heumega - dlr

HEUMEGA Independent trend analysis on megaconstellations

30 June 2021

HEUMEGA

Titel: HEUMEGA Version: 1.3

UnabHängige TrEndanalyse zUm Thema MEGAkonstellationen (HEUMEGA) – Independent Trend Analyses on the Topic of Megaconstellations Dear Sir or Madam,

We are very happy to receive your interest in the final report of HEUMEGA!

Some years ago, on satellite conferences or at the coffee tables next to the meeting rooms a lot of speculation

was ongoing on the realisation chances of megaconstellations. However, today we already register a huge

presence of constellations in the daily space business. Larger batches of satellites are being launched on a

regular basis and initial services are being offered.

This raises the question on how viable are the underlying business cases really? What is the status of the

technical challenges or the funding situation? Which chances can be derived for Germany in an European

context (and Europe) as a user or for its space ecosystem? These and further questions are subject to a deeper

investigation within the report. At this point we would like to take the opportunity to say thank you to the

contractor Universität der Bundeswehr München under the lead of Prof. Dr. Andreas Knopp and the

subcontractor Reder Engineering! The achieved results are very good starting points for the further

evaluation and for the presently evolving discourse.

We hope, the analysis provides you with interesting and enriching impulses and we are looking forward to

receive your feedback. For further exchanges, the persons in charge of technical matters of the activity at the

German Space Agency at DLR: Dr. Ralf Ewald ([email protected]) and Dr. David Futterer

([email protected]) are happy to engage into dialogue with you.

Sincerely

i.V. Dr. Björn Gütlich i.A. Dr. David Futterer Head of Satellite Communications

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Publishing information

Bundeswehr University Munich

Technology transfer agency ITIS GmbH

Faculty of Electrical Engineering and Information Technology Institute of Information Technology | SPACE Research Centre

Represented by: Professor Andreas Knopp, MBA

Werner-Heisenberg-Weg 39 | 85577 Neubiberg

[email protected] | +49 (0) 89 6004 7500

www.unibw.de/satcom

Reder Engineering GmbH

Harald Reder

Kapellenweg 9 D-88697 Bermatingen

[email protected]

+49 (0) 7544 501 2602

Contributors (in alphabetical order):

Dr. Thomas DELAMOTTE, M.Sc. Simon HEINE, Professor Christian HOFMANN, Professor Andreas KNOPP,

Dr. Marcus KNOPP, M.Sc. Kevin LI, Dipl.-Ing. (FH) Harald REDER, Dr.-Ing. Robert SCHWARZ, M.Eng. Florian

VÖLK

About the authors

Dr Andreas KNOPP is a Professor of Satellite Communications and holds the Chair of Information Processing

at Bundeswehr University Munich. He is also spokesman for the SPACE research centre, one of the largest

interdisciplinary research centres for space technology in Germany. He is a member of the Supervisory Board

of the DLR, a visiting professor at the Naval Postgraduate School, Monterey, CA (USA), a member of the

Technical Committee for Radio Systems in the VDE/ITG, and a senior member of the IEEE. He also holds an

MBA from the Gutenberg School of Business in Mainz. Professor Knopp advises the German Federal Ministry

of Defence on technological issues relating to space communication and has provided studies for various

federal and state ministries. Professor Knopp is a keen entrepreneur and co-founder of several start-up

companies as well as the author and co-author of 120 scientific publications and six patents.

Dr Christian HOFMANN is Junior Professor for Secure Space Communication at the Chair of Information

Processing at Bundeswehr University Munich. As an enthusiastic scientist and communications engineer, he

has worked on several ground-breaking developments in communications technology and has successfully

created a start-up out of his research. Professor Hofmann has also advised various companies, institutes and

ministries through studies and reports. He is a member of the VDE/ITG, the IEEE and the Space Research

Centre based at his university. Professor Hofmann is the author and co-author of over 40 scientific

publications and has five patents to his name.

Harald REDER is the Managing Director of Reder-Engineering GmbH. Reder-Engineering GmbH provides

technical and economic management consulting. Its customers include companies in the aerospace industry,

satellite operators and military organisations.

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I. Executive Summary

The independent trend analysis for megaconstellations (HEUMEGA) examines the technical and economic

aspects of these new communications systems. To this end, the Starlink, OneWeb, Kuiper, Telesat Lightspeed,

AST & Science SpaceMobile and KLEO Connect systems operating in Low Earth Orbit (LEO) and the O3B

mPOWER system operating in Medium Earth Orbit (MEO) were studied. For all systems – with the exception

of KLEO Connect – clear business models, stable financing and credible economic forecasts were derived using

publicly available information. For KLEO Connect, these could not be created because the information

obtained was insufficient.

The planned orbit designs for the systems reveal different service, customer and market segments in different

localised areas of interest. The company’s business models and respective corporate structures are just as

diverse. What all of the companies have in common is their efforts to cover large parts of the technological

value chain and product portfolio of megaconstellations, either through their own group of companies, or to

address them through resilient and long-term development partnerships. This also applies in particular to the

key technologies that have been identified in the trend analysis for the technical and economic success of the

constellations. These are the fields of antenna design, intersatellite links, network technology and routing with

optimised resource allocation, automation of flight operations and system management, and mass production

of cost-effective and highly integrated user terminals. A mixed picture emerges in the areas mentioned in

terms of the performance of the German space industry, which includes German system and market

leadership (intersatellite links) and a considerable technological lead on the part of competitors from the USA

(antenna technologies). If the export-oriented German supplier industry is to gain a significant market share

and successfully address the aforementioned value chains, it needs to develop a roadmap directed at the key

technologies, driven by its own European megaconstellation as a lead customer. The trend analysis provides

detailed suggestions, self-assessments by industry and information on the development budgets that will

prove necessary.

Access to an inexpensive launcher market is especially important for the commercial success of a

constellation. The partial reusability of launch vehicles offers massive cost advantages here, resulting in

average launch costs of less than 1000 euros per kilogram of payload mass. This benchmark will present a

major challenge for national microlauncher initiatives. At the same time, analyses show that, even with higher,

market-standard launch costs, a LEO constellation can compete and offer broadband internet access at a cost

that may be up to an order of magnitude lower than that of a Geostationary Earth Orbit (GEO) satellite. This

means that the potential of such constellations is moving into the domain of terrestrial telecommunications

connections. Factors in future success will include the low altitude of the orbits and a broad distribution of

customers on Earth, along with numerous other technical features that are the subject of intensive discussion

in this trend analysis, through modelling and simulation.

Megaconstellations are therefore an effective means of accelerating the expansion of broadband in Germany

and giving all households their ‘right to fast internet’. For that purpose, they need to be recognised as internet

service providers. However, since even constellations with a large number of satellites are only able to service

a very limited number of customers in densely populated regions with high demand, some constellations can

also prove economically successful by addressing additional customers outside of these regions. The

coexistence of commercial services and governmental, safety-critical applications in a single constellation will

not only secure and improve their economic efficiency, but also their environmental sustainability. This

provides the scope for cost-effective operations by Germany and Europe, which need their own

megaconstellation both to ensure freedom of information and to maintain their telecommunications industry

and access to the technologies.

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Securing frequency rights is vital as a strategic physical resource. Satellite networks will become part of the

sixth-generation mobile communications standard, so the aerospace industry will have to get involved in the

standardisation process and define its own research priorities. To this end, funding for space technologies will

have to be significantly expanded. Nonetheless, privately co-financed initiatives are also key to raising the

necessary development budget and maintaining the high level of agility required. Start-ups, SMEs and large

corporations must be equally able to develop and manufacture their products in the large quantities required,

and at competitive costs. If Germany and Europe act quickly and decisively, they can put themselves in a

position to gain market share and profit economically, despite the already noticeable technological lead of

non-European systems. The next opportunity for this will coincide with the first wave of renewals of the

satellites in constellations currently under construction, which will happen in approximately five to eight

years.

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II. Table of contents

I. EXECUTIVE SUMMARY 3

II. TABLE OF CONTENTS 5

Acronyms and abbreviations 8

1 INTRODUCTION 11

2 BACKGROUND TO THE TECHNICAL FEASIBILITY OF LEO CONSTELLATIONS 17

2.1 Basic principles: The constellation design and architecture of selected constellations 17

2.1.1 SpaceX Starlink 22

2.1.2 Amazon Kuiper 25

2.1.3 OneWeb 27

2.1.4 Telesat Lightspeed 29

2.1.5 AST&Science SpaceMobile 31

2.1.6 O3b mPower 33

2.1.7 KLEO Connect 36

2.1.8 Comparisons 36

2.1.9 Conclusion 38

2.2 Securing expertise in fields of technology with potential for success 39

2.2.1 Patent analysis 39

2.2.2 Antenna technology 41

2.2.3 Inter-satellite links 43

2.2.4 Network & routing 45

2.2.5 Automation 50

2.2.6 Roadmap for the integration of 5G/6G 52

2.2.7 Summary and status of the key technologies in Germany 53

2.3 5G/6G non-terrestrial networks using megaconstellations 54

2.3.1 Overview of standardisation activities 55

2.3.2 Summary of the previous NTN standardisation within 3GPP 56

2.3.3 Outlook on upcoming 5G NTN standardisation activities 59

2.4 6G NTN applications for megaconstellations 60

2.4.1 The 6G vision 61

2.4.2 Link budget analysis for NTN applications 64

2.4.3 Conclusion on 6G NTN using megaconstellations 66

2.5 Spotlight – sustainability aspects in LEO megaconstellations 66

2.5.1 The origins of space debris 66

2.5.2 Deorbiting scenarios for satellites in LEO 68

2.5.3 Conclusion on sustainability awareness for constellation operators 69

3 ECONOMIC ASPECTS 70

3.1 The market for megaconstellations 70

3.2 Market segmentation 71

3.3 Value creation chains 72 3.4 Considering megaconstellations from an economic perspective 73

3.4.1 Starlink (SpaceX) 74

3.4.2 Kuiper (Kuiper Systems LLC) 77

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3.4.3 OneWeb 80

3.4.4 Telesat Lightspeed 84

3.4.5 O3b mPower (SES) 87

3.4.6 AST SpaceMobile (AST SpaceMobile Inc.) 90

3.4.7 KLEO Connect 92

3.4.8 Conclusion 96

3.5 Selected cost aspects in the implementation of constellations 97

3.5.1 Launch costs 97

3.5.2 Satellite costs 104

3.6 Competitiveness of megaconstellations 107

3.7 Megaconstellations in China 110

3.8 Military use of megaconstellations 113

4 ANALYSIS OF THE PRODUCTION COSTS OF BROADBAND SERVICES 117

4.1 How many satellites does a LEO constellation need? 117

4.1.1 Protecting the geostationary orbit 118

4.1.2 Minimum number of satellites 120

4.2 Addressability – time-based accessibility for clients via a LEO satellite 122

4.3 Satellite systems in comparison 128

4.3.1 Overview of the results 128

4.3.2 LEO constellations 130

4.3.3 MEO systems 134

4.3.4 Fully occupied MEO orbit 137

4.3.5 GEO HTS 139

4.4 GEO/MEO/LEO cost comparison 142

4.5 Customer numbers and area covered by LEO constellations 144

4.5.1 Supply in Germany 146

4.6 Summary 147

4.7 Side note: Discussion of pricing for broadband options with megaconstellations 148

4.7.1 Budget theory principles 149

4.7.2 Conclusions for the pricing of megaconstellations 151

5 OPPORTUNITIES FOR GERMANY AS A USER OF MEGACONSTELLATIONS 155

5.1 Overview of possible areas of application 155

5.1.1 Smart farming 155

5.1.2 Autonomous driving 156

5.1.3 Industry 4.0 and IoT applications 156

5.1.4 Smart cities and smart grids 157

5.1.5 Broadband applications 158

5.2 Qualitative comparison of megaconstellations 158

5.3 Terrestrial broadband networks 161

5.4 5G mobile network expansion 164

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5.5 Official communications 166

5.6 Price comparison between Starlink and German landline, cable network and mobile connections

166

5.7 Conclusion 171

6 OPPORTUNITIES FOR GERMANY AS AN INDUSTRY IN THE MEGACONSTELLATIONS MARKET 174

6.1 Economic environment 174

6.1.1 Macroeconomic influencing variables and environmental factors 174

6.1.2 Sector structural analysis from the perspective of the supplier industry 176

6.2 Positioning of the German space industry 178

6.2.1 Procedure and basis for data 178

6.2.2 Assessment of the key technologies 179

6.2.3 Interests and competencies of the German space industry 180

6.2.4 Key technologies & budget forecasts 181

6.2.5 Economic factors 182

6.2.6 Strategies for entering the megaconstellations market 185

6.3 Results of analysis 186

7 RECOMMENDED ACTIONS AND OUTLOOK 189

8 BIBLIOGRAPHY 192

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Acronyms and abbreviations

Abbreviation Description

2G/3G/4G/5G/6G 2nd/3rd/4th/5th/6th-generation mobile communications standard

3GPP 3rd-generation partnership project

5G CN 5G Core Network

AGTA Telecommunications Working Group at the German Space Agency at DLR

AR Augmented reality

ATP Acquisition, tracking and pointing

AWS Amazon Web Services

B2B Business to business

BDBOS

Federal Agency for Public Safety Digital Radio

BDI Federation of German Industries

BMBF German Federal Ministry of Education and Research

BOS Security authorities and organisations

BSS Broadcasting satellite service

CAPEX Capital expenditure

CATV Cable television

DLR German Aerospace Center

DoD Department of Defence

DRA Direct radiating arrays

DSL Digital subscriber line

DVB Digital video broadcasting

EIRP Effective Isotropic Radiated Power

EOL End-of-life

ES Earth station

ESA European Space Agency

ESSB-HB-U-002 Space Debris Mitigation Compliance Verification Guidelines

ETSI European Telecommunications Standards Institute

FCC Federal Communications Commission

R&D Research & development

FoV Field of view

FSS Fixed-satellite service

FTTB/H Fibre to the building/home

G/T Gain-to-noise-temperature

Gbps Gigabits per second

GEO Geostationary Earth orbit

GM Gross margin

gNB Next Generation NodeB

GNI Gross national income

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GP Gross profit

GPS Global Positioning System

HPA High power amplifier

HTS High throughput satellites

IESS Intelsat Earth Station Standards

IoT Internet of Things

ISL Inter-satellite links

ISP Internet service provider

ISS International Space Station

ITU International Telecommunication Union

JV Joint venture

AI Artificial intelligence

SMEs Small and medium-sized enterprises

LCT Laser communication terminal

LEO Low Earth orbit

LoRa Long range

LOS Line of sight

LPWAN Low-power wide area networks

M2M Machine to machine

Mbps Megabits per second

MDA MacDonald Dettwiler

MEO Medium Earth orbit

MIMO Multiple-input multiple-output

MIOTY Miniaturised Internet of Things sensor network

ML Machine learning

NB-IoT Narrowband Internet of Things

NFV Network functions virtualisation

NGSO Non-geostationary orbit

NTN Non-terrestrial network

O-ISL Optical inter-satellite links

OPEX Operational expenditure

PNT Positioning, navigation and timing

PoE Power-over-ethernet

PPP Purchasing power parity

Q1/2/3/4 1st/2nd/3rd/4th quarter

QoE Quality of experience

QoS Quality of service

RAN Radio access network

RDOF Rural Digital Opportunity Fund

RF-ISL Radio frequency inter-satellite links

RTT Round trip time

SA 3GPP technical specification group service and system aspects

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Satcom Satellite communications

Sat-mBS Satellite-connected mobile base station

SDA Space Development Agency

SDN Software-defined networking

Tbps Terabits per second

TKG Telecommunications Act (Telekommunikationsgesetz)

TLE Two-line element

TSG 3GPP Technical Specification Group

TT&C Telemetry, tracking and command/control

UCSS Unipolar-coded Chirp-Spread Spectrum

UE User equipment

ULA United Launch Alliance

UniBwM Bundeswehr University Munich

USD United States dollar

VDSL Very high speed digital subscriber line

VHTS Very high throughput satellite

VLEO Very low Earth orbit

VR Virtual reality

VSAT Very small aperture terminals

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1 Introduction

Satellite constellations, and megaconstellations in particular, are currently receiving significant public

attention. They represent a shift in space-based activities towards the involvement of private investors and

New Space. OneWeb triggered the enthusiasm about megaconstellations in 2012 and became the driving force

behind the planning of numerous constellations such as Starlink and Kuiper. In spring 2020, OneWeb had to

file for bankruptcy and apply to commence a restructuring or reorganisation process (‘Chapter 11’) under US

bankruptcy law. OneWeb was up for sale and the British government saw this as an opportunity to, together

with partners, acquire shares in the company to restructure it and resume operations, thus positioning itself

in the New Space economy. It is therefore logical that policymakers and industry are continually keen to

ascertain the status and future of megaconstellations, as they are looking to assess their own options for action

and position Germany strategically for the future of space-based operations in the telecommunications sector.

The opportunities that megaconstellations likely present to the general public are obvious. It is hoped that

constellations will create new possibilities for the fast, area-wide connection of under-supplied regions,

coupled with low latency, as has come to be expected from terrestrial networks. The Internet of Things (IoT)

offers further opportunities for machine communications and the networking of sensors and devices. The focus

is on the entire range of conceivable applications and services, whether it be in the field of industrial

networking, agriculture, modern mobility solutions or in the air transport sector.

Further progress in terrestrial mobile networks, which really began at the end of the development phase for

the 5G communications standard and will finally be manifested in the subsequent 6G mobile standard, are

particularly beneficial for space-based telecommunications. Standardisation of 5G by the 3rd-Generation

Partnership Project (3GPP) explicitly provides for the use of satellites for communications by the Internet of

Things (IoT) in the latest 5G iteration (Release 17), thus opening up a field for the application of satellite

communications that represents a historic opportunity for a massive increase in the potential customer and

user base. In contrast to earlier generations of mobile communications, communications networks are now

entering their ‘third spatial dimension’. In this scenario, aircraft, high-altitude platforms and satellites in

different orbits are inherent components of mobile communications systems, so they are being given due

consideration in the drafting of new standards (see Figure 1-1). They offer opportunities for new global

services. Rather than simply remaining as alternatives to terrestrial mobile radio systems, they are now

important complementors, for example in meeting bandwidth and latency requirements or cost-effective IoT

services to the desired extent.1

1 Knopp, Andreas. Shaping the Future of Satellite Communications. in: Munich Aerospace e.V. (ed.). Munich Aerospace Report: New Horizons in Space

Technology. 2020. No. 30/04/2020. pp. 83–89.

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FIGURE 1-1: SATELLITES IN THE 6G MOBILE NETWORK2

Another new feature introduced by Starlink, the most successful and powerful private megaconstellation to

date, is a launch segment with its own launch vehicle, provided by parent company SpaceX. This significantly

taxpayer-financed and unique technological feature is widely regarded as the key to the economically

competitive development of space for telecommunications applications in the mass market and is a significant

factor in Starlink’s technological leadership. A user terminal is now also available on the market which is setting

new standards for other systems with its price and performance. Against this backdrop, the issue of economic

prospects for success and the added value or unique selling point of other constellations becomes relevant,

with the result that Europe and Germany, like many other nations, initially reacted cautiously to these systems

and have already lost time as a result.

Since then, however, the macroeconomic environment has changed significantly, and with it the view of such

megaconstellations, at least since the move by EU Commissioner for the Internal Market, Thierry Breton, to

seriously consider a European megaconstellation. This advance is driven not only by the economic

opportunities or possibilities for the digitalisation of Europe, but also by concerns about freedom of

information and the dominance of US technology groups in the media supply market3. Satellite constellations

are not just coming into focus as a new economic sector, but also becoming critical infrastructure of particular

significance in order to avoid an ‘imminent trend towards the concentration of economic – and consequently

political – power’ in the hands of private companies4. It is clear that private megaconstellations are no longer

focusing solely on business activities involving broadband services and internet connections. In future they will

be geared towards the profitability generated by complex service portfolios in which the content transmitted

via their networks contributes significantly to the company’s success. The focus is on all services that

2 Wang, P., Zhang, J., Zhang, X., Yan, Z., Evans, B.G., Wang, W. “Convergence of Satellite and Terrestrial Networks: A Comprehensive Survey”(2020)

IEEE Access, 8, art. no. 8946626, pp. 5550–5588. The work is licensed under a Creative Commons Attribution 4.0 License.

3 Cf. SWP study https://www.swp-berlin.org/10.18449/2021S02/ (accessed on 30/05/2021)

4 D. Sürig, ‘Europäisches Breitband aus dem All, Eine Studie empfiehlt der Bundesregierung, sich für ein Internet-Satellitennetz der EU einzusetzen’,

Süddeutsche Zeitung, no. 26, 2 February 2021.

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might possibly add value, particularly the dissemination of information and entertainment content such as

video or social media, which can be very well supported with new advertising offers. As a consequence, in stark

contrast to earlier initiatives in Low Earth Orbit, capital-intensive megaconstellations may no longer be

profitable on their own, as the margins are earned elsewhere5. This new perspective on business models for

megaconstellations and how they relate to threats to information sovereignty will have a lasting impact on

European space strategy. Now, it will not only be a matter of making the European supplier industry fit for a

new, price-sensitive market or to reposition it, but rather building up a complete system capability that not

only includes the construction of satellites, but also their launch and operation. It is precisely the high level of

capital investment required for this that will require cooperation between the public sector and private

industry. Europe has some catching up to do here, as is amply clear when we compare the US private capital

investment of 5.1 billion dollars with the 188 million euro equivalent in Europe up until now6.

Overall, megaconstellations represent a new opportunity for an export-oriented national economy, while at

the same time threatening the existing value chains for established geostationary satellite operators and their

supplier industry alike. Germany is particularly well positioned in the supply industry and is home to numerous

world market leaders for certain technologies among its SMEs. Correctly setting up this efficient industrial

environment, which has grown over decades, for the New Space economy of the future is now up to

policymakers and businesses at both the national and European level. One especially typical feature of New

Space is that, due to completely changed requirements for the implementation times and costs for space

systems, many of the established business models must be questioned and changed. This will only be possible

if the market is also opened up to new participants from branches of industry that were previously far removed

from space, especially in the areas of manufacturing, the semiconductor industry and software development,

who can contribute their processes and experience. New technologies such as machine learning and artificial

intelligence can also be developed, primarily with young technology companies and start-ups that are closely

connected to the scientific world and actively implement streamlined development methods. At this juncture,

too, a major rethink on the part of the space industry seems necessary, as is shown by recent developments

and criticism in the context of the planned European megaconstellation7. The integration of the user side will

also open up new opportunities in areas where Germany is already strong, and which are of utmost importance

for the German people. The German automotive industry has recently shown great interest in

megaconstellations, as it is looking towards new digital services and feels especially under pressure from US

vehicle manufacturer Tesla, which can easily integrate such services into its electric vehicles via Starlink8. It is

reported, for example, that individual manufacturers from the premium segment expect sales of around five

billion euros from data transfer between their vehicles. They regard passenger transport between urban and

rural areas as a particularly interesting application harbours potential for satellite services9. This

5 C. Daehnick, I. Klinghoffer, B. Maritz and B. Wiseman, ‘Large LEO satellite constellations: Will it be different this time?,’ McKinsey & Company, 2020. 6 J. Aschbacher, ‘Deutsche Fähigkeiten Satellitenkommunikation aus europäischer Perspektive’, keynote speech, DLR National Conference

on Satellite Communications in Germany 2021, 18 May 2021 (virtual).

7 L. Holzki, A. Höpner, T. Jahn, ‘EU plant Satellitensystem - fast ohne deutsche Firmen Beim EU-Großvorhaben "Internet aus dem All" kommt die junge deutsche Raumfahrtindustrie nicht zum Zug. Die Start-ups arbeiten daher an einem Gegenprojekt’, Handelsblatt, no. 037, 23/02/2021.

8 T. STÖLZEL, M. SEIWERT, ‘Wie Nespresso, nur galaktischer. Nach dem Umstieg auf E-Autos will Volkswagen nun sein gesamtes Geschäftsmodell auf den Kopf stellen: Die Gewinne bringen Softwareanwendungen, nicht der Verkauf von Autos. Alle Kunden fahren autonom – und vernetzt über Satelliten.’, Wirtschaftswoche 9, 26/02/2021.

9 J. Katzek (ACOD), ‘Breitband und 5G Integration des Satelliten in terrestrische Netze’, panel discussion, DLR National Conference on Satellite Communications in Germany 2021, 18 May 2021 (virtual).

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strong user side can drive developments in the space industry forward and promote new technological

advances.

Goals and tasks of the trend analysis

The HEUMEGA report initially set out to shed a light on megaconstellations as a whole, based on technical and

economic factors, and thus sum up the current situation. In terms of the technology, it makes sense to examine

the maturity of the constellations under development and determine which technologies will prove key to

economic success. The economic aspect involved an analysis of the business models and the funding status. In

terms of a ‘360-degree analysis’, the opportunities for Germany as a user of satellite-based services were

recorded after the status quo had been ascertained. The opportunities for the German space industry in the

context of the New Space economy were then added to the overall picture.

Demarcation

No analysis or assessments of the suitability or future viability of business models in the New Space economy

were carried out for the German or European space industry as part of this trend analysis. The current strategy

of promoting technology at national institutions such as the German Space Agency at DLR was not analysed or

evaluated either. Frequency and orbit regulation were not analysed, so no assessment can be made as to

whether the megaconstellations, products and services currently being developed will actually be feasible from

a regulatory perspective. For our purposes, we have assumed that the relevant frequency registrations

correctly reflect the state of affairs. In the model constellations that we developed as examples, we also did

not consider the aspect of frequency coordination or the associated power limitations, but this is irrelevant for

our statements and deductions. In addition, the focus was not on detailed studies of the sustainability aspects

of spaceflight, such as the threats posed by space debris.

Structure

The trend analysis is broken down as follows (see Figure 1-2):

Chapter 2 outlines the technological aspects of the megaconstellations considered here with their core

properties, features and modes of operation on the basis of international registration documents, press

releases and expert interviews. Additional analysis of patents and literature research also provides information

about the key technologies of megaconstellations and offers an outlook regarding the integration of satellites

into the existing 5G and future 6G communications network.

Chapter 3 describes the economic aspects of the megaconstellations with the help of analyses of the

constellation operating companies. Industry structures and competitive factors are examined and the

economic viability of the business models is analysed. Particular attention is paid to the impact of the launch

and satellite costs, as these are strategically important factors for Germany. Chapter 3 should therefore be

understood as a ‘top-down analysis’ based on the figures and the selling prices of the megaconstellations.

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Chapter 4 contrasts Chapter 3 with a ‘bottom-up analysis’ of the cost structure of megaconstellations. When

economic elasticity indicators are taken into consideration, the impact of technological progress on the

previously identified key technologies becomes clear. The chapter closes with a cost comparison between the

megaconstellations and other satellite-based broadband options. This comparison is accompanied by scientific

price theory considerations in order to classify the current price structure and thus create connections with

the selling prices from Chapter 3.

Chapter 5 deals with the benefits of megaconstellations for the German population as users and consumers of

satellite-based broadband services. The main focus is on developing a nationwide broadband network, but

also on integrating it into terrestrial mobile communications standards.

Chapter 6 addresses the German space industry. For this purpose, competition within the industry is first

extended to macroeconomic aspects in order to examine important external factors. Industry competition is

analysed and the changing role of suppliers defined. Further studies provide information about strategies for

investing in key technologies.

Chapter 7 concludes the trend analysis with 10 specific recommendations for action for the German Space

Agency at DLR and the responsible ministries.

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FIGURE 1-2: TREND ANALYSIS STRUCTURE

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2 Background to the technical feasibility of LEO constellations

This chapter serves as an introduction to LEO megaconstellations from a technical perspective. It provides a

condensed overview of technical parameters, pinpoints key technologies and reveals the potential of

megaconstellations in future radio standards. Readers who are still unfamiliar with the field of

megaconstellations are given a quick rundown in this chapter.

2.1 Basic principles: Constellation design and architecture of selected

constellations

This section presents the six most advanced megaconstellations in terms of technical and market maturity –

SpaceX Starlink, OneWeb, Amazon Project Kuiper, Telesat Lightspeed, AST & Science SpaceMobile, and O3B

mPower. It also includes the start-up KLEO Connect, which is the only German company looking to establish

and operate a satellite constellation in Low Earth Orbit. This chapter provides an overview of the design and

architecture of a megaconstellation, as well as introducing the terminology and parameters required for the

calculations found in the following chapters.

The architecture and design of a satellite constellation are mainly determined by the intended field of

application. In the case of LEO and MEO constellations, which we will examine in greater detail in this trend

analysis, this is primarily the global provision of internet access with high data rates.

FIGURE 2-1: OVERVIEW OF THE CONSTELLATIONS COVERED IN THIS TREND ANALYSIS

The International Telecommunication Union (ITU) manages the worldwide use of the radio-frequency

spectrum and is therefore responsible for the certifications of communication satellite systems.

Megaconstellation operators must register their systems (networks) via national regulatory authorities. This

is the FCC in the USA and the Federal Network Agency in Germany. The decisive factor for this is the date of

receipt of the application, as it works on a first come, first served basis. After the coordination discussions

have been carried out, the procedure is concluded with the notification (the granting of the right of use) to

the national regulatory authority making the request, which then transfers the right of use to the requesting

company.

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Figure 2-1 lists the filings (rights of use) of the megaconstellations from the ITU database that are examined

in greater detail in this trend analysis. Further information gleaned from specialist articles and internet

research round out the analysis of the individual constellations.

TABLE 2-1: ITU FILINGS SUBDIVIDED INTO DIFFERENT ORBITAL SHELLS

Constellation Orbital shell Number of satellites

Per shell Total

O3B O3B 3rd-gen (modified) - 0° incl. 8062 km alt. 10 34

O3B 3rd-gen (modified) - 90° incl. 8052 km alt. 24 Telesat Telesat LEO (modified) - 98.98° incl. 1015 km alt. 78 298

Telesat LEO (modified) - 50.88° incl. 1325 km alt. 220 Telesat VLEO Telesat VLEO (modified) - 37.4° incl. 1284 km alt. 45 117

Telesat VLEO (modified) - 99.5° incl. 1000 km alt. 72

Amazon Kuiper Amazon Kuiper – 33° incl. 590 km alt. 784 3236

Amazon Kuiper – 42° incl. 610 km alt. 1296

Amazon Kuiper – 51.9° incl. 630 km alt. 1156 Starlink SpaceX Starlink - 53° incl. 550 km alt. 1584 4409

SpaceX Starlink - 53.8° incl. 1110 km alt. 1600

SpaceX Starlink - 74° incl. 1130 km alt. 400



SpaceX VLEO SpaceX VLEO – 53° incl. 345.6 km alt. 2550 7500

SpaceX VLEO – 48° incl. 340.8 km alt. 2450

SpaceX VLEO – 42° incl. 335.9 km alt. 2500

OneWeb OneWeb – 87.9° incl. 1207 km alt. 660 1980

OneWeb phase2 - 87.9° incl. 1207 km alt. 1320

AST & Science AST & Science - 40° incl. 730 km alt. 15 240

A satellite’s orbit describes its movement around the Earth. In general, a distinction is drawn between Low

Earth Orbit (LEO), Medium Earth Orbit (MEO) and the Geostationary Earth Orbit (GEO) based on the distance

from the Earth’s surface. The choice of an orbit when planning a megaconstellation is determined, among

other things, by the foreseen applications (services) and the footprints to be implemented on the ground.

LEO comprises orbits ranging from 200 to 2000 kilometres from the Earth’s surface. Satellites in LEO move

around our planet at 7–8 kilometres per second. Its proximity to Earth makes LEO ideal for Earth observation

activities, weather satellites and broadband telecommunication services. The International Space Station

(ISS) and the majority of the planned megaconstellations examined in this trend analysis are in Low Earth

Orbit.

Satellites in higher orbits that can no longer be considered LEO but are not geostationary either are in Medium

Earth Orbit. This is currently mainly used by navigation satellites such as GPS, Galileo and GLONASS.

Communications satellites such as Globalstar and the O3B mPower constellation covered in this trend analysis

are in this orbit.

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Geostationary orbit is located at an altitude of 35,786 kilometres above the Earth's surface. It is a circular orbit

with an inclination of zero degrees, moving in an easterly direction. To an observer on Earth, a satellite in

geostationary orbit appears to be stationary in the sky, as they are both rotating around the Earth’s axis at

the same angular velocity. This makes GEO particularly suitable for broadcast applications, as a user only has

to point the antenna towards a fixed point once.

Figure 2-2 shows an example of a shell for the selected constellations, indicating the altitude and inclination.

FIGURE 2-2: MEGACONSTELLATIONS IN LOW EARTH ORBIT10

Certain satellite orbit parameters – the six orbital elements – are necessary to fully characterise a satellite

orbit. These are based on Kepler’s laws of planetary motion (see Figure 2-3).

Six orbital elements that describe an orbit:

• Semimajor axis (a)

• Eccentricity (ε): e/a ratio of linear eccentricity to the semimajor axis.

• Inclination (i): Angle between the equatorial and orbital plane. Values range between 0° and 180°.

• Right ascension/longitude of the ascending node Ω: Angle between the vernal equinox and the

point at which the orbit crosses the equatorial plane (moving north). Values range between 0°

and 360°.

• Argument of perigee (ω): angle of the ascending node to the perigee

10 Northern Sky Research (NSR), Non-GEO Constellations Analysis Toolkit, Version 08/2020.

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• Anomaly at epoch (v)

These parameters can be found in modified form in the two-line element (TLE) format, which can be regarded

as the standard for describing the position and orbit of a satellite in orbit. This makes it possible to identify,

observe and monitor launched satellites.

Inclination and amplitude are of particular importance when drawing a distinction between different shells

within a constellation. Depending on the design, a constellation may have several shells with a corresponding

number of satellites. All of the satellites within the individual shells make up a constellation.

The parameters presented set out the physical basis for calculations and simulations in the course of the

trend analysis. For each constellation considered, we calculate important key figures such as duration of

overflight, coverage areas, users reached, data throughput, etc.

FIGURE 2-3: ELEMENTS FOR DESCRIBING A SATELLITE ORBIT11

11 Cf. Ellipse orbit element: in: Wikimedia Commons, 2014, https://commons.wikimedia.org/wiki/File:BahnelementeEllipse.svg (accessed on

13/04/2021).

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FIGURE 2-4: DISPLAY OF A STARLINK SATELLITE FLIGHT AND THE ASSOCIATED PARAMETERS

TABLE 2-2: CALCULATED PARAMETERS FOR THE SCENARIO IN FIGURE 2-4

Shell SpaceX Starlink – 53° incl. 550 km alt.

Satellite overpass time 4.1 min

Orbit type & inclination Inclined, 53°

Max. latitude reached 61° N/S

Number of orbital planes 72

Satellites per plane 22

Total satellites per shell 1584

A shell of the SpaceX Starlink constellation is shown above (see Figure 2-4) by way of example, with the

parameters necessary for characterisation. An orbital shell comprises several satellites on one plane and is

characterised by the altitude and angle of inclination. The orbital inclination and altitude limit the maximum

degree of latitude that a constellation can reach. As such, LEO shells with an inclination of less than 70 degrees

can no longer offer real global coverage.

The size of a communication satellite's field of view (FOV), which indicates the area on the Earth's surface

that the satellite can cover from its orbit, is crucial for its operation. Like a beam of light, the satellite bundles

the emitted radio signal into a ‘satellite beam’, which is shaped according to the radiation pattern of its

antenna. The area where the beam intersects with the Earth's surface is referred to as the beam footprint,

which is shown as a circle or ellipse and more accurately indicated by a radius.

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The minimum elevation angle is the angle of elevation at which, for example, a parabolic antenna must be

pointed in order to still be able to receive the satellite signal at the edge of the footprint zone. There must be

no obstacles such as buildings or trees in the line of sight between the user terminals and the satellites.

The term ‘slant range’ is the line-of-sight distance between two points that are not at the same height relative

to a reference point. In satellite communications, this is the distance from the satellite to the outer edge of

its footprint on the Earth's surface.

The satellite’s flight velocity is a measure of how fast it moves in its orbit around the Earth. It is specified in

metres per second and allows the overpass – the period of visibility of the satellite at a user’s location – to be

calculated.

The technical parameters of the selected megaconstellations are examined more closely, compared and

graphically presented below. To avoid constant repetition of recurring characteristics we examine the unique

characteristics of each satellite in greater depth.

2.1.1 SpaceX Starlink

Starlink is a satellite network developed and operated by the US spaceflight company SpaceX designed to

offer end users worldwide internet access in future. SpaceX has been granted permission to launch 11,927

satellites into Low Earth Orbit (LEO) by 2027. The company has filed paperwork to launch up to 30,000

additional Starlink satellites.

So far, SpaceX has launched around 1500 Starlink satellites (as of 2021)12 using its Falcon 9 rocket, and put

them into orbit at an altitude of between 540 kilometres and 1300 kilometres. A licence change approved by

the Federal Communications Commission (FCC) on 27 April 2021 allows SpaceX a total of 2814 satellites,

originally planned for higher orbits, at orbit heights of 540 to 570 kilometres. This gives SpaceX the opportunity

to further optimise its constellation from an orbital mechanical perspective in order to be able to provide high

data rates in the future. The minimum elevation angle with which a Starlink user terminal can be operated is

just under 25 degrees, so areas over 61 degrees latitude cannot be reached in the first phase (see

yellow/orange routes in Figure 2-7).

In the current beta test phase, Starlink is achieving data rates of 40–93 Mbps in the USA13 and average

latency of 31 ms up to 88 ms. SpaceX, by contrast, predicts data rates of 300 Mbps and latencies of

around 20 ms for the end user with its fully developed megaconstellation.14 Starlink can achieve its

goals primarily through the use of optical inter-satellite links. Scientific studies show that the Starlink

constellation benefits most from the use of ISLs (inter-satellite links), especially since this can drastically reduce

the number of gateway stations required.15 The special status of inter-satellite links for the establishment of

future megaconstellations is also discussed in 2.2.3.

12 Cf. Foust, Jeff: SpaceX continues Starlink deployment with latest launch, in: SpaceNews, 04/05/2021, https://spacenews.com/spacex-continues- starlink-deployment-with-latest-launch/ (accessed on 20/05/2021).

13 Cf. McKetta, Isla: Starlink: Bridging the Digital Divide or Shooting for the Stars?, in: Speedtest Stories & Analysis: Data-driven articles on internet speeds, 17/05/2021, https://www.speedtest.net/insights/blog/starlink-q1-2021/ (accessed am 20/05/2021).

14 Cf. Crist, Ry: Elon Musk: SpaceX will double Starlink’s satellite internet speeds in 2021, in: CNET, 22/02/2021, https://www.cnet.com/home/internet/elon-musk-spacex-will-double-starlinks-satellite-internet-speeds-in-2021/ (accessed on 20/05/2021).

15 del Portillo, I., Cameron, B. G., & Crawley, E. F. (2019). A technical comparison of three low earth orbit satellite constellation systems to provide global broadband. Acta Astronautica, 159, 123–135.

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SpaceX is creating its own user terminal for the Starlink network, which can be purchased as part of the beta

test phase (see Figure 2-5). Since the start of the test phase in October 2020, SpaceX has put 10,000 of these

user terminals into operation and reservations have been made for around 500,000 terminals as of May

2021.16 The user terminal, which measures roughly 60 centimetres in diameter, is equipped with a phased

array antenna with an integrated modem and supplied with operating voltage via a 90-watt power-over-

ethernet (PoE) connection. Beta test users are tied to a specific service area, called a cell. If the Starlink

terminal is outside the cell range, the service is stopped. The antenna is geographically assigned via an

integrated GPS receiver, which provides the location data during operation. A large fanbase has formed

around SpaceX and the associated Starlink programme over recent years, thoroughly documenting and

discussing the progress of the project in relevant forums. In the process, the Starlink user terminal has already

been completely disassembled and analysed.17

Also worth mentioning are the Starlink user terminal’s built-in application processors and radio front-end

units. Both were manufactured by the Switzerland-based electronics and semiconductor manufacturer

STMicroelectronics. These microprocessors are thought to be derivatives of the STMicroelectronics product

range specially designed for SpaceX.18

FIGURE 2-5: STARLINK USER TERMINAL

Figure 2-6 shows the number of satellites within the ‘visibility cone’ of a user terminal, based on location

latitude and the minimum elevation angle at which the user terminal is allowed to operate. The satellites of

all of the shells of the previously authorised Starlink filings have been summarised in one graphic. This type of

graphical representation of the number of lines of sight to the satellites is also used in the following sections

that discuss the other constellations.

16 Rixecker, Kim: SpaceX: Halbe Million Vorbestellungen für Starlink, in: t3n magazine, 05/05/2021, https://t3n.de/news/starlink-spacex-halbe-million-

elon-musk-1376915/ (accessed on 20/05/2021).

17 Brodkin, Jon: Teardown of “Dishy McFlatface,” the SpaceX Starlink user terminal, in: Ars Technica, 02.12.2020, https://arstechnica.com/information- technology/2020/12/teardown-of-dishy-mcflatface-the-spacex-starlink-user-terminal/ (accessed on 21/05/2021).

18 Brodkin, 2020.

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FIGURE 2-6: NUMBER OF SATELLITES IN THE FIELD OF VIEW OF THE SPACE-X STARLINK CONSTELLATION USER TERMINAL BY

LATITUDE19

FIGURE 2-7: SATELLITE ORBITS OF THE ENTIRE STARLINK CONSTELLATION PROJECTED ONTO THE EARTH’S SURFACE20



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2.1.2 Amazon Kuiper

Project Kuiper is a constellation of communications satellites from internet company Amazon. The project is

still in its early stages and has not yet launched any satellites into space. The long-term plan is to have 3236

satellites in orbit between 590 and 630 kilometres in Low Earth Orbit, providing global broadband internet

access.

When comparing the number of satellites in the field of view in Figure 2-8 with that of Starlink, a similar

progression of the curve can easily be seen. Amazon’s constellation is also designed to cover certain latitudes

of the Earth better than others by using a larger number of satellites. There is a concentration of satellites

around the 35th parallel (north & south). From the 60th parallel, however, there are no more Amazon

satellites in line of sight, as can be seen in Figure 2-9 with a projection onto the Earth’s surface.

Little is publicly known about the Amazon Kuiper user terminal. All that exists is the drawing of a phased array

antenna shown in Figure 2-10, with both transmission and reception functionality. Amazon claims to have

developed the antenna itself. As such, it is taking a similar approach to SpaceX, whose Starlink terminal has

also been developed and manufactured in-house.

The antenna prototype has a data transmission rate of up to 400 Mbps. The form factor of 30 centimetres in

diameter is due to the choice of the Ka-band for the user link, and leads to a more compact antenna design

than that of conventional commercial providers. The reduced size and complexity makes it possible for

Amazon to lower production costs and contributes to the company’s stated goal of providing customers with

an end device that is affordable and easy to install.21

A key advancement was the combination of transmit and receive phased-array antennas into one aperture.

This can be done in other frequency bands, but Project Kuiper plans to operate in Ka-Band, which has transmit

and receive frequencies that are much further apart from one another than in the Ku-band. This makes it

difficult to combine transmit and receive into one aperture. Phased arrays are a class of radiating system,

where multiple antennas are on the same aperture, creating a focused beam of radio waves. The distance

together, as in the Ku-band, you can easily combine the transmit and receive function into one. However, if

the frequencies are further apart, as in the Ka-band, it is much more difficult to use the same lattice for both

transmit and receive signals. Amazon has apparently succeeded in combining both: a frequency band of 28.5–

29.1 GHz in the uplink and a frequency band of 17.7–19.3 GHz in the downlink.22

21 Cf. Nima Mahanfar discusses the science behind Project Kuiper customer terminal antenna: in: Amazon Science, 21.12.2020,

https://www.amazon.science/latest-news/nima-mahanfar-discusses-the-science-behind-project-kuiper-customer-terminal-antenna (accessed on 24/05/2021).

22 Cf. Nima Mahanfar discusses the science behind Project Kuiper customer terminal antenna:

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FIGURE 2-8: NUMBER OF SATELLITES IN THE FIELD OF VIEW OF THE AMAZON KUIPER CONSTELLATION USER TERMINAL BY LATITUDE23

FIGURE 2-9: SATELLITE ORBITS OF THE ENTIRE AMAZON KUIPER CONSTELLATION PROJECTED ONTO THE EARTH’S SURFACE24



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FIGURE 2-10: DRAWING OF AMAZON KUIPER’S PHASED-ARRAY ANTENNA25

2.1.3 OneWeb

OneWeb, a UK company, plans to provide worldwide broadband internet services with an initial 650 satellites.

Due to funding difficulties, OneWeb filed for bankruptcy protection at the end of March 2020 and laid off

most of its employees, but kept the satellite operations centre for the 68 satellites already in orbit. An

investment of over one billion UD dollars26, led by the UK government and Indian conglomerate Bharti Global,

helped OneWeb exit bankruptcy in November 2020.

A special feature of the OneWeb constellation is its use of polar orbits (see Figure 2-12). Unlike Starlink or

Amazon Kuiper, OneWeb satellites pass over both polar regions of the Earth with each orbit. This allows

coverage of the Earth’s entire surface with the communication services provided by OneWeb. However, due

to the geometry of the constellation, there is a concentration of satellites over the polar regions and a

sparseness over the Equator. Given the structure of the system, this can lead to instabilities in connection

reliability. The relationship between the number of satellites and the respective latitude is illustrated in Figure

2-11. The increase in the number of visible satellites above and below the 70th parallel and a minimum above

the Equator can be clearly seen.

The highly elliptical pattern of the OneWeb satellite beams is also unusual. As can be seen in Figure 2-13, the

elliptical beams are lined up horizontally due to the fact that OneWeb’s satellites follow polar orbits. With the

help of these beams, a satellite can sweep as much space as possible to the right and left of its ground track

on its route from pole to pole. For comparison, Figure 2-13 also shows the smaller, circular beams of the

Starlink satellites, which are arranged in a honeycomb formation. All of these were design decisions made on

25 Cf. Nima Mahanfar discusses the science behind Project Kuiper customer terminal antenna: in: Amazon Science, 21.12.2020,

https://www.amazon.science/latest-news/nima-mahanfar-discusses-the-science-behind-project-kuiper-customer-terminal-antenna (accessed on 24/05/2021). 26 Cf. London-based global communications company OneWeb raises funding from SoftBank and Hughes to fund its: in: Silicon Canals, 19/01/2021,

https://siliconcanals.com/news/startups/london-oneweb-gets-fund-softbank/ (accessed on 07/05/2021).

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an application- and context-specific basis.

FIGURE 2-11: NUMBER OF SATELLITES IN THE FIELD OF VIEW OF THE ONEWEB CONSTELLATION USER TERMINAL BY LATITUDE27

FIGURE 2-12: SATELLITE ORBITS OF THE ENTIRE ONEWEB CONSTELLATION PROJECTED ONTO THE EARTH’S SURFACE28



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FIGURE 2-13: SPACEX (RED) AND ONEWEB (BLACK, ELLIPTICAL) BEAM PATTERN29

FIGURE 2-14: SIZE EXAMPLE FOR THE ONEWEB USER TERMINAL

2.1.4 Telesat Lightspeed

Telesat is the fourth largest satellite network operator in the world and is building its own LEO satellite

constellation under the name Telesat Lightspeed.

Telesat Lightspeed consists of 298 satellites that are to be used for broadband internet services in the

enterprise sector. Telesat commissioned Thales Alenia Space as the main contractor for the production of the

LEO constellation, for a sum of three billion US dollars.

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From the filings it can be seen that two shells are provided for the constellation, with a polar orbit (90-degree

inclination) at an altitude of 1000 kilometres and a 37.4-degree inclined orbit at an altitude of 1248 kilometres.

Telesat thus achieves a mostly even coverage of Earth, as can be seen in Figure 2-15.

With regard to the user terminal, Telesat relies on cooperation with suppliers. Details of the partner structure

are broken down in more detail in Section 3.4.4.

FIGURE 2-15: SATELLITES IN THE LINE OF SIGHT BY LATITUDE FOR THE APPROVED TELESAT LIGHTSPEED CONSTELLATION30


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FIGURE 2-16: SATELLITE ORBITS OF THE ENTIRE TELESAT CONSTELLATION PROJECTED ONTO THE EARTH’S SURFACE31

2.1.5 AST&Science SpaceMobile

AST & Science is building the first space-based cellular broadband network for mobile phones under the name

SpaceMobile. It is intended to enable mobile phone users to connect to the internet via a direct satellite link

using a conventional smartphone. In 2019, AST & Science successfully launched a satellite as a technology test

environment. A constellation consisting of 243 satellites is planned, travelling at an inclination of 40 degrees

in a 730-kilometre-high orbit around Earth.

AST & Science claims to be able to provide 2G/3G/4G/5G and NB-IoT connectivity for standard mobile phones

and IoT devices using proven technologies (see Figure 2-18). In a field test, the start-up Lynk demonstrated

that it is technically possible to connect a smartphone from Earth to a satellite simulating a base station32. The

Virginia-based company wants its service to be reliable and provide backup connections and coverage for

remote regions.

In contrast to the simple use of the smartphone as a user terminal, AST & Science’s SpaceMobile satellites are

unusually large and weigh almost a tonne. Their oversized antenna makes them almost 10 times larger than

the average satellite in LEO. They essentially represent a cell tower in space that has to provide the necessary

link budget for the connection with the small smartphone antenna on the ground. The phased array antenna

measures 30 by 30 metres (around 900 square meters), so a lot of effort is needed to stabilise the


32 Cf. Jackson, Donny: Lynk claims successful test of satellite-to-cell-phone communications, cites potential public-safety value – Urgent Comms, in: Urgent Communications, 19/03/2020, https://urgentcomm.com/2020/03/19/lynk-claims-successful-test-of-satellite-to-cell-phone-communications- cites-potential-public-safety-value/ (accessed on 29/05/2021).

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satellite’s orbit. According to NASA, “For the completed constellation of 243 satellites, one can expect ,500

mitigation actions per year and perhaps 15,000 planning activities. This would equate to four manoeuvres and

40 active planning activities on any given day.”’33 In relation to the ambitious goals of other constellation

operators and the already steady increase in space debris (see Chapter 2.5), this assessment by NASA

constitutes a serious warning for the operation of such large satellites in LEO.

FIGURE 2-17: SATELLITES IN THE LINE OF SIGHT BY LATITUDE FOR THE AST&SCIENCE CONSTELLATION34

FIGURE 2-18: IMAGE FOR THE DEMONSTRATION OF THE SPACE MOBILE SERVICE - THE SMARTPHONE IS THE USER TERMINAL

33 Cf. Warwick, Martyn: New 243-strong satellite system will bring 4G and 5G to equatorial regions, in: TelecomTV, 18.12.2020,

https://www.telecomtv.com/content/access-evolution/new-243-strong-satellite-system-will-bring-4g-and-5g-to-equatorial-regions-40501/ (accessed on 21/05/2021). 34 Northern Sky Research (NSR), Non-GEO Constellations Analysis Toolkit, Version 08/2020

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FIGURE 2-19: SATELLITE ORBITS OF THE ENTIRE AST&SCIENCE CONSTELLATION PROJECTED ONTO THE EARTH’S SURFACE35

2.1.6 O3b mPower

O3b mPOWER is the next-generation Medium Earth Orbit (MEO) satellite system from SES, based on the

successful concept behind the existing O3b fleet. Currently, the O3b system is the only commercially operated,

non-geostationary satellite orbit (NGSO) constellation.

The O3b mPOWER satellites are scheduled to launch in 2021. Global coverage can be achieved with only six

satellites in orbit 8000 kilometres above the Equator. The constellation is to be expanded to 11 satellites at a

later date.

Each of the 11 O3b mPOWER satellites has an exceptionally high data throughput and low latency of around

150 milliseconds, thus providing high-speed connections of up to several gigabits per second to customers

around the world36.

35 Northern Sky Research (NSR), Non-GEO Constellations Analysis Toolkit, Version 08/2020 36 Telco & MNOs: in: O3b mPOWER SES, o. D., https://o3bmpower.ses.com/industries/telco-mnos (accessed on 30/05/2021)

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FIGURE 2-20: SATELLITES IN THE LINE OF SIGHT BY LATITUDE FOR THE APPROVED O3B MPOWER CONSTELLATION37

FIGURE 2-21: SATELLITE ORBITS OF THE APPROVED O3B MPOWER CONSTELLATION PROJECTED ONTO THE EARTH’S SURFACE38

37 Northern Sky Research (NSR), Non-GEO Constellations Analysis Toolkit, Version 08/2020 38 Northern Sky Research (NSR), Non-GEO Constellations Analysis Toolkit, Version 08/2020

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2.1.7 KLEO Connect

German start-up KLEO Connect aims to set up a LEO satellite constellation to provide real-time broadband

connectivity for industrial customers. The focus is on business-to-business (B2B) customers in the area of

machine-to-machine (M2M) communication and the Internet of Things (IoT). The product portfolio is to be

increased over time from simple broadband services to value-added services.

As the implementation of the KLEO Connect constellation is still at a very early stage and many of technical

parameters of the planned constellation are not publicly known, technical discussion is only possible to a

limited extent. A company profile including an economic overview of the company can be found in Section

3.4.7.

Like OneWeb, KLEO Connect relies on polar orbits for the satellites in the design of its constellation. Some 288

active satellites are planned on 12 polar orbits in a Walker constellation. These will be located at an orbital

altitude of 1050 kilometres and an inclination of 89 degrees39. KLEO Connect predicts data rates of over 10

gigabits per second per satellite and over one gigabit per second per user, which are to be achieved using

optical inter-satellite connections40.

2.1.8 Comparisons

Below you will find a comparison in terms of certain parameters of the constellations presented above.

Comparison: satellites in line of sight to the user

Comparing the number of satellites in the line of sight to the user terminal provides information about the

constellation’s design and area of application. Figure 2-22 is a combination of all satellite-in-LOS diagrams.

For instance, the high number of Starlink constellation satellites between the 40th and 60th parallel (northern

and southern hemisphere) is clearly visible. The system may be deliberately aimed at providing people in

North America and Europe with comprehensive, reliable satellite connectivity. In contrast, by deploying

satellites in Medium Earth Orbit, O3b achieves more concentrated satellite visibility from the Equator up to

the 45th parallel. In the case of the OneWeb constellation, the use of polar orbits is clearly visible, as the

number of satellites is strongly concentrated in the polar regions.

Smaller constellations such as those of AST&Science and Telesat also feature in this comparison, with fewer

satellites in sight. The large scale of the SpaceX and Amazon projects compared to other constellations is clear.

39 C. Kaiser (KLEO Connect), ‘#vernetzt 1’, short presentation, DLR National Conference on Satellite Communications in Germany, 18 May 2021 (virtual).

40 Cf. Sürig, Dieter: Raumfahrt: Breitband vom Himmel, in: Süddeutsche.de, 11/03/2021, https://www.sueddeutsche.de/wirtschaft/raumfahrt-

breitband-internet-eu-1.5229747 (accessed on 19/05/2021).

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FIGURE 2-22: COMPARISON OF SATELLITES IN LINE OF SIGHT FOR ALL CONSTELLATIONS UNDER

CONSIDERATION

Comparison of frequency usage

The availability of suitable frequencies is one of the main criteria for the successful establishment of a global

satellite constellation. Companies that secured frequencies for communication services in the Ku/Ka band for

their LEO constellations at an early stage – including SpaceX, OneWeb and Amazon – are now at an advantage.

When considering frequencies, a distinction must be drawn between frequencies for user communication and

frequencies for communication with the gateways. User terminals generally need to be inexpensive and easy

to use. The frequency range of the Ku and Ka bands is ideal because compact antennas can be built for this

purpose, as is the case for Starlink and Amazon. By contrast, gateway terminals can be more time-consuming,

complex and therefore more expensive. The use of the Q and V bands can also be easily integrated here.

With higher frequency bands such as the Ku/Ka band, the connection between satellite and user or ground

station is more susceptible to signal degradation due to the long transmission distance. These can contribute

to the fact that the capacity of the connection drops or may even be completely interrupted for a short time.

In order to deal with time-variable fading and to maximise the share of the transmission data, adaptive

techniques are generally used after channel estimation, and adaptive coding and modulation methods are

also used on the part of the protocol, such as DVB-S2X.

Figure 2-23 shows the secured frequency bands for the constellation operators studied in this trend analysis.

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FIGURE 2-23: OVERVIEW OF FREQUENCY USAGE FOR THE PRESENTED MEGACONSTELLATIONS

2.1.9 Conclusion

This chapter presents a concise run-down of basic technical knowledge for understanding the boundary

conditions in which megaconstellations operate.

The following were presented:

• The orbital mechanics of a satellite orbit and how it is described using the six

orbital elements

• Technical characteristics of the megaconstellations considered in this trend analysis

• Ground track of the constellation

• The number of visible satellites depending on the latitude

• Comparison of the constellations with regard to satellites in LOS and their frequency usage

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2.2 Securing expertise in technology fields critical to success

This section provides an overview and brief analysis of the major milestones in small satellite technology and

megaconstellations. The most important innovations from science and industry are summarised and listed.

The reader should gain an insight into the most important technological aspects of small satellite technology

and get an insight into additional future innovation sectors in the expansion of New Space.

2.2.1 Patent analysis

Figure 2-24 provides an overview of the innovation prospects and future technologies of satellite operators

presented in Section 2.1. The graph highlights the technology sectors in which companies want to differentiate

themselves from the competition. The focus is on achieving a competitive advantage and higher profit

margins. With an increasing number of innovations from the constellation operators, there is also the

opportunity of increased vertical integration and the possibility of becoming independent of suppliers. The

entire value chain can thus be operated by the company itself. In this context, their patents provide us with

initial conclusions about which technologies are key for megaconstellation operators to achieve a successful

and economic constellation.

For example, one of SpaceX's core innovations is the development and production of a low-cost yet highly

sophisticated user terminal. At the time of publication of this report, the purchase price for the user terminals

is USD 499, which is dwarfed by the prices of other user terminals. This cost reduction, combined with

consistent quality and performance is also echoed in the 27 patents filed by SpaceX in the last two years.

Fifteen of these patents deal with antenna design or antenna system development, and a total of 23 additional

patents involve innovations in satellite payloads and ground-based user terminals. On the other hand, it is

possible to see patents in the direction of satellite communication at AST & Science, which advertises a direct

connection between satellites and commercially available smartphones. These include advanced signal

transmission methods to use MIMO technology to transmit signals between the base station and user

equipment using multiple satellites. Other patents from AST & Science also address problems in satellite

MIMO technology for direct interconnection. There are other patents in problem-solving network

management to save broadband resources, thus providing a larger number of users with the same amount of

data throughput.

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FIGURE 2-24: OVERVIEW OF PATENTS FILED (AND GRANTED) BY MEGACONSTELLATION OPERATORS

However, the patents document just a fraction of the topics currently being investigated by the industry. It is

assumed that a lot of research is being conducted behind closed doors, especially in the future satellite field.

"We have essentially no patents. Our primary long-term competition is China,” as Elon Musk stated in a 2017

interview41. At the end of the day, the number of patents applied for show that the other companies are

following the same strategy. But even in this case, things could change in the near future. SpaceX, for example,

shows an upswing of filed patents in the last 2 years, sometimes with commercial sales of their user terminals

for the global market.

A comprehensive patent analysis now shows two sides. On the one hand, research can be treated as a trade

secret, in order to prevent the competition from participating in the innovation in all possible ways. This is an

extremely easy concept to implement in the technological field of space communications, where systems

operate hundreds, if not thousands, of kilometres beyond the reach of competitors. On the other hand, with

the advent of New Space, a new era of satellite communications is emerging that also introduces new patent

strategies. Thus, innovation in New Space is not only reserved for established large companies, as could be

well seen in earlier GEO satellite operations, but start-ups and SMEs can also play a part. Here, patent

protection primarily serves to protect innovations and force the substantial number of competitors to offer

either more expensive or inferior technology. In addition, patents also grant the opportunity to claim the

much-contested New Space Orbit and deprive other constellation operators of the opportunity to enter this

market. In the US market in particular, a successful patent application is key for outperforming the

competition. A popular and well-known example is the patent dispute between Samsung and Apple, which

lasted seven years and ultimately resulted in penalties of 539 million US dollars for Samsung, not to mention

the court costs and legal fees. Such patent lawsuits can also deter start-ups and SMEs in the space industry

from squeezing in between the big companies and constellation operators.

The increase in the number of patents from various constellation operators in recent years specifically

demonstrates the decision to adopt the second strategy – to establish a protection and deterring mechanism

for the competition. From this, we can draw conclusions from current patents as to the segments in which the

core innovations for the respective companies exist, and from this we can also identify various key

technologies for the commercial success of such a company. These key technologies are discussed in more

detail in the following sections. To analyse the key technologies, we will take into consideration the patents

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mentioned above, as well as current publications and news channels. This will allow us to present a

comprehensive picture.

2.2.2 Antenna technology

Antenna design is one of the most rapidly evolving technologies in satellite communications. Innovations and

developments in antenna technology have driven the demand for higher data rates, faster internet, long-

range reachability and reliable connectivity.

It all began in the 1960s with omnidirectional antennas, which only brought low data rates and minimal

antenna gain. Directional antennas were used for the first time with the introduction of three-axis stabilisation

on missiles. The most common antenna designs are horn antennas and reflector antennas. In the early 2000s,

the emergence of high-throughput satellites (HTS) gave rise to new requirements for antenna design and

entire antenna systems. One of the most notable features of the HTS is the multi-beam antenna, which

consists of several reflectors and feed antennas. Moreover, some flexibility was required in newer systems to

fulfil several different services simultaneously using one satellite (FSS, BSS, etc.).

Today, phased array antennas are the state of the art in antenna design. They are an assembly of individual

antenna elements that use analogue or digital phase shifters to provide directional, high-power transmission.

The direction of the radiation pattern can be changed with different phase shifts, and the shape of the

transmission can be altered as well. Reflectors are very rarely used here, in order to save space, especially for

small satellites. Instead, phased array antennas are advertised with direct radiating arrays (DRA), whose

advantages lie in their flexibility. This technology is used by all major satellite operators such as Amazon Kuiper

and SpaceX, as well as many other operators. In addition, this technology is not solely aimed at satellite

payloads, but can also be used for more flexible ground station design. Figure 2-25 shows concepts and

designs of phased array ground stations from SpaceX and Amazon Kuiper.

FIGURE 2-25: (LEFT) STARLINK USER ANTENNA AND (RIGHT) DESIGN CONCEPT AMAZON KUIPER USER ANTENNA SOURCE: STARLINK AND

AMAZON KUIPER WEBSITE USER ANTENNA

The attractiveness of phased-array antennas for satellite communications is a significant issue. A large number

of separate antenna elements can provide a greater number of spot beams each with sufficient radiated

power. At the same time, new antenna systems and on-board processing can still generate sufficient nulls

outside the conventional spot beams. Nulls are used to suppress interference for non-selected ground stations

or the broadcast areas of GEO satellites. Using a phased array antenna as a DRA achieves a previously

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unattainable level of flexibility for creating spot beams and nulls. The majority of problems with thousands of

antenna elements can be categorised in two groups – system complexity and heat generation. The system has

to process thousands of signals simultaneously at any given time with separate digital beamformers,

upsamplers and filters. A completely digital implementation of beamforming would therefore be too

computationally intensive and overly flexible. Hybrid beamforming can offer a solution here by first grouping

antenna elements using analogue beamformers. The smaller number of antenna groupings compared to the

individual antenna elements thus reduces the computational complexity while also diminishing system

flexibility. A solution for heat generation, which is made more difficult by the compact design of the complete

antenna system, must also be found with the help of novel heat dissipation strategies, especially in space-

based applications.

SpaceX has one of the most advanced technology portfolios in this area, with 23 patents in this engineering

domain. This accounts for 85 percent of all SpaceX's published patents. These patents range from the

mechanical design and construction of ground antennas to complex channel combiners and hybrid

beamforming systems. Ground antennas must have a compact design and be able to be manufactured cost-

effectively in large quantities. Payloads require that there is sufficient heat dissipation from the antennas, that

they have a robust design and that their power consumption remains low.

Patents here address issues in several areas – from heat dissipation in highly integrated circuits through

compact designs with highly optimised antenna element distributions to the optimisation of connections

between antenna elements and RF components. As shown in Figure 2-25, the end-user ground station is a

major innovation driver for SpaceX. The ground stations are equipped with mechanical components for the

initial alignment of the antenna and a complex phased array antenna system. Other features of the phased

array system are discussed below. The features are not limited to ground stations but are also used in a similar

form for the phased array antennas on the satellites. Therefore, SpaceX has written in its FCC filings that its

user terminal antennas are designed based on the satellite payloads.

In its antenna designs SpaceX integrates, among other things, the physical superposition of downlink and

uplink antenna elements42. Antenna arrays are stacked in layers to minimise the space required and the

material costs. As a result, current Starlink ground stations have a diameter of just 60 centimetres and

throughput of 300 megabits per second. Amazon Kuiper promises similar technical progress with an overlay

of transmitting and receiving antennas in Ka-band (shown in Figure 2-25). In doing this, Amazon Kuiper can

also save on size and cost. The antennas are said to be only approximately 30 centimetres in diameter and

have a throughput of 400 megabits per second.

In addition, SpaceX has patented a very flexible antenna array that is linked in groupings to individual digital

beamformers43. This is based on both analogue and digital phase shifters, which at the same time offer

flexibility, lower computational complexity and reduced energy consumption for the system. Advanced

algorithms are used for the connections between the beamformer and antenna elements. The connections

are optimally placed on several layers of the circuit board in order to reduce costs and, above all, loss of

performance. Further optimisations include switching antenna elements between the transmitting and

receiving of information (half-duplex) and the modular design of the entire antenna system. The combination

of all SpaceX innovations enables space saving, cost reduction and performance optimisation for the entire

system.

Phased-array antennas are the state-of-the-art technology currently in use, and are still being improved and

optimised. In addition to phased-array antennas, there is also active exploration of reflectarray antennas for

satellite payloads. Reflectarray antennas consist of several horn antennas directed towards a reflector

constructed from ‘unit cells’. These unit cells are small antenna elements that are constructed as striplines

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and can reflect the radiation from the feed antennas as spot beams. The advantages of reflectarray antennas

are their lower profile and reduced fabrication costs due to this use of striplines. Design concepts and

applications for satellite communications have been discussed in several publications. An initial concept for

the design and fabrication of reflectarrays with four-colour frequency re-use was published in 2020, followed

by an actual antenna design and subsequent measurements44. In the same year, a design in which

reflectarrays could be applied to LEO megaconstellations was developed45. Here, the authors have attempted

to build a very small reflector model that is within the cost and size limits of a small satellite in LEO orbit but

still provides sufficient antenna gain. Thus, this new technology can be a replacement for the DRAs currently

in use. This shows there are still further opportunities for innovation in antenna technology, even though the

market appears to be saturated with DRAs.

2.2.3 Inter-satellite links

Inter-satellite links (ISL) are links used for the communication between single satellites and whole satellite

constellations. These include transmission via selected radio frequencies (RF-ISL) or optical transmission

technology via laser (O-ISL). The former is the classical approach, which is mainly relevant to GEO satellites

and GPS systems but is also used for the LEO satellite constellation Iridium. However, in recent years the filings

for modern LEO have been submitted with laser optical ISL systems. SpaceX and Telesat, for example, have

already applied for an optical communications interface using laser terminals. This section is intended to

provide a brief overview of O-ISL and the need for it.

O-ISL gets more attention than RF-ISL for several reasons:

• Less interference and secure communication due to narrower beams

• Higher data rates thanks to higher frequency bands and bandwidth

• No need to apply to the ITU for frequencies

In addition, O-ISL can reach the actual speed of light in ‘free space’ and thus transmit information 47% faster

than terrestrial fibre-optic communications46. Beyond simple data transmission, O-ISL will lay the foundation

for incorporating software-defined networking (SDN), intelligent routing and resource allocation in

megaconstellations.

41 Insights by GreyB: SpaceX Started Patent Filing, in: Insights by GreyB, 12.03.2021, https://insights.greyb.com/spacex-patents/ (retrieved on

15/04/2021).

42 Space Exploration Technologies Corp., “Self-multiplexing Antennas,“ 20190252800, Aug. 15, 2019. Available:

https://uspto.report/patent/app/20190252800.

43 Space Exploration Technologies Corp., “Antenna-to-beamformer assignment and mapping in phased array antenna systems,“ 10971817, April 6, 2021. Available: https://uspto.report/patent/grant/10,971,817.

44 P. Naseri et al., “A Dual-Band Dual-Circularly Polarized Reflectarray for K / Ka -Band Space Applications,” vol. 68, no. 6, pp. 4627–4637, 2020. 45 B. I. Lueje, D. R. Prado, M. Arrebola, and M. R. Pino, “Reflectarray antennas : a smart solution for new generation satellite megaconstellations in

space communications,” Sci. Rep., pp. 1–13, 2020.

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Nevertheless, the implementation of O-ISL is not an easy task. Problems in low LEO orbit include the high

orbital velocity of the satellites and the required precise alignment of the lasers to the receiver. In

megaconstellations, there is also the constant change of neighbouring satellites, which makes any connection

between them more difficult. The "Acquisition, Tracking and Pointing" (ATP) method is used for the initial

orientation and synchronisation between transmitter and receiver47. The initial connection set-up, considered

on a practical implementation, takes 50 seconds and can then be reduced to 20 seconds for reconnections48.

The use of O-ISL in megaconstellations brings several innovations:

• The offload of user load from congested satellites to neighbouring satellites

• No need to expand gateway stations in sparsely populated, hard-to-reach regions of the world.

• Faster run times for time-critical applications (IPO, disaster response)

• Improved application of multi access edge computing (MEC)

The ESA's test series are among the earliest implementations of O-ISL. The first successful implementation

was demonstrated in 2001 between the GEO Artemis satellite and Spot-449. TESAT, in collaboration with DLR

and ESA, has also developed testbeds for its laser communication terminals (LCT)50. The LCT135, developed

by TESAT for exchanging optical messages between LEO and GEO satellites, is shown in Figure 2-26.

Another ESA project, called "High thRoughput Optical Network" (HydRON), also deals with optical ISL between

satellites, but also investigates optical connectivity from satellites to gateways via optical terminals51.

FIGURE 2-26: LCT135 DEVELOPED BY TESAT SPACECOM

46 M. Handley, “Delay is not an option: Low latency routing in space,” HotNets 2018 - Proc. 2018 ACM Work. Hot Top. Networks, pp. 85–91, 2018.

47 H. Kaushal, V. K. Jain, and S. Kar, “Acquisition, Tracking, and Pointing,” in Free Space Optical Communication, no. January, 2017, pp. 119–137.

48 B. Smutny et al., “5.6 Gbps optical intersatellite communication link,” Free. Laser Commun. Technol. XXI, vol. 7199, no. February, p. 719906, 2009,

doi: 10.1117/12.812209.

49 cf. footnote 31. 50 M. Motzigemba, H. Zech, and P. Biller, “Optical inter satellite links for broadband networks,” Proc. 9th Int. Conf. Recent Adv. Sp. Technol. RAST 2019,

pp. 509–512, 2019.

51 H. Hausschildt, C. Elia, H. L. Moeller, and W. El-Dalie, “HydRON: High thRoughput Optical Network,” 2019 IEEE Int. Conf. on Space Optical Systems and Applications (ICSOS), 2019.

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Of the companies that have applied for pure LEO megaconstellations, SpaceX and Telesathave applied for the

inclusion of O-ISL. Other companies, such as Amazon Kuiper, O3b mPower and AST SpaceMobile have not yet

published any information regarding the integration of O-ISL. In contrast, OneWeb has already communicated

that it will not integrate O-ISL into its antenna systems due to international restrictions.

Overall, so far only SpaceX has successfully launched satellites with O-ISL and conducted initial demonstrations

of the O-ISL communication interface between four satellites in its polar constellation. With this successful

demonstration, all Starlink version 1.0 satellites will now be equipped with optical inter-satellite links. Telesat

LEO is also heavily promoting O-ISL, which it intends to use to establish its position as the main provider of

backhaul functionalities to large telecommunication companies.

In the optical ISL, there are two companies, which collaborate with and promote German organisations, that

stand out successfully in international comparison. TESAT has already successfully equipped GEO satellites

with its LCT terminals, as well as launched products for the LEO and CubeSat segments. Detailed information

on the individual TESAT products can be found in table 2-3.

TABLE 2-3: PRODUCT RANGE AVAILABLE FOR LASER TERMINALS FROM TESAT (FROM: TESAT, “TESAT LASER PRODUCTS”, PRODUCTS | TESAT)

TESAT’s a wide range of offerings for the space industry is evident. It already has successful products in space

that have been working flawlessly for a decade, in the form of the LCT 135. Collaborations with several

programmes and missions are planned, such as ‘Copernicus Next Generation’ by the European Commission

and the Cube LCT in collaboration with DLR Institute of Communications and Navigation. Initial plans for

megaconstellation equipment are also under discussion. Important negotiating partners in the USA include

Lockheed Martin.

The other leading supplier of optical ISL in Germany is Mynaric, which also arose from the funding and

collaboration activities with German institutes and funding programmes. Its demonstration product is the

‘Condor’ laser terminal planned for O-ISL. Condor is said to offer a data transfer rate of up to 10 Gbps and

have a range of 8000 kilometres. For example, Mynaric has already signed initial supply agreements with

megaconstellation operator Telesat for the 2020 US Blackjack Track B programme52.

A successful demonstration by both companies could thus determine Germany's sovereignty in this field of

research and provide a major advantage to the industrial landscape in this technology sector..

2.2.4 Network & routing

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Network & routing will play a significant role in LEO megaconstellations in future. The integration of ISL

enables individual satellites can be used as relay nodes and entire network topologies with thousands of nodes

to be set up. The optimal distribution of resources, with the help of these networks, is an especially important

field of research that incorporates the aforementioned advantages of ISL. Topics include, for example, the

optimal route for data transfer through megaconstellations and the integration of software-defined

networking (SDN) to centralise network management. These problems are not only relevant in theory but can

have considerable industrial applications. For example, reducing transmission delays is a major issue in

finance, as can be seen from the construction of microwave relays for stock trading53.

The standard connection method using ISL is a cross connection between satellites. Two connections to the

two neighbouring satellites remain within one orbit, while the other two links are always temporary and with

neighbouring satellites in adjacent orbits.

A representation of the +Grid can be seen in Figure 2-27. Red denotes the ISL connection of selected satellites

with four other satellites as described above.

FIGURE 2-27: ILLUSTRATION OF THE +GRID ARRANGEMENT FOR SATELLITE CONSTELLATION FROM: D. BHATTACHERJEE AND A. SINGLA,

“NETWORK TOPOLOGY DESIGN AT 27,000 KM / HOUR,” IN CONEXT ’19: PROCEEDINGS OF THE 15TH INTERNATIONAL CONFERENCE ON EMERGING

NETWORKING EXPERIMENTS AND TECHNOLOGIES, 2019, PP. 341–354.)

52 Mynaric: Mynaric signs deal with Telesat, in: Mynaric, 21/10/2020, https://tinyurl.com/tue6m3my (accessed 30/04/2021).

53 S. Anthony, “The secret world of microwave networks | Ars Technica,” Ars Technica, 2016. https://arstechnica.com/information- technology/2016/11/private-microwave-networks-financial-hft/ (accessed Apr. 14, 2021).

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Several publications deal with the optimisation of transmission times or even packet round-trip time (RTT)

using the +Grid arrangement. Especially in cases with long connection distances, such as New York-London,

or London-Delhi, the use of satellite communications and smart network topologies can lead to improvements

in transit times. A 2018 publication54 looked at the Starlink megaconstellation with O-ISL and discussed a

method for improving transmission times. It was assumed that each satellite is equipped with five laser links.

Using Dijkstra’s algorithm, the satellite link between London and New York was shown to perform 40 % better

than conventional fibre-optic internet connectivity between the two cities. Other city links using constellations

were discussed in the same way, with transmission times for satellite connections also performing much

better. Further research on network topologies using the Starlink constellation was conducted in 201955.

Connections between several cities were considered and analysed for this purpose. Conventional network

design strategies such as integer linear optimisation or random regular graphs showed problems in their

computation times, which would have run from several minutes to 1029 days depending on the complexity of

the network. A new method that exploits the periodicity and symmetry of network topologies showed an

improvement in computation time without sacrificing optimisation results. For example, a reduction in the

number of nodes and edges between two endpoints could be achieved with the new method for the Starlink

constellation. The improvements were 54 percent and 40 % in the worst-case scenario compared to a +Grid

arrangement.

54 M. Handley, “Delay is not an option: Low latency routing in space,” HotNets 2018 - Proc. 2018 ACM Work. Hot Top. Networks, pp. 85–91, 2018, doi:

10.1145/3286062.3286075.

55 D. Bhattacherjee and A. Singla, “Network topology design at 27 , 000 km / hour,” in CoNext ’19: Proceedings of the 15th International Conference on

Emerging Networking Experiments And Technologies, 2019, pp. 341–354.

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Routing thus raises the question of an efficient solution for network management in megaconstellations.

Coordinating constellations of this size requires not only sufficient computing power, but also a certain

flexibility that has to be handled independently from the static hardware. Software-defined networking (SDN)

can offer a solution here. The hardware can be controlled and configured via virtual networks and systems

with the help of SDN. For this purpose, SDN offers the functionality of a separate and virtual control plane and

a data plane, which are responsible for the centralised control of the network (control plane) or the relaying

of data (data plane). Network functions virtualisation (NFV) is also key in this case. Thus, for example, the

management of the entire network can be improved by optimising the distribution of the network controllers.

In addition, SDN offers a modular design that makes it possible to quickly provide new connections to new

hardware (in this case, the satellites). The first publications56 on the integration of SDN into satellite systems

appeared in 2015. Several possible innovations using SDN integration were discussed. Deployment at only the

ground stations can provide cost savings, better quality of service (QoS) and easier integration with existing

terrestrial communications infrastructure. Furthermore, this topic was addressed in a 2018 publication57, in

which implementation of a dynamic SDN network was simulated using the Iridium constellation. This

examined the problem of changing satellite positions and the issue of placing controller satellites in the

constellations. It has been shown that placing the controllers in the satellite constellations rather than at the

gateways can reduce configuration times when issuing a command in the control plane to installation in the

data plane. Figure 2-28 illustrates the integration of SDN with controller satellites.

FIGURE 2-28: ILLUSTRATION OF POSSIBLE SDN INTEGRATION IN SATELLITE CONSTELLATIONS (FROM A. PAPA, T. DE COLA, P. VIZARRETA,

M. HE, C. M. MACHUCA, AND W. KELLERER, "DYNAMIC SDN CONTROLLER PLACEMENT IN A LEO CONSTELLATION SATELLITE NETWORK,"

PP. 1–6, 2018.)

56 L. Bertaux, S. Medjiah, P. Berthou, S. Abdellatif, A. Hakiri, and P. Gelard, “Software Defined Networking and Virtualization for Broadband Satellite

Networks,” no. March, pp. 54–60, 2015.

57 A. Papa, T. De Cola, P. Vizarreta, M. He, C. M. Machuca, and W. Kellerer, “Dynamic SDN Controller Placement in a LEO Constellation Satellite

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SDN also enables multi-access edge computing (MEC), which can manage the movement of services and

resources to the edge of the network infrastructure. In this sense, MEC platforms in LEO satellite payloads can

facilitate the development of new markets such as IoT via satellites. With MEC, critical network functions,

including offloading and caching, are supported directly by the payloads, significantly reducing the

communication overhead with the core network. MEC can thus serve as an essential building block for

satisfying challenging QoS/QoE requirements in certain network slices, especially for maintaining short-

latency services.

Simultaneously, the move towards implementing SDN features is reflected in the latest trend analyses.

Surveys have revealed that companies see SDN implementations as offering one of the biggest cost savings in

IT networking58. Results of the survey can be seen in Figure 2-29, showing that SDN is ahead of even 5G in the

interests of large IT companies. According to the trend analysis, network function virtualisation is also a crucial

factor for many companies. Like large IT companies, megaconstellations are trying to establish complex

network topologies, advertising backhauling via satellites or cloud computing, and offering fast and reliable

internet. Thus, it is not an unrealistic step to apply this trend analysis to satellite constellations as well.

FIGURE 2-29: MARKET SURVEY OF GERMAN COMPANIES (N = 158) WITH WAN AND PUBLIC CLOUDS (FROM IDC, "IDC

NETWORK TRANSFORMATION TREND ANALYSIS: GERMAN COMPANIES WANT TO BECOME MORE MODERN WITH SDN.")

Surveys and publications thus reflect that there is considerable potential in SDN/NFV for innovation progress

and sufficient interest in its integration. The fact that implementing SDN is a goal of some megaconstellation

operators, including Amazon Kuiper and O3b mPOWER, is further evidence of the interest in its potential.

Both companies are using SDN to facilitate the distribution of data and to centrally control and automate

entire network structures. Amazon Kuiper’s SDN, called Kuiper SDN, is designed to distribute spot beams, for

example. Kuiper SDN can thus enable fast resource allocation while minimising data traffic management. In

addition, handover between satellites in the event of failure will be feasible with Kuiper SDN. A geographically

unequal distribution of the global population, however, poses a challenge for megaconstellations.

The uneven distribution leads to the formation of hotspots with satellites that are completely busy with data

and system requests. At the same time, other satellites are idle, without sufficient data traffic and

computational work. SDN can be used to improve distribution of the work among the satellites and prevent

an imbalance in their utilisation. Once again, key concepts such as ‘edge computing’ become important here

to send resources and, above all, computing operations to less busy satellites.

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Figure 2-30 illustrates the planned satellite network for Amazon Kuiper59.

FIGURE 2-30: KUIPER SATELLITE NETWORK (FROM KUIPER SYSTEMS LLC, "TECHNICAL APPENDIX", FCC)

2.2.5 Automation

Automation is one of the key technologies to promote progress in any form of industry. In the German

automotive industry today, automation has become indispensable both as the basic framework and an

opportunity for further growth. Automation can and will play a key role in megaconstellations as well. Its main

benefits include reduced OPEX costs, ensured safety with the elimination of human error (e.g. error detection,

manoeuvring), simplified operation of highly complex satellite systems, and clear control of entire satellite

constellations for human operators. Similarly, automation can offer a considerable advantage and enable

progress for many of the key technologies mentioned above.

Automation can be introduced into the satellite industry in many ways. Figure 2-31 shows an overview of the

individual technology groups that play a significant role in automation. In this case, it can be divided into three

broad sub-categories: statistical estimation, metaheuristic algorithms and machine learning (ML). This chapter

focuses on metaheuristic algorithms, the use of ML and artificial intelligence (AI). This is followed by a critical

analysis of implemented AI systems, using SpaceX's automated collision avoidance system as an example.

59 Kuiper Systems LLC, “Technical Appendix,” FCC, available: “https://fcc.report/IBFS/SAT-LOA-20190704-00057”,2019.

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FIGURE 2-31: TREE DIAGRAM OF THE CLASS OF AUTOMATION

Many matters in megaconstellations can be optimised using ML and AI. Figure 2-32 shows some of the

potential applications of ML and AI, however only a small percentage of the possible topics are covered in this

report. While other areas may present opportunities for automation, such as the design of components or

even pure communications technology, our focus will be specifically on satellite technology.

FIGURE 2-32: INNOVATION OPPORTUNITIES FOR SATELLITES WITH ML AND KI

In the following sections, we will discuss some innovation opportunities in ML based on recent publications

and technologies that have already been implemented.

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Due to the extremely high number of separate spacecraft in megaconstellations, the automation of

trajectories and coordination between individual spacecraft is a matter of great interest. It is hardly

sustainable for companies to use human control to monitor every parameter of every satellite during the flight

and to fix any problems in the event of any error or failure of satellites. ML can help the human operator to

recognise and report errors and, in the end, correct them manually. One form of AI error detection described

in NASA's conference publication is called “Autonomy and TRajectories for Complex Trusted Operational

Reliability” (ATTRACTOR)60. This is an interaction of several ML components, which should help to detect

errors, to find error sources and to report the error. The main purpose is to detect errors correctly, i.e. to

avoid false positives and especially ‘false negatives’. With the help of active learning with an expert, the

machine can ultimately make and predict correct decisions itself. This could provide a solution to control

complex constellations and ultimately perform de-orbiting manoeuvres in the event of malfunction,

particularly for megaconstellations.

On-board processing is another important topic related to intelligent AI. On-board processing provides digital

reprocessing of signals to send them to low-power user terminals using frequency reuse and sufficient power.

The next key topic for on-board processing is flexible satellite payloads, which has already been discussed in

conjunction with SDN. Here, intelligent systems can ensure the efficient utilisation of key satellite resources

and provide flexible data management. Another key concept is beam hopping, with which the geographic load

can be controlled by the satellites themselves. A wide range of applications for individual satellites will then

emerge with the integration of 5G/6G. These topics are no longer limited to TV, telephone or broadband

internet, but are expanding into areas such as IoT services and autonomous mobility. On-board processing is

an essential component in the realization of flexible satellites for such a wide range of applications and has

also given rise to increased interest in resource allocation between satellites in megaconstellations. The

objective here is the autonomous allocation of limited resources between multiple satellites and the dynamic

resource allocation within an individual satellite. A large number of input parameters are relevant for this,

some of which are deterministic (trajectory, location, densely/sparsely populated FOV) and some of which are

random (high mobility users, errors/failures, rain fade). Intelligent systems need to anticipate predictable yet

random states and make suitable decisions to optimise data rates and throughput. The decisions include the

distribution of radio power, radio bandwidths and, in particular, the distribution of beams and associated

parameters. As can already be seen, a system of high complexity and high computing power that delivers fast

results has to be created for this purpose.

Individual publications have already addressed resource allocation problems, in which the problem was

considered for individual satellites. Here, either particle swarm optimisation techniques61 (PSO) or deep

reinforcement learning62 were used to enable dynamic resource allocation. In the first paper, the

metaheuristic algorithm showed faster convergence to the optimum compared to a genetic algorithm.

Especially for the short computation times, which is of particular importance in LEO constellations, PSO can

60 N. C. Oza, K. M. Bradner, D. L. Iverson, A. Sahasrabhojanee, and S. R. Wolfe, “Anomaly detection, active learning, precursor identification, and

human knowledge for autonomous system safety,” AIAA Scitech 2021 Forum, pp. 1–15, 2021.

61 N. Pachler, J. Jose, G. Luis, M. Guerster, E. Crawley, and B. Cameron, “Allocating Power and Bandwidth in Multibeam Satellite Systems using Particle Swarm Optimization,” 2020.

62 B. Deng, C. Jiang, H. Yao, S. Guo, and S. Zhao, “The Next Generation Heterogeneous Satellite Communication Networks : Integration of Resource Management and Deep Reinforcement Learning,” IEEE Wirel. Commun., vol. 27, no. 2, pp. 105–111, 2020.

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produce an improvement in resource allocation. The second publication deals with dynamic resource

allocation using a multibeam satellite in GEO orbit. Here, a system using deep reinforcement learning was

presented, which was able to make efficient and precise statements after initial training. A comparison with

other state-of-the-art methods showed either performance improvement (dynamic distribution using link

quality) or low algorithm complexity and computation time (dynamic distribution using genetic algorithms).

Data traffic can also be redirected to neighbouring satellites with the help of megaconstellations and the

connection of individual satellites through ISL. For example, one problem is the limited time a LEO satellite

can be in contact with a base station. It is likely that there is not enough time for the complete transmission

of important data, such as weather information, target tracking etc., to base stations. The 2017 publication63

attempts to develop an optimisation algorithm that distributes data to multiple satellites via ISL before they

have established communication with the base station. Research results showed improved throughput

compared to the scenario without offloading.

The avoidance of collisions between spacecraft and, in particular, with space debris has traditionally been

carried out in a semi-automated manner. This means that the detection and probability of collisions are

calculated automatically, but control and coordination is still done under human supervision. ESA has already

published statements stating that automating this process is necessary and urgently required64. The pioneer

of fully automated collision avoidance is SpaceX, which is the only company advertising this feature. At the

moment, no further information about SpaceX's automatic collision system is known and the functionality of

the system also remains unclear. The near collision in 2019 between ESA spacecraft and a SpaceX satellite

forced ESA to manually prevent the collision after SpaceX found the collision avoidance to be unnecessary due

to a software error65. In April of this year, SpaceX had to turn off their automated collision system again to

ensure coordination between a OneWeb and SpaceX manoeuvring operation. Both incidents raise questions

about the system, first, with regard to the reliability of such systems in the initial stages and, second, an

insufficiently integrated automation platform in all megaconstellations. However, these problems can be

solved with the help of further research, integration and investment in ML and AI.

2.2.6 Roadmap for the integration of 5G/6G

Megaconstellations will play an essential role in the development of 5G/6G networks, and the major operators

also see substantial market potential there. It is against this backdrop that the current work programme for

3GPP Release 17 of the 5G New Radio Standardisation defines, among other things, new features to support

LEO satellites. This step towards standardising satellite links in the 5G network represents only the first phase

of the seamless integration of non-terrestrial systems into 5G architectures. While initial applications for LEO

satellites will mainly be limited to backhauling, it is envisaged that megaconstellations will ensure an extensive

expansion of 5G/6G infrastructure in the future.

63 J. Xiaohua, L. Tao, H. Feng, and H. Hejiao, “Collaborative Data Downloading by Using Inter-Satellite Links in LEO Satellite Networks,” IEEE Trans. Wirel. Commun., vol. 16, no. 3, pp. 1523–1532, 2017.

64 “ESA - Automating collision avoidance.” https://www.esa.int/Safety_Security/Space_Debris/Automating_collision_avoidance (accessed Apr. 15, 2021).

65 J. Faust, „ESA spacecraft dodges potential collision with Starlink satellite – SpaceNews“,2019, available: https://spacenews.com/esa-spacecraft-

dodges-potential-collision-with-starlink-satellite/.

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The resulting global reach of 5G/6G services will be enabled by the applications including:

• Broadband Internet connections at higher frequencies via VSATs in hard-to-reach

regions, on aircraft and on board ships

• Traffic load balancing for locally overloaded terrestrial network access

• Direct access to mobile devices (e.g. smartphones and tablets) in outdoor environments via sub-6GHz

connections

• Monitoring of critical infrastructure for agriculture, exploration, logistics and industrial

use cases (IoT/M2M)

To achieve these goals, the standardisation work will gradually focus on defining a completely virtual satellite

network that will ensure flexible and adaptive management of hardware resources and network

functionalities. For example, network slicing is supported so that the requirements of different applications

can be satisfied with a single, shared physical network. In the long term, this virtualised architecture will be

fully integrated into the virtualised terrestrial network infrastructure to ensure harmonised management and

thus seamless access for users to the network and radio resources they require.

In order to achieve the envisaged 5G/6G milestones for megaconstellations, additional technological advances

will be necessary in the coming years. Some of the innovation priorities have already been mentioned above.

2.2.7 Summary and status of the key technologies in Germany

Using the above-mentioned patent and literature research, it has been possible to provide an insight into the

key technological fields necessary for the success of megaconstellations. It is evident that where innovations

and technologies are subsidised, the market can be won over. In order to successfully participate in the

development of megaconstellations and to demonstrate economic and technological success, mastering the

key technologies is a prerequisite. For individual suppliers and technology exporters, too, technological

leadership and innovative strength are essential for gaining market share and improving opportunities in the

international market.

Germany has already mastered some key technologies and is using them effectively, as can be clearly seen

from the example of optical laser terminals. Nevertheless, it must be said that some areas still need to catch

up. Antenna technology and on-board signal processing, for example, are essential technologies that must

also be manufactured and supplied rapidly in large quantities. However, other areas represent fresh territory

for all participants, offering many opportunities to establish themselves early on and set themselves apart.

This includes SDN and large parts of the necessary automation. These areas require software expertise and AI

knowledge, which are not necessarily the traditional strengths of the space industry. This is where the idea of

‘New Space’ comes into its own. Companies beyond the space industry, such as start-ups and SMEs, can

contribute and thus bring about changes in the existing economy. For software and the large unit numbers,

certain manufacturing and development processes are necessary that can be taken from the automotive

industry’s mass production processes. It is now evident that companies with a large vertical range of

manufacture and agile structures are better positioned than suppliers with singular strengths. These

structures resemble an amalgamation of different sectors and can be optimised by this means.

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Considerable attention is also being paid to user terminals. These represent an unusual challenge due to their

complex technology combined with the customer’s simultaneous demands for high usability and low prices.

In addition, terminals must be manufactured quickly in large volumes, but they must withstand all possible

environmental conditions. In examples such as SpaceX, a high integration density of the required components

can be seen. This enables cost-effective production from a single source. Such system integrations are rare

and a challenge in their own right.

2.3 5G/6G non-terrestrial networks using megaconstellations

An important building block for the success of terrestrial mobile networks in recent decades has been

international standardisation efforts, which have led to considerable economies of scale. For the first time in

the history of mobile communications standardisation, the 3rd Generation Partnership Project (3GPP), the

leading body in this field, is addressing the issue of integrating satellites into future mobile communications

networks with 5G. 3GPP was originally established in December 1998 when the European

Telecommunications Standards Institute (ETSI) joined forces with other standardisation organisations from

around the world to develop the technology specifications for third generation (3G) mobile networks. In the

mid-2000s, when it became apparent that 3G networks would be overwhelmed by the need for faster internet

access, work began on 4G specifications, which culminated in the Long-Term Evolution (LTE) standard around

2010. The requirements for 4G were not only faster peak data rates of more than 100 megabits per second,

but also the optimisation of the 4G standard for pure IP-based data transmission. 3GPP was thus already the

dominant body for the specifications of third and fourth generation mobile technology; it devises technical

specifications but not standards. 3GPP is therefore a technical organisation and not a standardisation

organisation in the strictest sense. These technical specifications are converted into standards by seven

regional organisations, such as ETSI for Europe. Apart from the administrative IT services, such as the

management of the 3GPP website, all the technical work that 3GPP undertakes is based on the research and

development, technology inventions and collaboration of the individual 3GPP members. Even the chairs and

vice-chairs of the various 3GPP groups are elected by the member companies and must act impartially on

behalf of 3GPP66. International standardisation efforts help to ensure compatibility between vendors and

reduce the costs of network operation and terminal equipment. In contrast, interoperability between

different satellite solution providers has been difficult to achieve, and the availability of non-proprietary

equipment has been severely limited.

66 Qualcomm, “Understanding 3GPP – starting with the basics,” https://www.qualcomm.com/news/onq/2017/08/02/understanding-3gpp-starting-

basics.

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FIGURE 2-33 REGIONAL STANDARDISATION ORGANISATIONS 66

A key driver for satellite integration in 5G and 6G is the high expectations for the currently planned

megaconstellations. Especially, the short latencies and the lower link budget make low-flying satellites within

mobile networks more interesting than geostationary solutions. Within 3G and 4G mobile networks,

geostationary satellites have occasionally been used by mobile network operators for backhauling in the

transport network. The end user of such a network has a connection to a mobile radio base station via their

terminal device, which is then connected to the actual core network via a satellite. The transport network

thus connects the radio access network with the core network, whereas network operators predominantly

use fibre optic or microwave technology to connect mobile base stations. However, the current

megaconstellations can already be used for 5G backhauling to accelerate the deployment of 5G services.

Telesat, the Vodafone Group and the University of Surrey have successfully demonstrated that

megaconstellations can enable backhauling for 5G mobile network operators. The Telesat Phase 1 LEO test

satellite was used in the trials. The results confirmed a network response time (round-trip latency) of 18 to 40

milliseconds – one of the lowest ever achieved for a satellite backhaul link. The demonstration supported

video chatting, web browsing and simultaneous streaming of up to 8K video. The project partners also

transmitted 4K video to an edge cloud of the 5G network, demonstrating an important future use case of

satellites in 5G67.

2.3.1 Overview of standardisation activities

The use of standards in satellite communications has a long history, starting with the Intelsat Earth Station

Standards (IESS) and the later development of standards in the Digital Video Broadcasting (DVB) and

European Telecommunications Standard Institute (ETSI). However, these standards were not sufficient to

ensure interoperability between solution providers. In the past, satellite ground segment manufacturers have

mainly been involved in DVB standardisation and relied on its technical specifications. As a result, there are a

variety of proprietary developments with respect to waveforms in the return channel, architectures and the

implemented protocol stacks68. Basic interoperability of satellite access networks between satellite ground

segment manufacturers is therefore often impossible. This is not beneficial if megaconstellation operators

want to be part of the 5G ecosystem. On the other hand, 3GPP standardisation does not provide any

specifications regarding the transport network, so that in the current 5G rollout (Rel. 15) of the mobile

network operators a large number of proprietary microwave and fibre technologies are used for backhauling.

67 University of Surrey, “World’s First 5G Backhaul Demo over LEO Satellite,” https://www.surrey.ac.uk/news/worlds-first-5g-backhaul-demo-over-

leo-satellite.

68 X. Lin et. al, “On the Path to 6G: Low Orbit is the New High,” https://arxiv.org/abs/2104.10533.

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Although most mobile users only focus on the generations of mobile technology that are introduced every 10

years or so, mobile technology is constantly evolving with new features and services that add significant value

to the mobile ecosystem. New functions are added by 3GPP releases introduced into the mobile system –

much like releases of major operating systems for smartphones or computers. 3GPP uses a system of parallel

releases that provide developers with a stable platform for implementing features at a given point in time and

then allowing new features to be added in subsequent releases. The publications are staggered, so work is

being done in parallel on several releases in different phases. When a release is complete, it means that all

new features are functionally frozen and ready for implementation. In addition, each 3GPP release is self-

contained, meaning that a mobile system can be built based on the frozen specifications in that release.

Therefore, the releases do not only contain the newly implemented functions but are also developed in an

iterative manner that builds on previous releases. In general, 5G is implied when referring to 3GPP Releases

15–17. Previous releases were essentially enhancements to the 4G LTE standard. Release 18 and onwards are

now to be placed between the 5G and 6G standards, which are expected in 2030. The best way to visualise

these releases is to look at the history of 4G LTE across multiple 3GPP releases.

FIGURE 2-34 OVERVIEW OF 4G STANDARDISATION66

2.3.2 Summary of NTN standardisation within 3GPP to date

Parts of the satellite industry have now recognised the need to embrace international standardisation as well

as to join forces with the mobile communications industry within 3GPP. The ongoing development of 5G and

6G standards provides a unique opportunity to completely rethink satellite communications at all protocol

levels. The work on satellite communications in 3GPP is commonly known as non-terrestrial networks (NTN).

The goal is to already achieve initial integration of NTN into 5G by further developing the protocols and

functions of the 5G core network and radio access network, including the ‘New Radio’ interface, to support

NTN. As part of the standardisation process for 5G (3GPP Rel. 15–17), this is the first time that satellites outside

the transport network are being examined in detail to analyse their potential added value for a direct end

user. Here, for the first time, the terminal no longer communicates with a base station via a terrestrial mobile

radio channel, but via a satellite channel (S- or Ka-band) to a distant base station as part of the satellite system

ground components. This NTN should allow the integration of geostationary and non-geostationary satellites

in both transport and radio access networks69.

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Within the first two phases of 5G standardisation during 2017–2019, two fundamental trend analyses were

conducted to investigate in which network architectures geostationary satellites as well as megaconstellations

could play a role in the future 5G/6G infrastructure. Figure 2-36 provides an overview of 3GPP standardisation

activities during this period. In addition, the trend analyses for NTN examined in detail for the first time which

components of the 5G protocol stack must be adapted so that direct radio access for 5G/6G end devices via

satellite can be enabled. It is the direct radio access with small user terminals with transmission powers of

maximum 23 dBm that poses the greatest challenge in connection with megaconstellations and 5G/6G

networks. At the moment it is also not clear if manufacturers will offer such small 5G NTN terminals on the

market while there is no suitable megaconstellation with which this service can be used.

3GPP defines specifications for complete end-to-end mobile communications systems, including terminals,

radio access, core network and services. However, the complexity and scale of these systems requires that

work for these specifications is divided into smaller, specialised working groups. Therefore, 3GPP is divided

into 16 specialist working groups (WGs), as shown in Figure 2-35 below. Most of the technical work and

decisions are made by these working groups, along with the three lead technical specification groups (TSGs).

FIGURE 2-35 OVERVIEW OF THE 3GPP WORKING GROUPS

69 VTT Technical Research Centre of Finland, 3GPP non-terrestrial networks: A concise review and look ahead ,“https://cris.vtt.fi/files/22778833/

VTT_R_00079_19.pdf.

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FIGURE 2-36 OVERVIEW OF 5G STANDARDISATION FOR 5G NON-TERRESTRIAL NETWORKS

The 3GPP Radio Access Network (RAN) TSG has completed an initial NTN trend analysis in its Release 15,

focusing on channel models, deployment scenarios and identification of potential major impacts on the ‘New

Radio’ interface. The 3GPP RAN TSG has also carried out an NTN trend analysis for Release 16 to define and

evaluate solutions for the main impacts identified. The 3GPP Service and System Aspects (SA) TSG working

groups have completed a trend analysis that identifies use cases and requirements in the use of satellite access

in 5G as well. The 3GPP SA TSG is currently conducting a further trend analysis on the integration of satellite

access in 5G, including architectural aspects and aspects of management and orchestration of the future

satellite-based mobile networks70.

The following standardisation activities on this topic have been carried out since 2015 in the individual

subgroups for 5G NTN standardisation.

• 3GPP NR-NTN standardisation Work item in 3GPP Rel-17 (until Q1/22):

o SA1: Use cases, specification of requirements

o SA2: 5G system architecture, roaming, handover

o SA5: Network management

o RAN1: Adaptation of 5G physical layer for satellites (initial access, synchronisation)

o RAN2: New Radio protocol stack (timing, handover, etc.)

o RAN3: Architecture (paging, link aggregation)

o RAN4: Radio performance and protocol aspects

The documents listed in Table 2-4 have been and will be published in this context:

70 X. Lin et. Al, “5G from Space: An Overview of 3GPP Non-Terrestrial Network,” https://arxiv.org/abs/2103.09156.

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TABLE 2-4 OVERVIEW OF THE 3GPP STANDARDISATION DOCUMENTS FOR 5G NTN

SA1

Study on using Satellite Access in 5G

SP-170702

TR 22822 Finished (2018-06)

SA1

Service requirements for next generation new

services and markets

SP-180326

TS 22261

Finished, v17.0.1

(2019-10) SA2

Study on architecture aspects for using satellite

access in 5G

SP-180505

TR 23737

Finished, v17.1.0

(2020-07) SA2

Integration of satellite components in the 5G

Architecture

SP-191335

TS 23.501,502,

503

Ongoing until 2021-

12 SA5

Study on management and orchestration aspects with integrated satellite components in a 5G

network

SP-190138

TR 28808

Finished, v17.0.0

(2021-04)

RAN /

RAN1

Study on New Radio (NR) to support non

terrestrial networks

RP-171450

TR 38811

Finished, v15.4.0

(2020-10)

RAN3

lead

Study on solutions for NR to support non-

terrestrial networks (NTN)

RP-190710

TR 38821

Finished, v16.0.0

(2020-01)

RAN2

lead

Solutions for NR to support non-terrestrial

networks (NTN)

RP-210908

TS 38.xyz

Ongoing until 2022- 03

RAN1

lead

Study on NB-IoT/eMTC support for non-

terrestrial networks

RP-210868

TR 36763

Ongoing until 2021- 06

2.3.3 Outlook on upcoming 5G NTN standardisation activities

The requirement for 6G in 2030, to be able to use mobile services at any location and any given time, can only

be satisfied with new technical solutions. Major cities will be covered with nationwide 5G mobile networks in

the foreseeable future. However, building up such an elaborate infrastructure with numerous radio towers

and their associated backhaul connections is not economically feasible in sparsely populated regions.

Consequently, in 2030 under the future 6G standard, a large number of low-flying satellites could cover rural

areas in addition to the terrestrial 6G networks. The foundations for this are now being laid with an initial

specification, ‘5G New Radio for NTN basic specification’, within the standardisation process for 5G Phase 3

(Rel. 17).

Due to the great interest in the new 5G mobile telecommunications standard, various public and private

sponsors have now made it possible to implement the mobile telecommunications standard as open-source

applications in the radio access network as well as in the core network for the first time since the original 5G

standard was published (Rel. 15). The associated implementations allow research institutions in the field of

satellite communications to precisely adjust the system parameters in the radio access network. This will allow

extensive functional tests of 5G-based satellite ground components in the radio access and transport networks

to be carried out before the finalisation of the standard for NTN (Rel. 17) and insights to be obtained. The

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principal functional verification of a 5G New Radio protocol stack adapted for satellite over a geostationary

satellite was demonstrated in 2021 by Fraunhofer IIS, EURECOM and the University of the Federal Armed

Forces Munich71. More comprehensive adaptations of the current 5G standard are still necessary for the use

of 5G New Radio access via megaconstellations, which should be fully specified by 202272.

The realisation of a 5G satellite system using megaconstellations understandably raises a variety of technical

and scientific problems. The lower a satellite orbits, the smaller the area it can cover, meaning more satellites

will be needed for a seamless satellite-based 5G/6G network in 2030. At higher orbital altitudes, the satellites

must have more transmitting power to bridge the greater distance. As a result, the 5G terminals on the ground

would also have to have more power and be heavier. A second difficulty is that low-flying satellites move

around Earth at high speeds. Thus, a 5G end user is within the footprint of such a satellite for only a few

minutes and the connection from one satellite to the next will have to be transferred repeatedly; at the same

time, the 5G connection must not be interrupted, even for small end-user devices. Currently planned

megaconstellations are mainly proprietary closed systems with a specially developed ground segment and

terminals, which will not be suitable for the upcoming 5G use cases. This represents a potential market for

new megaconstellation operators, who could benefit from the mass market for 5G/6G terminals with satellite

communications capability.

In addition, there are a variety of expectations, such as the interoperability of satellite network solutions with

the 5G network management system, which allows the mobile network operator or service provider to

manage and configure the satellite network resources. Mobile and satellite network operators expect the

integration of the satellite communications system into the 5G core network to provide secure end-to-end

services to and through satellite terminals. Another desire is cross-manufacturer interoperability between

NTN terminals, so as not to become dependent on just a select few manufacturers. The technology

commonality of satellite network solutions with terrestrial mobile components is expected to be scalable,

enabling cost reductions and new functionalities compared to existing satellite ground segments73.

2.4 6G NTN use cases for megaconstellations

Today, human end users are still the driving force in mobile networks. Online video accounts for about

70 percent of global internet traffic, with little variation across the continents. By 2030, this share is expected

to exceed 80 percent. Some estimates suggest that by 2030 the world will be transmitting up to 20 times more

data than it does today.74

71 Fraunhofer IIS and UniBwM, “First software-defined 5G New Radio demonstration over GEO satellite,” https://www.iis.fraunhofer.de

/en/pr/2021/20210312_5G_new_radio.html.

72 F. Kaltenberger et. al,” Building a 5G Non-Terrestrial Network using OpenAirInterface Open-source Software,” https://www.researchgate.net/

publication/351358019_Building_a_5G_Non-Terrestrial_Network_using_OpenAirInterface_Open-

source_Software?channel=doi&linkId=6093afb2458515d315fc3490&showFulltext=true.

73 ESOA, “5G Ecosystem white paper July 2020,” https://www.esoa.net/cms-data/positions/2278%20ESOA%205G%20Ecosystems%20UPDATE%

20NOV%202020.pdf.

74 McKinsey Global Institute, “Connected world: An evolution in connectivity beyond the 5G revolution,” https://www.mckinsey.com/

~/media/mckinsey/industries/technology%20media%20and%20telecommunications/telecommunications/our%20insights/connected%20world%20

an%20evolution%20in%20connectivity%20beyond%20the%205g%20revolution/mgi_connected-world_discussion-paper_february-2020.pdf.

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The 6G standard picks up where 5G leaves off. While many of the objectives of the 5G standard are likely to

remain unfulfilled, higher frequencies in the tera-hertz range and centimetre-precise localisation could

become a reality with the help of 6G. Latency of less than 1 microsecond for real-time applications over the

air, comprehensive global mobile coverage without interruptions and gigabit data throughput are the

mandate for the sixth generation of mobile communications.

2.4.1 The 6G vision

Low Earth Orbit satellites could also bring a breakthrough in 6G – not necessarily in network performance, but

in providing global network coverage for a wide range of end devices. By essentially providing broadband from

space, they could bring connectivity to parts of the world where laying fibre optic cable or building mobile

phone masts is not economically feasible. LEO satellites in megaconstellations are a key technology for 6G,

providing a bridge between the different sub-networks. They can link existing infrastructures and reach even

the most remote regions. In the future 6G standard, a large number of low-flying satellites will cover rural

areas in addition to the terrestrial 6G networks. They will also facilitate new closed networks that are

particularly secure and reliable.

Other objectives of 6G include the following:75 76

• Intelligent and energy-efficient networking of IoT devices;

• Integration of artificial intelligence at the edges of the network for fast and intelligent data flow to the end user;

• Latency below 1 ms for latency-critical applications from industry, tele-medicine or autonomous driving;

• Research and development of innovative approaches for increasingly shorter response times between individual 6G network participants;

• Convincing, high-resolution and smooth display of virtual worlds (VR) and augmented realities (AR) on data glasses; and

• Better resolution of video streams – and in the future, augmented and virtual reality (AR, VR) – while on the move.

75 University of Oulu, “White Paper on RF Enabling 6G – Opportunities and Challenges from Technology to Spectrum,” https://www.6gchannel.com

/items/6g-white-paper-rf-spectrum/.

76 Samsung, “6G The Next Hyper --- Connected Experience for All,” https://cdn.codeground.org/nsr/downloads/researchareas/

20201201_6G_Vision_web.pdf.

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FIGURE 2-37 OVERVIEW OF EXPECTED 6G REQUIREMENTS

New technical solutions are needed if 6G is to meet the requirement of using mobile services worldwide and

at any time from 2030 onwards. These ambitious goals can only be achieved by linking networks and creating

transitions between them without media discontinuity.

A number of research objectives therefore need to be addressed in order to establish the technical

foundations for 6G mobile systems:77

• Networking artificial intelligence: AI/Machine Learning (ML) technologies need to be harnessed as a

tool for significantly improving efficiency and user experience.

• Achieving extremes: extreme bit rates, extremely low (imperceptible) latencies, seemingly infinite

capacities, unlimited network participants and precise localisation.

• Network of networks: Different types of resources need to be aggregated to create a digital

ecosystem that is increasingly powerful, intelligent and heterogeneous. The goal is to eventually

create a single network of networks based on terrestrial and space-based infrastructure.

• Sustainability: Energy-optimised digital infrastructure for a reduced global 6G footprint and the

provision of effective and sustainable digitalisation tools for global industry.

• Dependability: Ensuring the confidentiality and integrity of communications and the

provision of data protection, operational resilience and security.

• Global service coverage through satellites: Efficient and affordable solutions for global

service coverage and the connectivity of remote locations through non-terrestrial networks.

77 University of Surrey, “6G wireless: A new strategic vision,” https://www.surrey.ac.uk/sites/default/files/2020-11/6g-wireless-a-new-strategic-

vision-paper.pdf.

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As we move towards 6G, standardisation is expected to continue to be key to the success of satellite

communications systems, including megaconstellations. 3GPP has been working steadily on 5G evolution and

will be working on 6G in a few years’ time. The satellite industry is expected to continue standardisation efforts

in 3GPP to drive satellite integration into 5G evolution and 6G systems via the next 3GPP releases. Continued

efforts will help introduce new features to improve performance such as throughput, radio link availability

and efficiency, as well as provide new capabilities to better support network architecture with advanced

regenerative satellites.

FIGURE 2-38 VISION OF A 6G MOBILE NETWORK

Satellite access networks will thus play a complementary role in the upcoming 6G mobile communications

ecosystem. Satellite links can provide direct connectivity to user equipment (UE) or indirectly serve a UE by

providing backhaul connectivity to terrestrial base stations or via relay nodes. Despite the widespread

deployment of terrestrial mobile networks, there are unserved or underserved areas around the world. 6G

satellite access networks can complement terrestrial networks to provide connectivity in rural and remote

areas. 6G satellite networks can enable communication scenarios with airborne and maritime platforms

aboard aircraft or ships, while being attractive for certain machine-to-machine, IoT and telemetry

applications. In the event of natural disasters that disrupt terrestrial communications systems and services in

some areas, 6G-capable megaconstellations can help to quickly restore the communications network in

affected areas.78 Satellite communication is ideally suited to the distribution of data and media. While

television broadcasting was undoubtedly the most important satellite service in the past, there are now a

variety of other use cases. For example, 5G mobile operators can already use

78 University of Oulu, “6G White Paper on Connectivity for Remote Areas,” http://jultika.oulu.fi/files/isbn9789526226750.pdf.

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satellite communications to multicast content to the network edge or to the ‘edge cloud’ to facilitate the

caching of content for local distribution. Satellites can complement this service at 6G. They can efficiently

deliver multimedia and other content across multiple locations simultaneously by distributing broadcast and

multicast streams with an information-centric network and using content caching for local distribution.

2.4.2 Link budget analysis for NTN applications

A sample architecture for the 5G NTN standard is shown in Figure 2-39. A 5G NTN usually consists of the user

equipment (UE), a transparent satellite for signal amplification in orbit, the base stations (gNB) at the globally

distributed NTN gateway sites, and the 5G core network (5G CN), which provides the connection to the

internet. In this architecture, the 5G New Radio air interface essentially replaces the DVB-S air interface of the

satellite ground segment available on the market today. However, the major geostationary satellite operators

and existing ground segment manufacturers currently prefer to include indirect 3GPP radio access via the

DVB-S2X standard for 5G radio access using VSAT terminals in the > 6 GHz frequency range. For planned

megaconstellations that will provide 6G broadband services via VSAT, it is not yet clear which radio access

standard will prevail. However, from a 5G and 6G chip integration perspective, access via the New Radio

interface for small user terminals < 6 GHz using LEO satellites is undisputed.

FIGURE 2-39 ARCHITECTURE FOR 5G NTN FOR DIRECT RADIO ACCESS VIA TRANSPARENT SATELLITE (3GPP RELEASE 17)

The following link budget analysis based on the assumptions of the 3GPP Release 16 NTN trend analysis

provides a more concrete understanding of the 5G and 6G NTN use cases for megaconstellations.

The first example includes an S-band LEO satellite (see Figure 2-40) for IoT applications, with the downlink and

uplink carrier frequencies of 2 GHz. The system bandwidth is 30 MHz. For the satellite, the effective isotropic

radiated power (EIRP) is 34 dBW/MHz, and the antenna gain-to-noise temperature (G/T) is 1.1 dB/K. The UE

is assumed to be a handheld terminal with 23 dBm EIRP. The UE has two cross-polarised antenna elements,

and the G/T is -31.6 dB/K.

Handheld

or IoT device

Spaceborne

Platform

Service link Feeder link

Gateway

Core network

Public data

network

FIGURE 2-40 DIRECT 5G RADIO ACCESS VIA HANDHELD TERMINAL AND CARRIER FREQUENCIES OF 2 GHZ

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The second example involves a LEO satellite in the Ka-band (see Figure 2-41) for broadband applications. The

downlink and uplink carrier frequencies are 20 GHz and 30 GHz, respectively. The system bandwidth is

400 MHz. The EIRP is 4 dBW/MHz, and the antenna G/T is 13 dB/K for the satellite The UE is assumed to be a

very small aperture terminal (VSAT) with 76.2 dBm EIRP and G/T of 15.9 dB/K.

FIGURE 2-41 DIRECT 5G RADIO ACCESS VIA VSAT TERMINAL AND CARRIER FREQUENCIES FROM 20–30 GHZ

Table 2-5 shows the results of the link budget calculation assuming an orbital altitude of 600 kilometres and

an elevation angle of 30°. In the S-band downlink with 30 MHz bandwidth, the signal-to-noise ratio (SNR) is

8.9 dB, which can give a spectral efficiency of 3.1 bps/Hz and a total throughput of 93.9 Mbps according to

Shannon’s formula. In the 400 MHz bandwidth Ka-band downlink, the SNR is 9.4 dB, resulting in a spectral

efficiency of 3.3 bps/Hz and a total throughput of 1.32 Gbps.

In the S-band uplink, the handheld UE uses 180 kHz bandwidth to achieve an SNR of 8.1 dB. The corresponding

spectral efficiency is 2.9 bps/Hz, and the achieved data rate is 0.52 Mbps. In the Ka-band uplink, the VSAT with

high transmit power and high-gain antenna can use the entire 400 MHz bandwidth and achieves an SNR of

19.3 dB. The corresponding spectral efficiency is 6.4 bps/Hz, and the data rate is 2.57 Gbps. The above results

show that use cases with medium to high data rate requirements in 5G and 6G NTN networks can be

supported using megaconstellations.

TABLE 2-5 LINK BUDGET ANALYSIS FOR 5G NTN USE CASES FOR megaCONSTELLATIONS79

Link budget S-band Ka-band

System Downlink Uplink Downlink Uplink

TX: EIRP/Bandwidth 56.6 23 26.6 76.2

RX: G/T [dB/T] -31.6 1.1 15.9 13.1

Bandwidth [MHz] 30 0.18 400 400

Free space attenuation [dB] 159.1 159.1 179.1 182.6

Fading due to multipath effects [dB] 3 3 0 0

Signal to noise ratio [dB] 8.9 8.1 9.4 19.3

Data rates [Mb/s] 93.9 0.5 1320.0 2570.0

79 X. Lin et. al, “5G and Beyond,” https://www.springer.com/gp/book/9783030581961.

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2.4.3 Conclusion on 6G NTN using megaconstellations

Any deployment of a megaconstellation for 6G relies on rich ground infrastructure to carry traffic between

the satellite gateway and a core network infrastructure. At the architectural level, cooperation between

megaconstellation providers and mobile network operators may yield synergies in the use of fibre

infrastructure, and thus

reduce the total cost of ownership of the entire 6G network architecture. This collaboration could take a

variety of forms, from simple fibre sharing, hosting or data centre sharing, to the operation of

megaconstellation gateway Earth stations (teleports) on a mobile operator's property. This could take

advantage of shared resources such as redundant fibre routes and better integration with the core network.

In addition, the use of megaconstellations as a non-terrestrial overlay enables independent and redundant

connectivity for all terrestrial network nodes, which could increase the resilience of the entire 6G network

structure.80

Non-terrestrial network solutions can contribute to the provision of future 5G and 6G services, offering

coverage, capacity, reliability and availability to complement cellular networks. Satellites can be particularly

valuable in extending 5G and 6G services to remote and rural areas. This added value is enabled by the

seamless integration of satellite networks through the development of 3GPP standards to support satellite

radio access and backhaul solutions as part of 5G Phase 3 (Rel-17). In summary, thanks to lower orbits,

megaconstellations could enable a wide range of applications in future 6G networks with the benefits of lower

latency and high throughput. In addition, next-generation very-high-throughput geostationary satellites could

cover capacity-intensive but latency-uncritical use cases in 6G.

2.5 Spotlight – Sustainability aspects in LEO megaconstellations

Since the launch of Sputnik 1 in 1957, the number of artificial satellites in Earth orbit has risen steadily. There

are now around 4000 operational satellites compared to almost 28,160 catalogued and monitored space

debris items (as of April 2021)81. Due to their high kinetic energy, even the smallest particles can cause a

dangerous impact when they collide with other objects. In particular, collisions among the debris itself pose a

substantial risk, because each collision increases the number of particles in space many times over. As such,

the mitigation and removal of space debris has become a major concern for space agencies.

2.5.1 The origins of space debris

The desire to find solutions to the space debris problem is reflected in the growing public debate and the

increased number of publications on the topic of space debris. Often discussed issues include the danger of

collisions82, light pollution83, or the impairment of radio astronomy applications84.

80 NGMN, “Non-Terrestrial Networks Position Paper,” https://www.ngmn.org/publications/ntn-position-paper.html.

81 Cf. Space debris by the numbers: in: European Space Agency (ESA), 15.04.2021, https://www.esa.int/Safety_Security/Space_Debris/

Space_debris_by_the_numbers (accessed on 22.04.2021).

82 Undseth, M., C. Jolly and M. Olivari (2020), "Space sustainability: The economics of space debris in perspective", OECD Science, Technology and

Industry Policy Papers, No. 87, OECD Publishing, Paris, https://doi.org/10.1787/a339de43-en.

83 Constance Walker, Jeffrey Hall, Lori Allen, Richard Green, Patrick Seitzer, Tony Tyson, … Yoachim, P. (2020). Impact of Satellite Constellations on

Optical Astronomy and Recommendations Toward Mitigations. Bulletin of the AAS, 52(2). https://doi.org/10.3847/25c2cfeb.346793b8.

84 Lossau, Norbert: Space: Too many satellites threaten radio astronomy, in: DIE WELT, 26.02.2020, https://www.welt.de/wissenschaft/

article206128897/Weltraum-Zu-viele-Satelliten-bedrohen-die-Radioastronomie.html (accessed on 22.04.2021 – only available in German).

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In technical terms, space debris is any artificial object that orbits the Earth without any use or purpose. These

may be former rocket components, satellites, debris or mission-related debris with dimensions ranging from

a few micrometres to a few metres85. An overview of the origin of space debris is provided in Figure 2-42.

FIGURE 2-42: SPACE DEBRIS SOURCES86

The European Space Agency's Space Debris Mitigation Compliance Verification Handbook (ESSB-HB-U-00287)

sets precise space debris mitigation measures. Clear rules are defined for the disposal of disused systems in

Earth orbit. Protected zones have been defined in space for spatial demarcation: The Low Earth Orbit (LEO)

protected zone extends to an altitude of 2000 kilometres above the Earth's surface. A corresponding

protected zone for Geostationary Earth Orbit (GEO) is located in the area of 200 kilometres above and below

the GEO and 15° north and south of the equator, respectively. Figure 2-43 shows the two orbital protected

zones.

For the maximum retention time of a satellite after its service life, ESA determines a time span of 25 years,

based on IADC guidelines. The 25-year de-orbit limit is the result of trend analyses to predict the evolution of

the population of space systems and debris in LEO. It is a trade-off between limiting the growth of the debris

environment over the next 100 years and the financial burden that implementing orbit clearance activities

after the mission ends has on programmes and projects.

85 Peters, Susanne: Innovative Approach for Effective and Safe Space Debris Removal, PhD dissertation, Aerospace Engineering, 2019, https://athene-

research.unibw.de/132244.

86 Peters, 2019.

87 European Space Research and Technology Centre: ESA Space Debris Mitigation Compliance Verification Guidelines, 1st edition, 2015,

https://copernicus-masters.com/wp-content/uploads/2017/03/ESSB-HB-U-002-Issue119February20151.pdf.

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FIGURE 2-43: ILLUSTRATION OF THE PROTECTION ZONES FOR LOW EARTH ORBIT (LEO) AND GEOSTATIONARY EARTH ORBIT (GEO)

2.5.2 Deorbiting scenarios for satellites in LEO

In order to avoid further space debris in Earth orbit and the consequences thereof, there are regulations for

the disposal/deorbiting of satellites at the end of their operational life. In this case, it is possible either to wait

for the system to re-enter Earth’s atmosphere naturally and without any intervention or to force deorbiting

using external forces or the system's own propulsion.

A further distinction is made between controlled and uncontrolled atmospheric re-entry. In the case of

uncontrolled deorbiting, atmospheric re-entry is not precisely controlled, so its exact path is not known in

advance. The re-entry time can usually be predicted with an uncertainty deviation of about 20% of the time

between the prediction and the expected re-entry event. While the impact zone is not controlled, the physical

properties (mass, size, material) of the fragments hitting the ground can be predicted. This means that the

risk of injury to humans can be assessed.

In the case of controlled re-entry, a deorbiting manoeuvre is used to control the exact time of re-entry and

the impact zone. As a result, the essential breakup can be controlled by targeting a specific perigee altitude

for the final deorbiting manoeuvre. Ultimately, this makes it possible to more precisely assess the risk of injury

to humans, which can be largely minimised by placing the debris impact over uninhabited areas.

Furthermore, there are initiatives that deal with actively retrieving space debris from LEO, such as the Swiss

start-up ClearSpace, which is developing a kind of "tow truck" with a grab arm. The aim is to capture

particularly critical and large pieces of debris and dispose of them by subsequent incineration. ClearSpace was

selected by the European Space Agency in 2019 to lead the first mission to remove debris from orbit by 2025.88

88 Cf. ClearSpace: About | Clearspace.today, in: ClearSpace, 05.02.2021, https://clearspace.today/about/ (accessed on 29.05.2021).

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FIGURE 2-44: DEORBITING STRATEGIES FOR A CONTROLLED OR UNCONTROLLED RE-ENTRY89

2.5.3 Conclusion on sustainability awareness for constellation operators

The issue of space debris and satellite deorbiting can be summarised by the fact that there is a high awareness

of the problem worldwide, which has grown in recent years, for example due to explosion events of rocket

upper stages or satellite collisions, which have been discussed in the press. Added to this are personal

experiences, such as seeing the chains of satellites in the Starlink constellation, which make it clear to

everyone that there is a limited number of orbital paths around Earth.

Space debris is a major concern for all space agencies and clear rules have been defined to avoid the

accumulation of further debris in space90. There is also a broad commitment to the adopted strategies among

the constellation operators. None of these companies vehemently oppose having to comply with space debris

rules. Looking at the constellations in this trend analysis, we assume that space debris avoidance and

deorbiting are an integral part of the companies' business plans. However, we were unable to find further

details relating to the concrete implementation of the regulations in the sources available publicly.

89 ESA Independent Safety Office (TEC-QI), “ESA Requirements on EOL De-orbit”, Technical Day on De-orbit Strategies ESTEC, Noordwijk, 17th March

2015.

90 European Space Research and Technology Centre: ESA Space Debris Mitigation Compliance Verification Guidelines, 1st edition, 2015,

https://copernicus-masters.com/wp-content/uploads/2017/03/ESSB-HB-U-002-Issue119February20151.pdf

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3 ECONOMIC ASPECTS

Having considered megaconstellations from a technical perspective in the previous section, we will now look

at them from an economic point of view.

The economic aspects of the constellations will be described and compared based on the following points:

• Company history and locations

• Shareholders and funding

• Project status

• Management Team

• Value creation chains and

• Positioning and market launch

This is followed by an analysis of the competitiveness of the constellations based on Michael Porter's Five

forces analysis framework.91

We have selected two of the main cost drivers of creating a megaconstellation and examined them as

examples of cost drivers in general. These are the launch and production costs of the satellites.

We evaluated the launch costs considering reusable launcher components and the associated cost savings,

using the SpaceX launcher as an example.

For the satellites, we estimated the manufacturing costs as far as possible based on publicly available

information and compared these with each other.

The structure of user prices is not analysed in this section; for this, please refer to Section 4, which also

considers the pricing strategy of megaconstellation operators.

At the end of the economic considerations in this section we present two separate topics — situation analyses

a) on the status of megaconstellation planning in China and b) on the military use of megaconstellations using

the USA as an example. The reason for this is that, from the authors' perspective, both topics will have a

somewhat considerable influence on the market development of the megaconstellations under consideration.

3.1 The market for megaconstellations

The marketing departments of megaconstellation operators often advertise megaconstellations with slogans

such as ‘Connecting the Unconnected’ or ‘Provide Internet Services to around Three Billion Unconnected

People around the World’, which may suggest that the primary aim is to provide (broadband) internet access

to people in places where there was previously no access to the internet. However, when considering the

business plans of the operators of mega-constellations this objective appears to be of secondary importance.

All the operators take a step-by-step approach in building their constellations, and plan to use the profits from

the first expansion stage to co-finance the subsequent expansion of the constellation predominantly or to a

considerable extent. This means that they must focus on the potential customers who can afford the price of

91 Porter, Michael: Competitive Advantage: Creating and Sustaining Superior Performance, Export, New York, USA: Free Press, 1985.

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their services from the outset. Following this, once the ramp-up is complete, they can strive to open up other

markets with customers who have less purchasing power.

To use an analogy: First, it is important to fill the Business Class of an aircraft, then one can market the

remaining resources with a flexible pricing policy.

It is therefore no surprise that Starlink, for example, has chosen the northern regions of the USA and Canada,

Great Britain, France, Germany and the Scandinavian countries for its market entry. After all, the monthly net

income in these countries is significantly higher than the international average.

In these regions, the target groups are primarily internet users whose current internet access is not of the

required quality in terms of bandwidth, latency and reliability, as well as internet users for whom the price of

internet access does not have an appropriate price/performance ratio.

This might create the impression that the service offerings of the megaconstellations in the market for

broadband services are being directed exclusively at the consumer segment. However, this is not the case. In

contrast to other communications infrastructures, their technical differentiation features allow

megaconstellations to offer a service portfolio for all broadband users. However, as we will see later,

megaconstellation operators position themselves differently in the different market segments and usually

apply a multi-level segmentation strategy to define their target markets.

3.2 Market segmentation

In order to identify the target markets of the megaconstellations under consideration, the broadband services

market must be segmented in a multi-stage approach.

The first level of segmentation, macro-segmentation, is made by region or country. In this first segmentation

level, the following categories have been made:

▪ North America & Canada

▪ Europe & the UK

▪ Africa & the Middle East

▪ Asia Pacific

▪ Latin America

▪ Rest of the world.

The countries

▪ China and

▪ Russia

are in a special group as far as megaconstellations are concerned, and as ‘protected markets’ must be

considered separately.

Following the geographical segmentation, further levels are introduced as part of a micro-segmentation. The

second level is differentiated according to customer groups:

▪ Consumer Broadband,

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▪ Enterprise Broadband,

▪ Governmental & Military Broadband and

▪ the M2M area with IoT Broadband.

Finally, in the third level, customers' mobility requirements are the criterion for selecting the target segments:

• Fixed

• Transportable

• Land mobile

• Aeronautical and

• Maritime.

FIGURE 3-1 provides an overview of the segmentation levels.

FIGURE 3-1: MARKET SEGMENTS

3.3 Value creation chains

Megaconstellation operators primarily provide communications and IT services. If a client requires specific

infrastructure, e.g. a user terminal, to use these services at the Satcom system interface, the operator of a

megaconstellation must ensure that this is available to the client.

Internal services are required for the provision of client-side services, for which specific infrastructure

(systems/devices/components) has to be created. If required, a user terminal is included.

A value chain model adapted to the task of comparing company activities, considering core and ancillary

activities and the respective depth of value creation has been used.

Following the basic model of a value chain according to Porter92, a graphical representation with two levels

was chosen, indicating a distinction between services that are necessary for product creation and the

infrastructure required to provide these internal services.

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FIGURE 3-2: VALUE CHAIN MODEL

3.4 Megaconstellations from an economic perspective

Megaconstellations with different business models and technical characteristics, each optimised for their

respective target markets, are already at a planning or implementation stage. The economic aspects related

to these megaconstellations are examined below using a selection of megaconstellations as examples. These

are the constellations

▪ Starlink (Starlink Services LLC, SpaceX)

▪ Kuiper (Kuiper Systems LLC, Amazon)

▪ OneWeb Constellation (OneWeb)

▪ Lightspeed (Telesat)

▪ O3b mPower (SES)

▪ AST SpaceMobile (AST SpaceMobile Inc.) and

▪ KLEO (KLEO Communications GmbH).


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3.4.1 Starlink (SpaceX)93

Company history and locations

SpaceX (Space Exploration Technologies Corporation) was founded in 2002 by Elon Musk. The company is

based in Hawthorne, California. The number of SpaceX employees is approximately 8000 (as of 05/2021).

The Starlink project began in 2015; development and production of the satellites now take place at a site near

Seattle. On 21 December 2020, Starlink's activities were transferred to Starlink Services LLC. Starlink Services

LLC is a subsidiary of SpaceX. Regional marketing companies have been established to market Starlink services

outside of the USA, including Starlink Deutschland GmbH in Frankfurt, Germany.

The ITU filings for the Starlink constellation were made via the US Federal Communications Commission (FCC).

Shareholders and funding

SpaceX is a ‘corporation’ in which Elon Musk holds approximately 48 percent of the shares as of 02/2021,

according to Forbes.94 Another shareholder is Google, with an investment of 900 millon US dollars, which was

made in 2015. According to Crunchbase95 there are a total of 39 investors.

Also according to Crunchbase, to date (as of 04/2021) SpaceX has acquired funds amounting to 7.5 billion US

dollars over 39 rounds of funding. SpaceX's market value is now estimated at 74 billion US dollars, according

to Craft.96 SpaceX's market value has doubled since August 2021.

The capex requirement for the implementation of a megaconstellation with approximately 4000 satellites was

estimated by Elon Musk in 2015 at 10 billion US dollars to 15 billion US dollars; in the meantime, SpaceX

management has reported a figure of 10 billion US dollars for a constellation with approximately 4400

satellites.

Project status

By 17 May 2021, Starlink had launched a total of 1677 satellites, of which 1578 satellites are still fully

functional in LEO orbit. Starlink is conducting a beta test operation with these satellites, in which about 10,000

users are currently participating. Starlink reports that a total of 500,000 orders97 have already been received.

Management team

No information is available for now about the management team of Starlink Services LLC. It is assumed that

there is a continued close alignment between the personnel structures of Starlink Services and the parent

company SpaceX. Information on the SpaceX management team can be found in FIGURE 3-1 below.

93 Homepage SpaceX: https://www.spacex.com

94 Homepage business magazine Forbes https://www.forbes.com

95 Homepage Crunchbase Company Data https://about.crunchbase.com

96 Homepage Craft, data and analytics platform https://craft.co

97 Sheetz, Michael: SpaceX: Over 500,000 orders for Starlink satellite internet service received to date, in: CNBC, 04.05.2021, https://www.cnbc.com/

2021/05/04/spacex-over-500000-orders-for-starlink-satellite-internet-service.html (accessed 27.05.2021).

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FIGURE 3-3: SPACEX MANAGEMENT TEAM [SOURCE: CRAFT]

Value chain

In its corporate alliance with SpaceX, the Starlink company has a very large core competence in almost all

areas of the value chain. This is a characteristic feature of all of Elon Musk's companies. The user terminal was

developed by Starlink to be ready for production, though manufacturing and delivery logistics could be

outsourced at a later date, if this should lead to a more cost-effective overall solution for large quantities.

FIGURE 3-4: STARLINK VALUE CHAIN

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Positioning and market launch

Starlink is the first mover in the megaconstellation market and is initially focusing on the US market for market

launch.

In the recently concluded auction as part of the first phase of the Rural Digital Opportunity Fund (RDOF)

programme in the USA, satellite operators were also able to participate. Starlink, Viasat and Hughes

participated in the auction. Since low latency (<100 ms) was highly valued in the bids, Viasat was not awarded

a contract, and Hughes only qualified to connect <4000 subscribers. Starlink, on the other hand, was awarded

the contract for connecting 625,000 subscribers. This means that out of the total 9.23 billion US dollars in

funding, Starlink can expect to receive a share of 855 million US dollars or 1268 US dollars per connected

subscriber. The prerequisite is that Starlink obtain the status of an Eligible Telecommunications Carrier (ETC)

in the 35 states to be served 98.

Marketing companies have been founded in the UK, France and Germany for promotion outside the USA.

Two gateway stations covering the UK, western Scandinavia, France and western and southern Germany are

located in France. Another gateway station is under construction in Germany. Permission to operate Starlink

user terminals in Germany has already been granted.99

There are agreements with Microsoft and, more recently, with Google100 to collaborate on the transmission of

cloud services and on ‘Ground Station as a Service’ services. These agreements also include the installation

of Starlink gateway terminals at their cloud centre locations.

In addition to these activities in the consumer broadband and enterprise broadband market segments, there

are intensive contacts with the US military; joint technical demos have already been carried out.

Starlink always markets services in the consumer broadband market directly, without the involvement of

external distribution channels.

98 FCC: https://ecfsapi.fcc.gov/file/1020316268311/Starlink%20Services%20LLC%20Application%20for%20ETC%20Dresignation.pdf.

99 Federal Network Agency Order no. 128/2020.

100 Reuters: Google wins cloud deal from SpaceX for Starlink internet service, in: Reuters, 13.05.2021, https://www.reuters.com/technology/google-

wins-cloud-deal-spacex-starlink-internet-service-2021-05-13/ (accessed 27.05.2021).

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FIGURE 3-5: STARLINK MARKET POSITIONING

Elon Musk's real goal

“…I think Elon was mulling it over for some time. The total addressable market for launch, with a conservative

outlook on commercial human passengers, is probably about 6 billion US dollars. But the addressable market

for global broadband is 1 trillion US dollars. If you want to help fund long-term Mars development

programmes, you want to go into markets and sectors that are much bigger than the one you're in, especially

if there's enough connective tissue between that giant market, and what you're doing now. That’s how I recall

it, but that’s a good question for Elon.”101

Gwynne Shotwell, COO of SpaceX

It is assumed102 that Elon Musk will take Starlink public once the business has achieved stable growth and its

appeal to investors has grown even further. On the other hand, a further sale of shares in SpaceX to finance

Starlink seems unlikely, as this could lead to a ‘dilution’ of Elon Musk's shares and possible investor influence

over his plans for Mars.

3.4.2 Kuiper (Kuiper Systems LLC)


Blue Origin, Jeff Bezos' launcher company, was founded in 2000. Work on the Kuiper Project was started

within this company and in 2019 was transferred to the newly formed Kuiper Systems LLC. Blue Origin and

101 A Conversation With Gwynne Shotwell, 2020 Satellite Executive of the Year: in: ViaSatellite, o. D., http://interactive.satellitetoday.com/via/may-

2021/a-conversation-with-gwynne-shotwell-2020-satellite-executive-of-the-year/ (accessed 27.05.2021).

102 Underwood, Kathryn: Will Satellite Company Starlink Go Public and When Is Its IPO?, in: Market Realist, 02.03.2021, https://marketrealist.com/

p/will-starlink-go-public/ (accessed 27.05.2021).

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Kuiper are subsidiaries of Amazon.com Services. The company’s headquarters are located in Redmont,

Washington. According to Amazon, 500 employees are currently working on Project Kuiper.

The ITU filings for the Kuiper constellation were made via the US FCC.


Amazon.com Services is the 100% shareholder.

The initial capex requirement for the Kuiper constellation is in the same order of magnitude as for Starlink,

approximately 10 billion US dollars. Jeff Bezos has pledged to finance this sum and, according to his

statements, has already sold shares in Amazon for this purpose.

Project status

The Kuiper project timeline is well behind that of Starlink. The development of the user terminals does not

seem to have been completed; there is only limited information on a prototype. Information on the status of

satellite development is not being released to the outside world either.

In March 2021, Amazon announced the conclusion of a contract103 with United Launch Alliance to implement

nine launches for Kuiper. Launch dates were not disclosed, but according to filing requirements Kuiper must

have at least 1600 satellites in orbit and be operational by 2026.

Management team

There is little information about Kuiper's management team. Rajeev Badyal, Kuiper's CEO, was previously vice

president at SpaceX. Unlike Elon Musk at SpaceX/Starlink, Jeff Bezos has not taken on an operational role as

CEO at Blue Origin/Kuiper. The following figure shows the Blue Origin management team

FIGURE 3-6: KUIPER MANAGEMENT TEAM [SOURCE: CRAFT]

103 Sheetz, Michael: Amazon signs with ULA for rockets to launch Jeff Bezos’ Kuiper internet satellites, in: CNBC, 19.04.2021a,

https://www.cnbc.com/2021/04/19/amazon-signs-ula-rockets-to-launch-bezos-kuiper-internet-satellites.html (accessed 27.05.2021).

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Value chain

As with Starlink, Kuiper is trying to cover as much of the value chain as possible with services in Jeff Bezos'

companies. However, the delays in Blue Origin's launcher development have been a setback to this approach.

As mentioned earlier, the contract for the first nine launches was recently awarded to UAL.

FIGURE 3-7: KUIPER VALUE CHAIN


Although Kuiper's timeline is significantly behind Starlink's, Kuiper's connection with Amazon and Amazon

Web Services (AWS) gives it a great means with which to enter the market, albeit at a later date.

Unlike Starlink, Kuiper is likely to address the enterprise market first, with support from AWS. US government

and military customers are also potential high-paying clientele for AWS's cloud services. In the consumer

market, the link with Amazon and its more than 150 million Amazon Prime customers104 will be used as a

distribution channel. The fact that Amazon105 has an outstanding position in the area of value-added services,

such as video streaming, plays an important role, as this business area is one of the strongest in the company

in terms of revenue.

Within the mobility segments, the segment of users with fixed user terminals will be prioritised.

104 Mohsin, Maryam: 10 Amazon Statistics You Need to Know in 2021 [March 2021], in: Oberlo, 17.05.2021, https://www.oberlo.com/blog/amazon-

statistics (accessed 27.05.2021).

105 C. Daehnick, I. Klinghoffer, B. Maritz, and B. Wiseman, “Large LEO satellite constellations: Will it be different this time?,” McKinsey & Company,

2020.

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FIGURE 3-8: KUIPER MARKET POSITIONING

3.4.3 OneWeb 106


OneWeb was founded in 2012 as WorldVu Satellites Ltd. by Greg Wyler. In March 2020, OneWeb Ltd. was

forced to file for bankruptcy because its largest investor at the time, Japan's Softbank, was unwilling to

provide further funding to continue operations. In July 2020, the insolvent OneWeb Ltd. was taken over by a

consortium led by the Indian company Bharti Global and the British Government (UK Department for

Business, Energy, and Industrial Strategy).

OneWeb Ltd. has its headquarters in London and a branch office in McLean, Virginia. The satellites are

manufactured by the joint venture company OneWeb Satellites in Merritt Island Florida and in Toulouse, with

Airbus as partner.


Shareholders are the British Government (500 million US dollars), Bharti Global (500 million US dollars),

Hughes (50 million US dollars), Softbank (350 million US dollars) and Eutelsat (550 million US dollars). The

British Government, Bharti and Eutelsat thus each hold 24 percent of the shares.107 A further 500 million US

dollars in capex is needed to fund the full build-out of 650 satellites by 2022.

106 Homepage OneWeb: https://www.oneweb.world/

107 Miller, Seth: Eutelsat makes major LEO commitment with OneWeb investment –, in: PaxEx.Aero, 29.04.2021, https://paxex.aero/oneweb-eutelsat-

investment/ (accessed 27.05.2021).

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FIGURE 3-9: CAPITAL SHARES OF ONEWEB SHAREHOLDERS [SOURCE: PAXEX.AERO)

Project status

With the launch (ST32) of the seventh block of 36 satellites at the end of May 2021, which was carried out by Arianespace from the Vostochny Cosmodrome, Oneweb will have 218 satellites in orbit. With this constellation, OneWeb plans to begin operations in regions above 50° North (UK, Northern Europe, Greenland, Iceland, the Arctic Ocean and Canada) by the end of 2021. Global services are expected to follow in 2022.108

Management team

Following the acquisition by Bharti and the UK, a new management team was established. Eutelsat’s arrival

on the scene may lead to additions or changes to the make-up of the management team.

108 Launch#6 Media Kit: in: OneWeb, o. D., https://www.oneweb.world/launch7-mediakit (accessed 27.05.2021).

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FIGURE 3-10: ONEWEB MANAGEMENT TEAM [QUELLE: CRAFT]

Value chain

OneWeb's business is focused on satellite operations and satellite network operations. The satellites are

manufactured in a joint venture with Airbus, and the ground infrastructure is produced in partnership with

Hughes. The user terminals are developed on behalf of OneWeb and provided by several suppliers.

FIGURE 3-11: ONEWEB VALUE CHAIN

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Following the recent entry of Eutelsat, close coordination between the two companies is expected in the

future. Presumably, customers will also be offered hybrid use of the LEO constellation and GEO satellites of

the Eutelsat fleet, similar to what is planned for Telesat and SES.

The market roll-out will take place in Europe and the UK, and the USA109 and Canada. Initially, the target

customers will be enterprise broadband customers, public authorities and the military. The consumer

broadband market may be left to Eutelsat with its Konnect HTS satellite and the Konnect VHTS satellite

currently under development. The planned user terminal designs indicate that it will serve maritime and

aeronautical customers in addition to fixed enterprise customers. The M2M IoT sector could be covered by

EUTELSAT with its planned Eutelsat (Eutelsat LEO for Objects) ELO constellation.

Capability enhancements are planned for the second generation of OneWeb satellites from 2024-2025. The

aim is to compete with Galileo and Glonass GPS for positioning and navigation timing (PNT)110 services.

FIGURE 3-12: ONEWEB MARKET POSITIONING

OneWeb is planning a gradual expansion of coverage areas, starting with the regions north of the 50th parallel

in Europe, the USA and Canada. Global coverage is expected to be achieved by the end of 2022.

109 Rainbow, Jason: OneWeb creating government subsidiary after buying TrustComm, in: SpaceNews, 10.05.2021, https://spacenews.com/oneweb-

creating-government-subsidiary-after-buying-trustcomm/ accessed 27.05.2021).

110 OneWeb | Network: in: OneWeb, o. D., https://www.oneweb.world/network (accessed 27.05.2021).

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FIGURE 3-13: TIMELINE OF DEVELOPMENT OF ONEWEB’S COVERAGE [SOURCE: PAXEX.AERO)

3.4.4 Telesat Lightspeed111


Telesat is the world's fourth largest operator of GEO satellites. The company is headquartered in Ottawa.

Their first Ka-band LEO satellite was launched in 2018 to secure spectrum rights and for test operations. ITU

filings for the Lightspeed constellation were made through the US FCC.


Telesat's shareholders are the Canadian Public Sector Pension Investment Board with a current 37 percent

stake and Loral Space & Communications Inc. with a 63 percent stake.

According to Telesat, the financial expenditure112 for the implementation of the Lightspeed constellation is

approximately 5 billion US dollars, of which 3 billion is in the form of equity and 2 billion in the form of loans.

111 Telesat: Telesat Lightspeed LEO Network | Telesat, in: Telesat |, 10.05.2021, https://www.telesat.com/leo-satellites/ (accessed 29.05.2021).

112 Cf. Foust, Jeff: Telesat completing financing for Lightspeed constellation, in: SpaceNews, 07.04.2021, https://spacenews.com/telesat-completing-

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Following the merger of Telesat with Space Systems Loral, the resulting company will be floated on the stock

exchange before the end of 2021 in order to create a stable basis for financing.

Project status

Thales Alenia Space was commissioned to manufacture the satellites and build the ground segment in

February 2021.113

The LEO satellites are scheduled to be launched into orbit from 2022.

Management team

FIGURE 3-14: TELESAT MANAGEMENT TEAM [SOURCE: CRAFT]

Value chain

Telesat Lightspeed's value chain has the value creation priorities of a classic GEO fleet operator. The focus of

value creation is on satellite operations and satellite network operations. Sales are handled by external

partners. The implementation of the ground and space segment was awarded to Thales Alenia Space as a

primary contract. The optical terminals are to be supplied by Thales Alenia Space Switzerland.114 The contract

requires Thales to subcontract a large part of the supplies for the satellites in Canada (e.g. MDA).

113 Erwin, Sandra: Thales Alenia selected to build Telesat’s broadband constellation, in: SpaceNews, 09.02.2021, https://spacenews.com/thales-

alenia-selected-to-build-telesats-broadband-constellation/ (accessed 29.05.2021).

114 Solutions, Kratos Defense Security: LEO Mega-Constellations, Squaring Up With GEO, and New Market Opportunities, in: Kratos, o. D.,

https://www.kratosdefense.com/constellations-podcast/leo-megaconstellations-geo-new-market-opportunities (accessed 29.05.2021).

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FIGURE 3-15: TELESAT LIGHTSPEED VALUE CHAIN


Telesat plans to offer its communications services via its existing GEO fleet and/or the LEO constellation

Lightspeed, depending on the respective usages. This is an attempt to meet the challenges of competing with

the LEO constellations of Starlink, Kuiper and OneWeb.

The market launch will be in the USA and Canada, where the largest share of revenue by far is currently

generated with Telesat's GEO fleet. Marketing will take place via the existing distribution channels.

FIGURE 3-16: DISTRIBUTION OF TELESAT GEO SALES BY REGION [SOURCE: CRAFT]

The main target groups are enterprise customers, public authorities and the military; the consumer broadband

segment will not be a focus. Customers with stationary, aeronautical and maritime applications are a priority.

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Market entry is planned for Q3/2022 with the ‘Polar Constellation’ and then in Q2/23 with the ‘Global

Constellation’.

FIGURE 3-17: TELESAT LIGHTSPEED VALUE CHAIN

3.4.5 O3b mPower (SES)115


O3b was founded in 2007 by Greg Wyler and acquired by SES S.A. in 2016. Today, O3b is a 100% subsidiary of

SES. SES Group has approximately 2200 employees and generated revenues of 1.88 billion euros in the

financial year.


The financing of O3b's business activities, and thus the financing of the O3b mPower constellation, is provided

by SES's financial resources. In the SES business plan116 the following financial resources are earmarked for O3b

investments: 370 million euro in 2021, 740 million euro in 2022 and 300 million euro in 2024, totalling 1.4

billion euro or 1.68 billion US dollars. The filings for the O3b mPower constellation were made via Luxembourg.

Project status

The six O3b mPower satellites ordered from Boeing are scheduled for launch in 2021 and 2022 with SpaceX

launchers. Start of operations of the first stage of O3b mPower are planned in 2022.

Management team

Stewart Sanders, Executive Vice President of Technology at SES, serves as Programme Manager for the O3b

mPOWER programme. Other management responsibilities are also performed by SES managers.

115 Homepage SES: https://www.ses.com

116 Reports and Presentations: in: SES, o. D., https://www.ses.com/company/investors/reports-and-presentations (accessed 27.05.2021).

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FIGURE 3-18: SES MANAGEMENT TEAM [SOURCE: CRAFT]

Value chain

SES/O3b is also focused on the provision of services in satellite operations and satellite network operations.

However, through its subsidiary SES Techcom, SES also provides systems engineering and installation services

for gateway and TT&C ground stations. User terminals are developed and manufactured with partner

companies. O3b mPower will have a unified modem product line, which was developed in cooperation with

Gilat and ST Engineering iDirect. Some of the O3b mPower TT&C and gateway stations117 will be operated with

partner companies. Four of the ground stations will be set up at Microsoft Cloud Data Centres.

FIGURE 3-19: O3B MPOWER VALUE CHAIN

117 SES Signs Agreements Across The Globe TO Build Eight, Initial O3b mPOWER Ground Stations: in: SatNews, 28.04.2021,

https://news.satnews.com/2021/04/28/ses-signs-agreements-across-the-globe-to-build-eight-initial-o3b-mpower-ground-stations/ (accessed 29/05/2021).

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SES will jointly market its communications services on the GEO fleet and the O3b/O3b mPower platforms,

similarly to Telesat/Lightspeed. User terminals are being developed to enable either GEO or MEO operation.

O3b's existing customer contacts are likely to be leveraged to serve their regions first, followed by North

America, Canada, Europe and the UK, with SES' current customers enterprise broadband and government and

military customers as the target groups. Stationary applications and the cruise industry, which is important

for SES, will be targeted first.

FIGURE 3-20: O3B MPOWER MARKET POSITIONING

FIGURE 3-21: SES REVENUES IN THE REGIONS [SOURCE: CRAFT]

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3.4.6 AST SpaceMobile (AST SpaceMobile Inc.)118


AST SpaceMobile Inc. was founded in 2017 as AST&S by Abel Avellan. Through a merger with New Providence

Acquisition Corporation, a SPAC company, AST SpaceMobile has been listed on the stock exchange since

March 2021. Filing for the constellation was done via Papua New Guinea, which could, at the very least, make

it difficult to get approval to operate in the USA.


AST Space Mobile's funding comprises 232 million US dollars from the New Providence Acquisition

Corporation and a further 230 million US dollars from investors, including Rakuten, Vodafone, American

Tower and UBS O'Connor. AST estimates a capex requirement of 260 million US dollars for the implementation

of the first expansion stage (Equatorial Constellation). The total requirement including business ramp-up costs

is expected to be around 510 million US dollars. The constellation in the final stages of development

(Global+MIMO) has a financing requirement of 1.7 billion US dollars including business ramp-up costs.119 AST

SpaceMobile expects revenue figures of 181 million US dollars in 2023, 2.63 billion US dollars in 2025 and 9.66

billion US dollars in 2027. This with an expected EBITDA of +90 percent!120 Nevertheless, these figures have not

triggered a gold rush atmosphere. Since AST first traded on 7 March, the share price has almost halved from

13.65 US dollars to 7.75 US dollars.121

FIGURE 3-22: AST SPACEMOBILE REVENUE PROJECTIONS [SOURCE: AST INVESTOR PRESENTATION]

118 Homepage AST: https://ast-science.com/

119 People-first technology: New Providence Acquisition Corp (NPAUU), in: New Providence Acquisition Corp., o. D., https://npa-corp.com/ (accessed

on 27/05/2021).

120 People-first technology: New Providence Acquisition Corp (NPAUU), in: New Providence Acquisition Corp., o. D., https://npa-corp.com/ (accessed

on 27/05/2021).

121 Cf. ASTS: in: Nasdaq, o. D., https://www.nasdaq.com/market-activity/stocks/asts (accessed 27.05.2021).

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Project status

No details are known. The constellation is scheduled to go into operation during the first expansion stage

in 2023.

Management team

The Executive Team and Board of Directors are led by founder Avel Abelan. The Board of Directors includes

employees from New Providence Acquisition Corporation, Rakuten, Vodafone, Tower Alliance and American

Tower.

Value chain

A special feature of the AST SpaceMobile constellation is that users can communicate directly via satellites

with their smartphones. The business model does not envisage concluding contracts with individual users.

AST's services are provided within the framework of a roaming agreement with mobile network operators. If

a user leaves a cell of their mobile phone provider, they receive an SMS offering them roaming via AST

SpaceMobile. If the user agrees, they are billed by their mobile operator.

The main focus of the service provision is satellite operation and satellite network operation. The satellites

are integrated by Nano Avionics, a company in which Abel Avellan has a stake. The payload is supplied by NEC.

FIGURE 3-23: AST VALUE CHAIN


ASTMobile will develop its market in close coordination with mobile operators Vodafone and Rakuten. In the

first expansion stage (Equatorial Constellation) with 20 satellites, the intention is to reach customers in 49

countries in a collaboration with Vodafone, including the Democratic Republic of Congo, Ghana, Mozambique,

Kenya and Tanzania. Operations are scheduled to start in 2023.122 This was confirmed by Mr R. Irmer

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(Vodafone) during the National Satellite Conference.123. According to him, the success of satellites in 5G

networks will crucially depend on the ability to maintain technical performance parameters across the satellite

range. These include latency and ‘seamless connectivity’ of the user with their usual terminal device.

For further market expansion, AST has applied for a licence in Japan together with Rakuten.

FIGURE 3-24: AST SPACEMOBILE MARKET POSITIONING

3.4.7 KLEO Connect124


The company KLEO Connect GmbH was founded as Kaskilo Connect GmbH by Michael Oxfort and Matthias

Spott in May 2017. In September 2017, the company was renamed KLEO Connect GmbH. In 2018, Oxfort and

Spott sold shares in the company to Shanghai Spacecom Satellite Technology for approximately 48 million

euro.125 KLEO Connect GmbH was based in Munich until April 2021, when the company moved to Berlin. The

KLEO constellation uses a filing from the company Trion Space AG (Vaduz), which was applied for via

Liechtenstein. To secure the frequency rights, the company Shanghai Spacecom Satellite Technology launched

two LEO satellites126 into orbit in 2019.

122 Nancymharvey: Vodafone and AST SpaceMobile Unveil Launch Plans | AST & Science, in: AST, 16.12.2020, https://ast-

science.com/2020/12/16/vodafone-and-ast-spacemobile-unveil-launch-plans/ (accessed 27.05.2021).

123 R. Irmer (Vodafone), ‘Broadband and 5G Integration of satellites into terrestrial networks’ Podium discussion, DLR National Conference Satellitenkommunikation in Deutschland 2021, 18 May 2021 (virtual).

124 Homepage KLEO: https://kleo-connect.com/

125 Annual report 2019 of eighty LEO Holding gmbH.

126 KL-Alpha A, B: in: Gunter’s Space Page, o. D., https://space.skyrocket.de/doc_sdat/kl-alpha-a.htm (accessed 27.05.2021).

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FIGURE 3-25: KLEO CONNECT GMBH NETWORK [SOURCE: NORTHDATA]


The journalist Peter B. De Selding127 describes KLEO Connect GmbH as ‘Germany-based, Liechtenstein-

registered and Chinese-financed’. The shareholders128 of KLEO Connect GmbH are:

▪ eightyLEO Holding GmbH (Grünwald): 44.92%

▪ Celeste Holding AG (Vaduz): 2.36%

▪ CED AG (Vaduz): 10%

▪ Shanghai Spacecom Satellite Technology (Shanghai): 42.72%

Michael Oxfort and Matthias Spott are shareholders of eightyLEO Holding GmbH and Shanghai Spacecom

Satellite Technology is a company owned by the Chinese investor GMS.

Celeste Holding AG and Trion Space AG, which hold the filings of KLEO Connect GmbH, were founded at the

same time on 12 September 2017. The authorised signatories for Trion Space AG are Michael Oxfort, Ji Zhou

and Michael Frommelt, for Celeste Holding AG it is Michael Frommelt. The postal address in both cases is c/o

Sophos Trust. CED AG was founded in 2018, the postal address is c/o First Family Advisors Trust, and the

authorised signatory is a member of the Board of Directors of Dorbat Treuhand und Verwaltungsanstalt,

Liechtenstein. Details on the financing of KLEO Konnect GmbH and the KLEO megaconstellation are not

known.

127 Selding, Peter: Germany-based, Liechtenstein-registered, Chinese-financed Kleo Connect nears ITU milestone for 300-satellite constellation, in: Space Intel Report, 20.04.2020, https://www.spaceintelreport.com/germany-based-lichtenstein-registered-chinese-financed-kleo-connect-nears- itu-milestone-for-300-satellite-constellation/ (accessed 27.05.2021).

128 Extract from the commercial register KLEO Connect GmbH.

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Project status

No details are known.

Management team

In 2018, Min Luo and Shawn Sherry were appointed as managing directors. In 2020, Michael Oxfort and

Matthias Spott left KLEO Connect GmbH and Clemens Kaiser and Mark Rigolle were appointed managing

directors in their place.

FIGURE 3-26: KLEO CONNECT MANAGEMENT TEAM [PHOTOS: KLEO]

Value chain

According to the descriptions on the homepage of KLEO Connect, the company wants to place itself as an IoT

service provider. Details are not known. The company's own value creation shares highlighted in Figure 3-27

are estimates derived from business models of other IoT satellite service providers, such as Orbcomm.

FIGURE 3-27: KLEO CONNECT VALUE CHAIN

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As previously mentioned, KLEO wants to position itself in the market as an IoT service provider.129 Details about

the time of market entry are not known. In his presentation at the National

Conference on Satellite Communications in Germany 2021, Dr Clemens Kaiser mentioned that the

implementation phase was to begin in 2021. In his presentation at the conference, he also stated that other

broadband services will become an increasing area of focus for the constellation.

3.4.8 Conclusion

In terms of implementation, the Starlink constellation is the most advanced. The construction of Starlink is

financed by the profits of SpaceX's launcher activities and the proceeds from a ‘cautious’ sale of Elon Musk's

SpaceX business shares. The financing of the first expansion phase can be considered secured and further

phases will probably be financed through an IPO.

Development will be additionally supported by government funding measures (e.g. RDOF) and by orders from

NASA and the US military.

Starlink has adopted its ‘Tesla’ business model with a high proportion of in-house value creation for SpaceX

and Starlink, providing a critical time advantage in product development and manufacturing.

Kuiper has suffered some setbacks in its implementation phase and is currently well behind Starlink. Blue

Origin's launchers will not be available in time, so the first launches will have to be commissioned with ULA

launchers.

Financially, Kuiper is in a good position and Jeff Bezos has pledged to invest 10 billion US dollars. So far, this

has been done through the sale of Amazon shares.

Kuiper's delay is offset to a certain extent by the existence of the Amazon customer base, which will be

targeted as soon as a reliable date for the start of operations is available.

The parent companies (Telesat and SES) or partners (Eutelsat) of the Lightspeed, O3b mPower and OneWeb

constellations have business experience in the GEO satellite sector.

For these three, the plan is to offer a hybrid, coordinated portfolio of LEO/MEO and GEO services.

AST SpaceMobile differs from the other megaconstellations we examined in that it uses commercially

available smartphones instead of specialised user terminals. The financing of the first expansion stage with 20

satellites seems to be secured by the recently completed IPO. In addition, financially strong partners, such as

Vodafone and Rakuten, are also involved in the company.

The shareholder structure of KLEO Connect is opaque and complex. No reliable statements have been made

about the timetable for the implementation of the constellation.

There is also no information regarding the financing of the constellation. The high level of involvement of a

Chinese investor could have a negative impact on the acceptance of KLEO Connect services in the area of

security-relevant IoT applications.

129 Homepage KLEO: https://kleo-connect.com/.

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3.5 Selected cost aspects in the implementation of constellations

As mentioned at the beginning of this chapter, we have selected two of the main cost drivers in the production

of a megaconstellation as examples in order to analyse them in more detail. These are the launch costs and

the satellite production costs.

Using the Falcon 9 and Falcon Heavy launchers as examples, we investigated the extent to which costs could

be reduced by reusing parts of the launcher.

We estimated and compared the production costs of the satellites as far as this was possible from publicly

available information.

3.5.1 Launch costs

The satellites of the SpaceX, Kuiper or OneWeb constellations have a lifespan of about 5 years. The service

life of a GEO satellite, on the other hand, is about 15 years. In a life-cycle cost comparison of constellations

and GEO satellites over a period of 15 years, the costs for three launch campaigns must be taken into account

for the constellations. The launcher cost thus plays an important role when analysing the profitability of a

satellite constellation.

One way of reducing launch costs is being implemented by SpaceX with the reuse of the first stage (booster)

and the payload fairing of its Falcon 9 and Falcon Heavy launchers. This approach is also being pursued in the

micro-launcher community, e.g. by Rocket Lab.130

Below, using the Falcon 9 launcher as an example, we will examine the savings potential that can be achieved

by reusing the first rocket stage and the payload fairing, and what this means for SpaceX in terms of

competitive pricing.

SpaceX is advertising a launch with a new Falcon 9 on its homepage with a price tag of 62 million US dollars;

the price tag for a launch with a new Falcon Heavy, which can carry a payload that is 2.39 times higher, is

stated to be 90 million US dollars (factor 1.45).

130 Associated Press: Rocket Lab’s satellite launch from New Zealand site fails, in: ABC News, 15.05.2021, https://abcnews.go.com/

Technology/wireStory/rocket-labs-satellite-launch-zealand-site-fails-77711230 (accessed 27.05.2021).

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FIGURE 3-28: SPACEX FALCON 9 AND FALCON HEAVY LAUNCH SERVICES [SOURCE: SPACENEWS]

The cost of launching a Falcon 9 with a reused first stage and payload fairing, if required, is around 50 million

US dollars.

Because SpaceX is not a publicly traded company, it does not publish details of its financial results. The

following assumptions are therefore based on statements made by SpaceX management, financial analysts and

business magazines, for example Forbes131.

According to Forbes, SpaceX generated 2 billion US dollars in revenue in 2018, with financial analysts at

Jefferies Group LLC132 assigned a relatively low gross margin (GM) of about 40% to this revenue in 2018.

If we relate the 40% gross margin estimated by Jefferies to the list price of a Falcon 9 launch with a new

launcher of 62 million US dollars, this amounts to a direct cost of 37.2 million US Dollars, or a gross profit (GP)

of 24.8 million US dollars per launch.

In order to examine the structure of the direct costs, we used statements made by Elon Musk during a press

conference in response to questions from journalists regarding the costs of the current Falcon 9 ‘Block 5’.

These can be read in the press conference transcript133.

At the press conference Elon Musk said that the key to Block 5 is that it is designed to do 10 or more flights

with no refurbishment between each flight and that Block 5 boosters are capable of on the order of at least

100 flights before being retired.

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The total cost breakdown would be as follows:

• First stage approx. 60%

• Second stage approx. 20%

• Payload fairing approx. 10% and

• Launch costs approx. 10% (incl. fuel costs at approx. 300,000 to 400,000 US Dollars).

FIGURE 3-29: DISTRIBUTION OF LAUNCH COSTS WITH A NEW FALCON 9

131 Team, Trefis: Revisiting SpaceX’s $36-Billion Valuation After Its First Manned Mission, in: Forbes, 02.06.2020, https://www.forbes.com/sites/

greatspeculations/2020/06/02/revisiting-spacexs-36-billion-valuation-after-its-first-manned-mission/?sh=5f5b548044fb (accessed 27.05.2021).

132 Jefferies - The Global Investment Banking Firm: in: Jefferies, o. D., https://www.jefferies.com/ (accessed 27.05.2021).

133 Sheetz, Michael: Here’s everything Elon Musk told reporters about the reusable rocket that will fly twice within 24 hours, in: CNBC, 12.05.2018,

https://www.cnbc.com/2018/05/11/full-elon-musk-transcript-about-spacex-falcon-9-block-5.html.

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If we apply the percentage cost distribution in Figure 3-29 to the aforementioned total costs of 37.2 million

US dollars, we obtain the individual cost items shown in Figure 3-30.

FIGURE 3-30: INDIVIDUAL COST ITEMS FOR THE LAUNCH OF A NEW FALCON 9

Four different scenarios have been outlined to illustrate the savings potential and a possible development of

launch prices under competitive conditions. Ten launches are considered in each case, assuming that a first

stage can indeed be used up to 10 times without planned maintenance and that a payload fairing can be used

up to 3 times.

Scenario A

• All launches will use a new launcher

• A minimum list price of 62 million US dollars will be attained for all launches

TABLE 3-1: SCENARIO A COSTS AND RESULTS

• Cost of one launch 37.2 million US dollars

• GM per launch 40%

• GP per launch 24.8 million US dollars

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Scenario B

• The first launch is conducted with a new Falcon 9 at a price of 62 million US dollars (e.g. US Military

customers

• The Falcon 9 from the first launch is reused for subsequent launches

• Each subsequent launch is listed at a price of 50 million US dollars

TABLE 3-2: SCENARIO B COSTS AND RESULTS

• Cost per launch with a reused launcher Ø 12.6 million US dollars

• Cost per launch in block of 10 Ø 15.1 million US dollars

• GM with a reused launcher Ø 74.7%

• GM per launch in block of 10 Ø 70.5%

• GP per launch with a reused launcher Ø 37.4 million US dollars

• GP per launch in block of 10 Ø 36.1 million US dollars

Scenario C

• The same as Scenario B but the launch prices with a reused launcher have to be reduced due to

competition. The same GP of 24.8 million US dollars as with a new launcher should be achieved for

these launches.

TABLE 3-3: SCENARIO C COSTS AND RESULTS

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• Same costs as in Scenario B

• Price for a launch with a reused launcher Ø 37.5 million US dollars

• GM per launch in block of 10 Ø 39.9 million US dollars

• GM with a reused launcher Ø 66.2%

• GM per launch in block of 10 Ø 62.1%

Scenario D

• This scenario is intended to represent the worst case scenario. Due to extremely strong competition,

prices have to be reduced even more than in scenario C. Nevertheless, it should still be possible to

achieve a GM of 40%, as in Scenario A.

TABLE 3-4: SCENARIO D COSTS AND RESULTS

• Same costs as in Scenarios B and C

• Price for a launch with a reused launcher Ø 21.1 million US dollars

• Price per launch in block of 10 25.1 million US dollars

• GP with a reused launcher Ø 8.4 million US dollars

• GP per launch in block of 10 Ø 10.1 million US dollars

The authors' assessment is that the likelihood of Scenario D occurring is low. However, we should demonstrate

what reserves SpaceX has at its disposal to stand up to a competitor should the need arise, from a strategic

point of view. It is more likely that the 50 million US dollar list price for a launch with a reused launcher is

already extremely competitive. And if competitors cannot catch up, SpaceX will try to maintain that price for

as long as possible.

Rideshare cost

In its rideshare programme, SpaceX currently offers a ride on a Falcon, bookable online for 1 million US dollars

for a payload of up to 200 kilograms. Each additional kilogram of mass costs 5000 US dollars.

Assuming that, in the case of a reused launcher, more fuel is required and the payload must therefore be

reduced by up to 30%, the Falcon will only be able to have a payload of 22,800 kg – 6,840 kg = 15,980 kg

available for a launch into LEO orbit. With a launch price of 50 million US dollars (Scenario B), this gives a price

of 3133 US dollars per kilogram.

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For Scenarios C and D, prices per kilogram are as follows: • Scenario C (list price for reused launcher Ø 37.5 million US dollars): 2347 US dollars per kilogram and

• Scenario D (list price for reused launcher Ø 21.1 million US dollars): 1320 US dollars per kilogram

In contrast, the planned prices for the German micro-launcher start-ups are:

• Isar Aerospace: 12,020 US dollars per kilogram,

• HyImpulse: 8414 US dollars per kilogram,

• Rocket Factory Augsburg: 2764 US dollars per kilogram.

A US dollar exchange rate of 1.2 was used to convert the prices that were quoted in Spiegel Magazine.134

Should SpaceX succeed in establishing a regular shuttle service for ridesharing on the basis of its US DoD and

NASA contracts and the Starlink launches, this would pose a serious threat to the business plans of the German

micro-launcher start-ups.

Falcon Heavy

With the use of the Falcon Heavy, the launch costs or prices can be reduced even further, provided that the

greater payload can be fully utilised during a launch. In a first approach, a greater payload by a factor of 2.39

and an additional price by a factor of 1.45 would result in a total factor of about 0.6. Within this order of

magnitude, the previously discussed Falcon 9 prices could be reduced even further in case of competition.

Impact on Starlink launch costs

A Falcon 9 can launch 60 Starlink satellites (v1.1), each with a mass of 260 kilograms. The cost of launching a

satellite with a reused launcher is 12.6 million US dollars / 60 = 210,000 US dollars. A competitor who does

not have their own launch capability would have to expect costs of 833,000 US dollars for a launch price of 50

million US dollars. With a launch price of 37.5 million US dollars (Scenario C), their costs would be 625,000 US

dollars. This is assuming that the competitor's satellites can also be launched in batches of 60 with a launcher.

The costs for a competitor without their own launch capability would thus increase by a factor of 3 to 4

compared to the costs of Starlink within the SpaceX group of companies.

Conclusion

SpaceX has done an excellent job in developing the booster and fairing reusability technology. However, we

should bear in mind that NASA and the US military have been, and continue to be, significant sources of

funding for SpaceX.

The low cost of the Falcon launcher is an important cost criterion for Starlink. Competitors who do not have

their own launch capability are faced with the dilemma of either hiring the services of SpaceX to launch their

satellites at a low cost, and thereby indirectly promoting Starlink, or booking their satellites with SpaceX's

competitors at a greater cost.

O3b mPower / SES has chosen SpaceX and Kuiper has chosen the competitor United Launch Alliance.

134 Se idler, Christoph: A-939f55a1-db0b-4cf3-9d8d-fc6e21d46f25, in: DER SPIEGEL, Hamburg, Germany, 30.04.2021, https://www.spiegel.de/ wissenschaft/weltall/isar-aerospace-hyimpulse-rfa-wettbewerb-fuer-deutsche-raketenbauer-a-939f55a1-db0b-4cf3-9d8d-fc6e21d46f25 (accessed 27.05.2021).

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3.5.2 Satellite costs

The satellites of the megaconstellations under consideration differ in terms their respective technical

specifications, in some cases considerably. The mass of a single satellite ranges from 147 kilograms for

OneWeb to 260 kilograms for Starlink and up to about 1800 kilograms in the case of mPower O3b's satellites.

Their production costs satellites also vary.

The values of 50,000 US dollars per kilogram to 60,000 US dollars per kilogram (e.g. for Intelsat 29e about 400

million US dollars for a mass of 6550 kilograms and in the case of Inmarsat 5 about 220 million US dollars for

a mass of 4000 kilograms), used for cost estimation in the design of large communications satellites, do not

apply when considering the production costs of satellites for megaconstellations.

SpaceX

SpaceX does not provide any concrete figures on the production costs of a Starlink satellite. In one of his

interviews, Elon Musk only mentioned that at the time of the interview, the launch costs for a satellite would

be slightly higher than the production costs of a satellite. This would mean that the cost of a 227-kilogram

satellite (without optical links) would be less than 618,000 US dollars, assuming the launch price of a new

rocket. However, if the launch price with a reused launcher is used for comparison, the estimated cost would

be less than 252,000 US dollars. The mass-related price thus ranges between 2700 and 1100 US dollars per

kilogram. The projected service life is given as 5 years.

OneWeb

By contrast, a number of internet sources estimate the cost of a OneWeb satellite at 700,000 to 900,000 US

dollars. The mass-based price is around 4760 to 6200 US dollars per kilogram. These prices do not include

optical links. OneWeb satellites are also expected to have a lifespan of five years.

Lightspeed Telesat

The Lightspeed constellation is expected to be made up of 298 satellites with a mass of about 700 kilograms.

The contract with Thales is worth 3 billion US dollars. This includes the production of the satellites as well as

other services. It has not been possible to determine conclusively what these are. Here are some indications:

“That contract, which includes network management software and integration of the satellites with

gateways, was valued at $3 billion, with Telesat estimating the total cost of the system at $5 billion.”135

135 Cf. Foust, Jeff: Telesat completing financing for Lightspeed constellation, in: SpaceNews, 07.04.2021, https://spacenews.com/telesat-

completing-financing-for-lightspeed-constellation/ (accessed 21.06.2021).

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“Telesat will rely on Thales Alenia Space not only to provide the space and mission segments, but also to be

responsible for the end-to-end network performance and related specifications of the system.”136

“Europe’s Thales Alenia Space is building the low Earth orbit (LEO) satellites in a $3 billion contract, including

network management software and gateway integration.”137

Assuming that, in addition to the 298 satellites, Thales also supplies 30 gateway stations and the software for

network management and satellite control, the following estimate can be made:

• Price for 298 satellites plus gateway sites and software: 3 billion US dollars

• Price for 30 gateway sites including network equipment and SW licences (per gateway 5 million US

dollars): 150 million US dollars

• Price for 298 satellites: 2850 million US dollars

• Price per satellite: 9.6 million US dollars

Based on this, the mass-based price is approximately 13,700 US dollars per kilogram. This price includes the

optical links supplied by Thales Alenia Space Switzerland. The satellites have a service life of 10 years.

O3b mPower

SES commissioned Boeing to deliver seven satellites in 2017 and a further four satellites in 2020. The satellites

are based on Boeing's 702X platform and have a mass of approximately 1800 kilograms. The contract for the

latter four satellites is worth approximately 566 million US dollars, including launches and insurance.

The insurance for the Falcon 9 launcher is about 4%. If you take the costs of a launcher as 37.2 million US

dollars as a basis for an analysis, this gives you a corresponding insurance premium of about 1.5 million US

dollars.

The insurance premium for a satellite in 2018 was approximately 5% of the satellite price, with an upward

trend. In the source mentioned below, a maximum value of 10% was forecast.138

With these assumptions, the price for one satellite is calculated as follows:

• Price for four satellites, launches and insurance: 566.0 million US dollars

• Price for two Falcon 9 launches: 100.0 million US dollars

• Price for insuring two Falcon 9s (4% of 37.2 million US dollars): 3.0 million US dollars

• Price for four satellites including insurance: 463.0 million US dollars

• Price for insuring four satellites (10% of satellite price): 42.1 million US dollars

136 Cf. Thales Alenia Space selected by Telesat to build its broadband 298-satellite constellation Lightspeed: in: Thales Group, 09.02.2021,

https://www.thalesgroup.com/en/worldwide/space/press-release/thales-alenia-space-selected-telesat-build-its-broadband-298 (accessed

21/06/2021).

137 Cf. Rainbow, Jason: Telesat raising $500 million in debt for Lightspeed broadband network, in: SpaceNews, 15.04.2021, https://spacenews.com/telesat-raising-500-million-in-debt-for-lightspeed-broadband-network/ (accessed 21.06.2021). 138 Cf. Foust, Jeff: Space insurance rates increasing as insurers review their place in the market, in: SpaceNews, 15.09.2019, https://spacenews.com/space-insurance-rates-increasing-as-insurers-review-their-place-in-the-market/ (accessed 21.06.2021).

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• Price for four satellites: 420.9 million US dollars

• Price per satellite: 105.2 million US dollars

The mass-based price is approximately 58,400 US dollars per kilogram. The satellites do not have any optical

links and have a service life of 12 years.

AST Spacemobile

AST Spacemobile plans to start operations with 20 satellites and then expand the constellation in three further

phases with 45, 45 and 58 satellites, up to a total of 168 satellites by 2027. The constellation is then set to

grow to a total of 336 satellites by 2030. These are expected to have a mass of > 1000 kilograms and be

equipped with antennas with an area of 900 square metres.

For the launch configuration with 20 satellites, AST&T estimates costs of about 510 million US dollars.

Assuming about 100 million US dollars for the launch costs and about 50 million US dollars for the ground

segment, this results in costs of 18 million dollars per satellite and a mass-based price of 18,000 US dollars per

kilogram.

KLEO Connect

For the KLEO constellation, no data was available with which to estimate the satellite price

Overview of production costs

The following figures summarise the production costs for one satellite and the costs per kilogram of mass.

FIGURE 3-31: PRODUCTION COSTS OF A SATELLITE

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FIGURE 3-32: PRODUCTIN COSTS BASED ON 1 KILOGRAM OF

MASS

The prices of the satellites are not fully comparable, as the technical complexity and mass of a satellite depend

on their respective uses.

A high satellite price alone should not be seen as negative. Other factors, such as those listed below, also

affect the economic viability:

▪ the number of satellites required for the constellation

▪ the service life of the satellites and

▪ the transmission capacity and utilisation profile of a satellite.

The costs per sellable Bit have been calculated in Section 4. This calculation considers the respective satellite

price and all the above-mentioned factors.

3.6 Competitiveness of megaconstellations

The constellations considered in this trend analysis provide customers with broadband access to the internet

via a satellite link.

In doing so, they compete with each other and with the providers of equivalent services via other technical

products (so-called substitutes), the operators of GEO satellites, mobile networks as well as fixed and cable

networks.

To define the competitive forces acting on the megaconstellations and assess the competitiveness of the

constellations, we have used Porter's Five Forces model139.

139 Porter, Michael: Competitive Strategy: Techniques for Analyzing Industries and Competitors, Export, New York, USA: Free Press, 2004.

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FIGURE 3-33: THE FIVE COMPETITIVE FORCES ACCORDING TO PORTER

The five competitive forces include:

1. competition in the market with established megaconstellations

2. the market power of customers

3. the market power of subcontractors and suppliers

4. the threat of substitute services from operators of GEO satellites, mobile networks, fixed and cable

networks and

5. the threat from new competitors in the field of LEO/MEO constellations that are about to enter the

market.

In addition, in the case of megaconstellations, the inherent danger of collision with satellites from other

megaconstellations and national restrictions on the use of services must also be taken into account.

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The collision of satellites could develop into a catastrophic event (Kessler syndrome), which could affect entire

megaconstellations. National restrictions and bans on the use of services lead to regionally limited gaps in the

utilisation of the affected constellations and thus cause economic losses for the companies concerned.

Established competitors in the market

Starlink is the first megaconstellation to begin operations in a beta test phase. The first expansion stage of the

constellation has been achieved and regular operation with the then usable footprints is scheduled to start at

the end of 2021.

The prices for the beta phase have been set in such a way that the prices of the GEO substitutes are narrowly

undercut, while a higher performance is promised.

It is likely that Starlink will lower its prices as soon as other megaconstellations enter the market or if

substitutes lower their prices.

The market power of customers

For customers who depend on low latency for their applications, the megaconstellation market is initially a

seller's market. The market power of customers is limited and will only increase when more

megaconstellations have entered the market and competitive offers become available.

As the first mover, Starlink will benefit from this situation, while its followers will have to deal with the prices

set by Starlink right from the start.

The market power of subcontractors and suppliers

Operators of megaconstellations with a relatively high vertical integration are the least vulnerable to (price)

pressure from sub-contractors and suppliers. Therefore, due to its high vertical integration, Starlink is least

affected by subcontractor and supplier pressure. Kuiper forfeited its advantages for at least the initial phase

when it had to buy launcher services from UAL as a result of Blue Origin’s failures. OneWeb benefits from its

joint venture with Airbus for satellite procurement. AST SpaceMobile has integrated satellites into a

subsidiary, although it should be noted that this company has not previously developed satellites of this size

and complexity.

Threats from substitute services

At the very latest, when Starlink starts offering its services in the regions previously served by GEO satellite

operators, fixed-line and cable network operators and mobile solution providers, existing suppliers will be

forced to react. One of the first measures is likely to be price reductions. For the megaconstellations entering

the market later, this will further worsen their position vis-à-vis the first mover, Starlink.

New competitors

All megaconstellation operators must first overcome the following hurdles:

I. Securing filings

II. Securing financing, at least until regular operation of the first operating phase,

III. Comprehensive planning for financing until the final expansion of the constellation, and

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IV. Availability of the infrastructure within the planned time and cost framework, as well as in the

required technical functionality and reliability.

An assessment of the megaconstellations, regarding the extent to which the megaconstellations considered

fulfil the above-mentioned requirements, is summarised in the following figure.

Category

Starlink Kuiper Lightspeed O3b

mPower

OneWeb AST

SpaceMobile

KLEO

Connect

I

II.

III.

IV. FIGURE 3-34: MEETING THE REQUIREMENTS FOR MARKET ENTRY

The best-placed constellations include Starlink, Lightspeed and O3b mPower. In the case of Kuiper, the

information available does not allow for a sufficient assessment of whether user terminals and satellites will

be available on time and within budget. Hence the lower rating in Category I, Filings.

The OneWeb constellation still lacks funds for financing the first expansion stage, and no reliable concept has

yet been communicated for financing the constellation in the final expansion stage. However, in view of the

financial strength of the shareholders, the UK Government, Eutelsat and Bharti, financing should be possible.

AST SpaceMobile's lower rating in Category III stems from the fact that the satellites are due to be integrated

by a subsidiary that has not previously integrated satellites of this size and complexity, which could result in

delays that could in turn have an impact on the business model. AST SpaceMobile's business planning assumes

very high profit margins from the very beginning of the operational phase. The financing of the expansion

phase is expected to be largely covered by the extremely high margins (EBITDA > +90%) from the operation

of the first expansion phase. We consider this to be extremely challenging.

No reliable information is available for KLEO Connnect that would allow for an assessment corresponding to

that of the other constellations.

3.7 Megaconstellations in China

"We are planning and developing space Internet satellites and launching experiments. For satellites, the state

will also set up a Guo Wang ‘State Grid’ company to be responsible for the overall planning and operation of

space Internet construction."140

Bao Weimin, director of the CASC Science and Technology Committee

The Chinese response to Elon Musk's megaconstellation Starlink seems to be Guong Wang (GW), recently

renamed China SatNet141. The project is anchored in the 14th Five-Year Plan and is managed as a company by:

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▪ Zhang Dongchen (张冬辰) (Chairman),

▪ Yang Baohua (杨保华) (General Director and Board Member) and

▪ Li Xiaochun (李晓春) (Board member).

The megaconstellation142 China SatNet is expected to be made up of a total of 12,992

satellites.

TABLE 3-5: CHINA SATNET CONSTELLATION [SOURCE: FOOTNOTE 140]

The frequency usage rights were applied for from the ITU in September 2020:

▪ 37.5–39.5 GHz (space-to-Earth),


▪ 47.2-50.2 GHz (Earth-to-space) and


The previously planned projects143

▪ Hongyun, 864 satellites, services to connect underserved regions

▪ Hongyan, 320 Satellite, maritime, aeronautical and mobile backhaul services and Galaxy Space, 5G

backhaul and IoT services

are likely to be integrated into or replaced by the China SatNet project.

140 Guowang, Renamed China SatNet, Will Be China’s Global Broadband Provider: in: CircleID, o. D., https://www.circleid.com/posts/20210329-

guowang-starlink-will-be-chinas-global-broadband-provider/ (accessed 27.05.2021).

141 The Dongfang Hour Newsletter - Issue #2: in: Revue, 17.05.2021, https://www.getrevue.co/profile/dongfanghour/issues/the-dongfang-hour-

newsletter-issue-2-615781 (accessed 27.05.2021).


guowang-starlink-will-be-chinas-global-broadband-provider/ (accesses on 27/05/2021b).


guowang-starlink-will-be-chinas-global-broadband-provider/ (accesses on 27/05/2021b).

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The Chinese government has thus consolidated its activities in the field of megaconstellations and will

henceforth manage them centrally. It will be interesting to see how international participation by Chinese

companies, such as that of the Shanghai Spacecom Satellite Technology in KLEO Connect GmbH, will be dealt

with in the future.

The following quotes from interviews in China News Weekly 144 show the potential threat attributed by the

Chinese leadership to an American megaconstellation :

"By means of ’combining the military with the people', Starlink can meet the military needs of the United

States." Yang Yiqiang believes that satellite Internet is more than simply providing network services for areas

that cannot be covered by ground networks. There are many military and national security behind it. "Similarly,

for China, network security has always been a hanging sword. After all, the root servers are all overseas, and

the satellite Internet is equivalent to rebuilding a new network system."

And further:

"Satellite Internet is more like a space-based iron tower. It can not only provide broadband services. If you

mount a camera on it, you can provide remote sensing services. If you add a navigation-enhanced payload,

you can provide services for autonomous driving. It produces many applications, more like a space-based

information highway."

With this in mind, the Chinese government will very likely refuse to issue operating licences to foreign

megaconstellation operators on Chinese territory and will not allow their satellites to keep their broadcasting

operations activated when flying over Chinese territory.

In addition, efforts will be made to convince countries that are already collaborating with China in the Belt

and Road Initiative and the Spatial Information Corridor145 to give preference to China SatNet. This applies

particularly to those nations that are already financially dependent on China.

For the megaconstellations considered here, this means that there will be several large white spots on the

map, which will have to be taken into account accordingly in satellite utilisation planning and business plans.

144 Anonymous: SpaceX produces 60 satellites a month. Do Chinese companies want to enclose space?, in: Teller Report, 27.10.2020a,

https://www.tellerreport.com/news/2020-10-27-spacex-produces-60-satellites-a-month--do-chinese-companies-want-to-enclose-space-.rJGitnxHOD.html (accessed 27.05.2021).

145 Spatial information corridor to build, bringing opportunities to satellite_Xinhua Finance Agency: in: XFinance, o. D.,

http://en.xfafinance.com/html/Industries/Technology/2016/280692.shtml (accessed 29.05.2021).

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3.8 Military use of megaconstellations

The Pentagon's Space Development Agency (SDA) was established in 2019 to coordinate all space projects of

the US military. The National Defense Space Architecture was developed under its direction. This architecture

is based on a network of GEO satellites and MEO and LEO satellite constellations. It consists of the following

capability layers, as shown in Figure 3-35:

▪ Transport Layer

▪ Tracking Layer

▪ Custody Layer

▪ Navigation Layer

▪ Support Layer and

▪ Deterrence Layer.

Tranche 0 of the Transport Layer satellites and the Tracking Layer satellites have already been ordered and

the satellite launches are scheduled for 2023. Tranche 1 with 150146 Transport Layer satellites is scheduled to

be put out to tender in January 2022 at the latest, with launches scheduled to begin in 2024.

FIGURE 3-35: US NATIONAL DEFENCE SPACE ARCHITECTURE [SOURCE: SPACENEWS]

The contracts for Tranche 0 were awarded as follows:

146 DoD Space Agency Moves Seen As Signs Of Real Change: in: Space News, o. D., https://bt.e-

ditionsbyfry.com/publication/?i=699725&article_id=3973621&view=articleBrowser&ver=html5 (accessed 27.05.2021).

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Transport Layer

▪ York Space Systems: 7 Class A satellites, 3 Class B satellites, contract value 94 million US dollars

▪ Lockheed Martin: 7 Class A satellites, 3 Class B satellites, contract value 187.5 million US dollars

A total of 10.7% of the order value is earmarked for an order to Backnang. With 34 laser terminals due for

delivery, this corresponds to a unit price of $19.125M/34 = $562,000.

Tracking Layer (Missile Warning and Tracking)

▪ L3Harris: 4 satellites, contract value 194 million US dollars

▪ SpaceX: 4 satellites, contract value 149 million US dollars

Launch Task Orders

▪ ULA: 2 Task Orders, contract value $224.3M (USSF-112, USSF-87) $112,15M/Launch

▪ SpaceX: 2 Task Orders, contract value $159.7M (USSF-36, NROL-69), $79.85M/Launch

The satellites of both capability levels are connected to each other via ‘optical crosslinks’, as shown in Figure

3-36. For this purpose, the tracking satellites are each equipped with 4 or 2 laser terminals.147

FIGURE 3-36: OPTICAL CROSSLINKS TRACKING- AND TRANSPORT-LAYER147

147 SDA Presentation Industry Day 04/02/2020.

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FIGURE 3-37: LASER TERMINALS OF TRANSPORT-LAYER SATELLITES147

The 150 satellites of Tranche 1 of the Transport Layer Constellation will not become operational until

2024/2025.

However, the threat of hypersonic weapon systems from Russia and possibly China already exists and the

need for an efficient surveillance system, combined with the near real-time capability of the Transport Layer

Constellation, is of utmost urgency.

As an interim solution until the transport layer constellation becomes operational, and subsequently expands,

SDA plans to lease capacity on the Starlink and Lightspeed constellations. Investigations and technical trials

have already been carried out for this purpose. In addition, there is close coordination with SpaceX and Telesat

on the design of the laser terminals. The aim is to ensure the interoperability of the laser terminals in order

to enable optical communication between the civilian satellites and the transport layer satellites148. The

communications network of military and commercial megaconstellations makes it even more difficult for a

potential attack to interrupt individual communication links.

148 Erwin, Sandra: Thales Alenia selected to build Telesat’s broadband constellation, in: SpaceNews, 09.02.2021b, https://spacenews.com/thales-

alenia-selected-to-build-telesats-broadband-constellation/ (accessed 27.05.2021).

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Collaboration with the US military is of high commercial value for SpaceX. In addition to the existing business

relationships in the launcher sector, this opens up another market for the delivery of LEO satellites to a

financially strong customer (tracking layer and future follow-up transport layer tranches). This will ensure

further utilisation of production capacities.

Starlink and Lightspeed can both hope for long-term and lucrative contracts from the US military and other

military customers for the use of the communication capacities on their megaconstellations.

In Europe and the UK, OneWeb and O3b mPower will also target the military as a client with their portfolio of

services. These customers need global, broadband communication with low latency times and their

requirements cannot be satisfactorily met by currently available satellite communication capacities.

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4 ANALYSIS OF THE PRODUCTION COSTS OF BROADBAND SERVICES

In the previous section, we focused on an analysis and presentation of the performance parameters of

planned satellite constellations including the price offerings for services on the market. This section will deal

with the production costs from the perspective of satellite operators and providers of broadband services.

The aim is to forecast the margins of the satellite constellations and project them onto current price offerings.

In the previous section we demonstrated that the price offerings of the constellations are high compared to

terrestrial equivalents, suggesting that broad market acceptance is doubtful. In this section, we contrast those

price offerings with production costs and show that the prices include considerable margins that could be

used to survive in the market as competitive pressure increases. We will also show that the high price offerings

are linked to the current supply of services, which is limited because of the ongoing growth of constellations.

This means that the supply shortage can be used in line with market mechanisms to tap first into customers

who are willing to pay a higher price. Our analysis will therefore provide insights into what pricing can be

expected after market saturation and what technical levers can be used to survive a price differentiation

competition.

For this purpose, we mainly calculate the costs associated with providing a broadband internet connection via

satellite. A realistic calculation requires many input parameters, some of which can be found in the literature

or in press releases. In some cases, however, we undertook more complex calculations or simulations of our

own.

4.1 How many satellites does a LEO constellation need?

This section looks at the number of satellites in a constellation, which is a crucial parameter for calculating the

costs of a constellation and the costs per user.

Here, we first determine the minimum number of satellites needed in a shell to reach any point on Earth. For

inclined trajectories, the aim is to achieve unbroken coverage between the maximum reachable latitudes in

the north and south. A discussion of more complex constellation designs with multiple shells is not included

here, as it would not significantly impact insights into cost structure. The calculation of the number of satellites

shown below is intended to estimate the costs for a generic constellation. However, the results can also be

used to draw conclusions about the parameters of constellations currently under construction.

Essentially, the number of satellites is determined by the following parameters:

• Minimal elevation: the lowest elevation angle under which a user terminal on Earth can

communicate

• Orbital altitude: the altitude of the satellite orbit above mean sea level

• Inclination of the satellite trajectories

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FIGURE 4-1: IMPORTANT PARAMETERS FOR CALCULATIONS RELATED TO LEO CONSTELLATIONS (SOURCE:

NSR)

The range on Earth in which communication with a satellite is possible can be determined from the minimum

elevation and orbital altitude of the satellite. This area is referred to below as the Field-of-View (FoV). Most

satellites designed for LEO constellations can form several directable beams within the FoV (cf. Figure 4-2).

However, simultaneous 100% coverage of the entire FoV is usually not possible for a single satellite, as we will

demonstrate in section 4.5.

FIGURE 4-2: DEFINITION OF FIELD-OF-VIEW AND BEAM PARAMETERS

An important constraint for LEO constellations is the protection of satellites in geostationary orbit (GEO). The

strategies employed to protect these orbits from interference have an impact on the number of satellites in a

constellation; we take this into account as this requirement reduces the FoV of NGSO satellites.

4.1.1 Protecting the geostationary orbit

Satellite constellations in LEO share data transmission frequency ranges with all other satellite systems. In

particular, the frequency ranges designated for LEO constellations are occupied by existing GEO satellites.

Strategies to avoid interference between LEO and GEO or MEO satellites are therefore essential.149 Measures

include limiting the radiated power150 of NGSO systems in the direction of GEO systems (both in the direction

of the space segment and in the direction of the ground segment). Various avoidance strategies exist to

149 International Telecommunication Union (ITU) recommendation ITU-RR No. 22.2.

150 International Telecommunication Union (ITU) recommendation ITU-R Nos. 22.5c seq.

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prevent an NGSO Earth Station (ES) exceeding the permissible interference power in the GEO system.151

The exclusion zone angle min is the minimum angle between two straight lines (one between the GSO ES and

the GEO satellite and the second between the NGSO ES and the NGSO satellite),152 as shown in Figure 4-3. For

implementation under ITU-R rules, this angle is considered a hard limit beyond which the NGSO system

operator commits to interrupting operations between the specific combination of NGSO ES and satellite. If

the angle falls below min, the NGSO system operator must either wait until another satellite with a higher angle

is available or choose a redundant satellite for the specific ground station location. The size of the exclusion

zone angle is a function of many system-specific parameters and will not be described in detail here.

The exclusion zone angle is used here as an example of a strategy for avoiding interference between GEO and

NGSO systems in order to study how it affects numbers of satellites. For this purpose, Figure 4-4 shows the

FoV of LEO satellites at different locations. The lighter colour marks areas with exclusion zone angles smaller

than 15°. To achieve gap-free coverage, satellites are placed sufficiently close together as shown in Figure 4-

5.

FIGURE 4-3: DEFINITION OF AN EXCLUSION ZONE ANGLE153

151 International Telecommunication Union (ITU) recommendation ITU-R S.1431: Methods to enhance sharing between non-GSO FSS systems (except

MSS feeder links) in the frequency bands between 10-30 GHz.

152 International Telecommunication Union (ITU) recommendation Rec. ITU-R S.1503.

153 Source: International Telecommunication Union (ITU) recommendation, Rec. ITU-R S.1503.

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FIGURE 4-4: FOV WITH AREAS IN WHICH COMMUNICATION IS NOT PERMITTED IN ORDER TO PROTECT THE GEO

FIGURE 4-5: FOV OF MULTIPLE LEO SATELLITES POSITIONED TO ACHIEVE GAP-FREE COVERAGE

4.1.2 Minimum number of satellites

Gap-free coverage of the service area of an NGSO constellation requires the FoVs of all satellites to be

superimposed without gaps. In all common constellation designs, as shown in section 2.1.8, the density of

satellites is lowest at the equator and highest at the latitudes corresponding to the inclination angle.

To take into account the limitations of the FoVs imposed by the protection of GEO, an arrangement of

satellites is chosen as shown in Figure 4-6. Here, at least two satellites are available at all locations in the

service area, at least one of which can be operated without affecting GEO.

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FIGURE 4-6: ARRANGEMENT OF THE FOV TO ACHIEVE GAP-FREE COVERAGE OF THE SERVICE AREA

The results of our calculations are shown in Figure 4-7. The figure shows the minimum number of satellites

for a LEO constellation with a shell at a 55° inclination as a function of the orbital height and the minimum

elevation at the user terminal. The expected correlation between orbital altitude (h) and the number of

satellites can be seen in the figure. The number of satellites decreases as the orbital altitude increases and

increases as the minimum elevation of the user terminal increases. A major impact of the elevation angle can

be seen here. For example, at an orbital altitude of 600 kilometres, the number of satellites required increases

from 1100 to 1600 when the minimum elevation angle is increased by 5°.

FIGURE 4-7: MINIMUM NUMBER OF SATELLITES FOR A LEO CONSTELLATION WITH A SHELL AT 55° INCLINATION AS A FUNCTION OF ORBITAL

ALTITUDE AND MINIMUM ELEVATION AT THE USER TERMINAL

This example illustrates the following:

• A constellation cannot be designed independently of the user terminal, as the properties of the

latter determine the essential parameters of the constellation.

• The technical parameters of individual components have a significant bearing on a satellite

constellation. Even small changes in such parameters can lead to major changes to the

constellation design.

• Although in principle the satellites allow for Earth-spanning coverage, constellation design –

especially inclination – determines and maximises the density of satellites over certain regions.

This in turn determines the service area, which we explore in more detail in the following section.

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4.2 Addressability — time-based accessibility for clients via a LEO satellite

To calculate the marketable transmission capacity of a satellite constellation, numerical data on the

addressable customers are crucial. In all satellite trajectories outside GEO, a satellite moves relative to the

Earth and is not exclusively positioned over the parts of the Earth where customers are located.

When designing a constellation, the expected density or distribution of customers on the Earth's surface is a

decisive factor. For this section, we have devised a method to estimate the ‘utilisation’ of a single satellite.

We refer to the utilisation time of a LEO satellite as a percentage of overall time as ‘addressability’. Since we

did not find such information in the literature and the sources consulted, we have developed a calculation

method and used it to carry out various analyses.

The basis is the trajectory of a single LEO satellite, which is determined by the parameters of the inclination

angle and orbital altitude. Depending on the minimum elevation at the user terminal, the satellite has a field-

of-view (FoV) that moves over the Earth according to the satellite trajectory.

For our analyses here, the trajectories of satellites were simulated over 60 days in order to obtain sufficient

data. The ground tracking of a LEO satellite at an altitude of 600 kilometres at 50° inclination is shown in Figure

4-9 for a period of 60 days. For Figure 4-8, the FoV of the satellite was determined and changed time-

dependently with a resolution of 1 second in accordance with the satellite trajectory.

FIGURE 4-8: FIELD-OF-VIEW OF A LEO SATELLITE AT 550 KM ORBITAL ALTITUDE WITH A TERMINAL ELEVATION OF AT LEAST 30°

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FIGURE 4-9: TRAJECTORY OF A LEO SATELLITE AT 50° INCLINATION OVER A PERIOD OF 60 DAYS

FIGURE 4-10: POPULATION DENSITY ON EARTH; PEOPLE PER PIXEL; PIXEL SIZE: 30 ARC MINUTES

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FIGURE 4-11: PROPORTION OF LANDMASS COVERED BY THE FOV OF A LEO SATELLITE PLOTTED OVER TIME

FIGURE 4-12: NUMBER OF INHABITANTS WITHIN THE FOV OF A LEO SATELLITE PLOTTED OVER TIME

For further analysis, data154 for the Earth's land areas and population were used to determine the proportion

of land areas within the FoV and the number of inhabitants living within the FoV. We took population figures

from the Center for International Earth Science Information Network (CIESIN),155 which are based on world

population data for 2015 and are shown in Figure 4-10. We used the CIESIN National Identifier Grid to allocate

land areas and population figures to countries.156

The analyses produced sample time series (illustrated in Figures 4-11 and 4-12) for a period of six

hours. The data were evaluated by land mass, as shown in Figure 4-13, with the proportion of the land mass

within the FoV of a satellite plotted on the abscissa (x-axis). On the ordinate (y-axis) the figure shows the

percentage of time during which the ‘minimum fill level’ of the FoV is reached. Thus, for example, if we

consider the Earth’s total land mass, for 70% of the time 1% or more of the land mass is within the satellite's

FoV. By contrast, the FoV is only 100% filled with landmass 11% of the time.

If, for example, it is assumed that the FoV should be filled with land mass 20% of the time in order to use the

satellite to its full capacity, the following utilisation rates can be read from Figure 4-13: if the users of the

constellation are distributed over the Earth’s entire land mass, a satellite would be active 38.7% of the time

(red curve), excluding the zones that protect GEO from interference. The

154 Gridded bathymetry data (General Bathymetric Chart of the Oceans). In GEBCO, o. D., https://www.gebco.net/data_and_products/

gridded_bathymetry_data/#global. Accessed 31/05/2021.

155 Center for International Earth Science Information Network - CIESIN - Columbia University. 2018th Gridded Population of the World, Version 4

(GPWv4): Population Density, Revision 11. Palisades, NY: NASA Socioeconomic Data and Applications Center (SEDAC). https://doi.org/10.7927/H49C6VHW. Accessed 17/04/2021.

156 Center for International Earth Science Information Network - CIESIN - Columbia University. 2018th Gridded Population of the World, Version 4

(GPWv4): National Identifier Grid, Revision 11. Palisades, NY: NASA Socioeconomic Data and Applications Center (SEDAC). https://doi.org/10.7927/H4TD9VDP. Accessed 17/04/2021.

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other curves in the figure examine the influence of the service area on addressability. No realistic deployment

scenarios for constellations have been derived from these scenarios. As an example, the yellow curve shows

the land mass of the Earth without Russia and China in order to examine how addressability decreases if a

constellation cannot be operated in individual countries for regulatory or political reasons. In this scenario,

the figure drops from 39% to 34%. If only the 40 countries157 with the highest purchasing power-adjusted

gross national income per capita158 (GNI PPP per capita) are considered the service area (purple/violet curve),

the result is an addressability of only 11.7%. As an extreme example, we considered only the land mass of the

European Union as a service area (green curve). In this scenario, a single satellite would only be utilised 2.8%

of the time.

FIGURE 4-13: PROPORTION OF LAND MASS WITHIN THE FIELD-OF-VIEW OF A LEO SATELLITE AT 55° INCLINATION AND 550 KM ALTITUDE

FIGURE 4-14: PROPORTION OF LAND MASS WITHIN THE FIELD-OF-

VIEW OF A LEO SATELLITE AT DIFFERENT ELEVATION ANGLES AT

THE TERMINAL

FIGURE 4-15: PROPORTION OF LAND MASS WITHIN THE FIELD OF

VIEW OF A LEO SATELLITE AT DIFFERENT ANGLES OF INCLINATION

157 Singapore, Qatar, Bermuda, Luxembourg, Switzerland, Norway, Ireland, United Arab Emirates, Brunei Darussalam, United States of America, Hong Kong, Denmark, Netherlands, Iceland, Austria, Germany, Sweden, Belgium, Finland, France, Australia, Canada, Saudi Arabia, United Kingdom of Great Britain and Northern Ireland, Italy, Japan, Korea (the Republic of), Bahrain, New Zealand, Malta, Spain, Israel, Slovenia, Czechia, Cyprus, Estonia, Lithuania, Bahamas, Portugal and Hungary.

158 GNI per capita, PPP (current international $) | Data from the World Bank, o. D., https://data.worldbank.org/indicator/NY.GNP.PCAP.PP.CD. Accessed 03/05/2021.

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In Figure 4-14, the Earth’s entire land mass is considered as the service area and the size of the FoV is changed

by altering the minimum elevation angle at the user terminal. Figure 4-15 shows what happens if the

inclination angle of the constellation is changed. In both cases, the results change only slightly and it can be

assumed that the numbers obtained can be used for many different constellation designs.

Finally, Figure 4-16 shows the number of inhabitants within the FoV in the same way as for the land mass in

Figure 4-13, which enables us to estimate the utilisation of a single satellite based on the inhabitants within

its line of sight.

We also used these figures for the addressable customer base depending on the constellation design in order

to determine the utilisation of a satellite and to realistically estimate costs. The findings related to the

economic conditions in the countries of the land mass covered in turn enable us to compare the costs with

the potential willingness to pay in order to draw conclusions regarding the economic viability of the systems.

FIGURE 4-16: NUMBER OF INHABITANTS WITHIN THE FIELD-OF-VIEW OF A LEO SATELLITE AT 55° INCLINATION AND 550 KM ALTITUDE

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4.3 Satellite systems in comparison

4.3.1 Overview of the results

As part of the HEUMEGA trend analysis, we carried out a cost comparison for the systems listed below. The

costs per marketable bit (incl. user terminals) were compared for broadband via

• a GEO satellite

• O3b MEO

• O3b mPower

• an equatorial MEO orbit, which is so densely occupied that a stationary alignment of the user terminal

is possible.

• a LEO constellation (1000 – 1200-kilometre orbital altitude)

• a LEO constellation (550-kilometre orbital altitude)

Intensive analyses and research were undertaken for each system. We conducted extensive calculations,

especially for the LEO constellations. The details are described in the following subsections The results are

summarised in Table 4-1. The individual rows of the table are explained in Table 4-3. The figures that serve as

input parameters for the calculations of the LEO constellations are also justified here. For the MEO and GEO

systems this has been done in the tables in the following sections.

As results, Table 4-1 shows the costs calculated per user per month for a broadband internet connection with

100 Mbit/s. These are the costs incurred by the operator. In the table, the parameters utilisation and

overselling, in particular, are variables that are difficult to determine realistically. For the purposes of

comparison, these parameters were therefore set identically for all systems. The absolute numerical value of

the result for the costs can vary greatly, especially due to overselling, and is therefore less meaningful.

However, a comparison of the systems is feasible.

First, the table demonstrates that a GEO HTS, the mPower system and a LEO constellation in low orbit have

costs in the same order of magnitude. However, it should be noted that the user terminals required for these

may differ. This is examined in the subsequent sections. A comparison for the cost of using a fixed diameter

user terminal would indicate that a LEO system is always significantly cheaper than a MEO system or a GEO

system.

The table further shows that a LEO system with a greater orbital altitude will generate higher costs per user,

although the entire constellation is cheaper in higher orbits. This is also considered separately in detail below.

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TABLE 4-1: CALCULATION OF COSTS PER MARKETABLE BIT FOR ALL SYSTEMS IN THE OVERVIEW

GEO

O3B

O3B

mPower

LEO 1100

LEO 550

Full MEO

(O3B

mPower

Sats)

Full MEO

(small

Sats)

Space segment Number of satellites 1 20 11 630 1775 803 803

Satellite lifespan years 15 12 12 5 5 12 5

Data throughput per satellite in

Downlink

Gbit/s 500 8 200 6 10 8 0.80

Number of satellites per rocket 1 4 3 60 60 3 60

Weight per satellite kg 6400 700 1700 225 225 1700 225

Cost per satellite €

milli

650 100 100 0.75 0.75 100 0.75

Costs for all satellites €

milli

650 2000 1100 473 1331 80,300 602

Launch cost per kg €/kg 7500 20,000 10,000 4000 4000 10,000 4000

Cost per rocket €

milli

48 56 51 54 54 51 54

Launch costs for all satellites €

milli

48 280 187 567 1598 13,651 723

Total cost €

milli

698 2280 1287 1040 2929 93,951 1325

Ground segment Number of

anchor station antennae

125 - 275 197 888 302 302

Number of anchor stations

(locations)

125 9 138 50 222 18 18

Cost per anchor station €

milli

1 2 1 1 1 1 1

Costs of other antennae k€ 0 0 100 100 100 100 100

Total cost €

milli

125 18 138 65 289 46 46

OPEX €

milli

2 2 2 30 30 30 30

User segment Cost per user terminal €350 €2000 €2000 €500 €500 €350 €350

Annual costs Annual constellation costs €

milli

47 190 107 208 586 7829 265

Annual ground segment costs €

milli

6 1 7 3 14 2 2

Total annual costs €

milli

55 193 116 241 630 7862 297

Annual user terminal costs € 35 200 200 50 50 35 35

Cost calculation Available throughput Gbit/s 500 160 2200 3938 17750 6304 642

Addressability (satellite

activity)

75% 75% 75% 30% 30% 75% 75%

Capacity 50% 50% 50% 50% 50% 50% 50%

Saleable throughput Gbit/s 188 60 825 591 2663 2364 241

User data rate Mbit/s 100 100 100 100 100 100 100

Number of users (simultaneous

supply)

1875 600 8250 5906 26,625 23,638 2409

Overselling factor 50 50 50 50 50 50 50

Number of customers 93,750 30,000 412,500 295,313 1,331,250 1,181,916 120,450

Annual costs per user € 619 6630 482 867 523 6687 2503

Monthly costs per user

incl. Terminal

€51.61 €552.50 €40.13 €72.21 €43.61 €557.21 €208.61

Monthly costs per Mbit €0.52 €5.53 €0.40 €0.72 €0.44 €5.57 €2.09

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4.3.2 LEO constellations

4.3.2.1 CONSTELLATION DESIGN

The LEO satellite constellations created below were used to determine cost per bit.

First, a constellation consisting of one shell was created (simulated) for each of the orbital altitudes of 550

kilometres and 1100 km. 55° was chosen as the most reasonable inclination angle because this maximises the

number of satellites over Central Europe and North America. The selected minimum elevation of 25° at the

terminal results in the parameters of the constellations shown in Table 4-2, which were calculated on the basis

of the considerations outlined in Section 4.1. The trajectories and satellites for an orbital altitude of 550

kilometres are illustrated in Figure 4-17 and those for an orbital altitude of 1100 kilometres in Figure 4-18. The

constellation at an orbital altitude of 550 kilometres results in 71 trajectories, each occupied by 25 satellites.

In this case, the FoVs of all 1775 satellites cover the area between 63° North and 63° South without gaps. An

orbital altitude of 1100 kilometres requires 42 trajectories, each occupied by 15 satellites. This reduces the

number of satellites to 630 satellites, while covering the area between 69° North and 69° South without gaps.

An increase in the angle of inclination in order to be able to cover the polar regions as well does not make sense

here, since an accumulation of satellites would occur at sparsely populated latitudes. Instead, another shell

with satellites in polar orbits would be useful in this case, which is also envisaged, for example, in the Starlink

system.

Figure 4-20 shows the distribution of satellites above the latitude in the generic constellation at 550 kilometres.

The average number of visible satellites at a location with a given latitude is displayed here. The maximum

number of satellites can be seen at a latitude of 50°. The distribution of satellites is contrasted with the

population distribution, as shown in Figure 4-19. The world population has the highest density between 30°

and 40° North, due to the populous states of India and China. To get a more realistic picture for potential

customers of a broadband internet connection, Figure 4-19 also shows the distribution of the population of the

40 states with the highest per capita income (GNI PPP per capita). This shows a clustering around 40° North,

while the population of the EU alone shows a clustering around 50° North. The 55° inclination constellation

created for comparison thus seems appropriate in terms of the distribution of potential customers willing to

pay for a high-quality broadband internet service.

TABLE 4-2: PARAMETERS OF TWO EXAMPLE LEO CONSTELLATIONS

Orbital altitude km 550 1100

Minimum terminal elevation deg 25 25

Inclination deg 55 55

Orbit radius km 6924 7474

Field of view radius km 937 1583

Number of trajectories 71 42

Satellites per trajectory 25 15

Maximum latitude reached deg 63 69

Number of satellites needed 1775 630

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FIGURE 4-17: TRAJECTORIES AND SATELLITES OF A GENERIC CONSTELLATION AT 550 KM ORBIT ALTITUDE AND 55° INCLINATION

FIGURE 4-18: TRAJECTORIES AND SATELLITES OF A GENERIC CONSTELLATION AT 1100 KM ORBIT ALTITUDE AND 55° INCLINATION

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FIGURE 4-19: DISTRIBUTION OF THE POPULATION ACROSS THE DEGREE OF LATITUDE

FIGURE 4-20: NUMBER OF SATELLITES IN VIEW ABOVE THE LATITUDE FOR THE GENERIC CONSTELLATION AT 550 KM ORBITAL ALTITUDE

4.3.2.2 DATA AND PARAMETERS

Table 4-3 below contains all the rows from Table 4-1. The parameters calculated here are explained and the

data used for the LEO systems are named and justified.

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TABLE 4-3: DESCRIPTION OF THE PARAMETERS FOR THE CALCULATION OF COSTS PER BIT; INCL. ASSUMPTIONS FOR THE ENVISAGED LEO CONSTELLATIONS EXPLANATIONS

Parameter Unit Value Explanation/meaning

Space segment

Number of satellites Calculated Results of the calculations given above

Satellite lifespan years 5 Assumption; typical value for LEO

Data throughput per satellite in Downlink

Gbit/s

6.25 (1100 km)

10 (550 km)

Assumption; own link budget calculations and

Starlink data from FCC filing; identical satellites at 550 km and

1100 km ( poorer link budget at 1100 km.

Number of satellites per rocket 60 Analogous to Starlink

Weight per satellite kg 225 Receiving see Section 3.5.2

Cost per satellite € €750,000 Receiving see Section 3.5.2

Costs for all satellites € Calculated -

Launch cost per kg €/kg 4000 Assumption; determined from retail costs of SpaceX

Cost per rocket € Calculated -

Launch costs for all satellites € Calculated -

Total cost € Calculated -

Ground segment

Number of anchor station antennae

Calculated

Calculated number of antennas to be able to achieve the

calculated throughput

Number of anchor stations

(locations)

Calculated

Calculated number of sites under the Assumption that

a site has 4 satellites in view and inter-satellite links are

used

Cost per anchor station € €1,000,000 Receiving

Costs per additional antenna € €100,000 Receiving

Total cost € Calculated -

OPEX € €30,000,000 Assumption; from interviews with experts

User segment

Cost per user terminal

€

€500

VK price Starlink; Assumption that with a high number of units

production costs of 500 € can be achieved Annual costs

Annual constellation costs € Calculated -

Annual ground segment costs € Calculated -

Total annual costs € Calculated -

Annual user terminal costs € Calculated -

Cost calculation

Available throughput

Gbit/s

Calculated

Sum of the throughput of all satellites in the downlink to the user

Addressability (satellite

activity)

%

30%

Assumption; from previous simulations

Capacity

%

50%

Assumption; for a fair comparison for all systems same chosen

Marketable throughput

Gbit/s

Calculated

Sum of the throughput in the user downlink that is

User data rate

Mbit/s

100

Assumption: for a fair comparison for all systems

same chosen Number of users (simultaneous

supply)

Calculated

Sum of users who can simultaneously

use the specified data rate

Overbooking factor

50

Number of users sharing the specified

data rate Number of customers Calculated Number of paying customers

Annual costs per user € Calculated -

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Monthly costs per user incl. terminal

€ Calculated -

Monthly costs per Mbit € Calculated -

4.3.3 MEO Systems


For the cost comparison, we used data for the O3b system and the successor system O3b mPower from the

company SES, as listed in Table 4-4 for O3b and in Table 4-5 for O3b mPower.

Most of the figures for the systems are available in press releases or other open sources. Only the throughput

per satellite for O3b mPower will be discussed again here. From the information provided by SES, the figure

of 200 Gbit/s could be taken for one satellite. In some cases, figures of up to 1600 Gbit/s per satellite were

also given. For a realistic approximation of the throughput, an estimate of a link budget for a MEO HTS was

undertaken in this trend analysis. For the cost comparison, the figure of 200 Gbit/s per satellite is used initially.

TABLE 4-4: DESCRIPTION OF PARAMETERS USED TO CALCULATE COST PER BIT; INCL. ASSUMPTIONS FOR O3B EXPLANATIONS


Space segment Number of satellites 20 Existing O3b system Satellite lifespan years 12 Source159 Data throughput per satellite via the downlink

Gbit/s 8 Source159

Number of satellites per rocket 4 Source160 Weight per satellite kg 700 Source161 Cost per satellite € €100,000,000 Receiving Launch cost per kg €/kg 20000 Receiving Ground segment Number of anchor station antennae 9 Existing O3b system Number of anchor stations (locations) - Cost per anchor station € €2,000,000 Receiving Costs of other antennas € - User segment Cost per user terminal € €2000 Receiving Cost calculation Addressability (satellite activity) % 75% Same receiving chosen for GEO and

MEO

159 Selding, Peter: O3b Execs Press Business Case for Bigger Constellation, in: SpaceNews, 06.12.2014, https://spacenews.com/31707o3b-execs-press-

business-case-for-bigger-constellation/ (accessed 31.05.2021).

160 O3b signs agreement with for third Soyuz launch: in: Arianespace, 19.11.2015, https://www.arianespace.com/press-release/o3b-signs-agreement-

with-arianespace-for-third-soyuz-launch/ (accessed 31.05.2021).

161 O3b – Spacecraft & Satellites: in: O3b, o. D., https://spaceflight101.com/spacecraft/o3b/ (accessed 31.05.2021).

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TABLE 4-5: DESCRIPTION OF THE PARAMETERS FOR CALCULATING THE COSTS PER BIT; ASSUMPTIONS FOR O3B MPOWER INCL. EXPLANATIONS


Space segment Number of satellites 11 Information from SES Satellite lifespan years 12 Source160

Data throughput per satellite via the downlink Gbit/s 200 Information from SES Number of satellites per rocket 3 Source162 Weight per satellite kg 1700 Information from SES Cost per satellite € 100,000,000 Source163 Launch cost per kg €/kg 10.000 Assumption; calculated from the

retail costs of SpaceX total agrees with satellite costs with sources160

Ground segment Number of anchor station antennas 275 Calculated number of antennas to be

ableachieve the calculated throughput

Number of anchor stations (locations) 138 Calculated number of sites assuming that a site has 4 satellites in view and intersatellite links are

used

Cost per anchor station € €1,000,000 Receiving Costs of other antennas € 100,000 Receiving User segment Cost per user terminal € €2000 Receiving Cost calculation Addressability (satellite activity) % 75% Same receiving chosen for GEO and

MEO

4.3.3.2 THROUGHPUT OF MEO SYSTEMS

A generic MEO constellation was considered below, based on the O3b mPower system. The calculations

carried out are aimed at the throughput and the production costs per user for a 100 Mbit/s connection.

The only application considered here is the provision of broadband to end users. In this case, the throughput of

the satellite is limited by the maximum data rate that can be achieved in the downlink to the user. If regulatory

aspects are not initially considered, a high throughput can be achieved in the uplink to the satellite, as the ground

terminals can be supplied with sufficient transmission power. In the downlink, however, all transmission power

must be generated in the satellite. The maximum available transmission power is the limiting factor if sufficient

bandwidth is available. Due to the large number of beams (>1000 for mPower) that can be generated by modern

satellites with phased-array antennas, the available spectrum can be reused very frequently. This means that

bandwidth is usually not the limiting factor for the satellite. Expert interviews have shown that the processor

performance, i.e. the processing speed of digital payload processors, is also very high. We can assume that the

processor in an O3b mPower satellite can process approximately 2 THz of bandwidth.

162 Henry, Caleb: SpaceX to launch SES’s O3b mPower constellation on two Falcon 9 rockets, in: SpaceNews, 09.09.2019,

https://spacenews.com/spacex-to-launch-sess-o3b-mpower-constellation-on-two-falcon-9-rockets/ (accessed 31.05.2021).

163 Henry, Caleb: SES orders four more O3b mPower satellites from Boeing, in: SpaceNews, 07.08.2020, https://spacenews.com/ses-orders-four- more-o3b-mpower-satellites-from-boeing/ (accessed 31.05.2021).

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A rough link budget was estimated based upon these assumptions and the figures from Table 4-6. The

unknown input power of the transmit amplifiers (HPA) available at the satellite was included as a variable. For

the maximum antenna gain at the satellite, a value of 48dBi was estimated from the known size of the O3b

antenna array (max. 1.5 metres).

TABLE 4-6: PARAMETERS FOR A GENERIC MEO HTS

Parameter Unit Value

Orbital altitude km 8000 Minimum elevation deg. 10 Satellite costs €/sat. 100,000,000 Satellite weight kg 1000 Launch costs €/kg 5000 OPEX € 20,000,000 Terminal costs € 2000 Costs per gateway € 1,000,000 Gateway lifespan years 20 Satellite lifespan years 12 Overselling factor 50 Capacity % 50 Usable bandwidth GHz 2 Frequency band Ka-band (DL) Satellite antenna gain dBi 48 HPA input power watt variable HPA efficiency % 20 User antenna gain dBi variable User data rate Mbit/s 100

The variable examined next is the diameter of the antenna at the user terminal. This is also varied and the

throughput of the satellite can be calculated with the help of the parameters mentioned previously. For this

purpose, it is assumed that all users have an identical terminal. The results are summarised in Figure 4-21.

In the graph on the left, the sum of the achievable throughput in the downlink to the users is plotted over the

antenna diameter of the user terminals. With small antennas on the user's side, the satellite must apply

comparatively high transmission power to close the link to the user. The bigger the antenna, the better the

link budget and more users can be served with the same transmission power, achieving a higher throughput.

The graph shows, for example, that with a realistic HPA input power of 1000 W, antennas with a diameter of

1.8 metres are required for a throughput of 200 Gbit/s. The same HPA power is used for one antenna. If, for

the same HPA power, a user antenna with a diameter of 50 centimetres is assumed, the throughput of the

satellite is reduced to 15.7 Gbps.

It is not feasible for a MEO satellite the size of the mPower system to provide 5 kW as input power for the

transmit amplifiers (HPA). The curve should therefore be understood as an upper limit.

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FIGURE 4-21: THROUGHPUT AND COST PER USER PER MONTH OF A MEO HT AS A FUNCTION OF ANTENNA DIAMETER AT THE USER TERMINAL

FOR DIFFERENT INPUT POWERS AT THE SATELLITE (HPA).

From the calculated throughput, the number of possible customers is calculated according to the previously

presented diagram. The costs for the system result in monthly costs per customer, which are shown in the

middle graph of Figure 4-21 with linear scaling of the antenna size. The graph on the right shows the identical

result in double logarithmic representation for better readability. From the figures, it is possible to determine

the costs that arise when a MEO system is used exclusively for retail broadband coverage.

If the realistic HPA input power of 1000 W is again taken into account, the following relationship emerges.

Competitive costs of 50 euros per month, which can be achieved by LEO systems with comparable framework

conditions, require a movable antenna with a minimum diameter of 1.4 metres for all customers. This antenna

size is likely to be unaffordable, uninstallable and unacceptable to the consumer market.

A more realistic application for broadband coverage via MEO satellites would be to install larger antennas at

a communal level, connecting end customers with terrestrial radio communications.

4.3.4 Fully occupied MEO orbit

In this trend analysis, the calculation of the cost per bit for a MEO constellation in an equatorial orbit was also

performed for comparison purposes. The constellation was designed in such a way that a rigid antenna

without tracking capability could be used on the user side. This takes into account the fact that the user

terminals of megaconstellations are currently a cost driver due to the heavy technical requirements combined

with a high integration factor of the components.

The following assumptions were made for the design of such a constellation:

In order to ensure a supply throughout Germany, a maximum latitude of 55° North would be required. An

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assumed minimum elevation at the user terminal of 10° results in a required orbital altitude of at least 8500

kilometres, which is 500 kilometres above the O3b constellation.

Under the further assumption that a user terminal has a 3 dB aperture angle of +/-1°, the number of satellites

required to ensure that each user always has a satellite in view within the 3 dB aperture angle can be calculated.

The resulting number of satellites for the above parameters is 803. The maximum diameter of the user terminal

antenna in Ka-band is approximately 50 centimetres.

TABLE 4-7: LIST OF PARAMETERS FOR CALCULATING THE MINIMUM NUMBER OF SATELLITES


Altitude km 8500

Minimal terminal elevation deg 10

Inclination deg 0

Orbit radius km 14874

Field of View radius km 5224

Maximal latitude deg 55

Minimal number of satellites 803

In order to estimate the costs of such a constellation, two different approaches were chosen:

1. It was assumed that all satellites technically correspond to the performance of an O3b mPower

satellite. All costs for launch and satellites were assumed and the achievable throughput with a

50-centimetre user antenna was assumed.

2. Alternatively, it was assumed that the satellites used in the LEO constellation would be raised to

MEO orbit for the same performance and costs and would operate there with a throughput that

is reduced in line with the poorer link budget. For this purpose, the achievable throughput per

satellite with a 50-centimetre-diameter parabolic reflector for the user side was estimated.

Furthermore, the calculation of the throughput per satellite assumes that not every satellite achieves the full

throughput, as unrestricted frequency reuse is not feasible due to the dense placement in the MEO orbit. For

the sake of simplicity, it was assumed that only 50% of the throughput can be achieved due to the dense

placement of the satellites in order to avoid interference.

The results in Table 4-1 can be interpreted as follows:

1. The first case with O3b mPower satellites shows higher costs of 557 euros per month compared

to the mPower system with 40 euros per month due to the smaller antenna at the user terminal

and the reduced throughput. Should the costs per satellite decrease with greater numbers of

units, the costs per bit will also decrease. However, due to the high launch costs, the MEO

system under consideration remains more expensive than the mPower system. The costs for the

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full MEO system would be comparable with the O3b mPower system only if the satellite costs

were reduced from 100 million to 5 million euro and the launch costs were reduced from

€10,000/kg to €1,500/kg.

2. If low-cost satellites, such as those used in a LEO constellation, are brought into a MEO

constellation to form a densely occupied equatorial orbit, the costs are comparatively high, and

these costs cannot be offset by the use of a cheaper user terminal that does not need to be

trackable.

4.3.5 GEO HTS


For the cost comparison of systems in different orbits, a system in GEO was considered, and its parameters are

summarised in Table 4-8. The data for the GEO HTS considered are based on ViaSat’s ViaSat 3 system. In the

GEO system, the data throughput in the downlink to the user is not a variable that can be taken from the

published data if broadband internet coverage is considered as an application. It is reasonable to assume that

the GEO HTS can achieve the specified data rate on average, but only with user terminals that have a very large

ground station antenna, as shown in the following subsection.

TABLE 4-8: DESCRIPTION OF PARAMETERS USED TO CALCULATE COST PER BIT; INCL. ASSUMPTIONS FOR

A GEO HTS EXPLANATIONS

Parameter Unit Value Explanation

Space segment

Number of satellites 1

Satellite lifespan

years

15

Typical lifespan for a GEO

satellite

Data throughput per

satellite in

downlink

Gbit/s

200

Based on ViaSat 3

(Viasat164)

Number of satellites per

Rocket

1

Assumption

Weight per satellite kg 7500 Source

Cost per satellite € 650,000,000 Source

Launch cost per kg

€/kg

7500

Assumption: determined

from retail costs of

SpaceX

Ground segment

Number of anchor station

antennae

Calculated Calculated number of

antennas required to

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achieve the calculated

throughput

Number of anchor

stations (locations)

Calculated Only one antenna per

station possible

Cost per anchor station € 1,000,000 assumption

Costs per each additional

antenna

€ - -

User segment

Cost per user terminal € 350 Assumption: see section

5.6

Cost calculation

Addressability (activity of

a satellite)

% 75 Assumption fir GEO and

MEO selected equally

164 Viasat Inc.: ViaSat and Boeing Complete CDR for ViaSat-3 Satellites, in: 2017–09-26 | Microwave Journal, 26.09.2017,

https://www.microwavejournal.com/articles/29112-viasat-and-boeing-complete-cdr-for-viasat-3-satellites (accessed 31.05.2021).

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4.3.5.2 THROUGHPUT OF GEO SYSTEMS

In section 4.3.3.2, the throughput and the costs per user for a 100 Mbit/s connection were calculated as a

function of the user antenna for a MEO system. This calculation is repeated here for a system in GEO. The

data from Table 4-9 are considered; these are based on the data of the ViaSat 3 system.

Here too, the power available for transmitting the signals is unknown. The total power of the satellite is

definitely the upper limit; for ViaSat 3 this is given as 25 kW EOL.165 In practice, however, only a small fraction

of this power is likely to be available for the transmit amplifiers.

TABLE 4-9: PARAMETERS FOR A GENERIC GEO HTS


Orbital altitude km 36,000

Minimum elevation deg. 10

Satellite costs €/sat. 650,000,000

Satellite weight k

g

6400

Launch costs €/kg 7500

OPEX € 2,000,000

Terminal costs € 300

Costs per gateway € 1,000,000

Gateway lifespan years 20

Satellite lifespan years 15

Overbooking factor 50

Capacity % 50

Usable bandwidth GHz 2

Frequency band Ka-band (DL)

Satellite antenna gain dBi 57

HPA input power watt variable

HPA efficiency % 20

User antenna gain dBi variable

User data rate Mbit/s 100

The graph on the left in Figure 4-22 shows clearly, for example, that with a positively optimistic assumption

of 5 kW for the HPA input power, an antenna with a diameter of 1.6 metres is required for a throughput of

500 Gbit/s. If a user antenna with a diameter of 50 centimetres is assumed for the same HPA power, the

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throughput of the satellite is reduced to 50 Gbit/s. Competitive costs of 50 euros per month, which can be

achieved by LEO systems with comparable general conditions, require an antenna with a diameter of approx.

1.5 metres for all customers.

This estimate makes it clear that, although a GEO system can deliver connectivity at a competitive cost, as

shown in Table 4-1, the comparison with identical user terminals shows a major disadvantage for the GEO

system.

FIGURE 4-22: THROUGHPU TERMINAL FOR DIFFERENT INPUT SERVICES AT THE SATELLITE (HPA)

165 Viasat Inc.: ViaSat and Boeing Complete CDR for ViaSat-3 Satellites, in: 2017–09-26 | Microwave Journal, 26.09.2017b,

https://www.microwavejournal.com/articles/29112-viasat-and-boeing-complete-cdr-for-viasat-3-satellites (accessed 31.05.2021).

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4.4 GEO/MEO/LEO cost comparison

The per customer costs of broadband provision have been analysed in detail above. We will now discuss and

evaluate the results.

Table 4-1 presents a detailed calculation of the costs, which is based on data from system operators and

manufacturers and the most realistic assumptions possible. The results are summarised in Table 4-10. The

costs shown are based on the data for the throughput per satellite and an assumed overselling of capacities

by a factor of 50. If, in the best possible case, users act such that the online times are distributed as evenly as

possible, 1/50 of the quantity of data will be available to each user, which can be transmitted at 100 Mbit/s;

for downloading this corresponds to 648 GB per month.

The size of the user antenna needed to achieve the given throughput was assessed in Section 4.3. The figures

are based on assumptions for satellite transmission power and antenna gain, which are not in the public

domain. The results of a very optimistic assessment do however show that significantly larger antennas are

needed at the user terminal for systems in GEO or MEO.

TABLE 4-10: CALCULATED COSTS PER USER PER MONTH FOR 100 MBIT/S WITH A SUFFICIENTLY LARGE USER TERMINAL

Fixed overselling factor/sufficiently large

user terminal

GEO

(ViaSat3)

MEO

(mPower) LEO 1100 LEO 550

Published/calculated downlink (DL) throughput per satellite

Gbit/s 500 200 6.25 10

Assumed overbooking 50 50 50 50

Monthly costs per user € 51.61 40.13 72.21 43.61

Monthly data volume per user (DL) GByte 648 648 648 648

Estimated user antenna diameter M 1.6 1.8 0.3–0.5 0.3–0.5

TABLE 4-11: CALCULATED COSTS PER USER PER MONTH FOR 100 MBIT/S WITH FIXED USER ANTENNA SIZE AND FIXED OVERSELLING FACTOR

Fixed overselling factor/same user

antenna size (50 cm)

GEO MEO LEO 1100 LEO 550

HPA input power per satellite W 5000 1000 250 250

Calculated downlink (DL) throughput per satellite with 50 cm user terminal

Gbit/s 50 15.7 6.25* 10*

Overbooking 50 50 50 50

Monthly costs per user € 439.88 299.24 72.21 43.61


*The quoted throughput for the LEO systems is less than the maximum possible throughput that can be calculated from transmission power and link budget with a 50-centimetre-diameter user terminal. This happens on the assumption that the efficiency of the payload processor limits the throughput.

In addition, a fixed antenna diameter of 50 centimetres at the user terminal was assumed to compare the

suitability of GEO, MEO and LEO systems for the provision of broadband internet for the end customer.

The results in Table 4-11 show significantly higher costs for GEO and MEO systems if the antenna diameter

and the overbooking factor are kept constant.

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The solution to offering competitive prices to end users for GEO and MEO is to reduce the transfer rate on

reaching a maximum quantity of data. The effect of taking this step is shown in Table 4-12. Here, the required

overselling of the system was calculated so as not to exceed costs of 50 euros per month on a consistent

basis. The quantities of data per user that can be achieved in the best case result from the overbooking

factors. In this case it turns out that a GEO HTS can only offer a volume of 74 GByte per month, while a LEO

constellation in low orbit can, at 743 GByte per month, promise the customer 10 times the quantity of data

at the same price.

TABLE 4-12: CALCULATED TRANSFERABLE QUANTITY OF DATA (DOWNLOAD) PER USER PER MONTH WITH FIXED USER ANTENNA SIZE AND FIXED

COSTS

Fixed costs per month/same

user antenna size (50 cm)



Gbit/s 50 15.7 6.25* 10*

Monthly costs per user €50.00 €50.00 €50.00 €50.00

required overselling to achieve costs 440 299 72 44


TABLE 4-13: CALCULATED COSTS PER USER PER MONTH WITH FIXED USER ANTENNA SIZE AND FIXED TRANSFERABLE QUANTITY OF DATA

(DOWNLOAD) OF 100 GBYTE PER MONTH

Fixed quantity of data per

month/same user antenna size (50

cm)



Gbit/s 50 15.7 6.25* 10*

Quantity of data per user per month GByte 100 100 100 100

required overbooking to achieve quantity of data

324 324 324 324

Monthly costs per user €70.35 €60.27 €14.67 €10.25

Table 4-13 shows the costs per user per month with a reduced data volume of 100 GB per month. This number

is in the order of magnitude promised by established GEO broadband service providers (cf. section 5.6). Here

too there is a noticeable difference between GEO and the roughly seven times cheaper LEO constellation.

The price of 10.25 euros per month for a connection with 100 Mbit/s and 100 GB of data per month clearly

shows the competitiveness of LEO constellations. The figures shown here depend on very many parameters,

which vary in practice. If, for example, the addressability, that is the time a satellite can reach a sufficient

number of customers, is cut from 30% to 5%, the costs increase from 10 to 40 euros per month. A similar, but

detailed analysis for all the important parameters is addressed in the following section.

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4.5 Customer numbers and area covered by LEO constellations

The large number of filed constellations in LEO raises the question of whether multiple constellations can be

economically successful. Evaluating this requires a large number of different parameters that are not easy to

determine. This chapter considers the question of how many customers a constellation can serve and what

area is covered in the process.

The LEO constellations considered cover a large service area between the northern and southern boundaries

with no gaps. However, it appears that 100% coverage is not possible 100% of the time. Figure 4-23 shows

the maximum reachable latitude for some NGSO constellations and the size of the fields of view of an

individual satellite.

FIGURE 4-23: FIELDS OF VIEW OF DIFFERENT CONSTELLATIONS

Satellites rely on a high antenna gain to achieve a high data rate and thus high throughput. The diameter of

an individual beam is therefore very small. The radii of the beams for different NGSO systems are shown in

Table 4-14 in comparison with the radii of the fields of view. The number of beams is also shown. The data is

derived from the respective filings to the FCC. For example note that Starlink satellites, as determined in

expert discussions, can form more than 40 beams. As such, the numbers from the filings do not totally match

reality.

The final column of Table 4-14 gives the calculated number of beams required per satellite to fill 50% of the

field of view. This measure was chosen as the constellations have a certain overlap with the fields of view.

The very large numbers in the Table show that 100% coverage for 100% of the time is only possible with an

unrealistically high number of beams.

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TABLE 4-14: REQUIRED NUMBER OF BEAMS PER SATELLITE TO FILL 50% OF THE FIELD OF VIEW

Field of view radius/km

Beam radius/km Number of beams per

satellite from FCC filing

Required number of beams per satellite from to fill 50% of the field of view

O3B MEO 4865 109 13 2418 Telesat LEO 2067 17 4 14,601

Amazon Kuiper 714 14 16 2460 SpaceX Starlink 550 937 7 4 17,040

OneWeb 685 16 8 1833

This fact allows the following conclusions to be drawn:

A single constellation can only cover 100% of the service area 100% of the time with numerous or

very powerful satellites.

In areas of high demand the constellations currently planned can only supply a very limited number

of customers. The only solution is to increase the total number of satellites. With sufficient response

speed, the capacity can gradually be increased by introducing additional satellites. Optimising the

distribution of the satellites across the latitudes with the highest paying customers is also important.

TABLE 4-15: ACHIEVED THROUGHPUT FOR DIFFERENT NGSO SYSTEMS

Constellation Orbit parameters Gbit/s per satellite Number of satellites

System throughput/Tbit/s

Per Dish

Total Per Dish

Total Per Dish

Total

O3b 0° incl. 8062 km alt. 20.5 41.0 10 34 0.21 0.7

90° incl. 8052 km alt. 20.5 24 0.49

Telesat 98.98° incl. 1015 km alt. 7.1 14.3 78 298 0.56 2.1

50.88° incl. 1325 km alt. 7.1 220 1.57

Telesat VLEO 37.4° incl. 1248 km alt. 18.7 37.4 45 117 0.84 2.2

99.5° incl. 1000 km alt. 18.7 72 1.35

Amazon Kuiper

33° incl. 590 km alt. 39.8 119.5 784 3236 31.22 128.9

42° incl. 610 km alt. 39.8 1296 51.62

51.9° incl. 630 km alt. 39.8 1156 46.04

Starlink 53° incl. 550 km alt. 6.6 32.9 1584 4,409 10.44 29.0

53.8° incl. 1110 km alt. 6.6 1600 10.54

74° incl. 1130 km alt. 6.6 400 2.64

81° incl. 1275 km alt. 6.6 375 2.47

70° incl. 1325 km alt. 6.6 450 2.96

SpaceX VLEO 53° incl. 345.6 km alt. 104.2 312.5 2550 7,500 265.62 781.2

48° incl. 340.8 km alt. 104.2 2450 255.21

42° incl. 335.9 km alt. 104.2 2500 260.41

OneWeb 87.9° incl. 1207 km alt. 11.0 22.0 660 1,980 7.25 21.8

87.9° incl. 1207 km alt. 11.0 1320 14.50

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The number of customers who can be supplied using NGSO constellations is determined using the figures

from Table 4-15. The data for the numbers of satellites and the throughput shown in this Table are as filed

with the FCC. The number of customers is calculated from the throughput determined there as shown in

Table 4-16. For this purpose, it is again assumed that each customer has a 100 Mbit/s downlink connection.

It was simplified by using the optimistic assumption that the throughput is fully available to the user for the

downlink. With an assumed overselling by a factor 50, the numbers in the final two columns of the Table are

produced according to the addressability of the satellites. The number of customers for the optimistic

assumption of 30% addressability for LEO systems lies between 315,000 for Telesat and 19 million for Kuiper.

Starlink’s VLEO system would be capable of serving more than 117 million customers with the data from the

filings. Disregarding the VLEO systems for the time being, O3b, Telesat, Kuiper, Starlink and OneWeb could,

on the given assumptions, together supply 27.3 million customers worldwide with broadband internet.

TABLE 4-16: NUMBER OF CUSTOMERS THAT DIFFERENT NGSO SYSTEMS CAN SUPPLY

Constellation

Number of satellites

Total throughput in Tbps

Number of customers with 100

Mbps

Number of customers at

100% addressability

and 50-fold overselling


30% addressability



10% addressability


O3b 34 0.7 7000 350,000 105,000 35,000

Telesat 298 2.1 21,000 1,050,000 315,000 105,000

Telesat VLEO 117 2.2 22,000 1,100,000 330,000 110,000

Kuiper 3236 128.9 1,289,000 64,450,000 19,335,000 6,445,000

Starlink 4409 29 290,000 14,500,000 4,350,000 1,450,000

SpaceX VLEO 7500 781.2 7,812,000 390,600,000 117,180,000 39,060,000

OneWeb 1980 21.8 218,000 10,900,000 3,270,000 1,090,000

4.5.1 Supply in Germany

The reflections below refer to Germany alone and take into account the number of customers supplied by

and the coverage area of the generic 550-kilometre-orbit altitude constellation calculated above.

For this constellation of 1775 satellites in orbits with an inclination of 55°, a satellite’s field of view is an area

of 2,758,221 square kilometres. Germany covers an area of 357,386 square kilometres and therefore fills 13%

of a satellite’s field of view. We can conclude from Figure 4-20 that there are at least 25 satellites in view over

Germany. We can therefore calculate the available throughput and the number of customers, as shown in

Table 4-17. There are two different cases in this regard:

1. All beams on Germany: it is assumed that every satellite in view supplies customers in Germany

exclusively. This case presupposes no customers in neighbouring countries.

2. Evenly distributed beams: it is assumed that the user density across Europe is constant. The user

number supplied by a satellite in Germany corresponds to the share by area of Germany in the field

of view.

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In the first case there are 125,000 users and in the second only 16,500. Assuming that around two million

households in Germany have no broadband internet connection, such a satellite constellation would only

serve a small fraction of the undersupplied households.

TABLE 4-17: NUMBER OF CUSTOMERS IN GERMANY OF A GENERIC CONSTELLATION OF 1775 SATELLITES AT 550 KM ORBIT ALTITUDE AND WITH

55° INCLINATION

All beams on Germany

Germany in the case of evenly distributed beams

(shared with neighbouring

countries)

Throughput per satellite Gbit/s 10 1.3 Satellites in view 25 25 Total throughput Gbit/s 250 32.4 User data rate Mbit/s 100 100 User number 2500 323 Diversity/overselling 50 50 Number of customers 125,000 16,150

TABLE 4-18: SHARE OF AREA IN GERMANY THAT A GENERIC CONSTELLATION OF 1775 SATELLITES AT 550 KM ORBIT ALTITUDE AND WITH 55°

INCLINATION COULD SUPPLY SIMULTANEOUSLY

All beams on Germany Evenly distributed beams

Beams per satellite 50 6.5 Beam area km2 153.9 153.9 Field of view of the satellite

km2 2,758,221 2,758,221

Satellites in view 25 25 Coverage area km2 192,423 24,932 Coverage area (G) % 54% 7%

Subject to the same differentiation, we also calculated the area in Germany that can be simultaneously served

with broadband internet. We assumed that each satellite can serve 50 beams simultaneously. The results for

the two cases are 54% and 7%.

These results make the following clear:

A single constellation can cover the potential need for broadband internet in more

densely populated areas, albeit with difficulty.

Multiple constellations providing broadband internet for the end customer could be

commercially successful.

4.6 Summary

In this chapter we have examined the production costs from the perspective of the satellite operators and

providers of broadband services.

The essential theses of this chapter are:

If maximisation of bandwidth and throughput for the individual user is the primary aim, the altitude of the orbit is the deciding factor for the per bit costs. The lower the orbit altitude, the lower the per bit

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costs.

The number of customers per area for a broadband connection is limited. In areas of high demand the number of possible customers is quickly tapped. One solution is to increase the number of satellites and the concentration of satellites across high-demand regions using an appropriate orbit design.

Distributing a constellation's customers as widely as possible across the globe is crucial to its economic success. Constellations can, however, also provide broadband while covering costs if only a limited number of countries are considered as customers.

A single constellation can only cover 100% of the service area 100% of the time with a great many or very powerful satellites. It looks as though multiple constellations providing broadband internet for the end customer may be commercially successful.

The user terminal is a decisive technology for the technical operability of NGSO constellations. For an

equatorial MEO constellation that is so densely occupied that a tracking user terminal can be dispensed

with, the result is similarly high costs that cannot be offset by the use of a less expensive user terminal.

The constellation cannot be designed independently of the user terminal, as its properties determine essential parameters of the constellation.

A LEO constellation in low orbit can provide each customer with around ten times the quantity of data per month at the same price as a GEO VHTS.

We were able to show that a LEO constellation can provide a 100 Mbit/s connection with 100 GB of data per month at a cost of around 10 euros per month. Current offer prices of 100 euros per month may therefore include substantial margins, which can be used to survive in an increasingly competitive market.

4.7 Side note: discussion of pricing for broadband options with megaconstellations

In the trend analysis we showed that the selling prices of broadband services are currently highly likely to be

well above (i.e., by factors) the arithmetically determined production cost. In this chapter we want to discuss

this circumstance in greater detail and at the same time address the criticism often heard in public and from

terrestrial mobile service providers about the lack of competitiveness of satellite internet services. However,

our approaches can only clarify fundamental relationships, while special features of the individual

constellations, whether known or unknown, are not taken into account. This is also particularly true for the

depreciation of R&D expenditure, which is not known in detail but can have a considerable impact on profit

margins and production costs.

First, we should note that the megaconstellation services market is not (yet) a functioning market. None of

the constellations has yet reached its desired operation and a competitive structure. Competition, on the

other hand, only exists with terrestrial service providers and broadband services via satellites in GEO in a

market that is not yet sharply defined due to the fact that

megaconstellations, at least officially, are currently not yet looking to compete with existing customers of the

mobile service providers. This also affects the pricing, as we will show below.

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4.7.1 Budget theory principles

According to current consumer theory models, the preferences of individuals are determined by the utility

function166. The demand for goods results from the utility function, with the individual acquiring all the goods

in such quantity that their own utility function is optimised as globally as possible (across all goods). The

budget limitation, i.e., the limitation of free income, has an inhibiting effect for the trivial solution of unlimited

consumption. The optimum for the quantity of a good in demand under a given budget limitation is called

Marshallian Demand167 (the so-called consumer optimum). We therefore assume that a person will demand

every good in such a quantity that they do not exceed their own budget, but that the combination of all the

goods fulfils their personal utility function (their own preferences) to the optimum. This scientific model has

become established for rationally acting individuals in economics and is used by companies as a basis for the

pricing of products or for marketing strategy, among other things. However, the unknown in this approach is

the model for the personal utility function, i.e. for the mathematical modelling of one's own preferences.

With an unmanageable number of goods that people consume, this becomes an unsolvable problem. Not

least for this reason, only the two goods case is normally used to play through different pricing strategies and

derive basic statements.

Figure 4-24 is a graphical illustration of the two goods case, in which good 1 is consumed or in demand in the

quantity x1 and good 2 in the quantity x2. Considered here are the demand situations for two income

situations (budgets) y1<y2. The person with budget y1 will only demand the goods 1 and 2 in the quantities

x1 and x2, so that the budget constraint p1x1 + p2x2 ≤ y1 is fulfilled. Along the straight orange lines in the Figure

the budget constraint is fulfilled with parity, i.e., the budget is consumed. Marshall’s demand is the point on

the utility function (blue) that has the budget straight line (orange) as a tangent. Here the entire budget is

used up and at the same time the utility maximised. For the price ��

� and �

∗

� corresponding to Marshall’s

demand the proportionality ��~��

�� (Cobb-Douglas utility function) applies. In other words: someone with a

higher budget at their disposal will consume more for the maximisation of their own utility function. In

addition, two different price structures are shown in the Figure: while the person with the lower budget

(income) receives the price ��

� for good 2, the provider charges the person with the higher budget the higher

price �∗

� . What is important to know, however, is that this person will nonetheless be prepared to accept the

higher price because, all in all, it can optimise its utility function globally despite this, and in so doing even

consume more of good x1. It merely depends on making the higher utility ‘tempting’ to the person – usually

a responsibility of marketing and advertising. In other words: the person with the higher income will see their

preferences satisfied globally even at the higher price and will therefore not necessarily be compared to the

person who has received the lower price. The key though lies in the clarification of the (additional) utility. It

should again be noted that this is a case of a consumer theory model with broad acceptance and empirical

evidence.

166 Alfred Endres, Jörn Martiensen: Mikroökonomik. W. Kohlhammer, Stuttgart 2007. 167 Anton Barten and Volker Böhm: Consumer Theory. In: Kenneth J. Arrow and Michael D. Intrilligator (Editors): Handbook of Mathematical Economics.

Vol. 2. North Holland, Amsterdam 1982.

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2

This model can be applied to the megaconstellations as follows: let’s assume that good 2 is described as

‘broadband internet connection’ in the end customer market (Consumer Broadband Market), without being

restricted to a technical solution (cable, satellite, etc). There will be customers who can receive a cheap cable

connection at the price of ��

� and the price will be widely known. As a result, such customers will be lost when

it comes to more expensive services, unless marketing can be used to bring them closer to an increased

sensed or actual benefit. But the model also says there will be other customers with a higher income who are

prepared to pay the higher price �∗

�, for example, for satellite internet, without being noticeably limited in

their global utility function. To put it in simpler terms, it could be said that these customers “can afford it” –

and they will be happy to do so. Intuitively, this conclusion is fairly obvious, though the apparently prevailing

public opinion of broadband services seems to be that, in Germany, such services must be more or less

identically priced, and an extreme price elasticity of demand will immediately force more expensive providers

out of the market. At the same time there is the generally politically motivated view that broadband services

count as public services of general interest and must therefore be accessible to all equally inexpensively. Our

aim here was at least to outline in rough terms that this viewpoint is not supported from a scientific, consumer

theory viewpoint and that differently priced broadband services can very well coexist in the market. If, for

example, we were to draw the analogy with the automotive industry, no one would doubt this statement.

A further conclusion that can be drawn is that the low acceptance of expensive satellite internet services in

the area of geostationary satellites cannot just be traced back to the pricing. In this case there is much more

of a ‘benefit problem’ resulting from the perceived complexity of the service (e.g., need for the installation

of hardware) associated with insufficient performance (e.g., volume limitation). This will be different with

megaconstellations, so market comparisons will be limited.

FIGURE 4-24: UTILITY MAXIMISATION IN THE TWO GOODS CASE, INTERNAL SOLUTION FOR TWO INCOME SITUATIONS y1 AND y2. FOR THE

PRICE p CORRESPONDING TO MARSHALL’S DEMAND p ~ y/x APPLIES

(COBB-DOUGLAS UTILITY FUNCTION).

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However, other findings can also be derived from the model shown, with a view to the systematics of the

pricing and the profit maximisation and to the question of how pioneer companies (first movers) will structure

their prices in the market. For example, a price-sales curve can also be constructed for good x2 (broadband

service) that allocates a quantity to each price and vice versa (Figure 4.25). This happens as Marshall’s demand

is determined for a good’s different possible prices. The good can be supplied at different prices as long as

sales increase with a falling price. Each point on the lower curve in the Figure represents a link between

quantity and price at which the company operates profitably. What is interesting for companies, in so far as

this is possible, is to offer different prices for the same good for different income brackets, because in this

way profit can be maximised. This happens either through suitable advertising in the customer groups or

through a perceived performance differentiation, which turns out greater than the difference in the

production cost. A third possibility of particular relevance here arises from actual or artificial scarcity of

resources. This approach is familiar from the booking of limited resources such as holiday hotels or airplane

tickets: The goods are offered very cheaply to begin with. When the resources become scarce the price rises.

In this way different consumer groups can be picked up at their Marshall’s demand point, thereby maximising

the profit. It is interesting that – at least in the model – all customers are nevertheless happy, because they

are still at the optimum of their utility functions.

A final look at the formation of monopoly prices is worthwhile (Figure 4-26). Monopoly prices are closely

aligned with the principle of profit maximisation. Since the following always applies: profit = turnover - costs

(G = U − K), the optimum can be determined by deriving both quantities U and K (graphically in the Figure

as U′ and K′). Monopoly price and monopoly quantity are at the intersection of the two curves; a further

increase in production will then only be lucrative to a limited degree, because with each additional quantity

sold the profit contribution of this quantity falls (the costs rise faster than the turnover). Basically, additional

turnover only worthwhile for as long as it at least covers the marginal costs (GK) (intersection of the red curve

with the price curve p(x)).

4.7.2 Conclusions for the pricing of megaconstellations

In our trend analysis we used a laborious bottom-up analysis to determine the costs of the production of a

broadband connection in costs per megabit, i.e. the marginal costs, assuming that the full available bandwidth

of our model system can be marketed. We contrasted them with the current Starlink selling prices (top-down)

and currently see a margin of a factor of roughly five. With the consumer theory considerations set out above,

some suppositions can be made about current pricing, which at least appear suitable for identifying a

particular trend and for challenging apparently obvious misinterpretations.

Two deciding factors come into play for pricing where megaconstellations are concerned. We will set them

out in detail in this chapter:

To serve customers in densely populated industrial countries with a high readiness to pay, multiple

(many) satellites must be available simultaneously.

Due to the inherent technical characteristics of a mega constellation, many times more of these

satellites are required for industrialised countries, since the system is in a constant state of flux.

This goes hand in hand with the drawback that each satellite is only flying above the land mass of

customers willing to pay for a very short time and most of the time serves other land masses or is

not even in service.

This peculiarity of the system must be shown in the pricing models. An analogy can again be drawn with

aviation: once completed, an aircraft has a certain number of seats, which cannot subsequently be changed,

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even if only a fraction are occupied for a flight. Not least, this lack of flexibility has led to oversized aircraft

being unable to succeed when full despite their advantages in terms of economies of scale.

When viewed together all aspects lead to the following conclusions:

Megaconstellations must gain the customers in the rich countries who have higher budgets, while

instead operating in poorer countries with prices at the marginal costs. Like the sale of tickets in

travel services, it will be a matter of integrating Marshall’s demand across all price points.

The advantage for the constellations is that they only need a few customers to be profitable in

small industrialised countries like Germany (which was shown in this chapter), so the customer

pool should provide the required demand. Since the German view (or the view of other countries)

is that satellite connections will initially be a scarce resource, in the view of the operators there is

no reason to reduce prices – even if the public articulate noisy criticism and insufficient confidence

in the business case. There will be no change here until a real market has developed, i.e,.

customers not previously connected terrestrially are connected or the number of constellations

increases. Until then, the pricing will correspond to monopoly pricing. The current clear distinction

between estimated marginal costs and selling price currently justifies the existence of a monopoly

price approach. Also in favour of a monopoly price mechanism is that constellations such as

Starlink are in the early stages of growth, i.e., currently supply is still extremely scarce. It is all the

more sensible not to let customers become accustomed to low prices and instead to market the

reduced supply with a high perceived benefit in small portions through marketing. In particular,

the current marketing strategies, with the need for preregistrations and advance payments to

secure a product, appear appropriate to this thinking.

Politics and people must therefore be aware that, even with regard to price theory, Starlink currently

has no reason to compete with the terrestrial providers. Our analyses indicate that it is not

acceptable to draw the direct conclusion that systems such as Starlink cannot be competitive or even

that the currently recognisably scarce resources represent a problem inherent in the system. This

too is not beyond the realms of possibility of course, but the considerations of monopoly pricing are

equally plausible. Only the future will shed further light on this.

Under the price mechanisms described it is entirely conceivable and reasonable for the

constellations to connect unconnected users in economically disadvantaged countries at extremely

low prices, and in this way deliver on the promise of global networking. As shown in this chapter,

the marginal costs of constellations can be very low, as can also be the minimum selling prices in

the case of globally favourable distribution of Marshall’s demand.

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FIGURE 4-25: THE CONSTRUCTION OF MARSHALL’S DEMAND FUNCTIONS FOR FIXED INCOME IN THE TWO GOODS CASE.

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FIGURE 4-26: MONOPOLY PRICING AS A FUNCTION OF THE MONOPOLY QUANTITY AND MINIMUM PRODUCTION PRICE AND PRODUCTION

QUANTITY AS A FUNCTION OF THE MARGINAL COSTS (GK). ′IS THE CHANGE IN THE TURNOVER WITH THE QUANTITY.

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1. 5 Opportunities for Germany as a user of megaconstellations The much-quoted digital transformation represents one of the fundamental challenges of our post-modern

society. A key element here is the ongoing intelligent, digital networking of business, industry, trade and the

public sector. With the introduction of the new 5G mobile standard and the promotion of broadband by

central government, Germany is currently paving the way for this transformation. Satellite communications

can make a major contribution mainly in the ‘last mile’, in peripheral areas disadvantaged in terms of

development technology by providing fast and uncomplicated economic solutions in all parts.

Below we will examine the above megaconstellations in terms of their potential to accelerate or support

Germany’s digital transformation. Three areas of application of the LEO satellite constellations that are

relevant for Germany are at the heart of the analysis:

1. (Partially) mobile applications (e.g. Smart Farming/Precision Agriculture, autonomous driving and flying)

2. Narrowband applications (e.g. IoT/M2M and Industry 4.0, Smart Cities and Smart Grids)

3. Broadband applications (e.g. teleworking, home entertainment, financial market applications, connection of commercial units)

5.1 Overview of potential areas of application

The following section starts by summarising the applications and services accessible through satellite

constellations. This will explain the background of the various areas of application and present their societal

benefits. According to a survey168 by Capitol Momentum on behalf of the BDI (Federation of German

Industries), 75% of start-ups in the space sector say they would like to serve customers who have not

previously been addressed by traditional competition in the industry. This includes a large portion of users

who, for the time being, have nothing to do with communication applications (e.g. in the area of Earth

observation) or only peripherally, yet in satellite communication there are numerous new use cases, which

we will now explain.

5.1.1 Smart Farming

Satellite data for agriculture, summarised by the terms Smart Farming and Precision Agriculture, are an

important field of application for Germany. Key digitalisation technologies such as efficient networks of small

transmitters and sensors (Low-Power Wide Area Networks or LPWANs), Artificial Intelligence and 5G mobile

may come into even greater use in aerospace in the future. At the same time the Internet of Things (IoT)

connection of satellite (data) and supplementation by complementary sensors in particular are decisive here.

The frequent call for ‘5G on every milk churn’ refers to two fundamental features of 5G: the very high data

rate and the extremely low latency.

For Smart Farming applications however, other aspects are considered urgent. For example, it is a question

of retrieving large volumes of map data from databases over the internet,

168 Capitol Momentum, “New Space Industry Report Germany 2020”, BDI, 2020.

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even during harvesting. This does not necessarily have to happen in real time, so the decisive 5G features are

not especially relevant here and geostationary broadband satellites can also be used.

Sensor technology in livestock farming is another area of application. This is underlined by farmers’

associations for example as an important factor in digitisation, since cattle farming – e.g., dairy cattle farming

– has an important part to play in Germany’s agricultural sector. In part-time agricultural businesses in

particular there are only a few staff available, and digital technologies offer new potential for further

productivity increases – almost the only chance to maintain competitiveness for this form of business.

5.1.2 Autonomous Driving

Traffic control and coordination is another future field of application of satellites at the interface with

digitalisation. In particular, autonomous driving and autonomous flight require high-precision satellite

navigation and are closely associated with the advances in the area of IoT. As with other IoT applications,

satellites, especially in combination with Low-Power Wide Area Networks (LPWANs) and 5G, can provide

decentralised coverage even in economically underdeveloped regions. Using available satellite constellations,

this decentralised coverage could also be implemented relatively inexpensively. Similarly, modern traffic

monitoring, from airborne devices through to automated parcel delivery by drones can be enriched by

satellite data. In particular, the increased autonomy of vehicles and aircraft is driving innovation here.

Because of the status of the automotive and aviation industries in Germany, the use and expansion of satellite

communications in this area are very important. Basically, we can say that autonomy in mobility can only be

achieved if the sensor technology and actuators can communicate with little latency. In general, these strict

latency requirements are currently equated with the 5G mobile standard, i.e. treated as a kind of ‘5G

performance’. High latency requirements can of course also be achieved with other technologies, such as the

ITS-G5 WLAN technology, which is also discussed in connection with autonomous driving169. LPWANs can

support the recording of sensor data with low volume, as currently already happens in large cities. Against

this backdrop, it is well worth considering the use of LEO constellations in supplementing the expansion of

the digital transport infrastructure.

5.1.3 Industry 4.0 and IoT applications

The most relevant characteristic of Industry 4.0 and IoT is the networking of different components, for

example in the production cycle (transport vehicles and machines). Key technologies for aerospace here are

the integration with terrestrial 5G technology, LPWANs and satellite navigation, satellite communications and

the satellite internet. Initial applications using blockchain technology and satellites, such as the tracking of

relief supplies by satellite modem, can also be implemented. Artificial Intelligence of Things (AIoT) solutions

– that is intelligent and networked systems that can also carry out self-correcting functions – are emerging

alongside artificial intelligence 170. The systems are also capable of operating with greater

169 A significant number of motor manufacturers have joined forces in the “5G Automotive Association” and are driving forward the 5G mobile standard for autonomous driving, as they are hoping this will bring them better opportunities in the global market (China). Other manufacturers, including market leaders such as Toyota and VW, favour ITS-G5, in particular against the background of the continuing controversial discussion of security in 5G networks. 170 J. S. Katz, “AIoT: Thoughts on Artificial Intelligence and the Internet of Things,” IEEE Internet of Things, July 2019.

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autonomy and increasing productivity. Here, satellites are the key to wide-ranging, inexpensive networking

of all these applications.

The automated recording of decentralised measured quantities known as ‘Smart Metering’ is an essential

part of the ‘Industry 4.0’ field of application. In particular, the monitoring of energy consumption and the

intelligent distribution of energy (Smart Grids) between generators and consumers play a major part here,

not least for the energy transition pursued. As a result of the sluggish development of digitalisation in rural

areas and the special requirements of large industrial plants, the LPWANs have now prevailed over the mobile

standard for Smart Metering. In addition to the LoRa standard, the MIOTY standard developed by Fraunhofer

IIS, which also belongs to the LPWAN technologies and allows uncoordinated access to the network by various

sensors, is particularly successful and widespread. For satellite communication, the UCSS standard developed

by UniBwM and marketed by the start-up NEOSAT GmbH is an IoT transmission technology that is currently

unrivalled in terms of its performance efficiency and, unlike all other LPWAN technologies, can still be

received reliably even at very low data rates of only a few 10 bit/sec. UCSS is therefore especially suitable for

highly miniaturised transmitters and for transmission via geostationary satellites. Nearly all the LPWAN

standards, however, currently only work terrestrially and cannot simply be connected to satellites in order to

cover the rural areas. Known further developments, however, give rise to expectations of integration in future

LEO satellite constellations. To date, more than 25 satellite constellations have been filed with or announced

to the ITU for this purpose citing IoT as a central business model. The commercially most successful

transmission technologies for such satellite constellations are currently the LoRa system and the NB-IoT

waveform provided for in the 5G standard. The methods for transmitting very small quantities of data via

commercially available geostationary satellites are also being researched, so that together with technologies

a great breadth of IoT applications could be covered using different satellites (also leased or hosted payloads).

This would effectively contribute to digitalisation and the energy transition; German start-ups are among the

technology leaders, and research groups have also been set up for this at universities (e.g. Erlangen, UniBwM)

and Fraunhofer Institutes (e.g. IIS).

5.1.4 Smart Cities and Smart Grids

Up to the start of the Covid-19 pandemic, it was undisputed that urban migration would continue to grow.

More and more people will continue to move to urban areas, not just in the western world, but especially in

developing countries. This presents great challenges for the municipal authorities in the areas of transport,

urban planning and the environment. Climate change will also present our cities with huge difficulties in the

future. Smart Cities – in other words cities that collect data using IoT sensors – are part of the answer to this

development. It may for example be possible to use satellite data to measure the local climate or the

distribution of pollutants in the city. The measured data is merged with terrestrial sensors and the

meaningfulness of the data increases as a result. This can be used directly to protect human health. Buildings

and other urban planning measures can be adapted accordingly and transport planning made easier.

In the area of Smart Cities, a Smart Grid refers to an intelligent power supply system. Like a conventional

power supply system, it consists of different power generators, energy storage facilities and consumers. The

defining difference between intelligent and conventional power supply systems is the communication of the

individual elements with each other. This makes it possible for the power supply system to respond flexibly

to changes, which in addition to optimising operation also enables secure operation.

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An added value for these applications through the megaconstellations lies in the connection of LPWANs and

5G networks and the chance to extend Smart City technologies into rural areas. This plays a big part, on the

one hand because the pandemic is leading to further urban sprawl in rural areas and, on the other, because

terrestrial solutions such as urban LoRa networks cannot be rolled out into the country to the required extent,

either technically or economically.

5.1.5 Broadband applications

“Nationwide provision with powerful gigabit networks available to all business and public facilities is the basis

of a successful implementation of digital opportunities in all areas of the economy and society in town and

country.”171

Terrestrial broadband networks are therefore an important location factor in global competition for our

commercial enterprises. More than that, they are necessary for implementing new forms of production,

intelligent mobility, innovations in the health system, the use of artificial intelligence, digital education and

networked working. The Coronavirus pandemic has revealed the benefits our society can draw from mobile

working and working from home, the possibility of digital shopping, digital medical consultations or digital

learning, even at a distance. For businesses these applications offer the prospect of new lines of business, in

which there are great opportunities for further growth.

First, it is a matter of adapting the network infrastructure to these growing requirements or letting them grow

with one other. The available network capacities are already reaching their limits today and are partly fully

utilised with the parallel use of a wide variety of services (e.g. ultra HD video streaming, telemedicine,

intelligent traffic control, real-time sensor and industrial technology, home office, home schooling, etc.).The

basic task is thus to provide nationwide broadband internet with transmission rates in the gigabit per second

range for all households and businesses. According to the Federal Network Agency, in implementing this aim

the federal government is mainly relying on wired technologies (FTTB/H and glass-fibre equipped CATV

networks)172.

This does not lessen the need for nationwide digital infrastructure with gigabit speeds. There is still a large

gap between available data rates and desired gigabit coverage. This offers a lot of room for complementary

solutions that can be rolled out quickly and provide acceptable data rates. Satellite-based internet

connections are one such solution, which can also be easily connected to the edge computing approach

described earlier.

5.2 Qualitative comparison of megaconstellations

Since Germany is facing enormous time pressure in the international competition for digitalisation, the

planned market entry of the various megaconstellations seems interesting (see Table 5-1). Two constellations

stand out in this comparison: Starlink has been providing its service in test operation in Germany and

elsewhere since autumn 2020 and is therefore in a pre-operational phase; O3b mPower does not plan on

entering the market until next year (2022), but will then be able to build on the experience with the current

first-generation O3b constellation and facilitate market access via existing customers. OneWeb and

Lightspeed have at least begun initial in-orbit demonstrations, to validate the technologies used; they are

planning their (limited) market entry for year-end 2021 (OneWeb) or from Q3 2022 (Lightspeed).

171 Cf. Broadband Promotion: in: BMVI, o. D., https://www.bmvi.de/DE/Themen/Digitales/Breitbandausbau/Breitbandfoerderung/breitband

foerderung.html (retrieved on 28.04.2021). 172 BMVI, Report on the Broadband Atlas Part 1: Results (as at mid-2020).

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From Telesat we know of various user demonstrations since 2018, including one with the telephone network

operator Telefonica in Spain to test terrestrial broadband services via satellite (HD video streaming,

videoconferencing, VPN links, large file transfers). The other constellations are keeping a low profile with

regard to initial service offerings. An initial in-orbit test was launched in 2019 for the AST Space constellation.

Using a small satellite launch in early 2021, KLEO Connect has presumably secured its frequency filings in the

Ku and Ka bands173.

TABLE 5-1: MARKET ENTRY OF DIFFERENT CONSTELLATIONS

2020 2021 2022

Starlink

OneWeb

O3b mPower

Lightspeed

AST Space unknown

KLEO unknown

Kuiper unknown

In the technical implementation for the provision of their services, the constellations partially differ in the

radio frequency bands used or licensed. Starlink and OneWeb rely on uplinks and downlinks in the Ku band.

Kuiper, O3b mPower and Lightspeed, on the other hand, favour downlinks in the Ka band and uplinks in the

Ka band. AST Space stands out through the direct use of 5G mobile frequencies in the S band. KLEO holds

licences for a wide frequency range into the Ka band. Table 5-2 shows an appraisal of the spectral efficiency

of these constellations, in which these numbers should be considered against the backdrop of the proven

degree of technological readiness. Amazon, for example, is planning the highest data throughput per satellite

for Kuiper (almost 40 Gbps), but has licensed less frequency bandwidth than OneWeb, SES or Telesat, so that

a highly efficient technology or very large user terminals must be used to achieve this goal. For O3b mPower,

a high data throughput is also planned per satellite (20.5 Gbps), but the spectral efficiency envisaged in this

system of around 4 bps/Hz is above the usual range for modern transmission processes and types of

modulation in the mobile environment. Here again powerful user terminals must be available to achieve the

aims. The other constellations (apart from AST Space and KLEO, for which insufficient data is currently

available) anticipate bandwidth efficiencies between 1.4 bps/Hz (Lightspeed) and 2.9 bps/Hz (OneWeb),

which is in the realistic normal range.

173 Gunter’s Space Page, “GMS-T”, available at: https://space.skyrocket.de/doc_sdat/gms-t.html (retrieved on 30.04.2021).

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TABLE 5-2: APPRAISAL OF THE BANDWIDTH EFFICIENCIES

THROUGHPUT PER

SAT [GBPS]

DOWNLINK BANDWIDTH [GHZ]

UPLINK BANDWIDTH [GHZ]

BANDWIDTH EFFICIENCY

[BPS/HZ]

STARLINK 6.6 2 0.5 2.6

KUIPER 39.8 2.4 1.6 10.0

ONEWEB 11 2 1.8 2.9

LIGHTSPEED 7.1 2.5 2.5 1.4

O3b MPOWER 20.5 2.4 2.5 4.2

AST SPACE ./. 1.6 ./.

KLEO ./. ./. ./. ./.

The different orbital altitudes of the satellites, but above all the different approaches to (digital) signal

processing (processing, serialisation, line length), cause the latencies in signal transmission and therefore

have a direct impact on the user experience and, in certain circumstances, limit the provision of potential

services. The megaconstellations must primarily be measured against wired networks, where the typical

latencies (median) range between 10 ms and 42 ms174. According to the information provided by different

providers, such latencies are also possible using LEO satellites. The signal delays to be expected in

megaconstellations are not therefore a dealbreaker for the provision of common broadband services (cf.

Table 5-3). Many firms even promise faster signal transmission than over wired networks and therefore focus

specifically on financial market applications related to high-speed stock exchange trading. Here there is a very

precise dependence on the geographic location of the communicating remote terminals and over how many

network nodes the signals are transferred (both with the wired and the satellite communication). A fair

comparison is therefore not possible across the board, but would have to be carried out on a case-by-case

basis. At best, latencies of just over 20 ms have been proven by measurements.

174 FCC Releases 2020 Communications Marketplace Report.

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TABLE 5-3: APPRAISAL OF SIGNAL DELAYS (LATENCIES).

AVERAGE

ORBIT

ALTITUDE

[KM]

SIGNAL DELAY

[MS]

(SIMPLE

HOP)

MIN. LATENCY

[MS]

(ACCORDI

NG TO

PROVIDER

)

MAX.

LATENCY

[MS]

(ACCORDING

TO

PROVIDER)

AVERAGE

LATENCY

[MS]

(ACCORDING

TO

PROVIDER)

STARLINK 550 3.7 20 60 40

KUIPER 590 3.9 ./. ./. ./.

ONEWEB175 1207 8.1 ./. ./. 32

LIGHTSPEED 1000 6.7 30 50 40

O3B

MPOWER176

8062 53.8 ./. 150 ./.

AST SPACE 730 4.9 ./. ./. ./.

KLEO ./. ./. ./. ./. ./.

User terminals (phased array antennas) already exist as marketable products for Starlink and OneWeb. For

O3b mPower we can assume that the user terminals of the first O3b constellation will be compatible or can

continue to be used initially with minor modifications. Contrary to the usual trend towards phased array

antennas, which make digital tracking possible by means of beam forming, the O3b anchor stations are based

on mechanical tracking. The connection to AST Space should be possible without special user hardware;

mobile terminals (smartphones, laptops, tablets, etc) should be able to dial in directly via the satellites. This

is the standard AST use case and what differentiates its offering with that of competitors.

A cost comparison for users of the above-mentioned megaconstellations has been set out in detail in

Section 5.3 and chapter 6.

5.3 Terrestrial broadband networks

Especially in areas where the expansion of terrestrial infrastructure with fibre networks is not economically

viable ("The availability of gigabit connections is particularly high in urban areas at 74.6%. In rural regions it

is around 16.7 % of households."), space-based communication systems bring added value. In principle, all

the megaconstellations rely on this opportunity and promise “Connectivity for unserved and underserved

customers globally.” They are therefore aiming at what is certainly a large, but also a very heterogeneous

market with consumers

who to date have had no access to broadband,

175 J. Brodkin, “OneWeb’s low-earth satellite hits 400Mbps and 32ms latency in new test,” available at: https://arstechnica.com/information-

technology/2019/07/onewebs-low-earth-satellites-hit-400mbps-and-32ms-latency-in-new-test/. 176 Barnett (2012), O3b – A different approach to Ka-band satellite system design and spectrum sharing, ITU Regional Seminar for RCC countries on

Prospects for Use of the Ka-band by Satellite Communication Systems, Almaty, Kazakhstan.

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who are dissatisfied with their internet access bandwidth,

who are dissatisfied with their internet access quality, or

who are dissatisfied with the price/performance ratio of their internet access.

All of the megaconstellations considered in the trend analysis plan to provide broadband internet services in

Germany. They will differ in services portfolios, in the customer target groups and the distribution channels.

Starlink and Kuiper will direct their offers at consumers and businesses and market their services directly.

OneWeb, O3b mPower and Lightspeed will use the existing distribution channels of their partners or parent

companies, Eutelsat, SES and Telesat, in Germany. OneWeb and Lightspeed will probably focus on business

customers. In addition to businesses, coordinated with GovSat, O3b mPower is also expected to appeal to

public authorities and the military. AST SpaceMobile will not be able to provide services in Germany until a

later expansion stage of its constellation and will use its partnership with Vodafone for market entry. KLEO is

presenting itself as a provider of IoT services and will possibly appeal to businesses and consumers (Smart

Home). However, there is simply not enough information available about the KLEO business model to make

detailed statements about it. Only Starlink and Kuiper therefore currently have an end consumer business in

mind as a declared aim; all the other constellations are targeting B2B business models with partly different

main focuses (cf. Table 5-4).

TABLE 5-4: ADDRESSED MARKET SEGMENTS OF EACH MEGACONSTELLATION

Marketing strategy Model Primary user target group

Starlink Direct B2C B2B Consumers, public authorities, military

Kuiper Direct B2C B2B Consumers, public authorities

Lightspeed Via distribution partners B2B (Canadian) public authorities and military

OneWeb Via distribution partners B2B Shipping and aviation, businesses, public authorities

AST Space Via mobile partners B2B Consumers

KLEO Unknown B2B Trade and industry

O3b mPower Via distribution partners B2B Consumers, public authorities, businesses, shipping

(cruising)

Based on the details of the relevant user terminals, we can assume that the value proposition of broadband

internet via satellite will move in a data rate range of between 100 Mbps and 300 Mbps.

This contrasts with the various desires of different social stakeholder groups (cf. Figure 5-1). According to the

latest report of the Broadband Atlas on broadband expansion in Germany177, 93.3% of private households are

already connected with data rates in excess of 50 Mbps. In view of the fact that about 11% of households are

located in rural areas, it can be assumed that a development in this bandwidth class is as good as complete

from an economic standpoint.

177 BMVI, Report on the Broadband Atlas Part 1: Results (as at mid-2020).

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In the next higher bandwidth category (that is, data rates in excess of 100 Mbps) 14.3% of households are

currently underserved, households are currently still underserved, and as many as 22.6% of private

households have to do without data rates above 200 Mbps. The situation is different for businesses and the

public sector (here using schools and hospitals as examples). In this comparison, schools, followed by

hospitals, come out worst, which in view of the current pandemic situation appears alarming. A broadband

internet connection (especially the uplink) would be particularly advantageous for these to be able to

effectively use the numerous above-mentioned digital services (telemedicine, virtual doctor consultations,

homeschooling). But there is still some catching up to do in terms of coverage for our commercial enterprises,

if politicians are serious about the call for legally mandated home offices and teleworking. Satellite-based

internet connections can be rolled out quickly and provide acceptable data rates – a real opportunity.

Needs analysis - broadband internet in Germany

45

40

35

30

25

20

15

10

5

0

Private households Schools Hospitals Commercial areas

User group

from 50 Mbps

from 100 Mbps

from 200 Mbps

FIGURE 5-1: NEEDS ANALYSIS OF DIFFERENT SOCIAL TARGET GROUPS

Despite its great potential, satellite internet continues to be a niche technology in Germany178. This is

especially apparent in the low user numbers regularly documented by the Federal Network Agency (cf. Figure

5-2). The acceptance of the product remains well behind the potential market despite the many existing gaps

in supply. The greatest hurdle in this regard is the generally higher end customer price compared with other

products. The latest initiative of the Federal Transport Minister to issue vouchers to subsidise hardware

acquisition costs could give satellite internet here new impetus179.

178 Puhl and Lundborg, Broadband Access via Satellite in Germany – State of Market Development and Development Perspectives (in German), 2019. 179 A. Sawall, Golem, “Scheuer seeking to promote satellite internet with 500 euros,” (in German) available at:

https://www.golem.de/news/bald-1-gbit-s- bundesverkehrsminister-will-satellitenanschluss-foerdern-2101-153405.html (retrieved on

03.05.2021).

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% o

f co

nnectio

ns)

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FIGURE 5-2: NUMBER OF BROADBAND CONNECTIONS VIA SATELLITE IN GERMANY (FROM M. KNOPP AND A. KNOPP, ON THE USE OF

SATELLITE COMMUNICATIONS FOR A NATIONWIDE HIGH-PERFORMANCE INTERNET, 6TH NATIONAL CONFERENCE

“SATELLITE COMMUNICATIONS IN GERMANY,” (IN GERMAN) BONN, 15.05.2019.).

5.4 5G mobile network expansion

As of November 2019 (cf. Figure 5-3), LTE (4G) can be received in 90% of Germany. For the individual mobile

network operators, LTE coverage varies between 69% (Telefonica) and 90% (Telekom), and covers a share of

private households between 89% and 98% of private households 180. Therefore, the capital expenditure for

the medium-term coverage of the remaining white spots could amount to 2.1 billion euros. While these costs

could be roughly halved by the network integration of extremely sparsely populated areas using directional

radio links, given the large number of white spots with very few households, the authors doubt that the

mobile network operators will carry out the network expansion on their own. The expansion of the 5G is still

very much in its infancy.

As regards the actual implementation of the digital transformation in Germany, the architectures that are

gradually emerging show that for the time being local networks and cloud solutions with locally distributed

sensors have higher priority than the real-time requirements behind 5G. Such networks use ‘edge computing’

functionalities, i.e., important calculations and network functions are not processed in a central data centre

but directly, locally, on site. In this way not all the data has to go on the internet anymore and real-time

communication requirements, e.g., between machines, can also be met locally. Similar approaches are also

used in larger properties of public authorities and industry under the term ‘campus networks’.

180 Final report on the mobile communications provision and costs study, 2019.

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FIGURE 5-3: MOBILE COMMUNICATIONS PROVISION IN GERMANY – AREA (FROM FINAL REPORT ON THE MOBILE COMMUNICATIONS

PROVISION AND COSTS STUDY, 2019)

Mere campus network solutions can however only be an intermediate step and not a lasting alternative to

well-developed mobile infrastructure.

We can therefore assume a similar scenario as in terrestrial broadband expansion and identify a clear added

value in the complementary use of space-based communications systems, which is reflected in the envisaged

business areas of the megaconstellations. High-speed links of up to 1 Gbit/s between terrestrial mobile base

stations and the core network could be created via satellites. Content such as videos or UHDTV, but also other

data, would then be transmitted over a large area to all the base stations in a target area by satellite. This

hybrid use of satellites with terrestrial base stations would relieve the earthbound backhaul networks

between the base stations and the actual core network. The capacities thus freed up could be used for other

user communication.

This scenario has already been tested by Telesat in different technology demonstrations, e.g., with Vodafone

in the United Kingdom. But nearly all the other constellations considered here are promising at least a

medium-term provision of mobile services. AST Space Mobile, Telesat Lightspeed and O3b mPower are aiming

explicitly at the mobile market with a B2B business model; on the other hand, KLEO Connect is focusing its

added value on mobile IoT applications.

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5.5 Official communications

Public authorities and organisations with security and safety responsibilities (BOS) have unique requirements

for the performance of their communications facilities. They include high availability in all situations and high

stability and privacy These include high availability in all situations as well as high resistance to interference

and interception. Since commercial networks only fulfil these requirements to a limited extent, BOS operate

their own terrestrial communication network in this country, which in the meantime has reached a very good

state of expansion and has also proven itself time and again in major situations and crises. This network,

known as "BOS radio", could be supplemented by a satellite component in the event that crisis or emergency

situations lead to partial or large-scale failures of the terrestrial infrastructure. Such situations are known

from past natural disasters such as flood events, which mainly resulted in the failure of the local power supply

(e.g. Elbe flood in Dresden). In these cases, satellite support offers an alternative that is independent of

terrestrial infrastructure and energy supply, highly available and ready to use at short notice.

In principle all the permanently available satellite systems can be used to implement a BOS satellite

component, which includes both the LEO constellations and geostationary satellites181. As the cost

comparison in Chapter 4 shows, both solutions are comparatively inexpensive. Mobile network nodes would

be used on the ground for the communication with the space segment, similar to the base stations of a mobile

network, which can be implemented in special vehicles with custom technology. The vehicles put up a local

ad-hoc network to which the BOS terminals connect. This network is connected by satellite to a functioning

terrestrial network node that can be located in a secure area, even at great distance. Tried and tested

architectures of this type are known from the military arena, where infrastructure must regularly be set up in

operational areas without terrestrial provision of basic supplies. International embassy networks also partly

operate on this principle.

A secure ground station is again required as head station for the terrestrial network. Multiple satellite-

connected mobile base stations (Sat-mBS) are also used in the nationwide BOS digital radio network. The

BDBOS has equipped two of its exchanges with satellite head stations for the radio traffic feed from the

satellite link to the BOS digital radio network. From these exchanges the Sat-mBS are connected to the

exchanges throughout Germany. Mobile base stations are mainly used in especially intensive operational

areas with an elevated BOS digital radio network capacity requirement or in the case of supply bottlenecks,

e.g. through the failure of regular base stations.

5.6 Price comparison between Starlink and German landline, cable network and

mobile connections

In the market for broadband internet access in Germany, the megaconstellations are competing with

providers of landline connections, mobile providers and operators of GEO satellites.

181 For GEO satellites the latency requirements may not be set too high.

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Statistics182 show that in 2019 of the 41.5 million households in Germany, 35.1 million, had a broadband internet

connection, according to currently published data of the Federal Network Agency183.

FIGURE 5-4: ACTIVE BROADBAND CONNECTIONS IN LANDLINES [SOURCE: FEDERAL NETWORK AGENCY]

2.9 million connections had a “marketed bandwidth” below 10 Mbit/s, 9.6 million connections had one from

10 to below 30 Mbit/s.

FIGURE 5-5: BANDWIDTHS OF THE LANDLINE CONNECTIONS [SOURCE: FEDERAL NETWORK AGENCY]

182 Destatis: https://www.destatis.de/DE/Themen/Gesellschaft-Umwelt/Bevoelkerung/Haushalte-Familien/Tabellen/1-1-privathaushalte-

haushaltsmitglieder.html. 183 2019 annual report of the Federal Network Agency: “Networks for the digital world“ (in German).

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The number of internet connections via GEO satellites is vanishingly small compared with the number of

landline connections. Just 25,000 connections in 2018184 and 23,000 connections in 2019185 (part of a falling

trend ) were satellite internet connections.

FIGURE 5-6: DEVELOPMENT OF SATELLITE INTERNET CONNECTIONS IN GERMANY 2008-2018 [SOURCE: FOOTNOTE184]

For frontrunner Starlink the following market potential can be derived for Germany in an initial rough

approximation:

6.4 million households not connected

2.9 million “underserved“ households with a data rate of < 10 Mbit/s

9.6 million “underserved“ households with a data rate of 10 to 30 Mbit/s

In total this would make 18.9 million households potential customers, as long as the households have a

suitable location for the user terminal and Starlink’s price during the operational phase is attractive.

Starlink’s current beta test prices form the basis for a comparison with the price level of landline, mobile and

satellite connections. Only tariffs that, in terms of the promised data rates, are comparable with the download

data rates of 100 Mbit/s achieved by Starlink in the beta test are used for the comparison.

Landline tariffs

Landline connections are provided as DSL/VDSL, fibre optic or cable connections. For the comparison Deutsche

Telekom and Vodafone tariffs with a download data rate of max. 100 Mbit/s were considered.

184 BMVI, Legal Challenges in the Creation of Incentives for a Nationwide Expansion of Fibre Optic Infrastructures, https:// www.bmvi.de/SharedDocs/DE/Anlage/DG/Digitales/rechtsgutachten-ausbauanreize-glasfaser-goldmedia kuehling.pdf?

185 2019 annual report of the Federal Network Agency: “Networks for the digital world“ (in German).

blob=publicationFile.

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It should be noted at this point that, according to the Federal Network Agency in the period 2019/2020, just

73.6% of users achieved at least half the contractually agreed maximum download data rate, with the full

speed only being reached by24% of users.

Deutsche Telekom Magenta Zuhause L (as at 3.5.2021):

100 Mbit/s max. downlink (VDSL min. 54, standard. 83.8, max. 100 Mbit/s)

50 Mbit/s max. uplink (VDSL min. 20, standard. 33.4, max. 40 Mbit/s, 50Mbit/s uplink are only

achieved in the case of a fibre optic connection)

Initially €19.95/month, going up to €44.95 per month from the 7th month

Internet flat and landline flat

Router credit 80 euros, online benefit 100 euros

Average annual availability 97%

Vodafone Red Internet & Phone DSL (as at 3.5.2021)

100 Mbit/s max. downlink (VDSL min. 54, standard. 87, max. 100 Mbit/s)

50 Mbit/s max. uplink (VDSL min. 20, standard. 37 max. 40 Mbit/s)

Initially €19.99/month, going up to€39.99 euros from the 13th month


Activation fee €49.99 euros, credit online benefit 50 euros

Router in the promotional period €0/month, otherwise €2.99/month

List price €42.98 euros/month incl. Fritz!Box 7530 Router

Average annual availability: not available

Vodafone Red Internet & Phone Cable (as at 3.5.2021)

100 Mbit/s max. downlink min 70, standard. 95, max. 100 Mbit/s)

50 Mbit/s max. uplink min. 5, standard. 9, max. 10 Mbit/s)

Initially €19.99/month going up to €34.99/month from the 13th month


Activation fee €79.98, credit online benefit €120

Average annual availability: not available

The list price tariffs of cable providers Unitymedia Kabel BW and PYUR are similar to the Vodafone cable

tariffs.

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TABLE 5-5: COMPARISON WITH LANDLINE TARIFFS

The average price of a DSL connection in the category examined is approx. 44 euros/month, while a cable

internet connection costs approx. 35 euros/month.

With its current prices, Starlink is not competitive with the similar landline connections on price. There is an

opportunity in the area of cable connections, where even today a factor 4 higher upload speeds can be

achieved with Starlink.

Internet access via the mobile network

Telefonica, Telekom Deutschland and Vodafone tariffs with an unlimited data volume and a download

speed of > 100 Mbit/s were considered for the comparison with prices in the mobile network.

TABLE 5-6: COMPARISON WITH MOBILE TARIFFS

The price range in the tariffs varies from approx. 55 euros/month to 94 euros/month. It is important to

remember that, depending on current promotional offers, different additional services may be included. The

average price for the comparison is 77 euros/month.

With regard to the download data rates with mobile broadband connections, it should be noted that,

according to the Federal Network Agency, the general level was well below the values of the landline

connections. Across all the service providers just 17.4% of users received at least half of the contractually

agreed estimated maximum data transfer rate. The data transfer rate was only reached or exceeded for 2.1%

of users.

To the extent that the user’s location is in a fully developed 5G supply area, the Starlink price is not

competitive with the mobile tariffs in Germany as part of fixed use.

min. durchschn. max. min. durchschn. max.

O2 (Telefonica)

Free Unlimited Max. Flex

Telekom

Magenta Mobil XL

Vodafone

RED Business Prime unlimited

Starlink

Better than Nothing Beta

Anbieter/TarifDownload [Mbit/s] Upload [Mbit/s] Internet-Flat,

Festnetz-Flat

Anschlusskosten

[Euro]

Monatlicher Preis

[Euro]

k.A 50,3* 300 k.A. 23,0* 50 incl. 39,99** 54,99

k.A. k.A. 100 incl.

0,0144 85,5 300 0,0144 35,4 50

99,00

* im 4G Netz **häufig Sonderaktionen ohne Anschlusskosten + Bonus

Mobilfunk-Anschlüsse

39,99** 94,00

50 100 20 40 excl. 555,00

incl. 39,95** 84,95

k.A. k.A. 500

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Internet access via GEO satellites

Currently, SES and Avanti capacity in the Ku band and the Ka band is provided via distribution partners in

Germany. EUTELSAT on the other hand markets the Ka band capacity of its Konnect satellite at 7.2° west

through its own distribution company. The GEO tariffs with the highest download data rates in each case

were used for the comparison with Starlink.

TABLE 5-7: COMPARISON WITH GEO TARIFFS

GEO-Sat connections

Provider/tariff

Download [Mbit/s] Upload [Mbit/s] Contention

Rate

Installation

Connection/Termina

l costs [euros]

Monthly price

[euros]

min. av.

max.

min.

av.

max.

SkyDSL (Ku band) 12** 24 40 0.6** 1.2 2 1:50 N/A 286.50** 39.90

SkyDSL2+Zuhause L

Filiago (Ka band) 0.128 44 50 0.128 2.4 4 N/A 294.95 529.80 69.95

Satsurf Premium Unlimited*

Novostream (Ku band) 6 16 20 0.5 1.6 2 N/A 254.00 388.90 59.90***

Astra Connect XL

EUTELSAT (Ka band) 50 75 100 2.5 3 5 N/A 99.00

49.00 activation,

HW incl. 69.99*****

Konnect Max

Starlink 50 100 20 40 N/A not required 555.00 99.00

Better than Nothing Beta

* Fair Use Policy, flow reduction over 100 GB ** Hire purchase

*** 50 GB data volume + Night flat additional 9.90 euros/month **** Promotional price, otherwise 349 euros

***** Flow reduction after 120 GB possible

In the comparison of Starlink’s performance data with the GEO satellites listed above it is clear that only

Eutelsat’s Konnect HTS achieves Starlink’s download data rates.

At the same time Starlink’s technical distinguishing features compared with the GEO satellites are the lower

latency (40 ms compared with approx. 500 to 600 ms with the GEO satellites) and the clearly higher upload

data rate (40 Mbit/s compared with 5 Mbit/s with Konnect).

In the price comparison Starlink is currently around 40% above EUTELSAT’s monthly prices. Starlink is

however expected to adjust its prices downward at the time of its expected market entry in regular operation.

That a sufficient reduction potential exists for this can be inferred from the explanations of the per bit costs

in chapter 4.

5.7 Conclusion

There is an opportunity awaiting Germany in broadband satellite communications, regardless of the type of

orbit, to supply its white (or grey) spots on the Broadband Atlas fast and nationwide. The established network

operators appear to be opening up to this technology, as various technology demonstrations (e.g. Telesat

with Telefonica or Airbus with Eutelsat) show. Moreover, experience in other countries (e.g. the USA and

Australia) indicates that any available bandwidth is used within a very short time. So there is a relatively low

risk in the technology (on the user’s side).

LEO constellations could, in any event, cooperatively complement terrestrial mobile networks, in particular

in mobile internet use and with the Internet of Things, to guarantee seamless network coverage nationwide

across the boundaries of different geographical areas. Similarly, the connection of many devices, either

directly or by means of a powerful base station, via satellites in low Earth orbit would also be available for

the transfer of real-time uncritical data in the Internet of Things because, in addition to the much quoted very

large number of connected terminal devices, this

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application stands out with very low sensor transmitter powers, to make long battery life possible.

Also interesting for future development is that the costs for satellite operators are also increasingly falling, in

particular as a result of technical advances. The megaconstellations promise further price reductions and new

pricing models for end users. This analysis clearly shows that in the course of their development (e.g., through

the automation of the operation or the realisation of a largely autonomous space segment)

megaconstellations can increasingly work more efficiently and therefore cut the costs for the operators in the

medium term. The corresponding offerings can therefore be expected to make competitive advances into

pricing regimes of terrestrial offerings. Since the first flying constellations are still under construction, the

capacity available in orbit (e.g. Starlink beta test) is well below the future potential. The effect of this reduced

offering with rising demand will continue to be that relatively high prices may be sought for satellite internet

services. With the expansion of the offerings and growing competition, prices will fall and the

megaconstellations will very probably develop into a real alternative to the terrestrial offerings.

In conclusion, the opportunities of the megaconstellations for users in Germany should be evaluated on the

basis of the above considerations. Three criteria are used for this:

1. Market entry

2. Diversity of the services provided

3. Complexity of the systems

Figure 5-7 illustrates the analysis in a spider chart. For the market entry criterion the data from Table 5-1 is

converted linearly into probability values: 2020 = 100%; 2021 = 50%; 2022 = 33%; for the constellations whose

market entry remains unknown a realisation probability was estimated on the basis of the available

information on the financing of the plans and the technological degree of readiness on the basis of in-orbit

demonstrations. The diversity of the services provided was assessed on the basis of the primary market

segments relevant for Germany and the technical capabilities with regard to the areas of application

described at the beginning. The Starlink constellation, for example, is aiming at three out of four relevant

market segments (consumers, public authorities, military) and can fully serve all five areas of application

(Smart Farming, autonomous driving, Industry 4.0, Smart Cities and broadband). As a measure of the diversity

of the services offered, the constellation has a value of (3/4 + 5/5)/2 = 87.5%. To evaluate the complexity, in

addition to the number of satellites in the constellation, the spectral efficiency of the communication

payloads was taken into account and a linear gradation was made starting from the most complex

constellation (Amazon Kuiper).

In summary, we can say that the above applications can be implemented with nearly all the constellations.

The biggest exception is likely to be KLEO Connect, which is directing its value proposition exclusively at the

Internet of Things. AST Space is also clearly differentiating itself from its competitors, focusing on the direct

connection of mobile devices, so that no special hardware is needed to use its services. While this may well

limit the possibility of connecting broadband services (e.g., only a few users will probably be attracted by UHD

video streaming on a smartphone), potential end customers will also be spared a crucial entry barrier, so

accelerated market penetration is expected here. O3b, too, is differentiating itself with the significantly higher

target orbit (MEO) compared with the other constellations.

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For the use of this constellation not only must latencies of on average up to five times higher be taken into

account; currently, the user terminals are also comparatively large and mechanically complex systems; a

direct connection of small IoT sensors is therefore not possible.

FIGURE 5-7: CONCLUDING ASSESSMENT OF THE MEGACONSTELLATIONS FOR USERS IN GERMANY

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6 Opportunities for Germany as an industry in the megaconstellation market

A key question from the perspective of the Federal Republic of Germany concerns the opportunities for the

business plans of the German space industry in the growing megaconstellation market. Germany is broadly

positioned, especially in the supply industry, and is an innovator in the global market in many technology

sectors. Thus, several renowned comparative studies and companies see Germany globally as a leading

location in the field of research and innovation186. Germany also plays a leading role in the area of space and

satellite research with a number of established companies and ‘hidden champions’. Based on the results of

previous chapters, this chapter considers opportunities for German industry to participate in the value

creation associated with megaconstellations and to develop as a strategically important partner in the supply

industry. This will mainly be a matter of keeping pace with the megaconstellations technologically and to

further expand technological leadership.

For every industry, entering the market at the right time is crucial for economic success. It should be noted

here that this optimal time must always be determined with a view to the future because technological

developments are usually needed before marketable products can emerge. The role and significance of

national technology promotion designed to support such developments looking to the future is evident here.

In the previous chapters we have shown that megaconstellations fulfil all the preconditions for not only

existing in the market, but also even for forming a technology and product segment of their own. This

situation is fundamentally different from the situation about 20 years ago, when innovations and ideas

involving constellations in low Earth orbit first emerged. Constellations such as Globalstar, Inmarsat,

Orbcomm and Iridium all had visions of megaconstellations in the 1990s. In the end no constellation was able

to achieve commercial success, and many had to reduce the number of satellites initially planned in their

constellation. Today people would put it simply, saying that the “time was just not yet ripe” for such products,

which on the one hand takes account of the lack of demand, but on the other also concerned macroeconomic

factors. In the previous chapters we have looked intensively at the microeconomy, i.e. the megaconstellations

sector environment. We will use these results to draw conclusions for industry. First however we want to

discuss the macroeconomic environmental factors that play an equally significant role in the success of

markets.

6.1 Economic environment

6.1.1 Macroeconomic influencing variables and environmental factors

PESTEL analysis is the evaluation of political, economic, social, technological, natural and legal environmental

factors that affect the industry environment but are beyond the direct influence of industry participants.

Sometimes hardly any or no influence

186 IfW Kiel and McKinsey & Company, “Analysis of the economic boundary conditions in Germany relevant to industry in the international

comparison final report to the Federal Ministry for Economic Affairs and Energy, Reference I C 4,” pp. 116-121, 2020.

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at all can be brought to bear on these factors and they should have a decisive effect for initial investments in

the business of megaconstellations.

Figure 6-1 shows the PESTEL analysis for megaconstellation operators. In the political environment, initiatives

for an EU megaconstellation of its own and also the international political competition with Russia and China

will contribute decisively to the promotion of megaconstellations. From the political perspective, a new ‘space

race’ is therefore underway, which is having a positive effect on the business prospects of megaconstellations.

With the help of O-ISL and de-orbiting, environmental protection and sustainability are promoted in the

natural environment, thus serving two social trends that are in vogue. Megaconstellations with O-ISL for

example offer the possibility of reducing the expansion of terrestrial gateways and therefore avoiding an

impact on nature. In contrast to this, of course, is the trend of polluting space with the constellations, which

is why de-orbiting strategies play a major role. In the economic environment, outside of state interest, there

is now also increased interest from entrepreneurs such as Elon Musk and Jeff Bezos. These private investors

are trying to operate and promote their own mega-constellations and will thus have resources that can take

over tasks of state welfare. Security concerns associated with the media power of these groups are growing

and threats to information sovereignty are increasingly being seen. This is leading to socio-political pressure

to create a functioning market by expanding the supply of constellations. In the technological environment,

with the introduction of 5G standardisation and in particular the extension to 6G standardisation, satellite

communications will also be included in telecommunications standards, and will therefore provide a seamless

integration of satellites in Earth-based communication. With the first press reports from China about 6G

technology in orbit187 the pressure is now growing on politics to avoid the technological dominance of China

experienced at an early stage in 5G through developments of its own. Under the designation New Space, the

initiation of the commercial and digital space industry, small start-ups and SMEs are now being given

opportunities to enter the space industry. In the end, driven mainly by Covid-19, an increase in direct

connectivity is in demand for the social environment. Human-to-human connectivity, in particular, is a

medium in demand, which can also be solved with the assistance of megaconstellations. We can see here

that – compared with the past – the time is right to promote and to implement innovations of

megaconstellations. In summary therefore, nearly all the environmental factors now favour the space

industry entering the megaconstellation market. This situation represents a fundamental difference from

earlier phases and therefore cannot be emphasised enough. In macroeconomic terms megaconstellations are

starting to develop into critical infrastructures, regardless of their economic success. They will therefore quite

automatically displace other technical solutions, including those of the space industry. This development

alone clearly speaks for a serious engagement of the industry with this market.

187 Redaktionsnetzwerk Germany, report: “China sends first global 6G test satellites into orbit” (in German) 7.11.2020.

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FIGURE 6-1: PESTEL ANALYSIS OF THE MEGACONSTELLATION SECTOR ENVIRONMENT

6.1.2 Sector structural analysis from the supply industry perspective

We would like to return to the sector structural analysis. In Chapter 3.6 the sector structure was analysed

with reference to Porter’s widely accepted economical five forces model, but with a focus on sector

competition from a product perspective (cf. again Figure 6-2). We want to use this model to analyse the

structure of the sector again from the perspective of the supply industry and in particular highlight changes

through the New Space Economy.

FIGURE 6-2: DESCRIPTION OF THE SECTOR STRUCTURAL ANALYSIS (FROM PORTER, “COMPETITIVE STRATEGY”, 1980, P. 4)

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The decisive changes in the industry from the supplier industry's point of view include three factors:

The massive expansion of vertical integration on the part of the operators of megaconstellations has

seen their bargaining power in their role as buyers increase hugely compared with the conventional

supply industry.

The expansion of vertical integration also leads to customers (the operators of the constellations) at

the same time being able to act as competitors on the suppliers’ side.

Finally, new agile production methods (e.g. series production), in combination with non-space

approaches to system design (e.g. lower service life requirements or even the willingness to dispense

with special hardening of products), are leading to new substitutes for their own products emerging

in the market. These are usually products that have not been developed specifically to space

standards and are contributed by suppliers outside the conventional space industry. This

development also presents SMEs and start-ups with opportunities, in particular because the pace of

innovation and pressure to innovate are increasing.

Taken together, all three developments lead to three fundamental effects:

A trend to lower prices for space devices. This is of course enhanced by the demand for higher

quantities.

Considerably shorter development times, which cannot be accepted from the customer’s perspective.

A dilution of the previously relatively sharply delineated ‘space technology’ branch of industry with other industries, in particular in software development. Barriers to market entry are reduced and the competitive pressure increases.

In recent years this sector environment has also changed significantly, with the entry of private investors in

the space industry in general and in particular the megaconstellations business. An industry structural analysis

of SpaceX reveals drastic changes here. We have a very special situation here, namely that constellation

operators have complete control over the industry environment. They are both their own supplier (e.g.

launchers, antennas and satellites). Their products are unique and innovative (sustainable launchers or high

performance antennas) with little competition, which above all cannot produce for the same prices and

quantities. They see few competitors in their own constellations, as they represent a closed ecosystem.

Finally, they are also buyers of their own products or supply directly to the end customer.

In summary, for the supply industry to establish itself successfully in the market, it will therefore depend, in

a macroeconomically advantageous environment, on finding the right technological responses to a

significantly changed sector environment. In this regard the German space industry benefits from its great

innovative strength and its outstanding reputation. The challenges, however, are in the required pace of

innovation, the production processes and the time for market entry, as many constellations have already put

together their technological portfolios and the necessary development times are an obstacle to an agile

response. It will be even more crucial to set itself up as an industry leader in key technologies, to push through

better prices and visible competitive advantages through the associated reduction of the market power of

the customers (the constellations) and the substitutes. In this trend analysis we have shown which key

technology fields we see here. In the sections below we will set out the present and future positioning of

German industry to work out opportunities.

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6.2 Positioning of the German space industry

6.2.1 Approach and databases

With a strong enabling technology and the necessary know-how it is now important for Germany to

strengthen and, where this has not yet happened, establish its position in the new market of

megaconstellations and the New Space Economy. Not only must large companies take on an active role, but

start-ups and SMEs in particular must be able to make their own contributions to demonstrate the strengths

of the economic structure in Germany. In previous chapters we began by working out the key technologies

for the economic success of megaconstellations and then showed which company structures and vertical

integrations established market players use to build up their added value chains. These added value chains

and key technologies are the first two databases for our analysis (cf. Figure 6-3).

Companies can only be strong in the short- and medium-terms in fields of technology in which they already

feel at home and with which they identify. In no way is this inconsistent with the possibility of creating

disruptive innovations. To identify company interests and strengths of the German space industry, the

“AGTA188 technology list” was used for the trend analysis. In their technology list the AGTA members have

identified what they see as strategically important fields of technology for the future of satellite

communications and ranked themselves with their business interests. In addition, they have provided

estimates of the development budgets required in the short and medium term in order to be able to compete

in the global market. This list thus represents a self-assessment by the companies and should initially provide

a very good insight into the strengths and development portfolios of German industry. It forms the third data

basis that we will use for our analysis (cf. Figure 6-3).

When evaluating investments for technology developments, it is not least important to select the

technologies with the greatest economic leverage. In chapter 4.4 we analysed the cost structure of

megaconstellations and showed how certain technological innovations translate into an improvement of this

cost structure and thus an increase in profit margins. With limited budgets, technology promotion should

focus primarily on those topics that offer tangible leverage. That is why our analyses on costs will form the

fourth data basis. It should be noted, however, that this purely economic view does not take into account

the strategic aspects of technology promotion. Thus, if Europe wants to be strategically capable of building

and operating megaconstellations, all key technologies must be mastered - even those that do not have great

economic significance.

188 AGTA stands for a committee in the Telecommunications Working Group of the German Space Agency, which was set up by the leading industrial companies and

applied science in Germany to advise the space agency on the strategic direction of technology promotion.

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FIGURE 6-3: INFLUENCING CRITERIA IN THE ANALYSIS FOR GERMAN INDUSTRY

With the help of the aforementioned entry criteria, we first want to establish the connection between

industry and technology. The main focus is to get a first impression of where the German industry finds itself

within the value chain and the key technologies of the mega-constellations according to its own assessment.

Based on this initial classification of the German space industry, further analyses of differentiation strategies

and performance-cost estimates are presented. The transformation of the space industry is not yet complete

and with the entry of start-ups and SMEs, a case-by-case approach is essential for the optimal promotion of

the German space industry in the megaconstellation market.

6.2.2 Assessment of the key technologies

With regard to the key technologies identified in this trend analysis, we find the following situation in

Germany:

Germany is currently global market leader in inter-satellite links technologies. This shows the

effectiveness of suitable and forward-looking technology promotion by the public sector in

partnership with industry.

With regard to user terminals, the situation is unsatisfactory and there is a lack of competitive

products. This does not however mean that no suitable technologies, e.g., on the modem side, were

available, merely the lack of an inexpensive, series-produced highly integrated terminal.

In antenna design, looking in particular at powerful phase-controlled antennas, we have to say that

other nations and companies have gained a considerable head start in development, first and

foremost SpaceX. In expert discussions, this has been estimated at up to 5 years.

Resource-optimised networks and routing and the area of automation in resource allocation and in

flight operations are relatively new areas of technology that continue to attract great academic

interest, but in which no provider has yet been able to prove themselves. There is an

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opportunity here to move forward faster than others and secure a leading position.

Based on this status quo, recommendations can now be derived for the further development of the

technological areas. A distinction must be made here with regard to the goals. If the goal is the ability to

realise an all-encompassing constellation with its own industry, all areas are equally strategically important.

If, on the other hand, the goal is to secure and expand market shares, different priorities can be set,

depending on which market shares are to be secured and which economic leverage is seen. We will come

back to this later. First, however, Figure 6-4 summarises the general recommendations for action per

technology area. This could be interpreted as a collection of the ‘overarching promotion goals\.

FIGURE 6-4: REPRESENTATION OF RECOMMENDATIONS FOR KEY TECHNOLOGIES

6.2.3 Interests and competences of the German space industry

Following an initial assessment of the key technologies, our goal is to make the connection to the self-

assessment of the industry and its added value chains.

For the initial analysis of company interests and competences, the ATGA technology list is ranked in a general

added value chain (see Figure 6-5). In so doing we expand the simple, one-dimensional assessment of industry

interests in key technologies into a two-dimensional analysis based on the added value chains used in Chapter

3.3 for the analysis of the market positioning of the megaconstellations. A certain production breadth of the

German space industry is shown, which is decisive for the further course. What can be clearly seen here is an

expanded interest on the part of German industry to make its contribution in all areas. Main focuses can be

identified on the basis of the quantity of expressions of interest in individual technology components (see

number next to each component in Figure 6-5).

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FIGURE 6-5: KEY INTERESTS OF GERMAN INDUSTRY IN AN EXAMPLE ADDED VALUE CHAIN

6.2.4 Key technologies and budget predictions

Requisite budgets are important for the strategic planning of private and public investments and for technology

promotion. It was impossible as part of the trend analysis to determine largely objective numbers here

according to scientific methods, as this would be a separate job lasting several months. To gain an initial idea

nonetheless, we decided to use the budget expectations according to the self-assessment of the German space

industry. The budget numbers have again been taken from the AGTA list and show the companies’

development budgets for acquiring or securing their own competitiveness.

The estimated budget figures can be seen in Figure 6-6. It can be seen that the German industry estimates

somewhat higher budgets for antenna design, network & routing and automation in order to keep up with the

international competition. In comparison, user terminals and inter-satellite links require less funding. The

technologies that will be funded with the budget are also described in the figure.

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FIGURE 6-6: BUDGET NUMBERS FOR THE KEY TECHNOLGIES BASED ON THE AGTA TECHNOLOGY LIST

Based on the projected budgets, a funding strategy could now be developed by placing the budget amounts in

a context with the expected benefits. For example, it could be assessed what economic leverage is associated

with the promotion of antenna development and whether the estimated sum should be invested here.

6.2.5 Economic factors

The last two subsections have shown the key technologies and market areas of megaconstellations in which

German companies want to operate competitively. We are now going to consider which innovations have the

best market prospects. In principle we can assume that the market prospects improve if a technology

develops greater economic leverage for the buyer, i.e., it reduces the production costs on the part of the

satellite operators or delivers technically superior performance. Especially lucrative areas of technology must

now be mapped by the technology competences and investment needs of German industry to identify the

so-called sweet spots, i.e., the most attractive market areas. The initial analysis shows the key technologies

in their effectiveness as economic levers, where it should be noted that this illustration is not surjective and

cannot therefore be bijective. For example, an improvement in antenna technology would have a positive

effect on the economically relevant parameters “satellite antenna gain”, “orbit altitude” or “transmitter

amplifier efficiency” and “minimum user terminal elevation”. We can infer that innovations in antenna

technology will be associated with relatively great economic benefit. This consideration is connected to the

budget required by the German space industry (AGTA) and a scatter diagram is produced (cf. Figure 6-7). The

y-axis shows the effect of the key technologies as an economic lever and the x-axis the budget required by

the German space industry. For the assessment of the relevance and the priority of an innovation the scatter

diagram is divided into three colour-coded segments. The individual colours represent these statements:

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Green: A worthwhile investment that promises an above-average economic benefit with the

associated budget framework.

Yellow: An investment that, given the budget framework required, should be carefully considered

where it promises average economic leverage. A decision should be made here on a case-by-case

basis, examining a strict technology roadmap.

Red: An investment that is not recommended without very precise planning, as the positive

economic effect is not immediately clear, but the budget requirement is comparatively high.

However, the red area does not mean that such investments cannot be sensible; rather, a precise

examination and a step-by-step approach are recommended.

The scatter diagram clearly shows that key technologies appear in both the green and yellow segments. We

can say here that large budget numbers, as for antenna technology because of its great economic leverage,

are nonetheless characterised as profitable. The graph also provides information on the timescale and the

development horizon. We can assume that budget requirements will continue to increase the further

investments are pushed into the future – because the industry is falling further and further behind. It

therefore appears reasonable to prioritise and give a quick boost to the topics in the yellow segment to avoid

their drifting into the red area over time. This is all the more the case if the current budget requirement is

actually low – as with user terminals. A comparison with inter-satellite links, which have roughly the same

budget requirements, however, also shows that they are associated with greater economic leverage and

should therefore be given priority in market terms. other words: Whereas with ISLs it is a question of making

an investment that is definitely necessary from an economic point of view, with user terminals it is more a

question of whether to enter the market now (but then quickly) or to leave the market entirely to others.

From an economic perspective both strategies are justifiable; the decision is therefore determined by the

individual technology roadmap and the available budget.

FIGURE 6-7: COMPARISON OF ECONOMIC LEVERAGE WITH BUDGET FORECASTS

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To expand the analysis with additional perspectives, we will also consider the state of key technology

development in comparison with the global competition. The state of development can be taken from the

research in previous chapters, in particular Chapter 2.2. Again, a scatter diagram is made (cf. Figure 6-8) in

which the y-axis shows the German state of development in the key technologies relative to the international

competition, while the x-axis shows the required funding from the AGTA technology list. Here too, the

individual segments of the scatter diagram are colour coded with a view to drawing some conclusions for the

profitability of an investment.

The results show that, in contrast to Figure 6-7, antenna technology falls into the red segment of Figure 6-8,

as the German state of the art is considered to be comparatively low and, in addition, the industry believes

that a very high budget must be invested in order to catch up. In comparison, the user terminals remain in

the yellow segment, as they require only one third of the budget costs to keep up with the international

competition, despite the low technological status in Germany. ISLs are once again in the green segment of

eligibility for funding, as they represent a key German technology due to the significantly higher development

lead and at the same time low budget requirements.

FIGURE 6-8: IMPACTS OF THE PER BIT COSTS ON CONSTELLATION OPERATORS

To prepare a conclusive forecast about the cost-effectiveness of the key technologies, the two scatter

diagrams must be considered together With the combination of both results, colour combinations arise from

the individual colour segments of Figure 6-7 and Figure 6-8, which allow meaningful observations to be made.

For example, in the case of the inter-satellite links, the colour combination "green-green" is recognisable,

which sees both the state of the technology in DE and the economic leverage in connection with the required

budget as a worthwhile investment. The colour combination "green-green" is thus a concrete technology to

be promoted. In contrast to this would be the colour combination "red-red", which of the two analyses

represents a more or less critical investment that needs to be closely examined and very likely requires high

budgets and immense effort. All the other colour combinations follow logic and should be recorded with

specific recommended actions according to budget and strategic orientation.

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6.2.6 Strategies for entering the megaconstellations market

In the previous chapters we have focused on the aim of developing a superior technology in competition and

not taking account of any development gap with the competitors. For the sake of completeness, we should

mention that this may be just one of several strategies for securing market shares. This strategy is based on

a performance advantage in competition and is typical for a high technology country with relatively high

labour costs. But an alternative would be to use a price advantage in competition, which is usually

accompanied by a low performance level (cf. Figure 6-9). This only makes sense, of course, if the performance

is still sufficient to ensure the key elements of the products or services. If we focus on a price advantage,

existing states of technological development may be sufficient and development budgets can be cut. The

authors have not however examined these possibilities in detail as part of this trend analysis.

FIGURE 6-9: DEFINITION OF ADVANTAGE STRATEGIES (FROM: T. WULF, ‘PLANNING AND DECIDING’ (IN GERMAN), HHL-LEIPZIG GRADUATE

SCHOOL OF MANAGEMENT, 2009)

It should also be mentioned that the investments in developments should be closely aligned with the available

competences of the companies to develop maximum economic leverage. Tangible resources play just as

much a role in this as intangible resources (cf. Figure 6-10). Just looking at intangible resources, the start-ups

have a special role to play because they often work on new technologies at a significantly faster pace and

significantly more forced because their founding itself necessitated specific know-how. Start-ups also offer

an effective way of attracting private capital, which meets the required development budget and relieves the

public sector or the R&D budgets of the groups of companies. In such a combination, fields of application

which according to our analysis were initially viewed critically may even become very attractive. A prime

example is antenna development with liquid crystal technology. The combination of a powerful start-up,

which contributes the technological principles from a university of applied science (tax-funded know-how) in

combination with financially strong investors, is in a position to close to the gap with the sector leaders faster

without overloading the public sector in terms of technology promotion. This shows not least

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that the analyses shown can only form a framework that must be tested and adapted in the specific individual

case.

FIGURE 6-10: MEANING OF CORE COMPETENCES (FROM: T. WULF, ‘PLANNING AND DECIDING’ (IN GERMAN), HHL-LEIPZIG GRADUATE SCHOOL OF

MANAGEMENT, 2009)

Once the key resources that are important for individual companies have been defined, it depends on how

companies want to stand out within the megaconstellations. The targeted implementation and investment

in a basic strategy are therefore important. A distinction between two market advantages is again made in

this regard (see Figure 6-9).

6.3 Results of the analysis

With the help of the analytical models described and the information collected, we now come back to our

assessments of the key technologies. To do this, we collected the industry's core competencies, determined

budget figures and also examined the industry's economic leverage for the technologies. In the process, all

three input criteria were analysed with each other and interrelationships were found, which are summarised

again here and presented in a product portfolio matrix (so-called BCG matrix). The BCG matrix is a portfolio

analysis model. It allows statements to be made about which resources should be spent on the further

development of individual technologies or capital goods in order to be successful in the long term. Usually

such models are created for individual companies; here, however, we want to look at the German space

industry as a whole in the light of the mega-constellations. The axes of the graph show the growth potential

of the key technologies and the relative German market share of the key technologies in a global comparison.

In addition, we introduce a third degree of evaluation here in the form of the budget sizes estimated by the

industry. Figure 6-11 now presents the BCG matrix of key technologies in the context of the German space

industry.

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We can clearly see that German inter-satellite links have a leading position in the international market and,

at the same time, there is still very great growth potential. This is a “star” in the sense of the BCG

nomenclature, i.e., further investment is justified. In antenna technology on satellites payloads and user

terminals we see a significantly weaker market share, which is currently mainly controlled by the

megaconstellation operators themselves. It is questionable whether antenna technologies from Germany can

(still) become a “star” (question mark category) or whether a general decline is impending. We see

automation and network & routing as technologies in which Germany already has something to offer and

that, internationally, are still in their infancy. There is great potential in both key technologies and with

sufficient budget and short innovation cycles a potential to grow into a “star”.

With the acceptance of tighter budgets for investments and disregarding private capital – which would

certainly be the best solution –two main scenarios from the BCG matrix can be derived (arrows in Figure 6-

11):

In scenario 1 the budget is sufficient to fund the potential question marks and let them grow into “stars” and also, in the meantime, if any budget remained, to keep existing “stars” at a high level (ISL).

Scenario 2, on the other hand, foresees a smaller promotional budget, in which the question marks

are first sorted according to funding potential. Here, for example, question marks close to the

quadrants of the “stars” are promoted, while other question marks are ignored. At the same time no

budget is initially allocated for the current “stars” (the ISLs) so that they initially fall back

technologically, but continue to generate turnover and profit (cash cows). New investments are made

at a later stage to raise the level or external investors are sought.

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FIGURE 6-11: BCG MATRIX FOR KEY TECHNOLOGIES

Other scenarios can be identified using the BCG matrix and differentiated in more detail for individual

technologies. Apart from the recommendations, the technology portfolios of the industry should be carefully

considered and transferred into a common overview. Funding by key words, i.e., by words that supposedly

sound current such as “artificial intelligence” or “5G”, is not advised. This is all the more the case if the

requesting industry is unable to prove any experience in these areas and is also unable to present a

technological road map of their own. Instead, the German Ministry for Economic Affairs and Energy together

with all subordinate authorities as well as the Federal Ministry of Defence and the German space industry,

should draw up a stringent technology roadmap with clear goals that is adapted to the market of

megaconstellations and classify all funding requirements there.

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7 Recommended actions and outlook This trend analysis has closely examined the status of the most important satellite megaconstellations under

construction. It has shown that most of these constellations have sustainable business models and, despite

the considerable capital requirement, have access to foreseeably secured financing. The competitive factors

here are varied and range from a substantial technology lead in key technologies, through special customer

access to controlling coverage of the entire added value chain. Especially varied and often not easy to see

clearly are the business models of the companies, in particular if the construction and operation of the

megaconstellation is just one element of a complex portfolio of digital added value services for very different

customer groups. Such constellations may be a threat to the information sovereignty of Germany and Europe

from a macroeconomic perspective, while at the same time they also offer significant opportunities to

increase the implementation rate of the urgently needed digitalisation of our society.

In the view of the authors of this trend analysis we have to assume that megaconstellations will play a decisive

role in helping determine the next generation of mobile networks and, in the process, establish digital services

in key areas of society that, even after a short time, will no longer be easy to substitute. Against this backdrop,

politics and the economy in Germany must find a strategy for dealing with such systems that counter both

the trend to market control by technology groups outside Europe and uses and preserves the economic

opportunities for the export-oriented supply industry. The substantial vertical integration of current

megaconstellations in particular represents a new barrier to market entry, which can only be overcome

through clear competitive advantages in the area of costs or technological performance.

If we consider that the service life of the LEO satellites is a mere five years, compared with a GEO satellite

service life of more than 15 years, then there are certainly opportunities for the German supply industry to

participate in the business with the successor satellites in a clear time frame. The operators of

megaconstellations, including those with a high depth of added value of their own, will always weigh up costs

and benefits before they take a make-or-buy decision regarding the successor satellites.

Against this backdrop, the authors of this trend analysis have derived the following recommended actions

from this trend analysis as a ten point plan:

1. Germany/Europe needs access to a megaconstellation of its own, both to safeguard freedom of

information and for the preservation of its (telecoms) industry and its technology access. Various

perspectives come into play here. On the one hand, domestic industry must be put in a position to

master all the key technologies of a megaconstellation and – in contrast to previously prevailing

manufacturing thinking – to supply relevant products in large quantities at competitive prices. On the

other, there will be areas in which the technology lead of the competing companies acts as a strong

brake on market entry and only makes it possible with considerable technology promotion by the

public sector. Careful consideration must be given here to which promotional aim should be achieved,

i.e., whether it is simply a matter of technology access or whether market shares should be won.

Promoting the development of

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series production processes and the construction of the necessary infrastructure should be a focus.

2. The funding of technology for space must be expanded and more deeply integrated with other

industries, such as the automotive industry or the energy industry, because they will appear as users

of the new digital services in the New Space Economy. To this end technology funding must be

directed consistently at strategic aims and have the support of a road map with medium- and long-

term aims. The aims must cover the full bandwidth, from securing technology leadership in many

areas, such as optical communications, to building up new competences in growth areas such as

artificial intelligence.

3. Start-ups and new technologies must be given special consideration, but for maximum economic

leverage of the funding instruments, the established space companies should be urged to show and

pave the way for these start-ups in the still specialised and partly closed market of the aerospace

industry, thus fulfilling their role as system integrators.

4. Germany and Europe must secure frequency rights and orbit rights in good time and more

tenaciously than in the past, and see these rights as a sensible strategic, physical resource. In

particular, higher frequencies than those used today still offer opportunities, while the current

technologically well-controlled low frequencies are already in widespread use.

5. The aerospace industry must immediately become involved in the research for the next generation

of mobile networks (6G) and define its own space-related research focus. 6G will shape the use of

space for decades to come and the influencing of standardisation activities presents economic

opportunities. The 6G research platforms and 6G research hubs, which are currently defined by the

BMBF, offer such an approach. They should be complemented by additional space-related

components and be scientifically integrated under the direction of the German Space Agency at DLR

as a national provider of expertise.

6. Megaconstellations are an effective means of accelerating broadband expansion in Germany and

giving all households access to their “right to fast internet” under the German Telecommunications

Act Amendment of May 2020. To this end, megaconstellations must, however, be recognised as

internet service providers (ISPs) and be provided with corresponding rights. Recognition as an ISP

would also offer the opportunity to integrate non-European providers better in the national

regulatory framework and thus combine new customer groups with consumer protection rights.

7. In the case of the services provided by megaconstellations, commercial services and official, security-

critical applications must be considered together. Instead of separate hardware for the different

requirements, the modularisation of communication chains by virtual software-defined networks will

come to the fore. This will improve the profitability of megaconstellations and their ecological

sustainability.

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8. Europe must further develop the launch segment aspect and match the technological performance

of US competitors. Access to a low-cost and reliable launch segment plays a crucial role in the

economic success of mega-constellations and is therefore a strategic resource that must be secured.

9. Public-private partnership models offer special opportunities for successful initiatives with regard to

megaconstellations, on the one hand because they can cover an elevated capital requirement and on

the other because the user or customer requirements can be taken into account at the system design

stage. In Germany different industries have already shown interest in satellite-supported services, in

particular the mobility sector and within it the automotive area. We recommend intensifying or

continuing to cultivate the dialogue in this regard on the part of the space agency. In particular, the

US constellations that are successful today have shown how important private investments are to

remaining agile and securing new space programmes.

10. In the end, operating satellite megaconstellations profitably means that the applications and services

supported should be highly diversified and fully researched in advance. Europe is, in principle, a

rather difficult market for satellite constellations because a good infrastructure already exists on a

limited land mass with a high concentration of users per area. It therefore makes sense to involve

such industries in system design that have an interest in global services and address a widespread

customer network. An example here, again, is the mobility sector, with aviation and motor vehicle

manufacturers. Other examples from the field of machine communication are logistics service

providers or the energy industry.

The authors of this trend analysis see a positive outlook for the satellite megaconstellations, despite the

recognisable technology lead of non-European systems. With the appropriate commitment, Germany and

Europe will be able to gain market share and profit economically. However, the course must be set quickly

and action must be taken more decisively than it appears at the moment. One particular advantage of Europe

must not be lost sight of, namely the existence of efficient and established satellite operators from the "old

space economy". These still have very good capital resources and can make important contributions with

decades of space experience. Moreover, the satellites in orbit can be integrated into new mega-constellations

to define ever newer services. There is considerable potential here that has hardly been discussed and not

exploited so far. In combination with strong engagement in the standardisation of future mobile networks,

this potential may even provide a suitable means of overtaking the competition again in the medium term.

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