Satellites: a new service sector?

New mar­kets, new stake­hold­ers, new pro­fes­sions: the satel­lite sec­tor cur­rently shows expo­nen­tial growth. It remains a cent­ral issue for States, yet the mar­ket also seems to be open­ing itself up to the private sec­tor as well – both big groups or innov­at­ive start-ups. Mur­i­elle Lafaye is head of the Busi­ness Intel­li­gence Centre (pôle Intel­li­gence économique) at the Nation­al Centre of Space Stud­ies (CNES, Centre Nation­al d’Études Spa­tiales). Her mis­sion is to gath­er inform­a­tion on issues around space eco­nomy and to identi­fy the growth dynam­ics of this highly com­pet­it­ive market.

What is the prin­cip­al trans­form­a­tion have you observed in today’s satel­lite market? 

Mur­i­elle Lafaye. The major upheav­al is that, over the past 5 years, the satel­lite mar­ket has shif­ted from a sec­tor focused on insti­tu­tion­al and defence needs, to a more clas­sic eco­nom­ic mod­el based on ser­vices. In 2015, under the impetus of the Amer­ic­an gov­ern­ment, pub­lic author­it­ies aban­doned their inher­ited mod­el of satel­lites to favour ad-hoc pur­chases of ser­vices from private com­pan­ies. It is a real paradigm shift!

These pro­cure­ments of ser­vices by pub­lic author­it­ies are also what allow new play­ers to prosper, even though they are not always prof­it­able. Plan­et (formerly Plan­et Labs) and oth­er new act­ors in the obser­va­tion of Earth thus receive orders from the Nation­al Geo­spa­tial-Intel­li­gence Agency, which is part of the U.S. Depart­ment of Defense.

But lately, the private sec­tor is also inter­ested in these new space com­pan­ies. Even if their invest­ments are smal­ler than those of pub­lic insti­tu­tions (in 2019, 95% of invest­ments were from the pub­lic sec­tor as opposed to only 5% from the private sec­tor), they are on the rise each year. Fur­ther­more, some cli­ents and investors have begun to join the boards of dir­ect­ors. For example, the Cli­mate Cor­por­a­tion, a sub­si­di­ary of Monsanto-Bay­er, joined the board of Plan­et. Their aim is to influ­ence the object­ives of space mis­sions to gen­er­ate inform­a­tion more adap­ted to their busi­ness. Per­haps they could even influ­ence the pro­duc­tion of satel­lites in the long run. Over­all, the diversity and the amount of these funds is what makes it pos­sible for new com­pan­ies to chal­lenge his­tor­ic­al act­ors. Plan­et is now in third place on the space imagery mar­ket, just behind Max­ar and Airbus.

In what ways are these new oper­at­ors dis­rupt­ing the space economy? 

Up until now in space tele­com­mu­nic­a­tions, com­pan­ies mainly put satel­lites in geo­sta­tion­ary orbit. They were pro­duced one by one and cost sev­er­al $100M. Today, SpaceX (with Starlink), Amazon (with Kuiper), or the Cana­dian Telesat, want to cre­ate mega-con­stel­la­tions of sev­er­al dozens of thou­sands of satel­lites: some­thing that was uncon­ceiv­able only a few years ago.

How­ever, the innov­a­tions of com­pan­ies that engage in the mar­ket are not only quant­it­at­ive. We are now able to make satel­lites cap­able of gen­er­at­ing medi­um-res­ol­u­tion images (5 to 10 m) of the sur­face of Earth for a few $1M. More and more oper­at­ors even offer met­ric res­ol­u­tion obser­va­tions: such a pre­ci­sion was up to now the prerog­at­ive of gov­ern­ments and their intel­li­gence services.

Many com­pan­ies, like the Chinese com­pany Jilin or the Amer­ic­an com­pany Plan­et, have thus spe­cial­ised in the obser­va­tion of Earth, to detect or man­age nat­ur­al dis­asters, to fol­low agri­cul­tur­al pro­duc­tion, or to observe oil and gas infra­struc­tures. In the case of Plan­et, the rise of private invest­ments allowed the com­pany to rap­idly under­take big mer­gers and acquis­i­tions. Hence, it acquired two com­pan­ies using satel­lites to provide high-res­ol­u­tion images of nat­ur­al and urb­an envir­on­ments: the his­tor­ic­al pro­vider Black­bridge and its Rap­idEye satel­lites in 2015, and the Terra Bella satel­lites, after reach­ing an agree­ment with Google in 2017.

How do you explain the expo­nen­tial growth of the num­ber of satel­lites produced? 

By the strong need for con­nectiv­ity, and the need to man­age vast flows of inform­a­tion. Ter­restri­al infra­struc­tures are no longer suf­fi­cient. There­fore, it is neces­sary to seek a com­ple­ment­ary solu­tion in space. New activ­it­ies for space in space will also require con­nectiv­ity and power­ful means of communication.

The increase in pro­duc­tion was made pos­sible by the expan­sion of the satel­lites mar­ket, the optim­isa­tion of pro­duc­tion lines (par­tic­u­larly due to robot­isa­tion), and the mini­atur­isa­tion of elec­tron­ics. The com­bined have res­ul­ted in a sig­ni­fic­ant decrease in cost, and explains the abund­ance of ini­ti­at­ives. His­tor­ic­ally, satel­lites were pro­duced one by one and for a spe­cif­ic mis­sion, where­as now, they are mass-produced.

The main issue today has become access to launch­ers: there are not enough to meet demand in the face of the abund­ant pro­duc­tion of satel­lites. The cost of launch­ing has been reduced. This has made space more access­ible and increased demand. Every­where in the world, engin­eers work on this issue: there are no less than 150 pro­jects on micro-launch­ers at present. Even if they do not all come to fruition, it shows the dynam­ics of this sec­tor, in which many new pro­fes­sions are cre­ated to organ­ise pro­duc­tion, tests, trans­port­a­tion, and the integ­ra­tion of these satel­lites on the launch sys­tem. We are also see­ing the growth of pro­fes­sions such as satel­lite con­stel­la­tion oper­at­ors, and brokers, who buy the avail­able places on launch­ers to resell them at retail, tak­ing a com­mis­sion in the process.

Has this rise of the private sec­tor led States to take a step back?

Not at all! They rely more and more on the private sec­tor, but States are not with­draw­ing from the space sec­tor, as it remains an issue of sov­er­eignty. The Min­is­ter for the Armed Forces, Florence Parly, thus stressed in her speech in Janu­ary 2020 that “our satel­lites and their pro­tec­tion are a stra­tegic imper­at­ive”. To address the risks in orbit (pro­lif­er­a­tion, debris, espi­on­age…) and pro­tect their satel­lites, the French Space Com­mand and the North Atlantic Treaty Organ­isa­tion (NATO) thus decided to cre­ate the Space Centre for Excel­lence (Centre spa­tial d’excellence) in Toulouse, which will become oper­a­tion­al in 2023. 

Many States, formerly cli­ents of European or Amer­ic­an his­tor­ic­al act­ors, are seek­ing to regain con­trol of the satel­lite sec­tor by encour­aging the cre­ation of nation­al com­pan­ies. This is par­tic­u­larly the case in China: the coun­try tries to keep up with the United-States and will prob­ably pro­duce nation­al coun­ter­parts to Starlink and Kuiper. It is also the case in India: the 15^th of Feb­ru­ary 2021, the Indi­an gov­ern­ment announced its wish to also cre­ate new nation­al com­pan­ies in order to address issues of Earth obser­va­tion, com­mu­nic­a­tion and/or connectivity.

Moreover, States con­tin­ue to play their reg­u­lat­ory role. France, for example, cre­ated a law on Space Oper­a­tions (Loi sur les Opéra­tions Spa­tiales – LOS) to force oper­at­ors to equip their satel­lites with thrusters to deor­bit them at the end of their lives and avoid space pol­lu­tion. There­fore, the access to space is not becom­ing entirely privat­ised, rather it is becom­ing more open. 

Inter­view by Juli­ette Parmentier