The global satellite market is forecast to become seven times bigger

As many as 70,000 low earth orbit (LEO) satellites are expected to be launched over the next five years, according to Goldman Sachs Research. Installed at altitudes of 100-1,200 miles, and circling the Earth every 90 minutes, these satellites could supplement cell phone, broadband, maritime, and aviation data requirements.

Our analysts’ base-case forecast is for the satellite market to grow to $108 billion by 2035, up from the current $15 billion. In the most optimistic scenario, the market could grow to be worth as much as $457 billion in that same period. Roughly 53,000 of the estimated 70,000 launches over the next half-decade are likely to be from China, writes Allen Chang, head of the Greater China Technology Research team. 

Satellites avoid “some of the difficulties faced by traditional ground-based infrastructure — such as difficult terrain or national boundaries,” Chang writes. But for LEO satellites to challenge traditional telecommunications services, some obstacles still need to be solved.

How much do satellite launches cost?

Due to their low altitude, LEO satellites have a narrow field of coverage. Moreover, to allow a sizable population to use LEO satellite communications simultaneously requires more satellites to ensure sufficient speed and bandwidth for each user. For example, if a single satellite provides 960 gigabits per second of bandwidth and transmits data at a speed of around 100 megabits per second, it would take around 460,000 satellites to cover half the world’s population.

Launch costs can be high: up to $12,000 per kilogram of satellite payload. Satellites can have higher latency, or lags in communication speed, than terrestrial transmission systems. Further, the short lifespan of LEO satellites will create a large amount of space debris, requiring an active debris management program. 

Even so, Chang writes, “we think there is good potential for LEO satellites to become a mainstream technology, affecting traditional telecom companies both negatively and positively.”

In the early stages, LEO satellites will supplement broadband in remote areas, competing with traditional broadband in rural markets. In the long term, satellite technology may be integrated into mobile networks, enabling seamless connections through partnership between satellite and telecom operators.

How satellite technology is getting better

A few key technological improvements would pave the way towards large-scale deployment of satellites, according to Goldman Sachs Research:

• Launch costs: As rocket payloads increase, the cost of launching a kilogram into LEO could, in theory, fall to $100-200. Costs have already dropped thanks to the ability to reuse the first stage of a rocket and using stainless steel instead of carbon fiber and aluminum in rocket designs. Reusing the whole rocket and increasing the sizes of rockets could shrink the cost even further.

• Bandwidth and latency: LEO satellite specifications continue to be upgraded, with greater bandwidth per satellite reducing the numbers of satellites required to form the network. To reduce latency, operators could increase the density of ground stations, or portable user terminals, to enhance data transmission.

• Ecosystem: The integration of constellation networks into existing networks could also accelerate the pathway for LEO satellites to cover a majority of the population. The ecosystem requires industry collaboration across telecom companies, tech giants, and governments.

What is the outlook for the satellite industry?

Our analysts expect an acceleration in satellites being launched in 2025, as more players join the competition and try to secure more frequency resources. Some researchers estimate that the LEO can host 10,000 satellites at most.

Satellite players tend to believe there will be ample space in the sky, but the best orbits with the most ideal altitudes (i.e., those that cover the earth most efficiently with a suitable speed and field of view) are limited, which is driving satellite players to accelerate their launch filings to the International Telecommunication Union.

Global satellite operators have submitted or announced 70,000 satellite plans for LEO, which are due to launch in 2025-2031. Chinese players are active, with at least three operators having submitted applications for mega-constellations of more than 10,000 satellites. “We expect the ultimate mainstream use case for satellite internet technology to be the upcoming 6G communications,” writes Chang.

How LEO satellites will improve connectivity

LEO satellites can serve as a supplement to submarine cables for high-speed cross-country networks. They provide global coverage for internet access, allowing users to stay connected including in regions where traditional infrastructure is lacking, such as on planes, electric vertical take-off and landing vehicles, and ships, as well as for emergency response when ground-based infrastructure is disrupted by disaster or in any place that lacks infrastructure.

Satellites could also offer crucial data services where none exist. Roughly 2.5 billion people, or 31% of the global population, still lack internet access, according to the World Economic Forum. These people are “likely to become the most immediate users of LEO satellite services as it scales,” Chang writes. Compared to traditional submarine cables, satellites have the potential to facilitate cross-country connections more efficiently without needing to exchange data with various local telecom carriers.

 

This article is being provided for educational purposes only. The information contained in this article does not constitute a recommendation from any Goldman Sachs entity to the recipient, and Goldman Sachs is not providing any financial, economic, legal, investment, accounting, or tax advice through this article or to its recipient. Neither Goldman Sachs nor any of its affiliates makes any representation or warranty, express or implied, as to the accuracy or completeness of the statements or any information contained in this article and any liability therefore (including in respect of direct, indirect, or consequential loss or damage) is expressly disclaimed.