Smallsat IOT: Finally Time To
Shine?
November 3, 2020 by Alan Crisp |
NSR
Smallsat constellations for IoT
have been planned for years, and launches are finally
happening with constellations beginning to offer
commercial services. Once dismissed as hype – the
planning of these constellations has come a long way. Is
it finally time for smallsat IoT to shine, and how
should it move forward in an era of COVID-19?

NSR’s recently released M2M and IoT
via Satellite, 11th Edition report, found total retail
revenues from smallsat IoT will reach over $600 million
in 2029. NSR revised up the revenue picture due to
increasing confidence that these constellations will
(slowly) begin to flourish. Changes in the technology
infrastructure, application targets, and interestingly,
COVID-19, are increasing the revenue potential for
smallsat IoT.
Technology
Terminals, hubs and sensors are
finally coming to market, with small satellite operators
either targeting 1 sensor to 1 terminal approach (1:1)
or use an aggregation model, which can result in
hundreds or a thousand sensors connected to a hub for
backhaul over satellite. There is now an increasing
gravitation towards backhauled service models in the
past couple of years – the Fleet Space portal and
Hiberband Via are two such products offering backhauled
services, which can accelerate revenues of M2M/IoT
service.
Offering backhauled services can
substantially increase ARPU for satellite operators,
with customers already placing orders for hundreds upon
hundreds of sensors. While some customers have acquired
MSS IoT terminals in the past in bulk, acquiring
hundreds or thousands of MSS terminals for hundreds of
dollars each quickly becomes prohibitive for many
customers. Consequently, only the tip of the iceberg of
potential M2M customers have so far been targeted by MSS
and VSAT technologies. With the lower pricing of
smallsats, the market pie will be expanded substantially
– over triple the number of smallsat IoT units will
become activated over MSS in the coming decade.
This is especially the case for
applications where more than 200 sensors are required,
for which NSR has identified as a crossover point as to
where backhauled service becomes more cost effective.
Below that, a 1:1 deployment is favored. Strategically
though, it will be key to remain technology agnostic and
not be locked into a specific format. Being able to
backhaul via LoRa, Bluetooth, Wi-Fi, and others will be
required in order to integrate with OEMs and existing
solutions (including terrestrial) more easily. This
opens up market opportunities considerably in a wide
range of applications and leverages existing
distribution channels and expertise in each application
group.
Applications
Agriculture, for instance, will be
one of the largest winners from this trend to backhauled
devices, and will reach 37% of the revenue picture by
2029. This greater utilization of the satellite link
will be driven by backhauling animal locations and soil
moisture sensors. While Globalstar has a good share of
the animal tracking market, smallsat constellations will
put pressure on the company through backhauling low cost
sensors.

Integrating connectivity with
vertically integrated applications to offer turnkey
solutions will be critical for further revenue growth
from smallsat IoT, as the market base widens. Hiber for
instance is offering remote pressure and temperature
monitoring in such a fashion, and it and other companies
partnering with Amazon AWS for data and ground station
services.
Also, while smallsat IoT operators
beforehand were planning new types of devices –
satellite connected life jackets for instance, the
market is now more or less revolving around the
traditional applications that MSS operators are also
targeting – transportation, cargo, agriculture, and
energy markets. While this doesn’t grab headlines as
much – this (and more realistic pricing plans) represent
a sign of maturing smallsat IoT market. Other new and
potentially quirky applications can still be targeted
but will be “icing on the cake” revenues.
COVID-19 Impact
While other applications have been
hit hard by COVID-19, the satellite M2M market has been
much more fortunate, with COVID-19 driving greater
automation trends, and hence, M2M demand. However, the
outbreak has caused heartburn for smallsat IoT
constellations, quite a few launches for smallsat
constellations, and with such smallsats often being
launched as a secondary payload, the primary payloads
often getting delayed. Delays of 6 months or more have
become standard.
We will also expect to see some
constellations fall over in the coming months and years,
and with COVID-19, many are noting that more and more
that funding has increasingly “taken longer than we
would’ve thought” – investors are increasingly wary
about the large field of operators entering the market.
Kaskilo, Commsat and Project Mustang are now in the
smallsat IoT graveyard and have pivoted away from
launching their own smallsat IoT constellations. Others
will fall behind with a lack of a first mover advantage.
With COVID-19, only the top few smallsat constellations
are expected to continue to be funded, with others
having funding potentially run out.
However, with those that will make
it through the “funding crunch” of the initial stages of
commercial revenues, an outsized return is expected. Not
only will there be less competition, but customers will
have increased certainty about the longevity of a
constellation, further boosting a virtuous cycle of
revenues.
Bottom Line
Smallsat constellations have come a
long way and are finally poised to have an impact that
has been years in the making. While in the past,
traditional satellite operators have been hedging their
bets with MoUs with smallsat operators, MSS operators
haven’t been taking them seriously as such. Late 2020
and into 2021 will be the time this changes. However,
the weak link to targeting traditional applications will
be the distribution channels.
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