For decades, Geostationary Earth Orbit (GEO) operators have dominated the satellite communications industry, positioned 22,000 miles above the Earth. However, the rise of Low Earth Orbit (LEO) networks, such as Elon Musk’s Starlink, is challenging the traditional GEO model and forcing industry incumbents to innovate rapidly.
The Impact of LEO Networks
LEO networks, operating at altitudes between 186 to 800 miles, offer several advantages over GEO networks:
- Lower Latency: LEO networks provide lower latency links, making them more suitable for user-friendly applications like streaming, video calling, and gaming. GEO connections, due to their higher altitudes, suffer from higher latencies that can degrade the user experience.
- Cost Efficiency: LEO networks are constantly reducing service costs, making them more competitive across various industries. This cost reduction is a significant factor driving the adoption of LEO networks.
- Frequent Updates: LEO networks frequently launch new satellites, allowing for network updates every two to three years. In contrast, GEO satellites have longer procurement processes and lifetimes of around 15 years, making them more static.
- Radiation Exposure: LEO satellites operate in a lower radiation environment, reducing the engineering challenges associated with high radiation levels. This makes LEO satellites more cost-effective and easier to deploy.
Financial and Market Implications
The rise of LEO networks is having a noticeable impact on the financial performance of GEO operators:
- Moody’s Ratings: In February, Moody’s Ratings changed its outlook on satellite operator SES from “stable” to “negative,” citing increased competition, price pressure, and the risk of oversupply from LEO networks.
- Market Capitalization: European satellite operator Eutelsat OneWeb has seen its market capitalization drop by more than 57% over the last six months.
- Subscriber Loss: Hughes Network has experienced a significant drop in broadband subscribers, from 1.17 million at the end of 2023 to 869,000 at the end of 2024.
The Future of GEO Networks
Despite the challenges posed by LEO networks, GEO operators are not out of the game. They are exploring new strategies to remain relevant:
- Multi-Orbit Approach: Eutelsat OneWeb, which operates both GEO and LEO networks, sees a multi-orbit approach as the future. This approach dynamically allocates resources based on demand and specific application requirements, offering continuous global connectivity.
- High Throughput Services: GEO satellites may evolve to focus more on high throughput services such as broadcasting, government communications, Earth observation, and weather monitoring. These applications do not require low latency and can benefit from GEO’s extensive coverage.
- Industry Consolidation: The satellite industry is likely to see consolidation and pivots as companies adapt to the new competitive landscape. Hybrid GEO-LEO services and better utilization of satellite capacity are emerging models that could provide more capital efficiency to GEO operators.
- IoT Opportunities: GEO operators can pivot towards the Internet of Things (IoT), where low latency is not a priority. IoT devices and low-data rate mobile assets can benefit from GEO’s extensive coverage and high throughput capabilities.
Conclusion
The rise of LEO networks is forcing GEO operators to innovate and adapt to a rapidly changing market. While LEO networks offer significant advantages in terms of latency, cost, and flexibility, GEO networks still have a role to play in providing extensive coverage and high throughput services. The future of satellite communications is likely to involve a combination of GEO and LEO networks, each serving different applications and market needs. As the industry continues to evolve, GEO operators will need to rethink their strategies to stay relevant in a world increasingly dominated by LEO networks.
