Highlights from SATELLITE 2024: Is the Industry Prepared for Transformation?

The undertone of SATELLITE 2024 was that the Satellite Communications (SatCom) industry is facing significant disruption from SpaceX and the growing new space segment. Enthusiasm remains for incumbents as they brace for a future of more market consolidation and collaborative opportunities with adjacent industries. In this way, new service opportunities like multi-orbit solutions, In-Flight Connectivity (IFC), and Non-Terrestrial Networks (NTNs) or Direct-to-Device (D2D) segments were publicly championed throughout the conference, with announcements made by several companies to explore the potential for NTN services.

This reflects the attitude of extreme caution that satellite operators currently have. While the benefits of scaling with a standardized ecosystem have been publicly known to the industry for some time, only now, after SpaceX has entered the NTN market, are the rest following. This also shows that there is still a love affair with expensive proprietary solutions (which has shown the gravitation toward government applications by many operators) as operators seem to be skeptical of standardized solutions.

The challenges the industry is currently facing will be exacerbated by the entry of new industry behemoths, including Amazon and some of China’s space tech providers—all of which the existing market does not seem to want to acknowledge or has any strategy for addressing.

From messaging communicated at the conference, it appears that “old space” SatCom operators are slow-moving (resistant to change, highly bureaucratic, and extremely cautious), creating a mindset that both fails to acknowledge the writing on the wall and slows down the opportunity for operators to take advantage of lucrative growth opportunities. This contrasts with the more agile SpaceX, which announced at the show it would be entering into the optical terminal business by selling optical lasers, further acknowledging that it disregards the implications of radio spectrum allocated for Inter-Satellite Links (ISLs) in WRC-23 along with its new Direct-to-Cell (D2C) services, which in contrast with The 3rd Generation Partnership Project (3GPP) standard, uses Mobile Network Operator (MNO) spectrum. SpaceX is making it clear it is playing by its own rules to disrupt the market and that speed, innovation, and increased tolerance for risk are key to survival.

As a result, satellite operators seem to have limited strategies to counteract the speed and innovation of the new space segment (except entering the market themselves via partnerships or the launch of new systems). As a result, the market is showing strong interest in consolidation (Mergers and Acquisitions (M&A)) and building partnerships across the communications ecosystem/value chain (MNOs, chipset vendors, solutions providers, data centers, etc.) as a way for the market to build resiliency and diversify revenue. This presents a strong opportunity for the terrestrial connectivity ecosystem (telcos, chipset vendors, data center operators, solutions providers, etc.) as the SatCom industry evolves. In this respect, the urgency created by widespread industry disruption and the desire to build resilient ecosystems with telcos will be a continued strategy for diversifying revenue streams and building into new markets for both industries.

There needs to be a shift in priorities, if not even urgency for incumbent SatCom players; particularly, moving away from being a slow-moving, expensive, and proprietary connectivity market (or rather, a set of markets) to one marked with open standards, rapid innovation, and greater tolerance to risk. The lack of standards adoption to protect the business will not work forever, as was shown 60 years ago with the telco industry, where the opening of mobile cellular and terrestrial broadband had a dramatic impact on competition. There is also a need for the industry to have a more integrated and synchronized approach to change, especially if existing Geosynchronous Orbit (GSO) players want to remain competitive in what will ultimately become a reflection of the telco market from past to present, e.g., an oligopoly of major (satellite) operators, likely SpaceX, Amazon, and potential Chinese satellite operators. If approved for full deployment, these systems alone could account for up to 70,236 satellites in orbit, 42,000 (SpaceX), 3,236 (Amazon), and ~25,000 (China’s Guowang and G60 Starlink). ABI Research anticipates that up to 98% of satellites deployed in the next decade are likely to be in Low Earth Orbit (LEO) and potentially attributed to these systems.

The road to transformation and an interoperable future (between other SatCom and terrestrial systems) is achievable and the market is showing signs of moving in this direction. Organizations like the Mobile Satellite Services Association (MSSA), for example, are helping push for market unification in open standards and accelerating collaboration efforts with terrestrial ecosystems (telcos, chipset vendors, data center operators, etc.). Efforts like these are needed, as market fragmentation caused by the historical pursuit of proprietary technologies will not allow satellite operators as they currently exist to be successful in a future of industry behemoths supported by rapid technological innovations and very large wallets.