In the classic novel “Love in the Time of Cholera” by Nobel-prize winning author Gabriel Garcia Marquez, the protagonist takes advantage of the imposed isolation of a purported cholera epidemic to consummate a life-long passion for the one he loves.
The global COVID-19 pandemic that is making shockwaves through every industry in the world will have a significant impact on the satellite industry as well. There is no doubt that those who work in the industry are filled with passion for this vital industry we all love, but with more than half of the world and nearly 90 percent of the US and Europe in lockdown, it will require a lot more than passion to surmount the challenges ahead as the very strength and resilience of the industry will be put to the ultimate test.
Even the most optimistic projections indicate that the restrictions on movement, travel and public events will continue to be in place for at least the next two months in most of the world. This is a major shift in how we do business with more people working remotely from homes and business and social interactions practicing physical distancing will migrate into the digital realm.
Amid the devastating economic impact of the global lockdown will have on certain industries like travel, leisure, retail and various services, some industries are projected to fare better that others. Among those that are expected to be in a better position to weather the crisis is the space and satellite sector, according to a report by Quilty Analytics. The report said that they expect the space and satellite industry to “fare somewhat better from a demand perspective than the economy at-large.” The report cited factors such as sizeable government dependency; support for first responders and resilient consumer exposure.
The industry’s dependence on government contracts where up to 70% of the market in some areas such as Earth Observation, plus the highly reliable and survivable nature of satellite communications services which are essential for disaster communications and back-up services, insulates the industry from some of the more severe impacts of the global pandemic, according to Quilty Analytics.
In addition, the consumer market for satellite services are unlikely to be cut during a time of stay-at-home orders. Already we have seen a spike in demand for streaming services in the second half of March when the pandemic kicked into high gear and more stringent lockdowns were put in place. Conviva analyzed global streaming data from the 21-day period between 3–23 March comparing the last seven-day period (March 16-23) to the previous two (March 3-16). It found that on a global scale, streaming jumped more than 20% as compared with the previous two weeks and nearly 15% as opposed to the previous week.
U.S. ratings agency Nielsen predicts that ‘staying in home’ could lead to a massive 60% increase in the amount of content watched.
As remote operations become more widely used in broadcast and other applications, there is a unique opportunity for satellite cloud-based services. Transitioning broadcast operations from hardware and manually intensive on-premises set up to a virtualized playout and operations model gives more flexibility and cost-savings for clients.
An Essential Industry
Another important factor that puts the industry in good stead is that it is universally deemed an “essential industry” so operations continue despite lockdown orders. The Satellite Industry Association (SIA) emphasized the essential role of the industry in statement stating:
“Satellite internet services are providing millions of businesses and families with essential broadband access to online education, business collaboration and communication tools, telehealth and critical government updates. Satellite-powered internet is keeping people everywhere connected with their teachers, doctors, employers, customers, friends and families. Satellites are enabling GPS navigation and timing – helping to power America’s mobile cellular phone industry and report on the spread of the epidemic worldwide. Satellite imagery and remote sensing companies are providing users with safe and remote ways to collect global onsite information while satellite television news and entertainment services are proving to be invaluable for the millions who are homebound. These are just a few of the vital services that satellites are providing to help keep Americans who are sheltering in place, safe, connected, informed and entertained.”
“During a crisis such as the pandemic, satellites also provide government customers including the Department of Defense (DoD) and the Department of Homeland Security (DHS), with a wide variety of critical crises communications, remote sensing and other services vital for use both in the United States and around the world. DHS named satellite operations as an essential part of functioning critical infrastructure that is imperative during the response to the COVID-19 emergency for both public health and safety as well as community well-being,” the SIA added.
This could be said for any country in the world as the satellite industry is a vital component of the global economy.
Impact on Industry Segments
While analysts seem to agree that the satellite industry as a whole is in better shape than other industries to face this global pandemic, certain segments of the industry will be impacted harder than others. Among the highly vulnerable includes the Aeronautical/In Flight Connectivity, Maritime/Cruise, Energy/ Oil and Gas markets. Overleveraged companies and start-ups with strained liquidity are in potential peril according to Quilty Analytics. On a positive note, the government/defense, enterprise, telecom and broadband sectors should be stable and even post modest increases during the crisis.
Research firm NSR said that demand erosion will be felt in the aeronautical, cruise and oil and gas markets in the next two-three quarters. 
NSR outline five key areas to focus on to build a long-term go to market (GTM) strategy such as price, bandwidth, contracts business models and external factors.
“The diverse nature of our industry — from Fortune 500s primarily dependent on the federal government to a mix of entrepreneurial ventures dependent on domestic and foreign commercial customers — may help mitigate some of the devastating effects being witnessed in other more vulnerable sectors such as travel/leisure,” said Courtney Stadd of Capital Alliance Solutions in a report published by the Space Foundation.
“Many space companies offer communications and imaging services that contribute to our national security, while providing critical communication connectivity that is of paramount importance to a society in a safe harboring mode — and therefore may warrant additional support from government,” Stadd added.
The Industry Response
In addition to ensuring that networks operate continually at high reliability during the crisis, space and satellite companies are stepping up to the plate to offer various assistance and new services to help mitigate the impact of the crisis.
To prevent any disruption in supply chains, Lockheed Martin will advance more than US$ 50 million to their small- and medium-sized business partners so that the companies can continue to operate and sustain jobs during the COVID-19 crisis.
Lockheed Martin’s Chairman, President and CEO Marillyn Hewson also announced that the company will donate US$ 10 million to non-profit organizations involved in COVID-19 related relief and assistance, with emphasis on veterans and military families, and that the company has activated a US$ 6.5 million employee disaster relief fund. In addition, the company will also donate the use of its corporate aircraft and vehicle fleet for COVID-19 relief logistical support and medical supply delivery, and the use of its facilities for crisis-related activities where “needed and practical,” said Hewson.
When the International Telecommunications Union (ITU) announced in March the launch of a global platform to help protect telecommunication networks during the COVID-19 crisis, the satellite industry welcomed the initiative. The new platform will assist governments and the private sector in ensuring that networks are kept resilient and telecommunication services are available to all during the crisis.
Among the companies responding to the challenge is mobile satellite service operator Thuraya. Thuraya has a standing agreement with the ITU to deploy its terminals for immediate assistance during emergencies and natural disasters. Its mobile satellite phones and broadband devices enable solutions that can help relief workers achieve maximum impact, while limiting their exposure to COVID-19. Thuraya can augment relief work in remote locations through telemedicine solutions such as teleconferencing kits and connected ambulances. The ambulance-to-hospital telemedicine system works over Thuraya’s IP broadband terminals and satellite network, connecting onboard wired and wireless medical devices to hospitals and diagnosing physicians. Moreover, relief agencies can use the solution to collect data on the spread of virus and visualize the pandemic, trace contacts and collect information to support health surveillance. It can also assist in coordinated efforts to deliver necessities such as vaccines and other medical supplies, or even satellite communications equipment.
“Reliable communications are urgently required where the threat from COVID-19 is greatest. The social distancing strategies introduced by governments across whole populations are expected to place severe strain on cellular networks and internet traffic. By increasing capacity over hotspots, Thuraya will ensure service continuity, even when there is a sudden surge in demand from remote medical setups, healthcare institutions and NGOs,” said Sulaiman Al Ali, Deputy CEO of Thuraya.
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| Virgin Orbit's mas producible bridge ventilator for COVID-19 patients. |
Other companies such as SpaceX and Virgin Orbit, among others are repurposing their companies’ manufacturing facilities to meet demands for emergency medical equipment. Spacex’ Elon Musk has helped procure some much needed ventilators for the medical community and also directed his company to product hand sanitizers and face shields which are in short supply. Launch services provider Virgin Orbit has developed a mass-producible bridge ventilator prototype for COVID-19 patients. Virgin Orbit worked with the Bridge Ventilator Consortium on the ventilator design. High-end, ICU-capable ventilators are in short supply as the pandemic worsened in recent weeks. The bridge ventilators can be used to help free up the more advanced ventilators for the most critical patients.
Satellite companies have a consistent history of contributing to relief efforts and providing much needed communication services during natural disasters and various emergencies. The COVID-19 pandemic is no exception and we will continue to see how satellite service providers will respond to the to meet the myriad communications requirements needed to mitigate this crisis.
Changes
Inevitably, as stringent measures are taken, the COVID-19 pandemic will flatten out and businesses will start to recover as we have seen in the country where the epidemic started--China and promising signs in South Korea and other countries that the curve is on a downward trajectory. As people start returning to work, however, it will be a very different environment they’ll have to face. The pandemic will have made a lasting impact on how we work and how we conduct business.
For one, telecommuting might catch on as teleworkers prove to be as productive as those who work from offices. There will be a permanent shift to move work from offices to the home and this will present an opportunity for enterprise and home networks.
Another impact of the crisis will be on supply chains as companies review how they source materials and possibly work with companies closer to them geographically and order more materials than the typical just-in-time delivery. This will ensure that they have inventories that can withstand longer-term disruptions in the supply chain. This could prove to be a short-term boon for some suppliers during the recovery period when companies start ordering more to boost their stockpiles to make them more resilient in the event of another breakdown in the supply chain.
Finally, a crisis of this unprecedented proportions will likely result in investments by governments and international organizations to combat future pandemics. This certainly won’t be the last pandemic we will face and to prevent another gross disruption would require putting in place a sophisticated organizational and network infrastructure that will be able to respond more quickly and more effectively against any future outbreaks. Such investments would require critical communications components that the satellite industry can provide.
This is not the first global crisis that the satellite industry has faced. In just the last 20 years, the industry has withstood the Asian Financial crisis in 1998, the dot-com bust of the early 2000s and the great global recession of 2008-2010, among others. Throughout those crises, the SIA actually reported that the satellite industry as a whole grew consistently every year since it started tracking the industry 20 years ago.
Having covered the satellite industry through all those previous crises, I have a feeling that this one will show how resilient the industry is and how it well-poised it is in surmounting the challenges ahead and finding opportunities during the time of COVID-19 and the inevitable global recovery.
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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
