Although increasingly inward-looking regimes are complicating market access for global broadband constellations, governments are also spending more in a satellite sector they see as a source of economic development.

The US$42m raised by broadband terminal maker Isotropic Systems includes equity and grant funding from the UK, which took joint ownership of LEO broadband operator OneWeb last year.

The funding should help ease some concerns around the ground segment, which panellists at a recent Fieldfisher conference warned could be impacted by failures in the wider ecosystem.

Rhys Morgan, regional VP for MENA at Intelsat, believes funding challenges will be the downfall of some mega-constellations as not all those in planning will be able to succeed.

But as well as potentially dampening investor enthusiasm for the industry in general, Morgan highlighted the knock-on effects on capabilities such as antennas, where much-needed development could be left uncompleted if expansive strategies crumble higher up the value chain.

That could result in an industry that has not been able to make the “quantum leap” envisaged today or two to three years ago, Morgan said, resulting in impaired user experience that hampers further growth.

Isotropic funding

Antenna makers taking advantage of the current period of cheap financing – as SPACs, an incoming space exploration ETF and other favourable winds boost the sector, are improving the outlook.

Isotropic’s funding was led by satellite operator SES (EPA:SESG), which has been helping to test the venture’s flat panel antenna technology on its O3b Networks MEO constellation.

Orbital Ventures, which secured is first fund last year, participated in the round that brings Isotropic to about US$70m raised to date. Existing investors Boeing HorizonX Global Ventures, Space Angels and Firmament Ventures also participated.

Proceeds will help accelerate production so that its first commercial product is available next year, in time to support new constellations and satellites that are due to come online.

Isotropic said it is opening a new facility in the UK and will create 150 highly skilled engineering roles in the country over the next two years.

“The UK space sector is thriving and with connectivity never having been more important, it’s vital we support pioneering companies like Isotropic Systems who are tapping into the benefits that space technology can bring us all on Earth,” UK Science Minister Amanda Solloway said.

The funding comes nearly a year after Isotropic switched its focus from consumer broadband to large enterprises such as SES – as well as government customers like the US Defense Department.

SES CEO Steve Collar said: “Isotropic’s multi-beam antenna plays an important role in our multi-orbit strategy and is a key enabler for advanced satellite services on land, in the air and at sea.

“Our investment reflects the potential that we believe this breakthrough technology has for SES and for the industry as a whole.”

Virtualisation traction

Alongside hardware improvements on the ground, the trend towards virtualisation is also creating new opportunities amid the ‘cloudification’ of the ground segment.

Internet giants such as Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT) are lowering barriers of entry and driving innovation in the sector as they spread corporate networks into the satellite realm.

Orchestration, AI and other digital capabilities will help improve the overall user experience, pointing to eventual interoperability between orbits as well as networks.

These trends are helping to change the perception of satellite technology as being a poor competitor to terrestrial systems, Chris McIntosh, CEO of MEO-based satellite operator startup Methera Global Communications, told the Fieldfisher panel.

However, it also raises questions over how much of a core capability a satellite operator should relinquish.

“The more reliant we become upon ground segment as a service, the more expensive it’s going to be, because [the cloud operators] will soon realise that they are holding the key to connectivity, and that the satellite part is just one small part of the whole system,” said McIntosh, who left as CEO of Viasat’s (NASDAQ:VSAT) UK operations in June 2017 to co-found the startup.

Ultimately it comes down to the contracts, he said, with operators needing to be mindful about their long-term needs.

Invisible connectivity

The panel agreed that satellite needs to become an invisible link in the wider connectivity ecosystem to be successful.

This is especially important as the industry marches towards the mobile data world, observed Andrew Davies, president of space solutions provider Stellar Solutions Aerospace.

5G satellite integration plays very much into the need for integrated mobility, Davies said.

“Making the ground segment homogenous, so you can actually access multiple systems from one device, I think is going to be a key enabler in the future,” he said.

The next challenge

How LEO satellite broadband entrants such as SpaceX’s Starlink will be able to handle thousands of customers remains an unresolved question, added Davies, given that it is a different business model to the one satellite operators are used to.

“I think the issue going forward is not just having the technology, not just having the right answer – you can’t build it and they will come because they won’t, you’ve got to go to them,” he warned.

He believes broad partnerships with companies that can reach far-flung markets will become increasingly important as these global services develop.

“Not necessarily just the digital lease seller model but actually perhaps partnerships with mobile operators, partnerships with fixed service providers – people who own the customer,” Davies said.

“I don’t think the satellite operators will ever own the end-user customer, and I think it’s the wrong ambition to think that way. They have to find the right partners to own those customers, and I think that’s going to be a big challenge.”