Smallsat IoT Players See Big Opportunity in Small Connections

Analysts say the smallsat IoT business is on the way to becoming a $1 billion market in the next 10 years. New Space startups in this area are increasing their momentum building constellations and developing technologies to connect devices in remote areas outside the bounds of terrestrial networks.

IoT smallsat business development has accelerated as a force within the broader satellite community. Tracking the use and location of expensive assets, monitoring agriculture crops and livestock, creating more accurate cargo delivery timelines and better logistics, locating someone buried by an avalanche, and even finding sources of gold are just a few of the applications for smallsat IoT.

According to Northern Sky Research (NSR), the smallsat IoT business is on the way to becoming a $1 billion market in just eight years. New Space startups in this area are increasing their momentum of building constellations and developing technologies, aiming to provide keener competition with the big satellite companies.

These predictions, IoT applications, and more were part of the discussion by Via Satellite with five executives of these New Space IoT players — Skylo, Lacuna Space, Totum Labs, Astrocast, and Fleet Space Technologies — as well as standard-bearer Iridium, about the growth of smallsat IoT services.

“This year, we are really going to see a kind of slow and steady growth of launches by smallsat providers that are offering a limited service and then gradually more and more services,” said Alan Crisp, NSR consultant and analyst. “Expect to see another one or two constellations. Probably more collaborations, like we saw between Omnispace and Lacuna.”

Under that collaboration, announced in March 2021, Omnispace and Lacuna Space are collaborating to distribute a global, open standards-based IoT network. The service will employ the LoRaWAN protocol to support direct-to-satellite communications for a broad range of IoT devices.

Crisp said that NSR expects the number of smallsat IoT constellations to be pared down in the coming years, expecting one or three companies to drop out of the market this year. Some of the constellations are finding that they are not able to offer pricing as cheap as originally planned ground stations and other aspects are accounted for, Crisp said.

“But it shows what's driving demand,” he said. “It's really the return on investment, with activity for vehicles and location tracking via online sites and things like that.”

Is there still room for competition? “I'd say so,” he said. “We'll see some slight price declines on Iridium to offset some of the smallsat demand. The existing operators will continue to grow.”

South Australia-based Fleet Space Technologies is focusing on the mining market niche for its services, according to CEO and co-founder Flavia Tata Nardini. The company, founded in 2016, launched Australia’s first four commercial nanosatellites in November 2018, then two more in 2021, and more are to come this year.

“What I've learned is that there are some very high-value applications in satellite IoT that cannot be served by a [broadband constellation like] Starlink,” she said. “They are so profoundly important for the customer, and their margins are so high, and people are willing to spend so much that those use cases are gold.”

Tata Nardini means that literally. Fleet Space has developed a device, the real-time ambient noise tomography (ANT) product, that can assist in scanning solid ground for any trace of copper, gold or other precious metals and communicate those findings via satellite.

“When you build a small satellite constellation, it's not a billion dollar exercise. It is maybe a couple hundred-million dollar exercise,” she said. “If you can be the only one that provides that high value application, you can finance your entire constellation and keep going from there.”

Another satellite IoT company, Skylo Technologies, offers wholesale connectivity largely to mobile network operators for direct-to-device connectivity. The company manufactures the Skylo Hub, similar to a mobile hotspot, and provides satellite network connectivity through existing Geostationary Orbit (GEO) satellites. Skylo does not have plans to launch its own satellites.

“You shouldn’t have to worry about using a satellite network or a cellular network,” Tarun Gupta, CPO and co-founder of Skylo, said. “Your decision should be do you want connectivity or not, and let the industry figure that out.”

Skylo users can roam onto the network much like international roaming works today. “If you have an important meter or an asset tracker, or any other sort of device that needs constant connectivity, we can be there for you from your existing device.”

Gupta says Skylo customers are looking to track containers, and not necessarily the ship they came in on. “We're looking at tracking higher value asset items,” he said. “These things such as any large retailer container would have, such as several million dollars’ worth of goods in that truck, even though they might be Rubbermaid products.”

When he goes to a customer and tells them that their existing mobile device can be upgraded for satellite connectivity, the first question they ask is: “Okay, where's the modem? How do I install it?” he said. Customers don’t have to modify their existing devices to allow for this capability, which is a “bit of a paradigm shift for them,” Gupta said.

Lacuna Space is based in Oxfordshire in the heart of the United Kingdom’s space startup community. The company started the operation of their third satellite in January, 2021, then followed with their first launch of 2021, representing the fifth IoT gateway developed by Lacuna to be launched. They launched their fourth IoT satellite in November, 2020. They focus on commercial B2Nb applications in agriculture, logistics and remote infrastructure monitoring, according to Jonathan Pearce, Lacuna chief commercial officer. Using IoT for precision agriculture, i.e., optimizing the least amount of fertilizer, pesticides and water is one intriguing application for growing products, he said.

“Once you've grown your produce, you need to transport it,” he said. “There's a lot of oversight in the supply chain now about provenance, and reporting what chemicals have been used, and where the food really comes from. That links to the logistics, where you could track crates of fruit around the world to know really where it came from.”

Another application is tracking machinery, Pearce said, such as an excavator. “It may be worth putting an expensive satellite receiver on that expensive asset,” he said. “There's also lower grades of assets. It might go from excavator down to generator down to pneumatic drills or even hand drills. So as the market expands, you will be able to track all sorts of things at low cost.”

Dave Gell, chief commercial officer with network operator Totum Labs said that the company is competing against cellular almost entirely as it moves into pre-commercial mode. Totum enables global asset tracking and monitoring using its own constellation of Low-Earth Orbit (LEO) nanosatellites that are in progress now and optimized device silicon. The wireless waveform provides worldwide coverage, indoor connectivity, and an embedded footprint the size of a postage stamp. The company expects to go live commercially next year.

“Part of the design of our unique, high performance waveform was to be able to build unit economics that allow us to price competitively with those cellular guys, and we do.” There is a board mounted chip antenna that is omnidirectional, so there is no need for a mounted directional antenna.

Totum is working with space partners Loft Orbital, Gell said, and has launched its first test satellite, which is fully functional. “The good news is we've been able to prove and demonstrate all this technology, including the indoor operation functionality. But we have to build our constellation.”

The Astrocast IoT service enables asset monitoring and two-way communications through a global nanosatellite network, according to Fabien Jordan, founder and CEO. The company focuses on remote areas of the world.

“We really try to unlock as many countries as possible from the regulatory point of view,” Jordan said. “We see ourselves as completely complementary to the existing terrestrial networks. And we see ourselves as an extension or supplement to these networks. This is how we approach the market — so we can really help these networks reach and cover remote areas.”

The challenges are not on the technology side anymore, he said, but come from the supply chain for getting the components, and the shortages of the chips for all their modules. “We see some of our customers dealing with similar issues, which affect the integration time.”

Jordan said that the global IoT market is booming. “This is going to continue. Global IoT Low-Earth [Orbit] services are contributing to the acceleration of satellite connectivity. And I would not be surprised if the number of IoT devices connected by satellites would exceed 100 million devices before the end of the decade.”

Iridium Communications, which had its first launch in 1997 to begin building its constellation, is monitoring developments on the smallsat IoT side of the satellite industry, according to Tim Last, vice president and general manager, IoT Line of Business at Iridium.

“We're paying attention to a lot of things that happen in the market, including the sort of growth in not only smallsat technology, but the proliferation of investment into IoT as a target market for that,” he said. “The capital markets are deciding that they're prepared to put a bit more money into space.” He said that, at last count, there were 15 or 20 companies that are offering various propositions related to IoT in space.

Iridium is seeing success in IoT, and growth in commercial IoT subscribers drove Iridium to another year of record revenue in 2021, according to the company’s financial results.

“IoT, and end-to-end before it, is the proven sort of business service offering,” he said. “I think companies and telcos around the world including Iridium have been doing this for years — improving business efficiency, improving sales, lowering costs. You can do that by connecting things with back office systems and ultimately connecting people to that.”

Last takes the view that many smallsat IoT players are selling their services on the back of an unrealistic business plan with technology that hasn't yet been proven, despite the investment going into the market.

“My summary at the moment is that space is pretty hard. Many of these companies are finding that out the hard way because very few of them have actually proven their technology thus far. None of them have got to scale,” Last said.

SpaceX’s acquisition of Swarm Technologies in August 2021 caught Last’s attention at Iridium. “But it's not even clear that SpaceX shows any interest in IoT, frankly,” he said. “SpaceX, and Starlink in particular, is a very different kind of company. It's a consumer broadband company primarily. Their core proposition is to put in consumer internet out there for the masses, if you like, and to the unserved parts of the world. That's very different to IoT, which is more of a B2B. It's an industrial kind of service offering.”

Iridium believes if some of the smallsat companies cross the finish line and prove out new use cases, Iridium may take a stake in the market as well. The company is adding some services that move them up into more valuable IoT services, with devices that can send more data for customers, he said. For example, Iridium is now building on its service platform an IoT service that allows customers to send megabytes of data per month.

“They haven't proven that they can sustain the kind of long term investment technology growth deployment of a network in order to then actually realize the kind of growth that they're forecasting on the back end.”

In addition, Iridium is continuing to assess the potential inorganic options as far as investing or acquiring one or two of these IoT companies. “It's a bit risky at the moment because honestly many of them haven't really gotten out of the science project phase,” Last said.

There is push from the smallsats and there is pull from the larger satellite companies as the IoT market heats up and competition intensifies.

Totum’s Gell touts the value proposition of the startups. “Iridium [has an] innovator's dilemma. You got that large capital investment that you're continuing to monetize, and you've got a large organization and you've got these smaller guys coming up with some very eye-popping economics. If I had to pick, I'd much rather be sitting in my seat than theirs.”

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