World Satellite Business Week Conference: The Innovation of Software Defined Satellites
In September 2019, we visited the World Satellite Business Week in Paris, one of the industry’s premier events. During the conference, manufacturers and operators unveiled several new additions to the satellite landscape.
Among them, new low earth orbit (LEO) satellite systems with applications in the Internet of Things (IoT) and new medium earth orbit (MEO) counterparts being applied in global wireless communication systems. But, the most interesting announcement was of new Software-Defined satellite technology that has the potential to revolutionize large satellite manufacturing and stimulate market growth.
Introducing Software-Defined satellites
Traditionally, large geostationary satellite systems have been built for one specific purpose. Once launched, the tasks that they are configured to complete cannot be changed over their typical 10 to 15-year lifecycle. During these periods, market demands change and eventually these satellites become redundant. To meet our needs as they develop, new satellites were built and launched at great cost.
Until recently, this was a sustainable model. But, as the rate of change has accelerated, it is no longer financially viable to commission new satellites when it is highly likely that they will become redundant and require replacing in the near future. Now, manufacturers have found a solution to this problem.
Software-Defined satellites completely change the way that geostationary satellites deliver services to the earth. Now, engineers on the ground can alter the satellite system while it remains in orbit. This means that these large satellite systems now provide more flexibility, both in terms of ability to adapt to market demands and increased flexibility in fleet management for global and regional satellite operators.
Benefits and Challenges
This innovation will reduce the lifetime cost of commissioning large satellite systems and reduce schedule risk, making them an attractive proposition for investors. If companies are looking to use satellites, they are far more likely to invest when the opportunity creates long-term flexibility, thereby alleviating risk of the technology being undermined by changes in the market.
At FTL, we are interested in the risk management associated with large scale and perceived high-risk projects, such as launching satellites. When providing finance to companies completing this type of work, some risk has been mitigated, but these changes also present new and heightened cyber security concerns.
The ability to have functionality re-defined from earth’s surface is both a strength and a weakness of these new systems. Their malleability opens a significantly heightened threat of hacking. Therefore additional attention will need to be paid to cyber security and the related risk management. If the owner can edit the satellite, or upload new operating software, this means hackers will potentially be able to do the same. While hacking has always been a threat, this is a new twist to that risk that will have to be addressed through an increase in cyber security in groundwork operations.
The Satellite Market and FTL
Satellite manufacturers introduced the designs for the new software defined satellites at the conference with plans to have them operational and launched in approximately 3 to 4 years. We think that this will lead to an upturn in what has become a stagnant large satellite market.
At FTL, our team have decades of experience working in the aerospace industry and are aware of the cyclical nature of large satellite sales since the late 60s and early 70s. Therefore, we know that this paradigm shift of innovation will likely stimulate the sale of these large systems.
Satellites are no longer being built for a single purpose, as once they were, neither are they expected to remain fixed with one footprint. Now, as businesses are growing and becoming more dynamic, the companies that would previously have been put off by being locked into one system for fifteen years, are contributing to the growth of larger satellites that can adapt to their needs. This is an exciting innovation and we are intrigued to see how the software defined satellites develop in the near future.
FTL is a private equity firm providing capital to innovative high growth companies in the life science, industrial technology and energy industries. Learn more here.