The writing on the wall

Disruption was the word that defined the Satellite2024 conference and exhibition last week, as discussions focused on how GEO companies could adapt to LEO challenges. Several established players congratulated SpaceX for its achievements, but it is no secret that legacy stakeholders are in an unpleasant situation because the industry has drastically changed, forcing increasing levels of innovation and risk taking.

As 亚马逊 prepares its market entry with the Kuiper LEO constellation, the anxiety level is sure to increase. However, perhaps the most promising aspect of today’s accelerated industry dynamics is that satellite is finally -and quickly- becoming mainstream technology. For an industry historically defined by niche markets and scarcity economics, the shift to an environment of 'abundance' is a new paradigm; with its own challenges and opportunities. A broadening industry scope can fuel growth for years, a tide that can potentially lift not one but several satellite players.

“Starlink has done a tremendous job in disrupting the industry, raising everybody’s game here” - Intelsat CEO David Wajsgras

Attack from below

In his brilliant book “The Innovator’s Dilemma”, Clayton Christensen cleverly explains how leading players with well-established products and services in matured sectors are often threatened by newcomers. Established players rarely lose when new rivals attack from the high-end of the market but they can lose when startups attack from below.? This appears to be behind the Starlink effect, which despite its large and growing size can still be considered a startup by several metrics. Most GEO operators and service providers have a rather B2B, enterprise-level focus so did not initially perceive Starlink as direct competition given its residential broadband play.

While many industry observers initially downplayed the potential for Starlink competing in traditional satcom verticals, the NSR NCAT while paper stressed in early 2022 that satcom LEO constellations would have to -also- target traditional satcom verticals like mobility routes for addressability maximization.

Scale has always mattered in satcom and this is one of the several aspects being redefined by the non-GEO revolution. A handful of deployed non-GEO satcom constellations already outnumber all GEO satellites together by more than an order of magnitude. Based on Celestrak data processed and analyzed through the Non-GEO Constellations Analysis Toolkit (NCAT4), there are 566 active GEO satellites (station-kept and inclined-orbit). All orbiting LEO and MEO satellites from Starlink, Eutelsat OneWeb , SES Satellites O3B, Iridium and Globalstar total 6,392 satellites. Starlink alone has 5,671 satellites in space (not all in destination orbits), so it is over 10 times the size of all GEO satellites combined.

We can argue that satellite count does not tell the whole story since GEO satellites can have more capacity than LEO satellites and better direct capacity to where it is demanded. This is true; it is also true that LEOs have bandwidth addressability constraints due to their low altitude and limited visibility of the Earth. Nevertheless, an order of magnitude difference in satellite count is a tipping point. Soon, there will be no place on Earth from where users will not be able to "see" tens of satellites overhead and connect dynamically to them using different look angles.

The writing on the wall

As “The Innovator’s Dilemma” points out, the disrupting potential of the new player is often unanticipated by the established players because the new rival initially "flies under the radar”. Yet, we could argue that there were many early signs of potential disruptions for the industry. Perhaps it was 10 years ago when the industry was debating the pros and cons of open versus closed HTS business models that the disruption potential became more evident. An article published by SatMagazine in 2014 said:

“The satellite industry appears to be at crossroads and more vulnerable to disruptions. Traditional FSS dominance at either global, regional or local levels does not necessarily translate into HTS leadership and, as players 'platformize' their offering around IP, the industry also becomes subject to the scale and network effects of (much larger) Internet-driven ecosystems."? - SatNews SatMagazine, November 2014.

In 2016 I also made the observation that there were already initiatives, mostly around LEO-HTS constellations, that could alter VSAT dynamics drastically in 3 to 8 years (2019 to 2024).

What comes next

What comes next is sure more change but exactly what and in what form is less clear. Intelsat turns 60 this year, after an amazing journey including a long list of industry firsts. Its birthday also marks the age of the commercial satellite industry where the rather incremental, evolutionary path of the "GEO satcom age" made industry evolution rather predictable to the point that even its own disruptability was anticipated. However, during disruption times it becomes increasingly challenging to foresee what comes next.

GEOs in particular will need to adapt as they can no longer rest on their laurels of SLA guarantees, VSAT simplicity and broadcast preponderance. In his public remarks at the end of the Satellite Show in DC, Christopher Baugh , NSR president and Analysys Mason partner put it best:

“What GEO satellites operators are going to do in competition with the LEO constellations? Undoubtedly Starlink was the theme at Satellite 2024. Starlink and SpaceX are changing the industry in real time, with really fast iterations and the rest of the industry has to compete and offer something compelling” - Chris Baugh, NSR, an Analysys Mason company president.