With the coming implementation of 5G, expansions in traditional fiber optic cable networks, and plans to deploy vast satellite internet constellations, improved connectivity seems to be one of the most far reaching trends of our time. Although most of us are familiar with 5G and traditional internet networks at this point, I wanted to take the time to introduce a new internet offering in the midst of approval and deployment. I’m sure many of you know that satellite internet already exists, however the current model is plagued by high latency, unreliable connections, and low throughput to end customers due to large satellites orbiting far above Earth’s surface. Current satellite internet is provided from standalone satellites orbiting the Earth at an elevation of approximately 22,000 miles, which provide coverage to large geographic areas. Using a single satellite to provide coverage over a large area limits the amount of bandwidth these providers are able to offer customers and often leads to slow speeds and unreliable connections. In order to solve these issues, SpaceX and at least three other competitors have made plans to launch constellations of satellites in a low earth orbit (otherwise known as LEO) to provide uninterrupted high-speed internet across the globe.
The basic dynamics of the technology are easy enough to follow – many small satellites will be launched into orbit anywhere from 350-1200 miles from the earth’s surface and use connections to each other and ground stations to redirect internet connection to the satellite dishes of end consumers. Since the signals will travel much shorter distances from ground stations to satellites, and back down to customers, latency will be reduced, and the connection should become more reliable than current offerings. In addition, using many more satellites will improve the total capacity available to end consumers and should alleviate many of the pains associated with current satellite internet.
But so what? What is the value in improving satellite internet if we already have reliable substitutes in fiber and wireless alternatives? The International Telecommunication Union’s 2018 report estimates that just over half of the Earth’s population has access to the internet – the other half is lagging behind. Once up and running, a LEO constellation can essentially serve any household in the world without the need for additional incremental investment. Although the majority of these people are located in rural areas or developing nations, this still presents an immense market opportunity for the companies pursuing LEO constellations as levels of disposable income and quality of life improve. In addition, building a functioning constellation requires a large up-front capex investment but avoids many of the expenses and logistical difficulties of installing wired solutions to these underserved areas individually.
Beyond offering high speed internet services to the ~4 billion people currently without access, LEO satellite internet constellations promise to offer improvements across a number of industries. One of the most important impacts appears to be on IoT and the future of autonomous vehicles. In order to improve the safety and efficiency of autonomous vehicles, they will require access to connectivity at all times, not just in urban centers with reliable wireless connections. If LEO internet can be successfully deployed at the claimed speeds, it can act as a complement to terrestrial networks and allow autonomous vehicles to maintain connectivity almost anywhere in the world. This would improve the safety of autonomous vehicles on long haul trips through access to software updates and machine-to-machine communications. These applications would be extremely beneficial for industries such as long-distance trucking which will likely be one of the most disrupted industries by autonomous vehicles. With uninterrupted connectivity, autonomous trucks would be able to access remote locations safely and increase the efficiency of this industry.
Additionally, LEO constellations are likely to reduce latency between distant access points as connections are passed along a mesh of interconnected satellites instead of through a network of weaving fiber optic cables. In theory, this has the ability to disrupt the high frequency trading operations of many financial institutions which rely on the fastest networks to capitalize on pricing discrepancies between markets – reducing latency by even milliseconds could offer a competitive advantage for traders. Of course, this advantage would quickly be mitigated as institutions adopt the fastest network – but these firms could serve as some of the largest clients to internet service providers offering the most competitive networks and serve as a major market for the justification of investment behind these networks.
With the rise of fast response, competitive video games such as Fortnite, low latency, high speed internet is becoming necessary for people to play this style of game. Currently, most connections in rural areas are not fast enough to play these games without lag, and in turn reduces the total number of players with access. The reduced latency of proposed LEO constellations appears to be acceptable for these types of games and would potentially provide access to many, many more people. Not only will the popularity of gaming drive demand for this type of service in new markets, but the video game industry would be set to grow in a virtuous cycle. Elon Musk has reported that SpaceX’s prototype satellites already offer internet speeds capable of supporting this style of gaming.
Although LEO satellite internet is not yet available and must first overcome many technical challenges, it will bring connectivity to a massive, underserved market, and should have positive impacts on many industries. SpaceX and others have already launched prototype satellites into orbit and claim that their services will begin to be rolled out by 2020 – this seems like an aggressive prediction due to the sheer number of satellites that must be launched, but they will likely become functional in the coming few years. I personally think we are still a long way from reliable LEO satellite internet access, but when it does arrive, it will have the ability to transform developing markets and many existing industries. Does this seem like a farfetched idea to beam high speed internet down from space, or a viable alternative in the near future? I’d love to hear any opinions or insights you may have!