The total market for satellite communication is significant, with total global sales of approximately USD 118 billion in 2020 according to the latest report from the Satellite Industry Association (SIA). The industry continues to demonstrate growth, with an increased flow of investments from both new and existing operators.
The industry is characterized by large increases in the volume of satellites being put into operation while the industry in general is undergoing changes with consolidations among operators throughout the value chain. The trend is for satellite operators, who previously only sold capacity, in part to begin acting through acquisitions of service companies in order to offer the market a complete solution and a broader offering of products and services. We have also seen a certain amount of consolidation of satellite operators, for example ViaSat’s acquisition of Inmarsat. Another trend is the addition of new operators in all parts of the value chain.
The key part in the entire chain is of course the customers, meaning the users of satellite capacity and other products, services and applications. In the past, customers’ use of satellite-based communication services has been a compromise between mobility, satellite coverage areas, capacity, flexibility or data rates. This is still valid to some extent, but Ovzon’s products and services are unique in that they have global reach and enable the highest transmission rates for the smallest and lightest mobile satellite terminals – a fully integrated service with the highest performance and delivery capacity.
Previously, Ovzon categorized its addressable market according to those parts of the market called FSS (Fixed Satellite Service) and MSS (Mobile Satellite Service). Even if these terms are still of interest, the boundary is not as sharp and distinct as it was earlier. These boundaries are being erased as investments increase in new satellites with steerable beams and small mobile terminals, a trend that is expected to continue. This, in combination with the fact that various market and industry analyses do not always sum up the market in accordance with the above categories, makes estimating an addressable market using earlier models difficult. Ovzon has therefore decided to begin using data from an industry leader, Northern Sky Research (NSR), to define the scope of the company’s market.
Ovzon operates in a section of the market known as the advanced satellite connectivity market, which NSR estimates is worth approximately USD 21 billion – according to NSR, a segment with a high rate of growth.
Ovzon’s addressable market is divided between government agencies and defense organizations (USD 7.1 billion), mobility services for land, air and marine transportation (USD 6.2 billion) and industrial solutions (USD 7.7 billion). Solutions that are adapted to the industry consist of media, aid organizations, transportation, mine operation, oil and gas, energy and the internet of things (IoT). Other parts of the satellite connectivity market such as broadband access or broadband internet, are not priorities for Ovzon. Ovzon believes that the company’s unique offering is well positioned to meet the needs of the addressable market: a service with truly mobile communication, meaning small and portable terminals that have secure direct connections and can send/receive the highest data rates with guaranteed availability of communication globally.
Satellite value chain and example companies
- Lockheed Martin
- Oribital ATK
- Thales Alenia Space
- Cobham (BGAN)
- General Dynamics
- Hughes (BGAN)
- Tampa Microwave
- Intelsat Government
- Network Innovations
- SES Government
- Inmarsat Government
- Government & Defense
- Emergency & Rescue Services
Key market drivers
Ovzon believes that the overall driver in the satellite communications market is based on the need for high-speed data transfer in combination with a high degree of mobility and portability, guaranteed availability and security. Globally, the need for communication in all sectors of society is growing. Stringent demands and expectations are being placed on access to connections with high data rates and mobility in pace with greater mobility and a robust increase in data and content. This requires constant connections with small, portable communication devices that can transmit large amounts of data, both in cities and in areas with insufficient MARKET or nonexistent infrastructure and in the most remote and isolated areas in the world. Moreover, the demand for secure communication is growing. More government organizations and companies are being exposed to cyberattacks, meaning hacking and attacks via ground networks that threaten to paralyze operations and government agencies for long periods.
The value chain
The market is also characterized by many different operators acting as both generalists and specialists. This is evidenced by a small number of satellite operations who have significant market shares. Ovzon’s clear strategy and offering create competitive advantages through a strategic balance of important characteristics adapted to the company’s focuson specific customer segments and their unique needs such as mobility, high data rates (both up- and downlinks), a high degree of link accessibility and a high level of security. Ovzon believes competition in this part of the market is limited.
One of Ovzon’s closest competing offerings comes from the satellite operator Inmarsat, with BGAN. This service includes satellite terminals that are equal in size to Ovzon’s satellite communication terminals, but with a transmission speed and capacity that is significantly lower. There are also competing offerings from Intelsat, for example, with terminals that are somewhat larger but have only the capacity to transmit at lower data rates.
Geostationary orbit (GEO)-based services
Our competitors’ services are largely based on high-capacity geostationary (GEO) satellites such as Intelsat’s EPIC and Inmarsat’s GlobalXpress and (the delayed) Viasat 3. They have been designed to offer the largest possible total accumulated bandwidth in the satellite, equally distributedover a large geographical area. The main competitive advantages of these types of services are coverage area and a price that is often lower. From a mobility perspective, however, this service design has involved clear disadvantages in the form of relatively lower transmission speeds and a need for larger terminals on the ground. They are thus more difficult to manage for mobile solutions, take longer to install and the transmission speed is significantly lower than the one Ovzon offers.
It should be noted that GEO satellite communication always has priority over LEO satellites (refer to the section on LEO below), which means that if a disruption occurs from LEO satellites, the GEO satellites always take precedence. Compared with many other satellites, the new generation of GEO satellites – where Ovzon 3 is leading development – have more antennas with a large amount of targeted power. This means that data transmission capacity and rates are much higher. Ovzon 3 will also be delivered with a unique on-board processor (OBP), which will be the most advanced processor that a commercial company has launched into space.
Ovzon 3 will thus enable continued innovations of even smaller portable terminals on the ground with higher data rates, unbeatable flexibility and built-in security. The development of new types of applications that are not currently available in satellite communication, such as direct communication between two small terminals without needing to connect via a teleport, will also be on offer. This increases protection against disruptions and will result in unbroken communication even if the ground network and other communication alternatives are knocked out, and will reduce latency.
Low Earth Orbit (LEO)-based services
Over the last few years, low earth orbit (LEO) satellites have garnered attention in the industry. Major investments in the segment were made in 2019 and 2020, with several launches as a result. LEO satellites are smaller in size, and the business model is based specifically on having a larger number of smaller satellites that create a network. One example of a company that aims to build a global LEO network is SpaceX, with its Starlink satellites. To date, they have launched over 1,800 satellites. SpaceX aims to launch 40,000 satellites at an estimated cost of approximately SEK 400 billion. StarLink is designed primarily to provide high-speed internet – especially downlink speeds – initially for the consumer market. The service is targeted at consumers around the world who lack access to the internet, and in addition to other LEO projects competes with terrestrial internet and 4G/5G.
The Canadian company Telesat, which is already an established GEO player, announced several years ago that they intended to launch an LEO network with only around 300 satellites at a cost of approximately SEK 50 billion. In parallel, Amazon has initiated Project Kuiper and applied to launch over 3,000 LEO satellites. Another project, OneWeb, had sent up 72 satellites through March 2020, when they went bankrupt. The company re-emerged in late 2020 with newly invested capital and a reconstructed ownership group, and launched approximately 350 satellites in 2021. A new LEO company, AST Space Mobile, could potentially be considered to have the most audacious concept from a technological and regulatory perspective. They aim to launch satellites into an orbit 700 km over the Earth’s surface that will communicate directly with a regular mobile phone without extra equipment. However, the company announced
delays in 2021.
Challenges for LEO
The challenges for LEO systems are many. From a historical perspective, achieving profitability in these projects has proven difficult. There are fundamental obstacles that are in part based on the global nature of the LEO systems, and in part to the fact that large portions of the Earth are uninhab- ited and there are few to no potential paying customers on approximately 90 percent of the Earth’s surface. In parallel, the pace of continual expansion of the terrestrial communica- tion network is increasing. A number of similar LEO projects were launched in the early 2000s. Some were shut down before launch, while others such as Iridium, Orbcomm, ICO Global Communications and Globalstar later went bankrupt.
What is often ignored is that the LEO satellites must be replaced more frequently – up to every five years – since they are closer to Earth and are thus more affected by its gravitational pull. This can be compared with GEO satellites, which have a service life of approximately 15 years. In most cases, the investments referred to in LEO projects thus concern the initial investment.
There are other challenges as well – technical and regula- tory, for example – that have already been mentioned above. For example, GEO always has regulatory priority over LEO satellites, which means that LEO satellites have little to no protection if a disruption occurs.
A certain advantage of the LEO project is lower signal delay owing to the satellites’ proximity to Earth. Applications that have been highlighted to benefit from lower signal delay of this kind is computer gaming and equities trading. It should be noted, however, that passing through teleports/gateways and other satellites increases signal delay and also creates a risk of hacking.
Potential business partners for Ovzon
As mentioned previously, the investments in the LEO segment are large and developments are progressing both within the segment and for the industry as a whole. This is a positive for the entire satellite communication industry and its customers. Ovzon believes that, like previous ventures in the LEO segment, challenges remain for many of these ventures in scaling up in accordance with the plans that these opera- tors have communicated. If any of these projects are realized in accordance with plans, however, these LEO players and their services are an excellent complement and potential partners for Ovzon, which addresses other customer needs.
It is important to emphasize that Ovzon’s existing SATCOM- as-a-Service offering was not designed to provide internet to a consumer market in sparsely populated areas, even though the service can be used for these purposes as well. Ovzon’s SATCOM-as-a-Service is specifically designed for the most demanding customers and is used in critical situations where the capacity to provide the highest data rates – both sending and receiving – with the smallest portable terminals and a secure connection are primary and crucial.
The launch of Ovzon 3 creates additional delivery capacity and enables new revolutionary functions that are currently not available in the market. Moreover, the system is designed to function even during external digital attacks, for example, if for some reason terrestrial stations are eliminated, have stopped working or are taken out of operation entirely.
Ovzon’s choice of basing the company’s unique SATCOM- as-a-Service offering on GEO satellites has to do with the demands of the company’s customers for high-performance and integrated complete solutions. This means the company is in a unique position and has a brand in the markets it has chosen to operate in. Ovzon has always focused primarily on understanding its customers’ needs and requirements, today and in the future. Accordingly, the technology and innovation are designed and applied to deliver the best products and services.
The market for satellite communication continues to attract a great deal of venture capital and major investments via high- quality investors. This drives development rapidly forward and generates continual progress. Ovzon has a strong position as a leader owing to the company’s proximity to its customers. This, in combination with a great deal of foresight and the capacity for creating technological solutions as well as delivering a world leader in guaranteed communication via satellite, makes the company highly relevant for the selected markets. Ovzon is the only service provider that furnishes an integrated portfolio of products and services for high-performance satellite-based mobile communication.