There is little denying that the track record for satellite internet up to now has been disappointing, including recent stumbles such as LeoSat and OneWeb. But close to three decades after ambitious, low-Earth-orbit (LEO) constellation ventures such as Globalstar, Odyssey, and Teledesic failed to take flight, the environment has started to look more promising.
Most crucially, satellite technology has made great strides in recent years, fueling the prospect of faster communications and higher bandwidth per user than cable, copper, and pre-5G fixed wireless, not to mention more traditional, geosynchronous (GEO) large systems. The use of higher-frequency spectrum will enable higher data rates, smaller antennas, narrower beams, and greater security. Advances in active antennas and processing have raised throughput per individual satellite, increasing constellation capacity, while electronically scanned antennas could enhance ground-station design and allow for more affordable, modular construction. At the same time, the rise of analytics and artificial intelligence (AI) can aid in the more efficient management and monitoring of the thousands of satellites required for large LEO constellations.
These advances have taken place as the demand for bandwidth (and lower latency) has reached unprecedented heights, and companies have devised innovative new business models to turn profits from global connectivity. Finally, both tech companies and investors now have much larger pools of capital at their disposal to help back what are very costly propositions.
But just as it did the first go-around in the 1990s, cost remains a significant obstacle to this next wave of satellite connectivity. In fact, future success of current players such as Kuiper, Starlink, and Telesat (and a resurrected OneWeb) largely depends on both operators and manufacturers making their pricing competitive to existing, established terrestrial alternatives:
- The biggest challenge is to reduce costs in manufacturing; the price of large communications satellites has typically ranged from $50,000 to $60,000 a kilogram. In order for large LEO constellations to be financially viable, companies will need to cut costs 90 to 95 percent, leveraging every possible tool, from automation to economies of scale to reduced component costs.
- Likewise, launch providers will have to examine every potential option for shrinking costs, including that of equipment and manufacturing. But in order to really make a dent, they must work to lower operating costs, which would maximize savings from reusability.
- Essential ground equipment such as gateway antennas and ground stations have typically been quite expensive to set up. The industry will need to devise ways to make ground-segment costs much lower than those of current approaches.
- Lastly, to unlock the consumer market—the one with the most revenue potential, and arguably a critical unlock to justify these constellations—the cost of antennas with electronically scanned apertures (ESAs) must drop by an order of magnitude or more. This advanced user equipment, which is essential for a large LEO internet network, has traditionally cost several thousand dollars, far too pricey to charge for residential customers. But as companies try to figure out how to bring a low-cost design to market, and at scale, they will have to be careful not to sacrifice quality, since high data rates, reliable beam steering, and smooth satellite handoff are critical for a good customer experience.
Space operations like those envisioned by today’s satellite internet players have never occurred on this scale, making the task of meeting these ambitious cost-reduction goals all the more daunting. But if the manufacturers and suppliers of both space and ground equipment can succeed, they could have the opportunity to serve a burgeoning market. The new constellations would add tens of billions of dollars of economic activity to satellite manufacturing, operations, launch, and consumer equipment, all while giving more consumers around the world greater access to internet connectivity. Together, these benefits should encourage providers of satellite components to persevere.
This post was adapted from the recent McKinsey article, “Large LEO satellite constellations: Will it be different this time?”
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