Low Earth Orbit (LEO) Satellites for Enterprise 5G: A Very Long-term Opportunity, at Best

While 2020 has been the year for terrestrial 5G deployments, 2021 starts with growing interest in how to bring mobile connectivity into space, as a range of companies like Amazon, Microsoft, Facebook, OneWeb, and SpaceX all announced their satellite ambitions for communication technologies during 2020. Amazon announced their intention to spend US$10 billion to launch low Earth orbit (LEO) satellites (i.e., those that operate at a particularly low altitude) into space. Most prominently, their LEO ambitions, called “Project Kuiper,” will also include backhaul for 4G and 5G sites. Since the early days of 2021, the discussion has gained significantly more commercial relevance, as the U.S. American Federal Communication Commission (FCC) has granted Elon Musk’s Space X company permission to launch 10 so-called “Starlink” LEO satellites into polar orbit to provide internet access.

It is time to debunk some of the myths that center around the use of extraterrestrial connectivity infrastructure for cellular connectivity and give a realistic assessment of how LEO can affect enterprise verticals.

Satellite infrastructure will be able to extend the coverage area of cellular connectivity beyond the reach of terrestrial connectivity infrastructure. Furthermore, satellites can provide particularly high bandwidths (up to 1 Gbps speed) in multicast mode, which allows the transmission of particularly large networking data to many end devices simultaneously. In combination with a coverage area of 100,000 km2, this allows the provision of mobile connectivity to a wide area that requires highly dense connectivity.

As low LEO satellites are deployed much closer to Earth than medium Earth orbit (MEO) or geostationary (GEO) satellites, they can deliver particularly low end-to-end latencies. While MEO and GEO satellites can only guarantee 180 ms and 600 ms latency respectively, LEO satellites guarantee maximum latencies of 30 ms. Even though this is higher than the <10 ms latencies that terrestrial 5G connectivity promises, it is still faster than terrestrial 4G’s 40 ms latency.

With these capabilities, LEO satellites are perfectly fit to serve several important use cases for consumer as well as enterprise 5G. On the one hand, the opportunity to provide ubiquitous coverage opens new use cases in the consumer as well as the enterprise domain. For consumers, this enables the provision of 5G connectivity for passengers on planes, trains, and ships. From an enterprise perspective, this allows truly ubiquitous and constant connectivity capabilities, e.g., to trace the transportation of particularly perishable and/or valuable goods along the entire supply chain (regardless of whether they are transported by sea or by airplane). Furthermore, satellites can provide enhanced connectivity for connected vehicle (C-V2X) use cases, where real-time traffic information would need to be transmitted to many cars at the same time.  

On the other hand, satellites can provide an important addition to existing terrestrial connectivity infrastructure, serving consumer as well as enterprise use cases. Firstly, satellite infrastructure can be used to bridge potential blind spots of terrestrial 5G infrastructure. Therefore, a satellite can be used to extend 4G or 5G connectivity to, for example, extremely scarcely populated areas that are difficult to reach with terrestrial network infrastructure. Furthermore, satellite communication can be used as backup for terrestrial network infrastructure in case of a natural disaster such as flooding or an earthquake. By taking over cellular connectivity for the affected areas, satellite communication can enable 5G use cases for first responders and disaster relief, thereby playing a critical role to guarantee fast and high-quality rescue operations to save human lives. Lastly, by providing 1 Gbps bandwidth, LEO satellites can readily be used for 5G backhauling.

Looking at the underlying business economics, satellite communication is substantially more expensive and complex to install than terrestrial infrastructure. The business case for satellite 5G, therefore, needs to be strong and compelling enough to justify the more resource-intensive deployment.

With this discussion in mind, it is time to shift the focus toward the future to understand the role that LEO will play for enterprise 5G in the immediate as well as the long-term future. As the previous section has argued, the additional value of satellite connectivity lies in the fact that it will augment traditional, terrestrial network infrastructure, and therefore provide for more resilient networks. Thus, in the long run, the telco industry needs to embrace LEO satellites as an additional infrastructure layer to provide 5G connectivity and augment terrestrial connectivity infrastructure.

With regard to unlocking new enterprise use cases, the picture is somewhat more complicated. To understand this, consider the following (very acute) example: By providing ubiquitous coverage, LEO satellite infrastructure could be used to track the transportation of a particularly perishable good, such as any of the COVID-19 vaccines (which require storage at a particularly low temperature) throughout the entire supply chain, monitoring temperature conditions. Passive condition monitoring, however, would not be able to adjust any of the parameters if supply chain conditions were worsening. To provide added value, satellite communication would have to guarantee automated measures adjust critical supply chain conditions (such as temperature) instantly. Without these measures, the goods would perish. Therefore, extending connectivity to allow goods traceability along the entire supply chain would not be sufficient to justify investment into LEO infrastructure for 5G connectivity, as it would require additional technologies to guarantee the ability to automatically adjust supply chain conditions. With LEO satellites guaranteeing latencies of 30 ms, it will be even more difficult to justify satellites for mission-critical use cases that often require <10 ms latencies. In short, the realistic use case of LEO satellites for enterprise 5G will most probably center around backing up terrestrial connectivity infrastructure to create more resilient connectivity infrastructure, rather than enabling new use cases and targeting completely new enterprise verticals. 

Reflecting on these two considerations, the telco industry needs to strike a careful balance: on the one hand, they should focus their efforts in the immediate and short-term future on creating a compelling value proposition for enterprise 5G, as their enterprise ambitions are far from being secured. On the other hand, they need to understand that LEO satellites will have an important role to play for enterprise 5G in the long term. To reflect this, operators should start now to plan ahead and widen their focus for potential partnerships with satellite providers to gain a first-mover, competitive advantage.