Next in Tech | Ep. 210: Satellite Market Perspectives

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Eric: Welcome to Next in Tech, an S&P Global Market Intelligence podcast where the world of emerging tech lives. I'm your host, Eric Hanselman, chief Analyst for Industry and Company Data at S&P Global Market Intelligence. And today we're gonna be looking at some perspectives around satellite and satellite markets.

And with me to discuss it is Mau Rodriguez, part of the Kagan analyst team who covers broadband. Mau, welcome to the podcast.

Mau: Hey Eric, thank you for having me.

Eric: Well, it's great to have you here. Satellite is, is such an interesting area. certainly, we've seen a lot of, of, of the public market stuff, the publicity that's all around it. Uh, but there have been some interesting transitions in terms of what's taking place. Uh, I, I guess maybe to start off with, uh, can you give our listeners, uh, a little bit of background in terms of what the market looks like, uh, and, and what you see just in terms of who the various players are?

Mau: with satellite broadband, uh, particularly the consumer facing one, it's pretty much a mixed bag. Um, we have the legacy operators who use geostationary satellite technology, and they're the ones who've been. Consistently losing subscribers. So, it's because there's not a lot of consumer interest when these operators, um, impose data caps and have limited capacity and persistently increase prices.

So those are, um, EchoStar and ViaSat, but, um. There's, there's, uh, a, a new player in town, not new, but relatively new, uh, Starlink and Starlink uses LEO, satellites, and they're the biggest one. they're the one that dominates, um, I guess the satellite broadband sector and Starlink has been pulling subscribers.

Left and right across the country. And they're the sole reason why, uh, satellite broadband in, in, for, at least for B2C has been growing in terms of subscribers.

Eric: And there's this guy, Elon Musk, you might have heard of who's running the company.

Mau: Yeah. Yeah. Um, Elon Musk is pretty interesting cause he's quite close with, um, the new president. Uh, and so with the new Trump administration. It would be, you know, I'm curious to see how he would influence, um, policy, broadband policy, you know, federal grants such as bead. especially knowing that he owns Starlink, so.

Eric: Well, you bring up, so an interesting point before we head down there, I want to quickly just do some background. I mean, as far as the geostationary markets, I mean, I mean, this is something where. I think many of our listeners may be aware of, uh, really what had been a, a lot of that, that large diameter satellite dish, sitting on your house kind of thing.

Uh, that, has, been the geostationary market. And the whole idea is you've got, uh. Uh, a small number, you know, single multiples of geostationary satellites that have a view, uh, and, and that they're in an orbit in which that same satellite is always in view of the antenna that that happens to be linking to it.

Now geosynchronous or geosynchronous or geostationary orbits are really way out in space. You're talking, you know, significant, significant altitudes. Uh, and as a result there's a significant amount of latency and limitations on capacity. I. you're bringing up, you know, Leo satellites, the low Earth orbit, they're much closer.

There, you know, in that 500 ish mile kind of range, and, and they're in an environment where that latency is much lower and the constellation's there and, and the satellite environment is what gets referred to as a constellation. There are lots of them orbiting rapidly so that the amount of time that any one satellite is actually gonna be in view is pretty limited.

But there are so many of them that you've got good global coverage, so you accomplish similar kinds of things to the geostationary environments, but you've now got what is this web of orbiting satellites that you're working with? And when we think about the total numbers that are up there, uh, what Starlink we discussing it, how many satellites does Starlink have to, to make this up?

Mau: Yeah, about 7,000.

Eric: Uh, it's, it's a lot.

Mau: Yeah, it's crazy.

Eric: but, well, but the idea is, is that you're, you're also relaying data, uh, you know, not only from earth to satellites, but satellite. Satellite satellites are able to hand off capacity. Uh, they're able to link across each other and relay, uh, across space. So, there're a set of advantages in terms of how they potentially, uh, can operate.

Some benefits in terms of, of where they fit. Um, it is an interesting market in terms of, uh, what they're able to cover and uh, how they're able to address it. Uh, but as you're pointing out, Starlink is probably the, uh, uh, certainly the, the best known of any of the options that are out there, What do you see as some of the, the other players that are there, uh, within that market?

Mau: Yeah. So, for one web. I believe they have over 600 LEO satellites. So, which pales in comparison to Starlink, but with them, uh, their satellites are positioned a bit higher than Starlink, so they don't really need a fleet of thousands of satellites just to provide, uh, global broadband coverage.

And then there's SAP with Lightspeed and there. still building out their fleet. Um, uh, but I think, uh, right now they have about 200 satellites, uh, mostly for backhaul services. Um, but, uh, I, I, I believe Telesat has, uh, contracted, um, launches with SpaceX, to deploy their satellites around, uh, 2026.

Eric: Ah, so, all right, so more that's building out well, and, and actually I'll bring in the other one that people might have heard of. Uh, which is, uh, Amazon and, and their project Kuiper. Uh, although we're talking about, you know, Telesat and Eutelsat being in a sort of a growth stage, uh, it's still fairly early days for Project Kuiper.

Mau: the company has said that they might have, uh, they might launch their services, uh, sometime later in 2025, and they have over 3000 satellites planned. But there is no news yet about pricing or, um, or anything specific like that. But what we do know is that, um, they could potentially offer speeds of up to 400 megs for households,

Eric: but they've gotta get there first. I guess right now they've got two test satellites that are launched and there, they're in line for some additional launches. I guess their launch partner is the United Launch Alliance. Uh, they've got, uh, Atlas five launch sits in theory coming up somewhere in here.

Uh. The problem though is that, uh, my understanding is each Atlas five launch, uh, only launches 27 Kuiper satellites. So, they're gonna have some catching up to do, I guess.

Mau: I believe, uh, Amazon also has, is it Blue Origin? which would help them, you know, it's just like Starlink with SpaceX. It's, they have their own, um, space company.

Eric: but that's also relatively early days. I guess they just launched the, the, the new Glenn and, and I don't know when they're expecting to actually get it online. I, I haven't heard any dates about when they're expecting to start new Glenn launches. Uh, have you.

Mau: No, no.

Eric: Yeah, to see, where that goes.

But it's interesting, again, they've, they've certainly got potential, and we'll have to see what happens in terms of that, that launch schedule and the cadence. Um, the thing is though, I, my understanding is it much like Starlink, they've gotta get, you know, up into the hundreds of satellites in order to get to an operational capacity.

So, it's, it's clearly, it's gonna take him some time to get that going, but.

Mau: Right. Yeah.

Eric: What do you see? I'm curious about the, the market perspectives. Uh, what do you see in terms of that kind of LEO satellite approach? You know, allow the star links and, and you know, any other potential competitors. Uh, how do you see that playing within the broadband market more broadly?

I.

Mau: Well, I, I think there's a lot of demand for these LEO guys. Um. Because there are so many rural areas that need connectivity. Uh, they, they also need consumer choice. Um, you know, especially with, um, sometimes it is costly to build out cable or fiber broadband to those areas. and also, emerging markets could use the help of LEO technology, uh, you know, but With Starling dominating, uh, that wouldn't be the most competitive. So there definitely needs to be a variety of choice for these customers, whether households or enterprises.

Eric: thinking about sort of the build out of rural broadband, uh, this is something where a lot of that capacity has been driven by some government programs to help fund that. Uh, things like, you know, bead funding, uh, and. Uh, the, the challenge I think was that initially Starlink, there were some technical qualifications that you had to have in order to qualify for that funding, and, and Starlink didn't qualify that for that, right. right.

Mau: Um, yeah, I think Starlink ran into some problems at the very start of the program, but, um, knowing that Elon Musk is quite. Close to, um, the precedent, um, that could change.

Eric: We'll have to have to see what happens going forward, but

Mau: Yeah. And we know that, um, I believe Kuiper Project Kuiper wants some bead money already, uh, in one of the states that have their bead plan approved.

And, you know, Kuiper hasn't, Kuiper hasn't commercially launched yet, officially at least. So, you know, I, I'm, I'm quite sure Starlink is, um, um, they'll be fine in terms of, uh, federal subsidies. Yeah.

Eric: Well, I mean they certainly, in terms of subscriptions, they seem to be doing well. Uh, it seems like they are, at least in some markets, uh, at least a challenger to, to other broadband technologies. It, it sounds like some of the biggest challenges right now are, are pricing. Is that what you see is the, the primary, uh.

Uh, competitive factor in, in some of the consumer, uh, deployment models.

Mau: Yeah, I think, uh, you know, pricing is a factor. Um. But also, uh, speeds. Which is why, you know, a lot of people, uh, choose fiber because they say, you know, fiber can provide gigabit speeds. Um, and satellite, uh, is not there yet. Um, but I think in terms of, for example, if we zoom in on the satellite broadband sector, um, a lot of, you know, the competition will lie on, uh, price war.

I think. Whoever could provide, the best value for money, then they would win, especially with Kuiper coming in.

Eric: Yeah. Well, and I guess the question then is, what's that competitive positioning between terrestrial, which is, I guess mostly fiber markets today? Uh, it seems like we're continuing to see the, uh, evolving dominance of fiber as the, the primary broadband, a delivery mechanism, uh, for most consumer, uh, broadband that's at least not, uh, satellite based.

How do you see that, that market today? Is it primarily, uh, fiber-based?

Mau: well right now cable is the king of broadband, so, um. If I'm not mistaken. Yeah, they, they dominate definitely. The, the market, um, cable has at least 80 million broadband subscribers. Um, versus let's say the telcos that have just, uh, over 30 million. That's, that's fiber and DSL lumped in together. So      

Eric: oh, well, by a really wide margin, uh, that's fascinating. Uh, interesting to see where that market goes. Uh, is, is that something where there's additional fiber build out or is this still something that's gonna be evolving, uh, over a longer timeframe?    

Eric: Oh, interesting. So, it's, I, I guess it's demand at that high end. It, it seems like that competition with gigabit, there is that demand for gigabit it seems like that's something that the satellite market isn't going to be able to address. Uh, that something where, uh, satellite starts to get towards that or is that always going to be the, the benefit of the terrestrial approach?

Mau: I think for now, that is the competitive advantage of these wireline operators. But with satellite broadband, their market is usually the rural areas. And so, they are the ones that cover areas that these wireline broadband operators don't want to build out Internet to. I think they have their own specific markets to address.        

Eric: So, it really winds up coming down to an issue of whether or not there's fiber capacity or fiber or cable capacity that's built out. Uh, and, and if they can reach you, I guess it's something where urban centers, more densely populated areas, uh, make a lot of sense for, you know, the various terrestrial providers to be able to get to, uh, and the rural markets are gonna be that place where, uh, the satellite providers are gonna be able to dominate, uh, again, where there's less sensitivity for whatever those top end bandwidth requirements are.

Interesting. Where do you see the market heading? Uh, what's the direction that it can take? Uh, what are your thoughts on that?

Mau: Penetration in the U.S. broadband penetration is at, I believe, it's 89% only. So, there's still a lot of ground to cover. And those areas are the isolated regions. And they're the ones who would benefit more from a satellite connection than waiting to have fiber or cable be built out to them. I think we need satellite broadband in order to bridge the digital divide.      

Eric: So, I guess we're in a, a situation where the terrestrial markets, uh, can handle as, as far as the economic, uh, imperatives are willing to take them. Uh, it seems like though the satellite market has continued to be fairly expensive. Is that something where we look at either optimizing or reducing costs in satellite, uh, uh, is that maybe subsidies to support, uh, access for, for those parts of the population that can't go direct? I’d be curious about where that goes and how we look to get satellite out into markets that have been more cost sensitive historically.

Mau: The subsidies would help, but also in the rural areas, it's less costly to deploy satellite broadband than fiber and cable.

Eric: Good point. In terms of being able to build out capacity, uh, it's gonna be something where being able to haul all that fiber or cable, uh, certainly in terms of spanning the digital divide, uh, maybe satellite is the way to go that way. I. Interesting to see where, where all of this happens to play out.

I mean, there also are all these other use cases that keep kicking around. I mean, things like, uh, backhaul for Telco. Uh, it does seem like satellite has the promise of being able to reach you wherever you are. Um, the, the difficulty, I guess, is figuring out what you can do with the bandwidth and the capacity to be able to reach there, but.

Maybe we get enough satellite constellations up there, we'll, we'll have more than enough capacity and, and be able to get, uh, at least a little closer to gigabit.

Mau: Maybe but then that would mean so many satellites in space that you confuse them with Stars.

Eric: Well, it, it seems like we're almost there now. I know there are a number of, uh, services that'll let you track, uh, Starlink, uh, satellite trains as they start to deploy. I, I guess we'll be seeing more of that as, as that goes forward, but, uh, uh, I think a lot lighter shining in the sky.

Mau: Right.

Eric: Well, thanks Mau. Uh, this has been great. Uh, appreciate all your feedback. Uh, it's been great to have you on the podcast.

Mau: Thank you. Thank you so much for having me.

Eric: There's so many questions about a lot of the capabilities that exist, but that we are at time, for this episode. Uh, that is it for this episode of Next In Tech. Thanks to our audience for staying with us and thanks to production team, including Sophie Carr, Feranmi Adeoshun, and Kyra Smith on the marketing and events teams.

And our agency partner, the 199. I hope you'll join us for our next episode where we'll be talking about m and an activity, mergers and acquisitions. We'll be coming back into a market that has had its own set of complexities. Uh, I hope you'll join us then because there is always something Next in Tech.