Competition Heats up in the Space Industry as China Seeks to Enter the Exclusive Space Launch Services Market

In April 2023, China announced that it had embarked on a new rocket launching system project, the Long-Range Aerospace Transportation System, that aims to rival SpaceX’s Falcon Heavy rocket by being capable of delivering similar payloads of 60 tons or more to the Low Earth Orbit (LEO), while being able to be reused more than 100 times with a low tolerance failure rate of below 0.3%. Current launch costs of China’s Long March rockets are estimated to be around US$ 3,000 to send one kg of cargo into LEO. With SpaceX being able to match and potentially even better the prices currently being offered by their Chinese counterparts, the Chinese government has indicated its ambitious plans to reduce payload cost to approximately US$ 150 per kg under this project. SpaceX is currently capable of delivering payloads at approximately US$ 2,800 per kg.

Private Chinese companies are also keen to enter the space launch services industry, with a recent flurry of activity surrounding developments in locally-developed rocket technology. In April 2023, Beijing Tianbing Technology Co. successfully launched the country’s first privately developed liquid-propellant rocket into space. In the same month, CAS Space, a Chinese commercial spaceflight firm, also announced that its rocket vertical landing test at sea was carried out successfully. Both developments mark significant steps forward towards developing reusable rockets for the country.

Launch costs are generally cited as one of the main drivers of cost for satellite deployment. However, the introduction of new space launch services companies, such as SpaceX, have driven down launch costs significantly with reusable rocket technology. Other companies, such as the French-based ArianeGroup and the American-based Rocket Lab, have also seen the potential of providing low-cost launch services, and have each signaled their intention to develop their own low-cost and reusable rockets as well.

The significant decrease in launch costs has lowered the costs of entry and facilitated the emergence of many “NewSpace” companies—private space companies—particularly in the satellite broadband and Internet-of-Things (IoT) sector.

• Satellite Broadband: Satellite Broadband operators, such as SpaceX, OneWeb, Amazon Kuiper Systems, and China Satellite Network Group, have all announced ambitious LEO satellite constellations for their satellite broadband networks, with a planned constellation of almost 60,000 satellites collectively.

• Satellite IoT: Lower barriers to entry have seen a number of satellite operator start-ups entering the low-cost, low-power satellite IoT market with players—such as Swarm Technologies, Kepler, FOSSA Systems, Sateliot, Lacuna Space, etc., —launching nano-satellites into space to form their LEO constellations. These nano-satellites are smaller and lighter than traditional satellites and can be launched at low costs by taking advantage of the services offered by these new space launch services companies.

To this end, ABI Research has a positive outlook for the Satellite Communications (SatCom) market, with the number of SatCom subscribers in the broadband space expected to grow from 4 million to 12 million, and satellite IoT connections from 9 million to 29 million, between 2022 and 2030.

The lowering costs of satellite launches introduces new opportunities for companies seeking to grab a piece of the SatCom pie. However, increased accessibility to this market also comes with risks as competition builds up quickly. This is particularly so for the satellite IoT market where the use of smaller satellites and constellations facilitate lower costs of operations. To this end, aspiring satellite IoT operators need to come up with a robust business strategy that should adequately cover the following areas:

• Having a Clear Value Proposition: Satellite operators need to have a clear idea of who their target market is and what their requirements are. For example, nano-satellite LEO networks are suitable solutions for targeting price sensitive customers who require low-cost, low-data consumption, and high-longevity IoT solutions. As such, nano-satellite operators should focus on driving down the cost of connectivity by leveraging on economies of scale with standardized solutions. On the other hand, satellite IoT operators using GEO networks could consider adding value to their solutions with increased customizability and/or higher Quality-of-Service (QoS) assurances.

• Strategic Partnerships: To maintain focus on their primary objective of providing connectivity, satellite operators should consider forming strategic alliances with different solution providers to deliver an End-to-End (E2E) IoT solution for customers. For example, nano-satellite operator, Lacuna Space, has partnered with Wyld Networks to offer an E2E satellite IoT solution, with the latter providing the ground IoT terminals and devices. Hiber, an IoT solutions provider which provides water supply and pipeline monitoring solutions with its IoT devices, has also partnered with Inmarsat to leverage on its ELERA network for satellite connectivity.

• Differentiated Offering: Satellite operators should consider offering a differentiated service offering that provides unique value for their customers. For example, Sateliot offers satellite connectivity over the standard 5G Narrowband IoT (NB-IoT) protocol, thereby enabling seamless connectivity for all NB-IoT enabled devices. In contrast, IoT solutions provider, Ingenu, has announced plans to offer satellite connectivity over its proprietary Random Phase Multiple Access (RPMA) technology—a wireless connectivity protocol utilizing Direct Sequence Spread Spectrum (DSSS) technology specifically designed for IoT communication—which the company reports to offer better in-building penetration and scalability capabilities.

As the competition in the space industry heats up, satellite operators need to build strong business models and continuously innovate to stay relevant in this fast-moving industry. Failure to do so may result in one falling behind while the industry surges ahead.