The global telecommunications market grew from $2.6 trillion in 2021 to around $2.88 trilion in 2022, at an astounding growth rate of 9% CAGR. The market is expected to continue growing at a rate of 7.4% reaching $3.82 trillion by 2026. Within global telecommunications, the satellite telecom (SATCOM) market is a small but fast-growing sub-segment. In 2022, the size of the SATCOM market was valued at $29.98 billion, and it is projected to grow to grow to $56.74 billion at a 9.54% CAGR1 by 2029. The COVID-19 pandemic had a staggering impact on the SATCOM market, resulting in lower demand across all geographies. However, recent geopolitical tensions, as well as a rising concern for national safety has helped the SATCOM market bounce back from the pandemic slump.
Market segmentation for SATCOM
At a broad level, the SATCOM market could be segmented into broadcasting, military applications and navigation, and others, such as remote sensing, weather monitoring, etc. The broadcast segment holds the largest market share among all segments and is primarily driven by a growing demand among end-users for internet and direct-to-home (DTH) services. With investments pouring into the space sector, and an arms race to build the broadest possible satellite constellation network, the broadcasting segment is expected to keep increasing its market share. The military applications and navigation, although, not it is not expected to grow at a similar pace to the broadcasting segment, will continue to see growth, owing primarily to the increased adoption of next-generation appliances and devices which provide and facilitate global connectivity with real-time information for armed forces.
What’s next for SATCOM?
The next technology curve for satellite communication lies in mass adoption of satellite-based communication services by the general public. Consumer demand for low-latency internet services and enhanced connectivity has been driving satellite launch companies and telecom providers alike to focus their attention on space-based communication. Space-based communication is not expected to replace terrestrial telecom connectivity, but to supplement it by increasing land coverage. In terms of land area, estimates show that only 15% of the Earth’s surface is covered by terrestrial forms of cellular networks and around 37%, or roughly 2.9 billion of the earth’s population are offline. After 2027, an average of 330 satellites will be launched per year, catering to both government and commercial entities globally. This is a threefold increase over the previous decade indicating significant growth in sector activity.
Telecom providers
The direct-to-satellite-based network for mobile phones is a game changer in terms of how it can help reduce the digital divide. Pockets of land that were previously not connected to land- based telecom networks can now connect to global infrastructure. Recently, the C-Band spectrum, which is a high frequency, low wavelength band typically used for satellite communications by military and defence forces, was redistributed to terrestrial 5G telecom providers. With its operating frequency in the range of 4Ghz – 8 Ghz, it is supposed that the lower portion of C-Band would be able to enhance the overall range of 5G coverage. 5G technology operates in the spectrum range of 2Ghz – 6 Ghz, and the lower portion of C-Band overlaps with the mid portion of 5G spectrum. With the range that C-Band promises, mid-band 5G would significantly overpower its predecessor, LTE2.
Outlook for mobile phone manufacturers
In order to access satellite communication, mobile phones require three key components: hardware that can support C-Band, approval from the Federal Communications Commission (FCC), and software to enable the hardware (also called firmware). The Google Pixel 6 mobile phone that was released in late 2021 satisfied the first two criteria but it didn’t have the firmware necessary to enable the hardware which delayed the adoption of the C-Band for mainstream commercial communications. As such, telecom carriers play an important role in implementing the right firmware — even when a phone could support the use of C-Band for 5G, without the appropriate firmware from the telecom providers, the technology remains useless. Apple has already moved into this space, established through its partnership with satellite operator Globalstar to pioneer the satellite-based SOS feature in their latest edition of iPhones.
Satellite launch companies
An arms race to set up the broadest range of satellite constellations has begun and companies operating in industries adjacent to telecom, are helping to build the necessary infrastructure to make high-speed satellite communication a reality. Currently, the technology is at a very nascent stage, where communications between mobile phones are limited to text messages. But sooner than later, telecom providers and satellite launch companies will meet their ambitious promises to enable commercial voice calling and internet access possible through satellite networks.
Companies like SpaceX have launched Starlink, the beta version of their satellite internet project, which utilizes satellites orbiting in the lower earth orbits (around 550 km from the Earth’s surface) to provide low latency, high-speed internet for commercial applications. The company has also applied for permission with the FCC, which will allow it to launch around 42,000 satellites in total.
Parallel, Amazon is working on setting up a satellite constellation called Project Kuiper which entails around 3,236 satellites. The company is expected to launch at least half of the estimated number of satellites by 2026. One major disadvantage that Project Kuiper faces is that it only supports about 400 Mbps of connectivity. However, the company has promised to increase the speeds in the near future.
OneWeb, a company similar to Starlink, plans to provide its internet service to businesses instead of end-users. The company is one of the early movers in space and has already launched and deployed around 322 satellites.
Unlike the aforementioned companies, AST SpaceMobile is an innovative satellite launch company that has plans to provide both broadband and cellular services to its customers. Supply chain constraints and inflation have been obstacles in the company’s path to global cellular domination. The company is expected to deploy around 110 satellites by the end of 2024. However, Starlink’s recent announcement of its launch of version 2.0 by 2023, which will enable both broadband as well as cellular services, will directly compete with ASTS’ primary business. The Starlink v2.0 satellites are expected to be rolled out using AT&T’s mid- band spectrum.
Conclusion
The innovations within telecom and satellite sector in regards to data connectivity are expected to happen all across the value chain. Not will satellite launch companies increase their efforts to set up satellites to increase network coverage, but also mobile phone manufacturers building their hardware to support satellite-based communications, and telecom service providers acting as a middleman in enabling the satellite waves to reach our smartphones will increase. The satellite-based telecom businesses are expected to play an important role in the race for the commercialization of outer space.
However, a few challenges lie ahead for the technology. Telecom is a heavily regulated industry, and any offshoot of it is also expected to receive similar treatment from the regulators, thus increasing the time required for its mainstream adoption. Other challenges could arise in addressing the potential increase in traffic across the lower Earth orbit due to a larger number of satellites orbiting the zone, addressing the potential pile-up of debris from satellite collisions and other unintended accidents, and addressing cybersecurity and privacy concerns among users of the technology.
Sources:
[1] https://www.fortunebusinessinsights.com/satellite-communication-satcom-market-102679
[2] https://www.pcmag.com/news/what-is-c-band
