Over the last several years, there has been a growing hype surrounding the space industry. Large companies like Apple, Amazon, and SpaceX have invested billions in developing a space-based broadband network, and venture capitalists are betting big on smaller firms.

At the center of these dreams of a lucrative space industry is the idea that the cost of launching and manufacturing satellites will decrease with time as the industry matures. We’ve already seen the rapid growth of low-earth orbit (LEO) satellites in orbit, the kind that is envisioned as the basis of internet broadband.

Source: Union of Concerned Scientists

The traditional government centers of space research, like NASA and the International Space Station, are no longer the only actors. Investors and businesses are planning to launch several thousands of satellites at various orbits to provide earth observation data, broadband services, maritime domain awareness, and even in-orbit repair of satellites to extend their operating lifetimes. SpaceX, in particular, has been at the forefront of the boom of delivering large numbers of satellites in orbit.

Source: Union of Concerned Scientists

Advances in materials, design, and manufacturing

One of the main barriers to a profitable space industry has been launch-related expenses. The cost of launching a satellite generally tracks with weight — about US$3,000 per kilo for a low earth orbit satellite and US$30,000 for geosynchronous (GEO) orbit.

Next-generation satellites benefit from advances in materials and the increasing use of commercial, “off the shelf” parts that have been modified for space. Miniaturized or lighter parts mean that there is no longer a need to launch a bus-sized observatory into GEO orbit. For example, Planet Labs has 150 active smallsats that can generate imagery at 1-meter resolution in a low-earth orbit, which is comparable to a satellite typically found in a higher orbit.

Besides the cost of launching, manufacturing a satellite remains high. It currently runs at least US$60 million to produce a geosynchronous satellite.

But there are also some signs that costs are being reduced, specifically in the smallsat arena. During an investor’s conference in 2019, SpaceX President Gwynne Shotwell, hinted to CNBC reporters that the company’s ability to manufacture Starlink satellites for well under US$1 million each, though this has yet to be confirmed. Planet Labs has produced satellites, each the size of a shoebox, for just under US$10,000.

Demand-driven network effects

The more satellites in orbit, the easier it is to communicate between satellites (using inter-satellite links) and to provide a vast territory with broadband access. This is why some of the major projects seek to launch an entire fleet of satellites in one go, like Jeff Bezos’s plan to launch 3,200 satellites to provide global satellite-based internet coverage. Further along in developing a broadband network, SpaceX has informed the FCC that they expect to service 5 million customers.

Beyond satellite broadband

More than just a project to build a new internet network, New Space is about new ways of using and collecting data using different frequency bands of light or advanced radar technologies. During the Covid-19 pandemic, satellites were used to build a picture of the pandemic’s effect on economic activity and consequently environmental impact by NASA and the European Space Agency.

The possible uses of these new satellite capabilities, especially when they revisit the same locations several times a day, include detecting changes to buildings or the ground in areas vulnerable to earthquakes. They can allow companies to track their supply chain down to the container, and help human rights organizations identify illegal fishing fleets decimating the marine ecosystem.

New space isn’t just about adding capacity for traditional services like broadcasting. It’s the next big thing that governments, businesses, and venture capital are betting on to transform the structure of the global flow of information. There’s good reason to expect the prognostications of a trillion dollar industry to come to fruition.

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TNL Editor: Nicholas Haggerty (@thenewslensintl)

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