The new year is finally here and it certainly is more promising than the very challenging year that was 2020. To say that the past year was a challenge is a huge understatement, but despite it all, there were some bright spots that bodes well for 2021 and beyond.
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| One of the bright lights from 2020 is literally the fast deployment of Starlink LEO satellites, here seen visible in the night sky. (image from StarWalk) |
One of the shining lights of 2020 was the continued deployment of Low Earth Orbit (LEO) satellites. SpaceX’s Starlink had a spectacular year having launched over 1,000 satellites in its constellation to date. Also, despite the downturn in key vertical markets like aeronautical and maritime, new vertical markets are emerging that will supplant or at least make up for lost opportunities.
All in all, the consensus among satellite executives is that 2021 will be a pivotal year for recovery in the industry, with projections that 2021 will reach the level of 2019 in terms of revenues and growth forthcoming from 2022 and beyond.
There are also some key events coming in 2021 that will stimulate developments for the satellite industry. Foremost among these is the 2021 Summer Olympic games in Tokyo, Japan that was postponed from last year to this July. The Olympics is set to showcase new 8K Ultra HD technology and revive the flailing sports broadcasting market. Ultra HD technology will be a boon to the satellite industry due to it requiring higher bandwidth to transmit.
With COVID-19 vaccines starting to roll out in 2021 and reaching a substantial part of the world’s population by mid-2021, the aero and maritime markets are set to recover, slowly at first and gathering momentum by year’s end.
Here are the key trends to watch in 2021:
More Consolidation
In a downturn, companies that have sufficient resources are always looking for mergers and acquisition (M&A) opportunities to grow their companies and increase market share. 2020 saw major M&A activity, among them Intelsat’s purchase of inflight entertainment company Gogo Inc. and Viasat’s acquisition of maritime and oil and gas service provider RigNet. Intelsat, which underwent bankruptcy proceedings in 2020 is obviously betting on the recovery of the aero market. The same goes for Viasat, which has been heavily vested in the aero market and its hedging it bets by expanding its maritime and oil and gas portfolio.
Although some mergers did not materialize in 2020 such as the Comtech acquisition of Gilat which would have created a ground equipment powerhouse, expect more M&A activity in 2021 which will considerably impact the dynamics of the satellite industry.
The Decade of the LEOs
Last year we projected that the decade of the 2020s will be dominated by the LEO constellations. In 2020, despite the initial falling out of some players with the bankruptcy of OneWeb and LEOSat, LEO companies led by SpaceX’ Starlink and Amzon’s Kuiper are on track to fully deploy their megaconstellations. Even OneWeb has remerge from bankruptcy with new investments from Bharti, the UK government and Hughes, among others.
The global pandemic has actually significantly increased the wealth of two of the main backers of LEO systems, namely SpaceX’ Elon Musk and Amazon’s Jeff Bezos, who have been going back and forth in the top 1 and 2 positions of the world’s richest persons. Given the heavy infusion of cash needed to launch LEO systems, SpaceX’ Starlink and Amazon’s Kuiper will likely not be struggling in terms of getting new capital. With such heavy hitters bankrolling some of the LEO systems, the emergence of LEO constellations (at least two of them) is almost assured through the end of the decade.
China has also gotten into the LEO game with new planned constellations from emerging Chinese companies (see Blaine Curcio’s article on “China’s Answer to Starlink” in our December 2020 issue).
One thing going for the LEO operators is the increasing demand for internet access in developing countries. Over four Billion people still do not have basic internet access and LEOs can help bridge the gap in this underserved market.
Emerging Verticals
The global COVID-19 pandemic has change society in profound ways, not the least of which is the way people work and relate remotely requiring large amounts of bandwidth. This has led to the acceleration of new technologies such as 5G. 5G will be many orders of magnitude better than previous wireless communications and data connectivity networks. NSR forecasts that 5G will generate US$ 21 Billion in cumulative revenue through 2029 for fixed satellite services, mainly from cellular backhaul. “But what makes the standard truly ground-breaking is that it has been designed from the ground up as a network of networks that can seamlessly integrate technologies including satellite into the 5G core. These advanced features mean that 5G has the potential to become a unified network platform, which satellite services can adopt to deliver plug-and-play convenience to fixed and mobile network operators,” according to a recent report from the World Teleport Association.
Innovative Technologies
Pandemics have a way of spurring innovation. Isaac Newton developed some of his great theories during his isolation from a pandemic. This pandemic has also given rise to innovative products and services that are being introduced in the market.
Among those to watch out include Microsoft’s satellite-to-cloud service Azure Orbital which is competing head on against Amazon Web Services in the cloud via satellite market.
Another company to watch is Northrop Grumman’s SpaceLogistics which last year made history by successfully servicing two commercial satellites in-orbit with is Mission Extension Vehicle-1. Watch out for more of these types of innovative services emerging in the years to come.
The Space Sector is Poised for Growth
Space is going through a renaissance of sorts with renewed public interest the likes of which has not been seen since the 1960s.
Last November 15th, Crew Dragon Capsule launched by SpaceX’ Falcon 9 rocket docked at the International Space Station delivering four astronauts. It was the first time the US successfully shuttled humans in space since the end of the Space Shuttle program nearly ten yeras ago. This significant achievement was heralded by many as a game changer in human spaceflight.
After many fits and starts, Virgin Galactic is targeting 2021 for its much awaited launch of tourists to space with its SpaceShipTwo vehicle.
Virgin Galactic has over 8,000 people sign up for its sub-orbital flights costing US$ 250,000 each.
Space activities in China and India also continued unabated even during the pandemic. Last month, China launched a mission to the moon that planted a Chinese flag in the moon’s surface-the only other national flag apart from the US currently in the moon. Meanwhile, India is planning to launch this year uncrewed flight tests of its Gaganyaan human spaceflight program to be followed by crewed launches in 2022-23.
The emergence of the US Space Force has also elicited similar ambitions for other countries. All this activity and renewed interest in space will benefit the satellite industry by residual effects in investments and innovation.
Things are looking up for the satellite industry in 2021.
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Virgil Labrador is the Editor-in-Chief of Los Angeles, California-based Satellite Markets and Research which publishes a web portal on the satellite industry www.satellitemarkets.com, the monthly Satellite Executive Briefing magazine and occasional industry reports called MarketBriefs. Virgil is one of the few trade journalists who has a proven track record working in the commercial satellite industry. He worked as a senior executive for a teleport in Singapore, the Asia Broadcast Center, then-owned by the US broadcasting company CBS. He has co-authored two books on the history of satellite communications and satellite technology. He holds a Master’s in Communications Management from the University of Southern California (USC). He can be reached at virgil@satellitemarkets.com
