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CHAPTER III - A Dynamic Satellite Industry Amid Growing Spectrum Demand

The number of new satellite systems, particularly satellites in NGSO orbit, is anticipated to expand dramatically. The use of satellites in low earth orbit is expected to increase by at least an order of magnitude in the coming years as economies of scale, rocket reusability and opensource designs offer unprecedented low costs in the manufacturing and launch of satellites. Although much of the roundtable discussion focused on growth in new satellite services, the importance of traditional, established operations should not be discounted.

Declining Costs and New Broadband Constellations
Sean Casey, Vice President of Business Development at Atlas Space Operations and former satellite investor, gave a presentation on the wave of disruption from new satellite companies enabled by lower cost launches and equipment. He noted that the overall investment growth in the new space race is mostly due to a handful of large, if still new, companies, most notably SpaceX and OneWeb. However, he outlined a number of trends that are driving the cost of satellites down to where their funding fits into existing Silicon Valley investing practices.

With the entrance of a multiple private-sector rocket options, the cost of payload launches is decreasing rapidly (Casey estimated the cost of payload for smaller satellites is about $2,000 per kilogram of weight, working off of the Space X Falcon 9 rocket expenses of roughly $60 million per launch). Companies are also reselling rocket capacity, allowing for economies of scale from payload aggregation, further driving down the costs of getting satellites into space.

Much of the interest is in new LEO constellations that are designed from the ground-up for lower-latency broadband service. Several companies are looking at large LEO constellations for broadband. If the metric is the number of planned satellites, SpaceX appears to be leading the pack and has been authorized to operate nearly 12,000 satellites. Many others are in the race, however, Telesat—a Canadian company—has plans for just over 500 satellites, and Amazon aims for over 3,200 satellites under their “Project Kuiper” program.

Small Satellites and Other New Entrants
Small satellites, although limited in their applications compared to larger, more expensive and higher-powered satellites, are seeing significant growth. Generally, any satellite less than 500 kilograms is considered “small,” but much of the interest is around even smaller, so-called nano- and picosatellites, that are generally less than 10 and 1 kilograms respectively. These small satellites have very different performance characteristics compared to their large geostationary cousins.i As might be expected, smaller satellites tend be much less expensive. Hardware can be purchased for $100,000 or less, depending on functionality, compared to tens and even hundreds of millions of dollars for traditional satellites. Small satellites use lower power and relatively simple antennas to transmit at lower data rates. Usually small satellites have no propulsion systems and short lifespans. Despite their relative simplicity, there is tremendous expansion in educational and research applications, amateur experimentation and commercial operations.

The CubeSat design, introduced in the early 2000s, is a driving force in this wave of satellite start-ups. The CubeSat is a modular design comprised of 10 cm cubes. Modules can be linked together to add different functions or components. These uniform designs allow for sourcing of commercial, off-the-shelf components and open-source software and hardware.

The CubeSat was initially developed by Bob Twiggs and other engineers at Stanford and California Polytechnic State University with the goal of allowing aerospace students to build and fly an engineering payload within the timeline of a single academic year. Dale Hatfield, Adjunct Professor and Executive Fellow at the University of Colorado at Boulder, emphasized the importance of this educational consideration to enabling low-cost, rapid access to satellite spectrum, explaining that “you may want to try to do something within a couple of semesters and so forth… if we’re going to continue to have young people involved in aerospace engineering… you need that as part of your pipeline.”

Planet Labs is an example of an early innovator in the application of the CubeSat form factor, and is expanding considerably. The company has launched over 100 satellites and is not alone in expanding into the fast-growing satellite-based IoT, analytics and Earth exploration services. Several small start-ups are in the investment and growth phase.

The level of sophistication and awareness of spectrum policy among these small new entrants varies. Some participants asserted a number of small satellite start-ups have “questionable spectrum assets.” One participant remarked, discussing a chart of satellite-related start-ups, that “half of those companies [being discussed] have no rights.” Some roundtable participants expressed concern about basic spectrum awareness in some of the smaller start-ups, and even with investors, of the need to acquire rights to use specific frequencies. Chris Weasler, Head of Global Spectrum Policy at Facebook, noted that it “doesn’t feel obvious” to investors that there is a firm understanding of the licensing requirements or how interference is resolved.

The ITU itself has recognized that “many nanosatellite and picosatellite operations to date have been non-conforming to the Radio Regulations.”ii This obviously presents a concern, not only for interference-free operation, but also for the potential to stifle the growth of these new services. Sean Casey compared the lack of easy access to spectrum to the lack of affordable rents in the Bay Area, worrying that “if you have to pay a high price premium for spectrum access, then that may be a barrier to entry to the industry just in general and lock people out.”

History Repeating?
For many roundtable participants, the vigor of today’s satellite sector has echoes of the past. This is not the first time the industry has seen an outpouring of excitement around NGSO deployments. In fact, LEO constellations were a component of the overall tech boom and bubble during the late 1990s. Major companies like Teledesic, Iridium and Globalstar invested tens of billions of dollars into their voice-centric systems that were ultimately undercut by broadly available terrestrial cellular service. Participants pointed out that Teledesic was one of the largest failures, along with Skybridge, TerreStar, Globalstar and LightSquared, as notable bankruptcies. The Iridium constellation was nearly decommissioned but saved at the last minute and continues today as a modestly successful company.

The relative success of terrestrial voice services—cellular wireless systems—was a significant cause of the popping of the 1990s satellite bubble. Cellular offered a compelling service at a lower price point. Even if it could not be used at sea or in many rural areas it had adequate coverage for most major urban centers and along most major freeway systems. To some extent the tensions between satellite and terrestrial allocations continue to echo through spectrum management today.

Satellite users are not alone in their growing demands for spectrum—a wide variety of commercial terrestrial uses, notably 5G (and before it 4G), and government users continue to require access to more spectrum resources. As former Assistant Secretary for Communications and Information and NTIA Administrator David Redl stated in a speech subsequent to our gathering, “The era of easy spectrum decisions is over…. That’s true across the board, whether you’re a satellite operator, a terrestrial wireless provider, or an unlicensed user. Spectrum has become more important than ever to our daily lives and government missions. Competition for spectrum resources has never been more contentious.”

However, different wireless systems are not necessarily at odds. Valerie Green, Executive Vice President and Legal Officer of Ligado Networks, noted that an important consideration to achieving policy goals is to use satellite and terrestrial systems together. Historically, it has been an either/or discussion—terrestrial or satellite—when the policy focus should be on recognizing the ways in which satellite and terrestrial networks can complement each other. This may be especially true where satellites can give ubiquitous coverage in rural areas, augmented with a terrestrial network in towns and in larger congregations of people.


i For an overview of these small satellites from the ITU perspective, see ITU-R “Characteristics, definitions and spectrum requirements of nanosatellites and picosatellites, as well as systems composed of such satellites” Report ITU-R SA.2312-0 (2014). Available online: https://www.itu.int/dms_pub/itu-r/opb/rep/R-REP-SA.2312-2014-PDF-E.pdf.
ii Ibid at 11.
 
 
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