Three key developments to drive the market forward

In summary

  • According to a new market report on the subject, the number of global satellite IoT subscribers will reach 5 million in 2021.
  • Three key developments to watch out for in the coming years: the rise of Low Earth Orbit (LEO)-based networks, the advent of hybrid satellite-terrestrial connectivity, and the entry of tech giants as operators.
  • The market is expected to grow to $1 billion by 2026, with intense competition remaining extremely high.

Why it matters

  • Organizations that were previously unable to connect to IoT solutions in remote areas due to lack of coverage and cost issues now have several viable solutions.

Although satellite connectivity in the M2M/IoT space has been used for asset tracking and remote telemetry applications since the late 1970s, it has historically been viewed as the last alternative to terrestrial networks, mainly due to its higher cost and low-cost power efficiency of legacy Solutions . More recently, with the healthy growth of the IoT market and limitations in the reach of terrestrial networks, there has been renewed interest in satellite-based IoT connectivity.

In the past 4 years, at least 13 startups and seven incumbent satellite operators have announced plans to deploy or have commercially launched satellite IoT networks that promise to provide low-power, low-cost connectivity to IoT devices directly from space. Unlike terrestrial networks, which only cover around 15% to 20% of the earth’s surface, satellite networks can cover almost the entire surface of the earth and help meet the increasing need for IoT connectivity in remote or inaccessible areas. As the demand for IoT solutions continues to grow, IoT Analytics believes that satellite connectivity will play an increasingly important role in the future of IoT, although satellite IoT will remain a niche service compared to the overall IoT market for years to come.

Market Overview: The State of Satellite IoT Connectivity in 2022

According to IoT Analytics’ Satellite IoT Connectivity Market Report 2022-2026the number of satellite IoT connectivity subscribers will surpass 5 million in 2021.

Today, only 2% of the global satellite connectivity market (in USD) relates to satellite IoT connectivity revenue. The bulk of satellite revenue today still represents voice communications for remote workers and represents first responders and internet connectivity services for consumers and businesses in remote areas. However, as satellite IoT connectivity revenue is growing 14 times faster than revenue from traditional satellite connectivity, the IoT is emerging as a category.

Established satellite operators such as Inmarsat, iridium, ORBCOMMand global star contribute to more than 80% of global satellite IoT connectivity revenues. However, emerging startups offering low-power and low-cost IoT connectivity via LEOs – based small satellite constellations – are expected to gain ground and account for about 20% of the global market by 2026.

As the market rebuilds, we have identified three key developments that are likely to accelerate the growth of the satellite IoT market from a CAGR of 7% in previous years to a CAGR of 14% in the coming years. Global sales are expected to surpass $1 billion by 2026.

Evolution 1: The rise of LEO-based satellite IoT networks

According to IoT Analytics’ Satellite IoT Connectivity Market Report 2022-2026LEO constellation-based satellite IoT connectivity will grow at a CAGR of 25% between 2022 and 2026. Most of the new satellite IoT networks announced and deployed in recent years use LEOs. We have identified two main reasons for the higher adoption rate of LEO-based deployment.

  1. LEO are better suited for low-power communications. LEO satellites are deployed at 200 km or less. A shorter distance to earth means lower signal propagation losses (estimated to be around 25dB less than GEO), reducing the power requirements of user equipment and making them ideal for communicating with low-power IoT devices.
  2. LEO constellations enable faster design and deployment at lower cost. Today, most LEO satellites for the Internet of Things are built using CubeSat technology, which allows companies to mass-produce components and offer commercial off-the-shelf parts. It drastically reduces the cost and time required for satellite design and development. The combination of CubeSats and LEO represents the fastest and most cost-effective way to set up and deploy a satellite constellation for the IoT today. It has become the preferred option for established satellite operators and NewSpace startups launching satellite IoT connectivity services.
Satellite IoT Connectivity Market - Satellite orbits used for IoT M2M services

Development 2: Introduction of hybrid satellite-terrestrial connectivity

Partnership and collaboration are key to IoT delivery, as we can see in the satellite IoT connectivity ecosystem. Terrestrial and satellite-based IoT network operators are increasingly merging to offer hybrid connectivity solutions, for example. Kineis and Deutsche Telekom (Kineis‘ The KIM 1 module is now certified by Deutsche Telekom and can be used by their customers in hybrid cellular-satellite solutions).

The solution enables IoT devices to use terrestrial connectivity (e.g. cellular) as their primary option and switch to satellite when moving to areas without terrestrial network coverage. The solution requires two different RF chipsets embedded in the end-user device or satellite terminal.

In addition, new technologies are emerging that provide terrestrial and satellite connectivity via a single RF communications chipset. For example, the LoRa Edge LR1120 chipset supports sub-GHz LoRa, SATCOM S-Band, and 2.4GHz LoRa.

However, the single communication RF chipset, which supports terrestrial and satellite connectivity, can also be implemented on existing IoT devices through a firmware upgrade with no or minimal hardware changes, allowing vendors to leverage existing certifications, devices and ecosystems. For example, satellite and OQ have developed similar solutions that enable existing NB-IoT devices to communicate via satellite, requiring only a firmware update for the devices, with no hardware or antenna modifications required.

Satellite IoT Connectivity Market - Hybrid Terrestrial-Satellite Mode

Evolution 3: The entry of tech giants as LEO-based broadband satellite operators

LEO-based connectivity is a new frontier. To seize this opportunity, tech giants such as Starlink by SpaceX or Project Kuiper from Amazon deploy LEO constellations for broadband internet connections. These constellations do not directly address the IoT market. From a technical point of view, however, it could ultimately represent a solid option for customers who require both high and low bandwidth connectivity applications (e.g. ships/container ships or remote industrial sites) and become a strong competitor for those companies that are dividing focus on satellite backhauling for IoT. For example:

  • Affiliated Farms Pty Ltda licensed Australian telecommunications provider, will start a pilot project Starlink‘s backhaul service to provide fence-to-fence connections on farms for technologies connecting robotics, agricultural IoT, mobile phones and home offices.
  • Last year, 2021, SpaceX acquired swarmwhose target market is those who need low-cost IoT connectivity.

The prospects for the satellite IoT: A growth market with intense competition

As the market continues to grow toward a $1 billion market size, the sweet spot for satellite IoT connectivity remains deployment in remote and isolated areas. Satellite connectivity competes (and is overwhelmingly more expensive) with other terrestrial connectivity options everywhere else. Therefore, the overall size of the satellite IoT market will remain a fraction of the overall IoT market for the foreseeable future.

At the same time, increasing competition in the satellite IoT market and the continued erosion of IoT connectivity prices (and thus revenue margins) risk eating away at the significant CAPEX required for satellite operators to build satellite networks. Therefore, we anticipate that some of the new satellite operators may not be able to sustain their businesses and may be forced to change their business model in order to survive. Some of these struggles are already visible. For example, hibernationwhich was among the first NewSat companies to commercialize satellite IoT connectivity services, recently abandoned plans to complete its constellation to focus on delivering vertical IoT solutions (Astrocast then acquired hibernation in May 2022).

Definition of Satellite IoT

“Satellite IoT refers to the use of satellite communication networks and services to connect terrestrial IoT sensors and IoT end-nodes to a server (e.g. in a public or private cloud), either in conjunction with or as an alternative to terrestrial communication networks. ”

More information and further reading

For more insights, check out our coverage of the Satellite IoT Connectivity Market:

Satellite IoT Connectivity Market Report 2022 Product Icon

Satellite IoT Market Report 2022-2026

119-page report detailing Satellite IoT market including market share, use cases and technical details.

Download the sample to learn more about the reporting structure, the companies included, and to view additional data points.

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