While I missed coming home for Christmas in 2014, I have come back to the United States every year since 2013 for the SATELLITE Conference, and while every year has its own themes, 2020 has been perhaps the strangest lead up to SATELLITE of any year thus far. If the first two months of 2020 is any indication of the decade to come, we can expect a volatile decade full of unprecedented technological achievement and, in either best-case or worst-case scenarios, respectively, exploring new worlds and creating totally new markets, or creating and then bursting spectacular bubbles. The two months preceding have been incredible. To review:
We have seen a strange two months. For starters, the word of the year thus far has clearly been coronavirus, with the horrific disease stalking the earth, having immobilized at times hundreds of millions of people in China, and now having put as much as 1/3 of Italy’s population under quarantine. Such a disease moving at such a speed, we have never seen before, and while it may well be a black swan event, it may also be a symptom of an increasingly interconnected world. I am thankful every day for having witnessed the outbreak from a vantage point such as Hong Kong—a seemingly vulnerable dot in a sea of Mainland China, but during the virus, a bastion of stability due to an incredibly diligent population and relatively tight border policies. While not directly relevant to the space industry, the coronavirus is perhaps the most consistently-heard word coming into the conference, and will thus likely be a talking point.
More directly related to space, the first 2 months of the 2020s have been fascinating, and leading into SATELLITE, there have been some incredible events. The most impressive, by some margin, has likely been the launch of Starlink satellites throughout the year.
In September 2019 at the Euroconsult World Satellite Business Week in Paris, SpaceX CEO Gwynne Shotwell said that SpaceX would conduct 1 dedicated Starlink launch every 2 weeks in 2020, with each launch containing 60 Starlink satellites for the company’s global satellite internet constellation. At the time, I was skeptical—manufacturing and launching 60 satellites—even relatively small ones (each Starlink satellite is a little more than 200kg)—is hard enough. To manufacture and launch 60 every two weeks seemed unlikely.
And yet, in 2020, we have seen 3 launches so far, with a 4th launch coming up next week. While not quite one launch every 2 weeks, the pace of manufacture and launch has been incredible, and Elon Musk was recently quoted as saying that Starlink can now manufacture satellites more quickly than they can launch them, and that the cost per satellite to manufacture has fallen below the cost to launch. While we have no way of knowing if this is true, we also have no “more reliable” source on the matter than Elon Musk, and at any rate, the company has now launched more satellites than any other company in the world, despite having only started launching last year. Indeed, the first 2 months of the decade have been any indication, the 2020s are likely to be a fascinating time for broadband constellations.
Separate to constellations, but targeting a similar market, a variety of small geostationary (GEO) satellite manufacturers have made major announcements thus far in 2020. San Francisco-based Astranis, a small GEO manufacturer and satellite operator, announced a Series B funding round of $40 million in equity and $50 million in debt, with the equity coming partly from Andreesen Horowitz, a blue-chip Silicon Valley investor. Saturn Satellite Networks, a small GEO manufacturer, recently made claim to be able to deliver 100 Gbps of HTS for $100 million, though the company has yet to announce any firm contracts for its satellite. The increase in small GEOs is occurring at a time when GEO-HTS are becoming larger, and in general there is a huge increase in the amount of bandwidth available in space.
From the perspective of satellite communications, then, the conference will have two interesting themes, namely constellations/mass manufacturing of satellites, and the revolution in the GEO comms space. There may be a revolution in satellite communications during the coming decade, and should that revolution take place, we will look at these few months as a turning point.
While the revolution in satellite communications has likely been the biggest space story of 2020, it is far from the only one. Financial markets have been broadly volatile over the first two months of the year, and space companies have been no exception.
Virgin Galactic, the space tourism company founded by Richard Branson, has seen exceptional stock price volatility since its IPO in September 2019. After an IPO at a price of around US$10 per share, for a market cap of around $2 billion, the company value increased to nearly $40 per share in February 2020, before falling to around $21 per share as of March 6th. The company plans to start to bring tourists on suborbital space flight in 2020, and will, at least in the short-term, have a monopoly on the market. While it is not clear how large the market is for $200,000-250,000 space flights, Virgin claims to have slightly more than 600 people in its “One Small Step” program, who have paid a refundable $1,000 deposit for a trip. The mania around Virgin Galactic’s stock price in the early months of the decade is, if nothing else, an indication of the growing interest by investors in the space industry.
SpaceX also announced in early 2020 preliminary plans for a Starlink IPO, while another Musk company—Tesla—sold $2 billion in shares at a valuation of more than $100 billion. A Starlink IPO would allow Musk to establish a valuation for the venture, raise some capital, and also potentially bid up the value of the company through highly public and often controversial marketing of the product, in a manner similar to what has been done with Tesla.
On the other side of the world, satellite operator China Satcom has seen its stock price nearly double in 2020, and now has a market cap of more than $10 billion, or ~20x revenues and 150x earnings. SES, meanwhile, has seen its share price collapse by 30% in the week following a dividend cut and guidance downgrade, and now has a market capitalization of EUR3.3 billion, or 1.5x revenues and 30x earnings. The United States Federal Communications Commission (FCC) ruled in early 2020 on its incentive payments for C-band spectrum reallocation in the US, with this leading to a plunge in Intelsat’s share price due to speculation that the company will decide to declare bankruptcy following the ruling.
While several companies have been winners thus far in the financial markets in 2020 (Tesla and by extension SpaceX/Starlink, Virgin Galactic, and others) and some have been losers (satellite operators, mostly), there has nonetheless been a clearly increased interest in the space industry by the financial community and the public at large, and this has made it, in some instances, easier to raise funding.
Some additional information details about a few selected topics realted to this article.
The first 2 months of 2020 have been an eventful 2 months, in both the world and the space industry. Heading into the conference, there are several key themes that I will be looking out for.
The revolution in satellite communications—constellations, more capable GEO-HTS capacity, and a change in the way that satellites provide communications services. This will also include evolutions in antenna manufacturing, with companies such as Isotropic, Gilat, and others making announcements related to LEO antennas.
Evolution of space financing—bigger ambitions in space will require more money. As space becomes more commercialized, there will be more ways of earning revenues from everyday consumers, and, given the role that venture capital has come to play in startup financing, there will likely be many angles to play of showing top-line growth, raising more funding, showing more growth, raising more funding, etc., without ever reaching profitability. That being said, increased financing will also mean increased opportunities for companies to create sustainable business models involving the commercialization of space.
Internationalization, or lack thereof—while not much discussed above, 2020 has also seen geopolitical volatility, and this has made international collaboration in space different, if nothing else. The most obvious example at SATELLITE will be the lack of Chinese attendees due to restrictions put in place following coronavirus, but separate to that, there will likely be a marked decrease in more general international attendance at the conference. 2020 has seen space and politics mix in sometimes toxic ways, with the above-mentioned FCC ruling involving at various times the (accurate) portrayal of SES and Intelsat as foreign corporations looking to gain billions of dollars from US taxpayers for a spectrum resource that was, at least initially, given by the government to the operators for use. One of the best parts about the space industry is how international it is, and while it will certainly continue to be international through the 2020s, this internationalization will be likely different from before.
In my 8 years of attending SATELLITE, none have had such an interesting lead-up. Like the rest of 2020 thus far, it is not entirely clear how the conference will end up this week, but the most certain thing is that it will be damned interesting.
Blaine Curcio
Founder at Orbital Gateway Consulting
Blaine Curcio has spent most of his career working in the satellite communications and commercial space industry, with experience at satellite operator SES, and with a multiple industry consulting and research firms. Blaine has spent his entire career in Asia, and is a recognized expert on several topics related to China. This has included giving lectures on the Belt and Road Initiative, China’s macroeconomy, and the Chinese space industry. He regularly attends conferences throughout Asia as a speaker and moderator, and is a contributor to SpaceWatch.Global, Talk Satellite, and the Satellite Executive Briefing, among other industry publications.
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