraging on the know-how from Deimos Imaging on optical imagery and from MacDonald, Dettwiler and Associates Ltd. (MDA) on Synthetic Aperture Radar (SAR) with the RADARSAT, Urthecast is proposing the OptiSAR™ constellation concept, with eight tandem pairs of satellites. Each pair consists of one optical satellite and one radar imaging satellite for providing multi-spectral, all-weather imagery. The focus on making access to data simple and easy through an API is similar in intention to that of SkyBox Imaging or Planet Labs. After raising $15m in three rounds, Urthecast went public in June 2013.
Consumer Electronics Lifecycles and Commoditisation of Nano-Satellites
This new space era is not exclusively at the behest of the traditional, wealthy players. The standardisation of nano-satellites with the CubeSat concept, proposed initially by Cal Poly and Stanford in 1999, is arguably the main contributor to a democratisation of access to space. Launched as piggyback payloads of bigger satellites or from the International Space Station by Nanoracks, this piece of technology is changing the way business is done in space, allowing dozens of schools and universities to launch their experiments into low-earth orbit at an affordable cost (usually under $100k). Space agencies such as NASA, ESA and the UK Space Agency are also playing a fundamental role in this ‘commoditisation of space’, by granting cheap or free access to launcher real-estate to universities wanting to deploy their CubeSats or small companies that want to test new technology in-orbit. As a consequence, today we see nano-satellites being launched by elementary schools and space enthusiasts through crowdfunding campaigns.
A number of companies dedicated to nano-satellite production have appeared in the market (Clyde Space, GomSpace, Pumpkin, ISIS Space and others), selling satellites almost as Commercial-Off-The-Shelf products. Mission development cycles, which are usually of several years for larger satellite programs, has been reduced to around a year in nano-sat technology demonstration missions, such as ESA and GomSpace’s GOMX-3. We’re reaching a typical consumer electronic product lifecycle, with one to two years from design to launch.
The explosion of CubeSats launches (from fifteen in 2010 to more than 120 in 2015) together with the prospects of new commercial applications based on this type of platform - and the lack of dedicated launchers serving this class of spacecraft - is creating a race for ‘small sat’ launchers. More than twenty launch vehicles dedicated to the small satellite segment (1-50kg) are currently under development, with launch price projections as low $20k per kg.
What About the Future?
Space seems trendy nowadays and possibly ‘the next big thing’. Whatever happens, it’s safe to say we’ll witness big successes and spectacular failures and that this fascinating sector will undoubtedly continue to challenge the ability of humans to innovate.
In the nano-satellites segment, although universities were responsible for most of the launches to date, typically with scientific or R&D objectives, SpaceWorks forecasts that in the coming years, Earth observation and remote sensing applications will account for the majority of new launches. As technology progresses and these platforms become more reliable and powerful, we should expect to see satellites similar to CubeSats providing commercial applications in other, more demanding and critical applications, like communications.