The Internet of Space Things

Is it wrong to wish on space hardware? So sang Billy Bragg in 1985 and his question was prescient: the 1990s saw a flurry of satellite activity with very smart people jumping into the space game with the dream of delivering broadband data to the underserved masses. Sound familiar at all?

Back in the 90s it was an unmitigated disaster. Teledesic (led by Bill Gates and wireless visionary Craig McCaw) failed to get off the ground – literally; it didn’t launch a single satellite – while Iridium filed for bankruptcy and sold for less than the cost of decommissioning its in-orbit satellites. Other satellite dreams also teetered on the edge of failure, particularly if tied to the idea of delivering the Internet, rather than low-band satellite mobile services, and any plan to launch a LEO (low Earth orbit) solution was doomed. And so, the 21st century started with bruised egos, failed dreams, and a lack of a space-based Internet. Seemingly, only Billy Bragg had called it correctly.

Nearly 20 years later, the dream of LEO-based solutions is back. Starlink, Elon Musk’s next big bet, is leading the way with 1,600 satellites currently in orbit and a beta test under way. Not to be outdone, Jeff Bezos has plans for a similar solution with Project Kuiper, while Boeing also has plans for a space-based Internet solution. Add to these the two key incumbents that survived the turn of the century debacle – Hughes Net and Viasat – that each have a solid niche with their GEO (geosynchronous orbit) solutions. That’s a lot of space hardware to chase after the rural population that is underserved by terrestrial Internet solutions.

Our 2019 Rural America and Technology report estimated that 31% of households in the continental U.S. were without broadband solutions, far higher than FCC estimates. Shocking as that statistic is, it’s probably worse as many “broadband” households use DSL, which typically provides speeds at the very low end of what can be called broadband (we will be looking more closely at this in our upcoming Broadband America report).

That’s the good news and the obvious market opportunity for a consumer-focused satellite solution. But this is where it gets a little tricky: satellite solutions are far from cheap and, unless subsidized, will not appeal to many of the underserved households. What is more, satellite is far from the only game in town now: the wireless (cellular) providers are all pushing fixed cellular broadband solutions where they can (that is dependent on the capacity of the towers and backhaul of course), while fixed wireless networks continue to improve in speeds.

In other words, there look set to be too many companies chasing after a slowly decreasing market opportunity (the underserved consumer). Or perhaps the consumer is not really the core target audience for these new LEO satellite solutions. Sure, it’s a nice opportunity along the way, and an almost altruistic cause to connect the underserved (which comes with government subsidies of course), but it’s not a strong enough business model, I suspect.

Rather, this is about having control over a broadband distribution system that can be leveraged for everything from drone management (think package deliveries in more remote areas) to rapid communication with electric vehicles to improve autonomous driving (think Tesla, obviously). In other words, this is less about connecting people than it is about connecting “things” and the new satellite entrants are all very focused on IoT solutions that will support their core businesses. When you look at the billions of dollars being spent on satellites from that perspective, perhaps this time around the investment will prove worth it.

 

Skip to content