Space has always fascinated and intrigued me. For a long time, it had been that elusive, final frontier beyond the reach of humans. Ever since the Wright brothers powered the first aircraft in 1903, we have dreamt of one day conquering outer space and unravelling its mysteries. More than a century later, the time has come. Much like the Internet in late 1990s, which led the digital revolution for the next two decades, space is at the cusp of a mega cycle. In a multi-part blog, I explore the space economy – its evolution and future for nations and businesses.
Space has largely been a realm of governments dominated by the US which accounted for 70% of the spend in the early 2000s. Now more than 90 countries are now participating in the space economy, which is estimated to reach $1 trillion over the next decade. The sector has also witnessed a huge spike in venture capital activity attracting significant private sector capital, even though the venture capital investments halved to $21.9Bn in 2022 (from $45.7Bn in 2021) 1, due to macroeconomic headwinds.
Historically, the space economy has been characterized by the high cost of launch of the larger & more expensive GSO (Geosynchronous orbit) and GEO (Geostationary equatorial orbit) Satellites. GSO satellites have the same orbital period as earth’s and operate at an altitude of 35,786 km. These GEO satellites cover a larger Earth area and were used for earth sensing, satellite TV and weather. However, on account of latency and susceptibility to interference from objects on earth, they were less useful for communications and IOT.
On the other hand, the much smaller and cheaper LEO satellites orbit close to earth (altitude of less than 2000 kms) with reduced latency. However, we need hundreds or thousands of LEO satellites in a constellation to provide adequate coverage. Their lower latency makes them a logical choice for space-to-mobile connectivity, and they have seen heightened activity in the last decade. There are almost 5,500 active satellites in orbit as of the end of 2022. Many companies are ramping up their satellite launches in the next 2-3 years. Starlink currently has 3,300 satellites in orbit, and they have FCC approval to deploy 7,500 satellites as part of its Internet network constellation2. Amazon Kuiper plans to deploy a constellation of 3,236 satellites3, with 1,500 of them to be launched in the next 5 years. We could end up with 50-80k satellites by the end of the decade.
There are a wide range of business use cases ranging from earth observation and imaging, satellite to mobile communication, space manufacturing leveraging principles of microgravity and sustainability. The largest value pool is the 5G based convergence of Terrestrial (TN) and Non-Terrestrial Networks (NTN) using Satellite communication. The benefits are immense in terms of Service ubiquity (e.g., SpaceX’s Starlink offers broadband services to unserved locations) and service continuity where 5G services cannot be provided by TN alone (e.g., ViaSat provides inflight Wifi services in flights) and service broadcasting (e.g. Satellite TV content)4.
Another example of an interesting use case is using satellite images to determine Night Time Light (NTL)5 and its variance across decades to determine levels of human activity and natural events (refer image below). This can act as a measure of socio-economic and other environmental indicators like electricity consumption, population growth etc. The below picture depicts states with high development and socio-economic activity indicators contrasting radiance variation in a decade.
Why is space at a tipping point?
One of the primary factors is the significant decline in cost of satellite launch, from around $160,000/kg in 1960 to $1400/kg. SpaceX starship is expected to bring this down to $100/kg later this year. Moore’s law is disrupting the space industry.
Companies like SpaceX and Blue Origin are investing in reusable rocket launchers, which will also lower entry barriers for access to space and reduce overall costs.
Technology advancements in Satellite to mobile communications: Until now, consumers had to carry expensive satellite phones and pay high call rates to send and receive messages from remote locations, which lack cellular coverage. There have been significant announcements in the last few months overcoming some of the previous technological limitations. Apple has partnered with GlobeStar to provide emergency SoS services on iPhone 14. T-Mobile, in August 2022, announced its partnership with SpaceX to provide ubiquitous connectivity in remote locations (mobile dead zones), leveraging SpaceX’s LEO satellite constellation. At CES 2023, Qualcomm announced its Satellite messaging solution (Snapdragon Satellite) leveraging Iridium’s satellite constellation.
Some Interesting developments…
These fundamental seismic shifts put space at an inflexion point. The space economy could give nations and companies access to new value pools given their space priorities and where they intend to play. Every enterprise needs to have a space strategy, which I will discuss in my next blog.
It’s exciting and the race has just begun.
- Reuters, https://www.reuters.com/business/aerospace-defense/space-startups-funding-halved-2022-investors-shift-safer-bets-2023-01-19/
- CNBC, https://www.cnbc.com/2022/12/01/fcc-authorizes-spacex-gen2-starlink-up-to-7500-satellites.html
- Amazon, https://www.aboutamazon.com/news/innovation-at-amazon/amazons-project-kuiper-satellites-will-fly-on-the-new-vulcan-centaur-rocket-in-early-2023
- NRSC, https://bhuvan-app1.nrsc.gov.in/2dresources/NTL_Atlas.pdf
- 5GAmericas, 5GAmericas, https://www.5gamericas.org/wp-content/uploads/2022/01/5G-Non-Terrestrial-Networks-2022-WP-Id.pdf
