Satellite Ground Segment Needs to Expand and Digitalize to Meet Demand for Growing Space Capacities

Kongsberg Satellite Services (KSAT) has recently announced its investment to install new antennas for its ground stations, as well as signing new partnerships to enhance its capabilities. These partnerships include working with Microsoft’s Azure Orbital, Amazon Web Services (AWS) Ground Station, and South Korea’s COMTEC. Earlier this year, ATLAS Space Operations, a Ground Software-as-a-Service (not to be confused with Ground Segment-as-a-Service (GsaaS)) also expanded its ground network capabilities by partnering with Viasat Real-Time Earth (RTE), as well as with AWS Ground Station.  

For Satellite Communication (SatCom) networks, ground stations play an important role in providing communication links between Earth and space. They are stationary infrastructure equipped with large parabolic dishes for communication. In addition, ground stations are crucial for connecting the satellites or constellations with terrestrial networks and the Internet. With the growing number of satellites in space, especially in the Low Earth Orbit (LEO) segment, ground segment players will need to prepare for the potential demand surge in the future. Additionally, the number and coverage of ground stations that an operator has will determine the ability to handle capacity and latency requirements across geographical locations. In today’s market, ABI Research believes there are at least three different groups.

1. The dedicated traditional ground station infrastructure players (much lesser in today’s context, e.g., satellite operator-owned ground stations without open access)
2. The hybrid players who own the infrastructure but at the same time allow others to tap into their infrastructure and have agreements with other players to expand capabilities. (e.g., KSAT, AWS Ground Station, and Azure Orbital)
3. The pure software players who do not own the infrastructure, but tie up with infrastructure players with open access (e.g., ATLAS Space Operations).

Based on ABI Research’s market data report, SatCom Constellations: Deployments & Subscriptions, the total number of SatCom subscribers is expected to grow from 14.8 million in 2022 to approximately 53.3 million by 2030, representing a Compound Annual Growth Rate (CAGR) of 17.4% from 2022. With the growing number of satellites, the number of subscribers, and thereby capacity, there is a need for more investment in ground stations to meet this strong demand in the future. 

The growth of the space segment will necessitate the growth of the ground segment to support its developments. This can range from new markets (e.g., maritime Internet of Things (IoT)) and applications (e.g., supporting rural connectivity with broadband-intensive applications), which LEO satellites can support. The ground segment market has growth potential characterized by increasing demand pressure (for both capacity and geographical coverage), as well as the high cost of investment to build new ground stations. The traditional dedicated ground stations model will no longer suffice to keep up with the demand of future applications due to the high costs and rigid dedicated business models. This has pushed the ground segment industry to innovate and seek new approaches to compete and capture a greater share of the market. Not only have new entrants materialized, but also new business models have emerged.

The ability to offer affordable services is crucial for an expanding market and helps attract new customers and opportunities. One of the trends in the ground station market is the need to drive a greater amount of usability and achieve higher levels of efficiency and Return on Investment (ROI) on current ground stations’ capacity. How will the market evolve in the near future?

With the future diversified requirements for satellite connectivity, the ground segment is expected to be increasingly software orientated and, thus, flexible. Each group of companies in today’s market plays an important role in the future development of the SatCom industry. Investment in hardware and equipment is necessary for capacity and capabilities. Hybrid players allow for greater usage of their infrastructure and pure software players drive cost-effective and efficient usage of ground stations. ABI Research believes that a key theme for the ground segment remains a win-win scenario. For all the players within, the expansionary market, and the growing pie, begets a situation where demands are not satisfied by the incumbents. For example, KSAT partnering with other GSaaS providers is a win-win scenario, with KSAT expanding upon its global coverage and ability to cater to growing and new demands (e.g., satellite IoT and wide area-based monitoring).

Therefore, ABI Research believes that market consolidation is not expected in the near term due to growing demand and varying use case requirements. These requirements could vary in the form of cost, availability, security, reliability, latency, capacity, and redundancy, among others. New players could enter or incumbents could expand their capabilities to match these varying requirements and demand gaps. At the same time, ground segment players have to take note of the uncertainties that exist in today’s global economy. This industry needs to take note of at least two crucial factors:

1. Geopolitical Tensions and Developments between Large Countries: In a previous ABI Insight, Sustainability in Space during the Age of Mega Constellations—Can It Be Achieved?, I touched on how the space industry’s future potential is highly dependent on strong international governance and rules that countries have adopted. Should countries continue to undermine the progress toward such an outcome, the future of the space industry is bleak.
2. The Rising Cost of Financing: Interest rates in the current global economic environment continue to remain high, as central banks combat inflation. Ground stations are costly investments that are typically financed over time. Thus, with the continued higher interest rates, companies will need to assess their strategies and plans to improve their competitiveness in the market.

This is only the start of space industry growth, and the ground segment will continue to evolve alongside the uptick of the space segment market. There are signs of improvement in terms of global inflation with the International Monetary Fund (IMF) citing that inflation will fall to 6.6% in 2023 compared to 8.8.% in 2022. Therefore, it is important for players to remain prudent about the cost of financing and maintain a clear strategy to capture the future growth potential. Right now, the key outcome the industry should aim for is providing greater, cheaper, flexible, and more efficient access to ground station services.