The Business of Satellites

I love engaging and insightful discussions about technology. I have a knack for doing that with total strangers, a true sign of an extrovert. This article was inspired by a discussion I had with one of the greatest minds in Satellite Radio in Asia last weekend when I shared a ride with him as we headed to the Imternational Telecommunication Union -World Radio Communication Conference in Dubai. . I enjoyed our chat because many people had raised similar topics since taking up the realms as the MD-CEO of NIGERIAN COMMUNICATIONS SATELLITE LIMITED (NIGCOMSAT) . It was refreshing to have a chance to engage and learn more on this topic. Our discussion looked into not just the considerations of choosing a satellite technology but the business aspect of satellite technology.

To start with the basics, satellites are launched in space. They collect and transmit data that can be used for communication, navigation or weather. Satellite technology has evolved, and now we have three main types of satellites orbiting the Earth: GEO, MEO, and LEO.

The difference

• Geostationary (GEO),? - 42,000 kms radius from the Earth’s centre
• Medium Earth orbit (MEO),- 2000 to <35786 KM from the Earth’s centre
• Low Earth orbit (LEO)- 160 to 2000 KM from the Earth’s centre

Earlier, satellites were GEO, and as technology improved, we now have MEOs and LEOs. The main difference between all three is how close they are to the Earth. LEO, being the closest, means you have better data speeds, and GEO is the farthest away from Earth, while MEO is just in the middle, as the name suggests.

My new friend (let’s call him Feng) and I chatted about the benefits of the various options and why countries and businesses should opt for Leo satellites. Our exchange allowed us to look at that choice through the business of running one.

Feng and I were discussing trends in the satellite industry when he mentioned, "If I had to launch a communication satellite now, it would be a Leo." I was curious about that comment, but I understood probably why he said so. LEOs actually have what we call low latency, typically more than five times faster than GEOs, making the user experience closer to terrestrial fibre-connected devices. He was right; with the speed of fibre, we should all have LEO satellites in the sky. I, however, pointed out that because of its lower orbit nature, you require quite a lot of LEOs to cover the same area on Earth that a GEO would.

Covering the Earth

I asked Feng, "How many LEO satellites would it take to cover the entire China?" He said about a 1000 theoretically.

I asked about how to use a GEO. "If you were to launch a GEO across China, you would probably need just one or two."

We approximated that to launch one LEO in space is about 2M USD; you do the maths for a thousand LEOs. To launch a GEO over China would cost us 250 to 500 MUSD. If we had to pass on these huge investment costs to clients/consumers, are they willing to pay the price difference for the speed we provide? Can that price truly compete with the terrestrial fibre companies?

I inquired further with Feng about launching GEO, MEO, and LEO. If you are using satellites for communication, they are usually fixed in orbit (if they are GEOs). However, because LEO satellites are constantly moving relative to Earth at a given moment, they tend to spend a lot of time over oceans and other unpopulated areas. That brought us to Station keeping. Satellites have what we call earth stations or hubs. These are large receiving and transceiving centres built on Earth that track and communicate with the satellites in space. Though this is not a big cost driver, you will need to build fewer of these stations for a GEO and increase as you move to a MEO or LEO.

Life Span

There are so many considerations we did not get to before our ride got to our destination. One easy aspect is the lifespan of satellites. Businesses are driven by value exchange. Options are viewed via a cost-benefit analysis, and the business case hinges on your ability to return value to your investors in the shortest minimal time. It is common knowledge that satellites in space have a lifespan; LEO satellites have a much shorter lifespan than traditional satellites. This means that they must be replaced more frequently, which can be costly. The typical lifetime of a LEO satellite is 7–10 years, while Geo Satellites can have a lifespan of 15 to 20 years. While this is not a negative or positive, it just means investors require you to return maximum value before the investments retire or expire.

I enjoyed my discussion with Feng. It was a breath of fresh air. While we viewed it through the lens of technology, we also chose to look at it through the view of an

investor or business. It all boils down to making technology choices not entirely based on evolution but on other considerations like value and what price.

If we draw an analogy with purchasing a technology gadget such as a phone or laptop (though this is quite simplistic), are you obliged to upgrade your laptop or phone each time a newer release shows up? When is the best time to upgrade, and what considerations do you adopt to make that choice? Now add another layer of complexity, considering you needed that decision to bring value to investors; which options keep you relevant while maximizing value?

Good morning and happy Monday!