Satellite players bet on direct-to-device (D2D), IoT, and cloud for next big liftoff

Partnerships will allay disruption fears among telcos, yet only fundamentally strong satellite businesses will thrive and attract capital amid gloomy outlook

This brief report explores three potential new growth markets for satellite operators who are looking to overcome intense competition, tough macro conditions, and the niche nature of their market. The report also discusses the impact on the traditional telecom market, the revenue opportunity for telcos from satellite partnerships, and key challenges confronting satellite operators.

Satellite operators are being forced to expand their addressable markets in the near term, courtesy of several factors: rising competition, with the emergence of players such as SpaceX along with several upstarts including AST SpaceMobile and Lynk; a tough funding climate resulting from a grim economic outlook and rising interest rates; and, market concentration risks arising from the current focus on satellite broadband internet. Operators are raising stakes in new pursuits and developing new offerings to address the situation. The analyst expects three new potential addressable markets to provide transformational opportunities for satellite operators in the next 2-4 years. These include Direct-to-device (D2D), Internet of Things (IoT), and cloud-based services. Looking at these market opportunities, a thought may arise whether satellite operators are trying to disrupt the traditional telecom market.

But the reality is that telcos will continue to be the primary service provider for wireless access. Telcos are also going to benefit from partnerships with satellite operators as they will aid in providing an enhanced experience for telco customers, reinforced by ubiquitous coverage. For satellite operators though, navigating the regulatory hurdles and ensuring constant capital flow are vital concerns; several players from the current herd will vanish in the next 3-5 years.