EchoStar Goes Big on Satellite IoT, A Cause for Concern Among Competitors?

EchoStar's pan-European satellite IoT network was commercially launched in late 2022. It is now supporting at least seven Internet-of-Things (IoT) solution providers, including France-based APIK, the United Kingdom’s Dales Land Net, Germany’s Dryad, Cyprus’ CyRIC, France’s SYMES, Italy’s ProEsys, and international mobile Satellite Communications (SatCom) solutions provider Galaxy 1. The satellite IoT service will leverage EchoStar’s Geostationary Earth Orbit (GEO) satellite, EchoStar XXI, which provides satellite connectivity via the LoRaWAN IoT standard and covers countries across mainland Europe, Scandinavia, and the United Kingdom.

Taking into consideration the company’s previous announcement of the purchase of 28 nano-satellites in February 2023, which will operate in the Low Earth Orbit (LEO) to connect global IoT devices and interoperate with its GEO satellite, the entry and continued expansion of EchoStar’s satellite IoT network is expected to shake up the market, which has been traditionally dominated by the four incumbents—Inmarsat, Iridium, ORBCOMM, and Globalstar.

As covered in ABI Research’s Satellite IoT Applications and Services application analysis report (AN-5815), the decreasing costs of satellite launches and lower capital outlays have accelerated the growth of satellite IoT networks. A number of new Small Satellite (SmallSat) operators—Swarm Technologies, Kepler, FOSSA Systems, Sateliot, Lacuna Space, HEAD Aerospace Group, Totum Labs, etc.—have entered the satellite IoT market with low-cost and low-power satellite connectivity offerings. Accordingly, ABI Research expects the satellite IoT market to exhibit strong growth over the next few years, with total satellite IoT connection revenue growing from US$2.2 billion to US$7.8 billion between 2022 and 2030 (at a Compound Annual Growth Rate (CAGR) of 16.6%).

Momentum and interest in the satellite IoT space is clearly growing, with one of the leading chipset manufacturers, Qualcomm Technologies, announcing the launch of two new chipsets, the 212S and the 9205S, both of which support The 3rd Generation Partnership Project (3GPP) Release 17 specification for Non-Terrestrial Networks (NTN) IoT applications. Qualcomm is reportedly partnering with Skylo to deliver satellite connectivity to IoT devices located in remote and rural areas. At the Mobile World Congress (MWC) 2023, MediaTek also unveiled its MT6825 standalone chipsets, which are capable of establishing IoT-NTN connectivity via satellites in Geostationary Earth Orbit (GEO). Other notable recent announcements include Apogeo Space’s plan to launch an additional nine satellites and commence commercial satellite IoT services by 2023.

Despite the excitement and hype around satellite IoT, aspiring satellite operators should note the importance of being prudent in their investments, given the strong global headwinds. For example, in June 2023, satellite IoT solutions provider Hiber was granted a moratorium amid troubles with cash flow. In April 2023, satellite operator Astrocast also needed a US$17.5 million financial loan from Thuraya to help expand its existing satellite constellation.

While space launch costs have been decreasing, aspiring SmallSat operators need to be cognizant of other financial challenges when deploying a LEO constellation and account for them in business projections. Some of these challenges include:

• Large Number of LEO Satellites Needed for Ubiquitous Global Coverage: While the launch costs of individual SmallSats is lower relative to traditional GEO satellites, the smaller coverage area per LEO satellite will, in turn, require a larger number of LEO satellites to be deployed for global coverage. It is estimated that a minimum of 25 LEO satellites, as compared to three GEO satellites, will need to be deployed for global coverage. Use cases and business opportunities will be limited during the initial stages of setting up LEO constellations, which may, in turn, impact cash flow.
• Shorter Lifetimes for LEO Satellites: Operating in closer proximity to the Earth, LEO nano-satellites typically have a much shorter lifetime of about 5 years before they fall out of orbit and into the Earth’s atmosphere. As a result, maintaining LEO constellations will require frequent replacement of out-of-service satellites, which leads to high recurring capital and operating costs.

With many aspiring players looking to grab a slice of the growing pie, it is imperative for satellite IoT players, particularly in the low-cost, low-power space, to draw up comprehensive business models. In this regard, ABI Research recommends the following:

• Accurate Market Sizing: Satellite IoT operators should have a clear understanding of their target market—including its requirements, market size and expected growth—with realistic targets set based on each phase of constellation deployment.
• Strong Value Proposition: Satellite operators should develop key competitive advantages to gain a foothold in these identified markets. Long-term and strategic relationships should be developed with key customers to ensure sustained and healthy revenue streams.
• Continued Innovation: Satellite operators should continuously develop new solutions/services and technical capabilities to better meet the requirements of customers and stay relevant in this fast-moving industry. Partnerships with IoT solution providers could be formed to provide high-value end-to-end solutions for customers.