The Bottom Line

EO Downlink: Easing the Bottleneck

The Earth Observation industry is ascendant on multiple fronts, not the least of it being a growing number of satellites planned to launch over the coming decade. Sensor types are various, from very high resolution (VHR) optical and Synthetic Aperture Radar (SAR) to hyperspectral, radio occultation and others.

In 2020, Larry Fink, CEO at BlackRock, the world’s largest asset manager detailed in his letter to clients a move to make sustainability a core part of the firm’s investment approach. Together with the UN SDG’s call for the Decade of Action (2020-2030) and more recently at the US Securities and Exchange Commission, this has spearheaded a reshaping of finance and reporting based on Environment, Social and Governance (ESG) data, bringing EO into the spotlight on the global stage. This is good news for an industry that has traditionally struggled to attract large commercial contracts, remaining focused on Government and Military applications for data and intelligence contracts. Market demand for EO data is beginning to take shape, and satellite operators will need to address a variety of existing challenges to meet it.

EO data is generally downlinked from satellites either to private data centers, hosted centers or directly onto cloud infrastructure of the operators. Keeping aside captive markets in the former two, NSR’s Cloud Computing via Satellite, 2nd Edition report forecasts more than $10 billion in cloud service revenues for EO data downlink through the next ten years. The transport of satellite imagery onto public cloud servers is a growing fraction of the downlink business: incumbent EO operators offer a suite of ancillary services directly or through subsidiaries and are reshaping business structures to keep up with new-space operators who are to adapt to the cloud from the start.

While Gov/Mil clients drive a significant portion of downlink revenues, taking up 68% of the cumulative opportunity during 2020-2030, the adoption of cloud services for direct downlink is much faster in the commercial EO sector, at 30% CAGR during the same period. These numbers are closely linked to ongoing trends in both the space and ground segment for EO.

EO Insights, not Data

Delivery modes for satellite imagery are changing, and multiple operators are shooting for a data subscription model. Platforms and marketplaces are on the rise, attempting to breakdown the traditionally opaque model of how EO data is sold. Getting closer to the customer, whether in the energy, agriculture, insurance markets is important for operators and downstream analytics providers alike. Understanding end customer requirements and meeting them to spec will be a key factor in differentiating the winners. As such, geospatial intelligence tools are fast become a component of existing big data applications. Given such a diverse ecosystem, the cloud is an essential foundation for each layer in the EO demand stack.

Ground Segment Evolving

At the same time, recent announcements from major cloud service providers entering the ground station business have brought a fresh wave of interest. Newspace players such as RBC Signals have made a business out of taking advantage of spare capacity on existing antennas, and continue to expand their presence fueled by funding rounds. The need for high volume downlink at lower costs by new satellite operators are driving investments into improving and automated services that take advantage of shared antenna infrastructure. Pricing models too are changing. While the traditional pricing per satellite pass metric still has its place, pricing per minute is on the rise as well. Ground service providers are currently either augmenting or revamping their capabilities. Virtualization at all layers will be the most effective way to meet emerging EO data requirements in the market. Offering these data providers a seamless cloud-based experience via easier APIs and autonomous satellite contact scheduling will be key, and cloud is again an essential foundation for such services.

The Bottom Line

The EO data market is on the cusp of accelerated growth, and it will certainly be interesting to see all the new data types and applications that satellite players will bring to market in the coming years. For the business models to close however, moving away from CAPEX intensive towards lower OPEX type cash flows will be imperative, both in space and on the ground.

Dynamic network management and automated scheduling capabilities are key drivers in this market, as players compete to offer improved services at lower costs. And leveraging the cloud will help the EO value chain get there, starting with opening up the ground data bottleneck.