Satellite operators are figuring it out as they go to find efficient ways to meet the demand for more LEO constellations without a set of instructions for doing so. At the 36th Space Symposium in the “LEO Constellations: New Technologies, Business Models and New Challenges” session (August 24, 2021) they focused solely on LEOs and the challenges of sustaining the business models and the physical room in space.
The moderator for the session was Christopher Baugh, President & Founder of Northern Sky Research (NSR) with the following panelists: Maj. Gen. Clinton E. Crosier, USSF (Ret.), Director, Aerospace and Satellite, AWS; Mark Dankberg, Chairman of the Board, Executive Chairman and Co-founder, Viasat; Chris Johnson, Senior Vice President, Space, Maxar Technologies; Dr. Fred Kennedy, President, Momentus; Neil Masterson, Chief Executive Officer, OneWeb; Gwynne Shotwell, President and Chief Operating Officer, SpaceX.
BUSINESS MODELS, SUBSIDIES, AND COST REDUCTIONS
Efforts to find and maintain successful business models for LEO and to foster healthier profit margins continue to be more creative and innovative. The foundation of the business case is supported by those efforts, by past precedence and by the current satellite internet growth rate.
“The thing that really drives the business case, especially in commercial communications, is what we’ve been doing [internet by satellite for 15 years] and there is a very steady 35% compound annual growth rate in demand…[there are] 600 million homes on satellite TV today all watching the same thing at the same time,” said Dankberg.
One of the first topics of conversation for the panel was the question of subsidies and their value. Most of the panelists agreed that their business models support their operations without subsidies. Demand and the cost to operate match up well with the price the market will bear for services.
“Viable without.” Shotwell responded when asked if subsidies were critical for her business. “In fact, there is actually a lot of overhead that comes with subsidies.” Nothing is free and the overhead involved can outweigh the benefit of the subsidy.
Masterson had a slightly different view on subsidies, “I do actually think that subsidies have a part to play because in some cases that is a social purpose that governments want to fulfill and if they want to provide connectivity in certain markets, I think subsidies will in fact play a part. In terms of the question how important is it to our model, I would concur with Gwynne, it’s not.”
While the business models support the cost of operation and manageable bottom lines, the effort to innovate ways that reduce costs for LEO providers and their customers remains ongoing. Continued innovation in this area is key to the ultimate success of the LEO industry.
The space-to-space application (or the ability to do rapid relay especially over oceans where it is not possible to have ground stations) is a way to reduce costs while expanding service area. There will be space-to-space networks in government and commercial markets going forward. SpaceX, for example, already has spacecraft carrying laser terminals for doing this work and plans for all spacecraft going forward to have laser terminals on board.
Utilizing hybrid systems as a way of attaining higher peak speeds in real time with the ability to switch based on performance can reduce costs as well, explained Dankberg, “If you have a mobile terminal, you likely already have a hybrid capable terminal if you can manage the scheduling and airtime delivery.”
At SpaceX they were able to control their costs prior to service roll-out with the exception of the user terminal. The cost of user terminals is still higher than the average customer can afford. Shotwell did declare that later this year user terminal costs will be cut roughly in half and then further down the line cut again resulting in a 75% reduction from the current price tag.
Providers, like SpaceX, have been mitigating costs creatively by making user terminals so easy to install that there is no payment required for a separate installation team, by eliminating rental costs wherever applicable, and by investing in reusable launch systems which have been key to bringing the cost of the satellite technology to a reasonable place. The entry of more players into the LEO industry will naturally drive down the cost of ground equipment – which is one of the big challenges to the affordability of entering or sustaining LEO services.
SUSTAINABILITY ON LAND AND IN SPACE
LEO sustainability relies upon successful business models as well as the physical room in the LEO orbit in space. The panelists were divided on the degree to which this challenge affects LEO success.
Crosier summarized the LEO revolution as “making the world a better place from space.” There are many creative use cases arising from the capabilities of collecting and moving data from the LEO orbit. For example, Edgybees is using LEO SAR data to provide real-time ground situational data to first responders. Other companies have found ways to help the planet. Satellogic is trying to use their high-resolution EO to do environmental and resource management and Gatehouse Maritime is combining their LEO and ground-based data to support endangered whales.
“So we’re seeing a whole new set of missions today beyond ISR and satcom that fundamentally are helping us,” said Crosier, “Everything from crop production and food supply analysis to managing the environment and ecosystem. And I think it’s just a wonderful opportunity that LEO presents, it’s that unique orbit that allows us to see things nearly simultaneously that we couldn’t do five years ago. And frankly, five years from now, we’ll be impressed with the new missions that companies are building in LEO for other ways to provide innovative capabilities from space.”
The unique capabilities of LEO help manage the sustainability of the earth and its inhabitants. The projected growth of LEO launches also have the potential for mismanagement of the limited resource of the physical space in the LEO orbit range.
“The FCC has said multiple times that low earth orbit is a limited resource. So the question is, what is the resource that is limited and what is the way that you would quantify that,” said Dankberg. If antenna surface area is multiplied by the number of satellites, that then becomes a metric that can be used for determining the limit of the resource in the LEO orbit. “Either LEO works as an economical way to deliver bandwidth or not. The issue is, is there enough room in space for them. There hasn’t been a lot of focus on that question.”
A study done by MITRE for the National Science Foundation looked at whether there is a stable equilibrium that can be reached if there were, for example, 50,000 satellites in space that have a lifespan of 5 years and 10,000 a year must be launched to sustain them. Their results on the question of whether it would be possible to sustain a constellation of 10,000 represented a resounding no because the number of collisions and derelict satellites due to untrackable debris would grow to the point where maintenance wasn’t possibly manageable.
Shotwell, who was not troubled by the outcome of the MITRE study, stated, “Transparency, communication, responsible operators, good technology, there’s ways to address it.”
All the panelists agreed on two things regarding sustainability. First, that commercial entities must proceed in a cooperative and collaborative way to manage the limited LEO resource in space. Second, that it is important to support the new companies entering the industry whose business plan is to remove space debris in creative and innovative ways.
THE ULTIMATE SUCCESS OR FAILURE OF LEO
“The barriers to entry to enter space are falling…the issue then just becomes, how do we keep that land grab from undermining the whole ecosystem,” Dankberg noted. With easier access to the market and the ongoing effort in reducing cost of operation, there are and will continue to be many new providers launching spacecraft into LEO.
Shotwell added, “LEO will succeed. I have found, and I think this is broadly applicable, that when responsible operators and businesses work together, coordinate and don’t weaponize bureaucracy, don’t weaponize licensing, then we can figure out how to make this work.”
The consensus of the panel to address both economic and physical space sustainability involved the convergence of commercial entities to design a set of standards and operating protocol that protect the physical space, the missions, and the economy for all affected groups around the world. In the long-term, a solution and plan must be determined to collectively manage the economy, coordination, and debris involved with tens of thousands of space craft in LEO or it will not be a sustainable business model.
