Opinion: The Coming Satellite Revolution
Opinion: The Coming Satellite Revolution Aviation Week & Space Technology
Fri, 2016-08-12 04:00
When Facebook’s Mark Zuckerberg announced he wants to fill the sky with thousands of low-Earth-orbit (LEO) satellites to improve internet connectivity, many traditional space players remembered when Microsoft’s Bill Gates and others invested in Teledesic, Iridium and other ventures in the 1990s only to see them fail. Two and a half decades later, terrestrial communications capabilities have dramatically improved, while geosynchronous orbit (GEO) capabilities have improved but still remain a generation behind, and LEO capabilities have remained a niche alternative.
The vision of the tech giants is clear—deliver ubiquitous, low-latency, high-speed broadband and drive down the cost for data while expanding bandwidth and thus the market. In a recent paper, Farooq Khan of Samsung detailed how LEO constellations could rival the speeds of ground-based systems and in certain regions become a linchpin in the coming 5G wireless infrastructure. Tech giants are looking for ways to mesh terrestrial, air and space capabilities to create ubiquitous 5G connectivity. Billions are at stake as the new space race for the next generation of communications is ready to begin.
But are things different this time? There is not just a tech company making a push into space this time; Facebook, Apple, Google, Samsung all have plans to link wireless networks across terrestrial and space boundaries. This time, in addition to making investments, the tech giants seem aware of the existing ecosystem and competing technologies, and they are teaming with other ventures, such as OneWeb, SpaceX and LeoSat. They are also partnering with industry leaders like Airbus, Intelsat and Eutelsat to increase the chances of success.
As LEO solutions gain interest once again, there are many technical hurdles to overcome. Experts will need to solve for multiple gateways, optical links, backhaul and data-caching solutions. Operational challenges like inorbit coordination and handoff, idle capacity over oceans and large-scale orbital management will need solutions. They will need to understand if latency matters or if there are ways around it via sophisticated caching. And they will need to resolve issues surrounding interference between GEO and LEO signals. Simultaneously, GEO systems continue to improve. Typical GEO “clockspeed”—the product development cycle —has been 9-12 years, and as existing constellations reach maturity, newer high-throughput satellites will drive down data costs. The next generation of GEO satellites is high-powered and flexible, and requires only a few in orbit to achieve global coverage.
But there is one advantage LEO satellites can offer that other options may not be able to counter. LEO has an inherent clockspeed advantage. Sure, LEO satellites are smaller, lower-powered and require replacement every 2-3 years. But therein lies the advantage. LEO constellations made up of hundreds or thousands of satellites do not require homogeneity of the network. Large LEO constellations are actually a collection of layers placed in orbit by different launches. Because of this heterogeneity, they can be continuously replenished with updated technology. Over time, this will drive down costs, speed technology updates, present new business models and expand the customer base. This is something the tech giants are very good at: fast-paced, continuous innovation. Ask wireless handset companies that have exited the market just how hard it is to keep up with the innovation cycles of Google, Apple and Samsung.
Managing different clockspeeds is one of the biggest challenges for companies. We’ve seen examples in automotive and other industries where entire sectors have been upended when the tech giants entered them, as Google did with Nest thermostats and Tesla did in automotive. Companies in this situation should challenge their perception of the ecosystem, reevaluate their position in the market and develop a new set of proprietary insights. In doing so, they must establish methods to test new market scenarios and assess unmet needs to drive differentiation and value across technologies, business models and customers. This is the only way to forecast how profit pools will change and to develop a proprietary view of how value migration is occurring.
The satellite consultancy Northern Sky Research recently found that 52% of the industry believes one or many new satellite systems will be deployed in coming years. Will LEO’s high clockspeed and ability to incrementally improve technology be the deciding factor? Or GEO’s high-powered flexible switching technology? Will airborne high-altitude platforms be alternatives to satellites? No matter the answers, the tech giants’ desire to ensure that space is a big part of the 5G wireless ecosystem has the biggest potential in decades to disrupt traditional space. The tech giants are coming. Jono Anderson is a principal in KPMG’s strategy and innovation practice.