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Summary

The deployment of telecommunications infrastructure rarely elicits popular excitement. But even the launch of a new foldable mobile phone generated less interest and fewer gasps of awe than the passing overhead of a series of SpaceX Starlink satellites did in the UK toward the end of April during the COVID-19 pandemic lockdown.

SpaceX now has enough satellites in orbit to provide an initial wholesale communications service

On April 22, SpaceX launched another 60 Starlink satellites into a low Earth orbit (LEO) for its Starlink communications constellation. While they are undergoing preliminary in-orbit tests, the satellites are deployed in trains at about 224km above the Earth’s surface before final positioning into their 550km operating orbits. These trains of satellites are particularly visible with the naked eye during the current pandemic lockdown, thanks to significantly reduced air and light pollution. Following complaints from astronomers, SpaceX is now experimenting with alternative coatings and orientations that will reduce the amount of light reflected by the satellites, so this may be a never to be repeated phenomenon.

The SpaceX Starlink LEO constellation has more than 400 satellites in orbit at the end of April, which is the threshold needed to offer a limited service in northern geographies, according to a briefing given in May 2019 by CEO Elon Musk. The plan is ultimately for Starlink to have tens of thousands of operational satellites in orbit.

Starlink—and rival LEO constellations proposed by Amazon, OneWeb, Swarm Technologies, and others—will provide a variety of services including cellular backhaul, wireless voice and data communications, consumer broadband, support for the Internet of Things, and mission-critical connectivity as well as disaster recovery, business continuity, and emergency backup services.

However, the cost of building a constellation consisting of hundreds or thousands of satellites is considerable, and revenue will only start to flow after a large number of satellites have been launched. In an industry beset by bankruptcies and withdrawals, OneWeb has been the most recent satellite operator to file for Chapter 11 protection. OneWeb blamed the COVID-19 crisis for its inability to secure new investment. The future of the company’s 74 satellites is uncertain.

Wholesale is the only practical route to market for satellite communications

Despite the popular interest this week in strings of satellites passing overhead, the constellation owners will find it very difficult to reach and to serve the mass market. Only by wholesaling their services to terrestrial communications service providers can they build the customer base and traffic that will sustain their businesses. Terrestrial fixed and mobile operators already have well-established consumer brands and the necessary marketing and distribution capabilities, and they know their markets and regulatory regimes better that any of the satellite operators. Without wholesale partners the new generation of satellite operators are unlikely to succeed.

Appendix

Further reading

Developments in the Wholesale Satellite Communications Market, GLB006-000042 (April 2020)

Satellite Technology Drives Growth in Broadband Connectivity in Rural Africa, GLB007-000327 (December 2019)

“Satellite-based wholesale takes off,” GLB006-000025 (April 2019)

“Satellite communications in the Middle East cater to a niche market,” GLB007-000332 (December 2019)

Author

David James, Practice Leader, Wholesale Telecoms

[email protected]

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