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What’s next in NewSpace?

February 22, 2018 While attending the SmallSat Conference in Mountain View, I watched in real time the successful launch of the Falcon Heavy on February 6th 3:45 PM (EST) from Kennedy Space Center wondering what would come next ...

February 2018

While attending the SmallSat Conference in Mountain View, I watched in real time the successful launch of the Falcon Heavy on February 6th 3:45 PM (EST) from Kennedy Space Center wondering what would come next. The Falcon Heavy is the direct successor of the “moon rocket” Saturn V which was retired by NASA in 1973 and is now being brought back to humanity by Elon Musk. He enlisted the help of 21st century technologies including Silicon Valley’s finest software, sensors, micro-electronics and algorithms.

Although SpaceX full name – Space Exploration Technologies, Inc. – points to its lofty ambition of making mankind a multi-planetary species, they set clear near term commercial goals: Ramping up production of the smaller Falcon 9 rocket to launch 800 small satellites to low earth orbit (LEO) in 2019 – the first batch the StarLink network of over 4800 satellites delivering broadband internet service to 50 million currently underserved subscribers in the US. SpaceX targets the satellites to cost less than $ 1m each and thus make the service affordable globally. By 2025 a whopping 90% of SpaceX’s revenue shall stem from satellite internet services. And they execute on the promise: Today, on February 22nd at 6:17 AM (PST), a re-used Falcon 9 rocket successfully launched two micro-sats for testing purposes on a ride-share basis from Vandenberg AFB, California.

Competitor OneWeb, backed by European Airbus SE, Qualcomm and Softbank, plans a constellation of 900 LEO-satellites and focusses on mobile connectivity. An even larger number of small sat constellations will be launched as smart sensor platforms. It is thus reasonable to expect 10.000 or more LEO-satellites to be launched in the next 10 years. That number alone constitutes a sizable market opportunity for the NewSpace supply chain. And a massive opportunity to create all kinds of down-stream businesses based on that data&voice traffic.

Internet service via LEO satellite constellation is only one area of innovation in space technology dubbed “New Space” or “Space 2.0” which more or less started with the cube sat revolution back in 1999 by Stanford University and CalPoly. A cube sat, i.e. 1U, is defined by volume (10x10x10 cm) and weight (less than 1.33 kg) – today’s standard seems to be 3U to accommodate optical sensors and satisfy power requirements. Some say “New Space” started as a new standard for small sats and has evolved now into a new frame of mind, a new way of looking at  opportunities in space: make more (better, smaller, lighter, faster) with less (money and time-to-market)!

I am asking myself:

  1. Which are the most interesting technologies and applications?
  2. How soon are there commercial break-throughs to be expected? How big of a market will they trigger?
  3. Who are the most insightful people and where do they go to work?

High fidelity sensing from space is another LEO satellite constellation enabled area of innovation. The future of earth observation is in hyper-spectral sensors (continuous spectrum, nano-meter fidelity), high temporal (= real time) and spatial resolution (= sub-meter). Start Ups like Planet, Spire, Capella, GeoOptics, BlackSky, Orbital Sidekick, Koolock, and others will soon (in the next 5 years) provide more data than we know what to do with it. The challenge is not so much the aerospace technology but building the platforms for turning these data into information and knowledge and make them accessible to paying users. Specialty sensors (multi-spectral ,RF , d-GPS, magnet field, radioactivity, etc.) combined with data fusion, on-board processing, encryption will allow a global situational awareness at an unprecedented level. Classical earth observation will morph into creation of digital earths (note the plural!).  Corporates and consumers don’t want the pixels but answers to their most pressing questions. Here start ups like Orbital Insights, Digital Globe (now a Maxar Technologies company, NYSE:MAXR), Palantir, etc. come into play. And above all, high resolution and exotic sensors tend to draw Government attention and regulation. Up until 2010 sub-meter resolution optical and microwave pictures were classified. No wonder that In-Q-Tel (www.iqt.org), the venture capital arm of the US national security agencies, is heavily invested in this area. Whoever wishes to mine these data has to comply with rightful national security interests.

Space is foremost a place starting by definition at 100km above mean sea level. And in order to do anything in New Space, you need to get there. When it comes to launching the question is whether to take a bus (=ride share as secondary payload) or a taxi (dedicated launcher). Also, while satellites fail gradually, chemical rockets fail violently. Reliability is the critical issue, is difficult to achieve and needs to be proven to successfully solicit commercial constellation customers. There have been 30+ small launcher projects in the last 5 years, but currently to my knowledge only RocketLab (https://rocketlabusa.com), a Bessemer Venture backed start-up, seems to be truly on the verge of becoming fully operational. The Electron dedicated launcher (for small sats up to 150 kg) launched successful from their New Zealand launch site and is slated to pick up a regular schedule with a cadence of one per month. Aside from Virgin Orbit (www.virginorbit.com) which has conceptualised an aircraft launched rocket for payloads up to 300kg into LEO, there are other rocket launcher start-ups such as Australia’s www.gspacetech.com. Launch cost for secondary payloads will probably fall from currently approximately $50k to $20k per kg within 3 years. With thousands of small sats being put into LEO orbits in the next 5 years, there seems to be market for 3-5 dedicated small launchers globally.

We will see ground stations with phased-array antennas automatically tracking multiple satellites thus avoiding the current one satellite – one antenna bottleneck. The insatiable demand for data already drives the development of outsourced ground station services. Revenues especially for remote sensing applications will depend on accurate and secure data delivered in the cloud. The market for dedicated up-link/down-link services such as already provided by Norwegian Kongsberg Satellite Services (www.ksat.co), and Swedish Space Corporation (http://www.sscspace.com) will grow and attract more new entrants such as Atlas Space Operations (www.atlasground.com). This is an area where I could see asset deals or spin offs of ground stations networks from existing vertically integrated space companies. An interesting twist on the up-/down-link play are antennas for mobile broadband connectivity. There are more than 500k commercial vessels worldwide (Aircraft, Ships, RailCars, Busses, Trucks) and even more cars on the road. They all require flat panel antennas capable of multi-band interoperability and receiving multi-megabyte data packages. Companies like Kymeta, Phasor, etc. are aiming at that developing market. And it is going to be huge.

Of course there are New Space ventures which target other areas such as (no particular order):

Advanced communication satellites for MEO (Medium Earth Orbit) or GEO (Geosynchronous Earth Orbit) serving as cell towers and relay stations for data traffic. Below GEO, creative orbit design and advanced communication terminal engineering are differentiating factors for niche constellations.

Usage of microgravity onboard the ISS (International Space Station), or by other means such as fall towers, parabolic flights, etc. for research and production. Although there are striking applications (by example annealing wafers under microgravity increase the IC yield to almost 100%), due to  restrictions in logistics, no-one has proven commercial viability yet.

Talking about production in space: since 2016 the International Space Station (ISS) features an Additive Manufacturing Facility (AMF), where start-up “Made In Space” has installed a Zero-G 3D printer processing different thermo-polymer materials. That is a hopeful start.

Human space exploration including in-orbit space tourism, travel to Mars & Moon, habitat and colony building, astronaut training on earth. Even by their most optimistic proponents (Blue Origin, Virgin Galactic, Bigalow Aerospace), this area is decades away from seeing regular service.

Moon & Asteroid missions for mining of natural resources (interesting to note that some asteroids have lower energy requirements to reach than the moon due to the later’s gravitational pull). There are serious endeavors on their way to prove viability of these missions but I don’t see any successful private mission on the horizon. Please note that on January 23rd, 2018 the Google Lunar XPRIZE, a $30m prize purse for landing on the moon, went largely unclaimed because of the 17 teams that entered the 10 year long race to the moon, none will make it by the deadline March 31,2018. I quote the organiser: “it proved to be terribly difficult to land on the moon”.

New Space technologies and spirits may make interplanetary, scientific missions cheaper and save taxpayers money. As more and also smaller nations come to realise that space is an interesting place to prove themselves (besides remote sensing and communication), there might develop a sizeable market for turn-key missions which aids the supply chain. Great.

Reaping commercial benefits from these activities seem to be further out than 10 years.

And then there is a quite an eclectic mix of challenges associated with these new space markets:

There are 250.000 tracked items below 1000km orbit. Who takes care of  the current and future space debris?

With more already than 100 commercial sat operators traditional frequency bands are becoming scarce. Optical frequencies might offer some relieve but who optimizes the spectrum usage?

Cybersecurity threats mount – who provides security for satellite tracking & control, data integrity and mission-related extra layers of encryption?

While 10.000 sats over 10 years is more than building and testing one-off prototypes on-site (the traditional space business model), there is surely no real mass production. But provide these small series enough value added to support a new BOT (build-operate-transfer) supply chain to space system operators? There seems to be forming an interesting industry structure made of turn-key mission integrators (such as Tyvak, GomSpace, etc.), contract manufacturers (such as Blue Canyon Technologies, Berlin Space Technologies, etc.) and second/third tier component suppliers (engines/thrusters, attitude control, RF modules, power modules, sensors, etc.).

Perhaps the most visible sign of COTS usage (Commercial Of The Shelve) was in 2013 when NASA put two Samsung SmartPhones into space – and they kept working. Who will advance the next COTS-based standards to make space systems cheaper?

Functional integration, substitution of complex hardware systems by software, miniaturization of sensors, etc. will substitute traditional industrial value-added. Traditional RFP-responding, cost-plus driven space tech prime manufacturers are scrambling to make sense of New Space. Who will benefit from the space industry consolidation?

Last not least, New Space is very regulation intensive: There will be an enormous workload for all kinds of professional services navigating Government agencies waters and achieving licenses of all kind.

New Space is neither a vertical market nor a horizontal technology. All in all, space technology related business transactions (“the space economy”) today constitute a $ 350bn market worldwide. The New Space revolution has disrupted first and foremost the way we think about space tech. Satellite based internet services aside, I am betting that the first sizeable commercial breakthroughs in the next 5-10 years stem from applications for B2B and B2C customers utilising the massive amounts of remote sensing data and combining them with advanced analytics to create true and proprietary insights. As a sales executive in the building material business I wish to have my confidential daily global overview over all construction sites. As a homeowner north/south of 40 degrees latitude I wish to have my personal regular thermographic images of my home and my PV installation. The real bottleneck is identification of critical questions (“pain”) which are answered by sophisticated data analytics (“solution”) and are delivered as a user friendly product to paying customers.

Does it constitute a “10X” for the global space business? We don’t know yet whether the juice is worth the squeeze (heard on the street).

But by the way, you may follow the trajectory of the Falcon Heavy payload, a Tesla roadster, on this website: http://www.whereisroadster.com