This article addresses the issues facing LEO constellations. These are both technical and financial. While the concept of bringing connection to the unconnected might be regarded as the finances associated with trying to achieve income from less developed and sparsely populated areas is a conundrum that is yet to be resolved.
The technical problems facing LEO constellations are well understood and can be dealt with to some satisfactory level. These range from supply chain hiccups in the satellite manufacturing process, launch problems, several in-orbit issues such as blockage and collision risk and issues involving transmission and reception such as shadowing, signal interference and cyber-security. Of these, perhaps, the collision issue could turn out to be the most difficult technical obstacle, if, indeed, it is possible to resolve this. Russia’s threat against both Starlink and OneWeb is ultimately self-defeating as destroying LEO satellites would, in all likelihood, create a Kessler effect or collision cascade rendering LEO orbit paths unusable for all users including China and Russia. Also traversing them to higher altitudes would become perilous.
However, the issue that may bring down the whole house down is financial. If it has to run at a loss, then the laws of economics will fail these enterprises. Earlier attempts have already gone down for financial reasons. Globalstar, Iridium, Odyssey, and Teledesic either had to scale back or abandon their plans for LEO connectivity schemes because of a mismatch between cost and demand. LeoSat never managed to get enough investment and OneWeb went under and had to be resurrected after Brexit by Eutelsat, the UK government and Bharti Global.
If it is considered that the constellations spend most of their time whistling Dixie over the oceans, mountains, forests and deserts, then some problems become apparent. The major portion of income can only be earned over (say) 10% of the Earth’s surface where humanity is bundled together. The pinch points in the system are the satellite gateways. These small and humble satellites do not have high throughput so the number of users who can access the system is restricted. Starlink has already capped the number of users per satellite constellation umbra. Indeed, they have also introduced what is, effectively, a two-speed offering with prime access. Telesat and OneWeb also offer differing packages. This is a point worth considering in more detail.
Market Factors and Frictions
If the majority of income is currently coming from populated areas, then LEO constellations are, in effect, competing with their terrestrial cousins and will need pricing to reflect this. One of the LEO constellation operators is offering close to this. Low monthly prices result in an increased number of customers to achieve profitability and it has been suggested (by Motley Fool) that Starlink will need 22 million subscribers to achieve its financial goals ($18 billion US in annual profit and $30 billion US in revenue) but it will need all of its 7,500 FCC licensed satellites to be the latest version or better to provide the bandwidth. On the other hand, OneWeb internet service will be sold through partnerships with telecommunication companies, broadband providers, governments, and other organisations that deliver internet service to customers but it expects to achieve $1 billion US in revenue within 3-5 years. Other projected LEO constellations are further behind in development and deployment.
There is a lot of emphasis on the benefit of LEO constellations which is significantly lower latency. The main uses of the internet are searching for information and web browsing, news, communication and collaboration, file transfer and data transfer, social networking, entertainment, gaming, online gambling, business promotion, earning online, online shopping (e-commerce), education, blogging, dating and remote work. Few of these are influenced by the offer of low latency.
Another advantage touted by LEO constellation operators is the ability to connect in remote areas where mobile phone connection is sparse. 90% of the world is within signal range of a mobile ground station according to various sources and the 10% that isn’t is very sparsely populated. And when a sheikh stops in a caravanserai in the middle of the Gobi desert and his entourage decides to do some on-line shopping, long latency is the last problem he has to worry about.
The Path to Profit
Low latency is only really needed by specialist applications such as option trading, some banking, remote surgery, diagnostic imaging, navigation, weather forecasting, collaboration, research, ticket sales, video broadcasting, on-line gambling (including futures trading) and online multi-player gaming. Apart from gaming, the great unconnected are unlikely to require such speedy connection except in emergency conditions. However, it should be noted low latency is still needed to some degree with the new wave of maritime digitalisation tools.
Given that the majority of the world wide web’s activities are not latency critical, then the appeal of LEO constellations is simply the cost of access, it could be argued to some extent. OneWeb address this problem by dealing with terrestrial partners who then deal with the consumer. Starlink has tried to go direct by selling the antennas and router to end-users but the price of this may be too steep for many remote populations.
For ground networks a latency of less than 100 milliseconds (ms) is considered acceptable but for optimal performance, latency in the range of 30–40 ms is desirable. A GEO satellite can have a latency as high as 400 ms while a LEO satellite will tend to equal its ground network speed. Logically a premium service would deal with the specialist applications and the data would travel to the LEO constellation and back again in short time while non-premium service would merely relay to the GEO and back again which would allow individual consumers to use their cheaper phased array antenna and router rather than the larger expensive dishes supplied to major users.
The concept of a GEO-LEO hybrid model has fascinated for some time so that those not requiring instantaneous response, could be relayed GEOwards. The next version of LEO satellites would need to have a rack of relays attached with laser communication to their GEO partner. The hitch would be at the GEO end which would require modifications. It won’t be long before someone sets up a repair shop in space to modify existing GEO satellites rather than replacement after they finish their expected 25-year lifespan.
As well as the advantages already listed of the GEO-LEO SD WAN, there are a few more such as simple adaptation because of the inherent use of standard internet protocols without going through a protocol conversion which can slow deployment. It may be possible to reduce the constellation density by orbiting slightly further out thus obtaining a larger umbra, providing services across wider areas. It would also allow the instructions on what to do with the data to be sent on a different wavelength than the data itself saving both computing power and simplifying data streams.
For more information about LEO constellations and a recently published report on Starlink, please click here or email us, info@ValourConsultancy.com