When the sun sets on a clear sky, step outside and look at the stars. Somewhere in that pitch black sky will be a giant piece of ultra-modern technology beaming down TV or data streams back to the earth. The number of satellites in use is set to grow from around 3,000 now to around 20,000 by 2020, driven by a growing need for connectivity that can reach everywhere.
The resurgence comes as no surprise to Rupert Pearce, who leads UK-based global satellite provider Inmarsat, as innovation in the sector has grown rapidly in the last few years, thanks to tumbling costs and greater capabilities.
When I sit down with Pearce, who has been in the satellite industry for more than 13 years, he says this growing demand for satellite fits with a changing view on how we use connectivity, and the democratisation of the internet.
“The world is also changing and beginning to need what we can provide even more,” he says. “We’re beginning to look at connectivity in a different way. Previous generations grew up in an unconnected world where they wrote letters to one another. The generation coming through are the iPhone generation – they grew up with a rattle app!”
What this means is that connectivity is now becoming almost a human right, he says. “It is very hard to live without it these days – but it is also becoming part of the critical national infrastructure in any country. We see that in every corner of life and across all industries.”
He continues: “In the digital economy, coverage and reliability become critical functions. There are very large parts of the world you can’t cover with terrestrial technology and it is also inherently unreliable – it blows over in bad weather.”
CEO Pearce’s office, where I spoke with him, is made up of small scale models of all the satellites Inmarsat – which was founded as International Maritime Satellite Organization by the UN in 1979 – has had in operation.
Inmarsat is a rarity within the satellite game. It is solely a mobility provider, offering connectivity to businesses primarily operating in the maritime, aviation and government fields. It operates 13 satellites that give it a global network and it trades in over 200 countries, through a distribution network of 600 partners.
“Strategically, we believe in doing the things that differentiate us from our competitors. We were born as a mobility operation working with global customers. We look for global customers and mobile,” he says. “If they don’t value both, we want them to value one of them. When you put that in a context of supporting local MNOs on fixed backhaul it fits neither. It is a very well-served market so it wasn’t a priority market.”
The number of competitors operating in the satellite sector is certainly growing. Take OneWeb for example: its proposed constellation of approximately 648 satellites will offer global internet broadband services within the next few years, operated by WorldVu satellites. WorldVu, founded in 2012, is backed by Japanese technology giant SoftBank.
Some of these competitors plan to launch hundreds or thousands of low-orbit satellites in order to compete with the incumbents, something Pearce says he welcomes.
“On balance, more competition is a really good thing. It brings more innovation,” he says.
“Yes, there is a risk of disruption for incumbents like us but that’s the law of technology. Incumbents usually benefit more from this than newbies, as we can adopt [the new technology] from a position of strength.”
Incumbents have “usually got the profitability and free cash-flow to move quickly and in an agile way”, he adds.
“We are a global mobile satellite operator. We don’t focus on just one region: we build for global coverage, and we support mobility. So you can put a device on your plane, one device, and have the same service wherever you fly that plane in the world,” he says.
“To build a global network requires massive investment – just shy of $2 billion – and it also needs very skilled capabilities. We are differentiating ourselves from most other companies in the rest of our industry. We are probably the leading innovator in our segment.”
He continue: “That’s why the revolution of the small satellites is proving so interesting, because [new operators] have a very different business model.”
Internet of Things
One key reason for the demand for more connectivity, and subsequently more satellites, is the growing internet of things (IoT) market. Connections to the IoT are expected to top 20 billion in the next few years – and some vendors have predicted even higher numbers than that.
I ask if the move to the IoT really fits with Inmarsat’s traditional strategy, and Pearce nods, saying certain IoT applications fit well with plans to provide global mobile solutions. Sectors like automotive or aviation need to be able to be connected anywhere, and some locations just aren’t feasible for current terrestrial technologies, he explains.
“We’re looking very hard at intelligent transport networks for IoT for cars, trains, trucks and so on. They all need connectivity, they tend to be mobile, and they are a natural place for us to play. Many are global too.”
Providing such connectivity means striking more and more partnerships with traditional mobile operators – something it is less familiar with than some its rivals, which have specialised in wholesale backhaul services.
But some of these deals are coming through strongly. Pearce gives two examples. “We are beginning to work with MNOs more directly. In Europe, we have a big joint venture with Deutsche Telekom in aviation (see page 20). In 27 countries we have an IoT alliance with Vodafone. What they do there is use us to extend their range of their IoT systems into rural and remote areas, either using our services direct or using a small hub. But those relationships are early days.”
Whilst the relationship with Deutsche Telekom plays into its own tradition as a provider of connectivity to aircraft, the relationship with Vodafone, in Pearce’s own words, “is different”.
“It is about our extension into IoT. It is a natural fit, not because it is about mobility, or because it is regional, but because of the L-band,” he adds.
L-band, a satellite-industry term for the 1-2GHz spectrum band, has proven very strong in the IoT space because it connects well with small, cheap and resilient terminals. “L-band has this unique utility to support very small devices in all sorts of places. As IoT starts to proliferate, and people look at expanding their networks, our L-band satellites have this weird utility.”
He enthusiastically jumps out of his seat, something he does on regular intervals during our meeting in his London office, to pick up a small model that looks a bit like a shark fin. It is the kind of receiver that would connect a car to one of Inmarsat’s fourth generation satellites – and it fits in my hand.
“Usually, when terrestrial meets satellite, terrestrial is slightly smaller and somewhat cheaper. So normally companies go for that, and satellite is used to extend coverage, boost resiliency with less congestion, and deploy and forget – investment cycles run for 20+ years,” he says.
“The cycle of upgrade is very rapid in cellular but ours are long-term investments. The assets could last for nearly 30 years, which is very valuable in an IoT context.”
Satellites also do broadcast services, which is “very efficient”. In IoT that’s very important because you’ll want to do over-the-air updates to your network. Cell sites are getting smaller, becoming less efficient for one to many beams, so satellite can come over the top of that. Those capabilities are about a third cheaper than terrestrial, like for like – so it’s going to be more important as a service, and play into the strengths of satellites.”
Is Inmarsat eying other partnerships with operators? Pearce won’t mention names, but he says he can foresee a situation in which Inmarsat transports its aviation services over to America. In fact, he fires a warning for the likes of ViaSat which is already offering something similar in the region.
“[We] do something really innovative across Europe that we can export globally, including in the US – look out ViaSat in your home country!” he concludes.