Satellite IoT Startups Sateliot and OQ Technology Continue to Gain Support, Proving There is More Than One Way to Grow in the NTN Market

Satellite Internet of Things (IoT) startup Sateliot announced in late November that it will partner with Eseye, an innovative IoT Mobile Virtual Network Operator (MVNO) based in the United Kingdom. The partnership will allow Eseye’s customers to roam onto Sateliot’s Release-17-complaint network when cellular coverage is unavailable. This announcement follows a similar collaboration between Sateliot and Paris-based IoT MVNO Transatel, made public in 2023.

These partnerships prove that Sateliot’s main mission—to be a Non-Terrestrial Network (NTN) roaming partner for cellular-based operators—has landed, despite only being founded in 2018 and having a relatively immature constellation of Low Earth Orbit (LEO) satellites. Given that it faces enormous Capital Expenditure (CAPEX) costs and heavy competition from Skylo and legacy satellite providers, the continual growth of Sateliot and other satellite IoT startups can be somewhat mysterious. Their success points to larger questions about what IoT MVNOs are truly looking for in an NTN partner.

IoT MVNOs have only a few options for The 3rd Generation Partnership Program (3GPP)-compliant NTN connectivity partners. Most have chosen Skylo, given that the company has created an impressively viable business model for this nascent market. Using the existing Geostationary Earth Orbit (GEO) satellites of legacy operators like EchoStar and Viasat, Skylo can offer ready-to-go 3GPP-complaint NTN connectivity to IoT MVNOs. It has established this successful satellite connectivity business without absorbing the astronomical cost of launching a satellite constellation of its own. Since its founding in 2017, the company has announced partnerships with several IoT MVNOs, including Soracom, Emnify, and floLIVE, and has quickly become the most successful satellite partner on the market.

Startup operators Sateliot and OQ Technology do not have comparable commercial success to Skylo, yet they also continue to grow and form partnerships with influential cellular operators. Like Sateliot, OQ Technology has announced a collaboration with Transatel, as well as with Mobile Network Operators (MNOs) O2 Telefónica and Deutsche Telekom. Both startups have also acquired impressive financial support. Sateliot recently received a €30-million loan from the European Investment Bank (EIB) after raising another €30 million in a Series B funding round in September. Similarly, the Luxembourg government recently invested in OQ Technology, backing a large portion of its €30-million Series B funding round. OQ Technology is also financially supported by Aramco’s venture capital fund.

The startups’ success can largely be attributed to their LEO-based connectivity. When supported by a large enough constellation and sufficient ground stations, LEO satellites can often provide continuous coverage, lower-latency messaging services, and better device battery conservation than GEO satellites. These benefits are extremely persuasive to IoT customers, so much so that IoT MVNOs would be willing to partner with these new LEO satellite operators regardless of their ramp-up time. 

There are other reasons that LEO satellite startups would be growing, despite an intensely competitive market. Given that these startups have not yet constructed full constellations, their eventual coverage areas are still quite malleable. This has likely helped LEO-based startups attract large, influential funders, like Saudi oil & gas company Aramco, that wish to shape the startups’ eventual satellite launches and coverage to their needs. OQ Technology, for example, will connect Aramco’s Intelligent Integrated Node (IIN) technology, an agreement that will likely direct some of OQ Technology's coverage and satellite locations. Legacy satellite operators or Skylo would not attract such funding partnerships, even though their commercial prospects are theoretically more proven, given that their constellations are already constructed and their coverage is not as easily influenced.

As they do with cellular operators, IoT MVNOs will likely partner with multiple satellite IoT providers to maximize coverage. They might partner with both GEO and LEO satellite operators, given that customers’ latency and pricing requirements will differ. Offering both types of satellite connectivity could also give an IoT MVNO a more competitive connectivity portfolio. Transatel is a good early model for this sort of diversification, given that it has partnerships with Skylo, Sateliot, and OQ Technology.

Sateliot and OQ Technology, however, should not take for granted that they will be the de facto LEO-based partners for IoT MVNOs. In January 2024, Iridium announced Project Stardust, a Narrowband (NB)-IoT NB-NTN service using the 3GPP NTN standard. The standardized network will be based on the company's existing LEO satellites, allowing the service to quickly ramp up, just as Skylo was allowed to do by using the legacy satellites of its GEO-based partners. Iridium’s combined maturity and LEO-based connectivity could make the company a quick and viable NTN partner for IoT MVNOs.

LEO-based startups will have to prepare for this coming competition quickly. To partially protect themselves from Iridium’s new service, these satellite operators could create tailored services for influential customers or carve out a niche coverage area or sector specialty, like oil & gas. In doing so, they could still be considered a good partner that could diversify an IoT MVNO's overall NTN roaming portfolio. Additional competitive dynamics could further inhibit the startups. ABI Research anticipates that other legacy LEO satellite operators, like Globalstar or even Starlink, could follow Iridium’s path and release their own standards-based services, further crowding a segment of the market that OQ Technology and Sateliot once owned.

MVNOs, in advancing their goals of seamless, global connectivity, will also have to confront several challenges specific to satellite connectivity. Due to rising geopolitical tensions, countries are increasingly concerned with satellite data sovereignty, with countries like China and the United States trying to ensure their satellite devices only connect with satellites operated by their own nations or allies. These concerns could threaten an MVNO’s ability to provide seamless, international connectivity agnostic to satellite operators. Given that the satellite IoT market is so new, it is subject to quick changes, either in the form of new competitors or political pressure. LEO-based startups and IoT MVNOs must be flexible, changing strategies, target applications, or target countries to accommodate these new challenges.