New satellite technology has triggered a space race between the so-called ‘hyperscalers’ – cloud providers with global scale such as Amazon Web Service (AWS) and Microsoft. With the announcement of Microsoft’s new Azure Space project in October, it is clear the tech giants are doubling down on investment in the $1trn space economy to improve global connectivity and thereby expand the market for cloud computing services.
While space was once the domain of nation states, the falling costs and rising potential of satellites have transformed commercial investment in space, says Stephen Kitay, senior director of Microsoft’s new cloud computing project Azure Space.
“The cost of getting satellites into space is coming down and at the same time as that’s happening, the processing… capabilities of the satellites themselves is going up,” Kitay explains.
That combination is opening new frontiers for cloud computing. “Whether it’s delivering video content to underserved communities or connecting telemedicine, e-health, smart agriculture, there’s a role for us to make sure that we’re leaving no one behind in cloud computing.”
Satellite broadband has the potential to provide access to untapped parts of emerging markets and remote areas of developed economies with poor connectivity. Unesco estimates just 54.8% of households worldwide were connected to the internet in 2019, while the United Nations found 20% of the global population did not have access to 4G network coverage or better in 2018.
Accessing talent and resources in these previously disconnected regions could be a game changer across a wide range of industries, says Tom Stroup, president of the Satellite Industry Association (SIA); for example, enabling industries such as agriculture to use the internet of things (IoT) for processes like soil and livestock monitoring.
“When you look at the potential of monitoring any kind of equipment pipelines, whether it’s shipping or location of airlines, all of those things are potential beneficiaries,” he says. “You think about the number of different companies that can take advantage of the connectivity for online payment processing that currently don’t have access to broadband service, and you can just really envision what the size of that market is.”
The wide-reaching impact of this technology is evident from Coca Cola, one of the early investors in UK-based satellite company OneWeb, according to Stroup.
“I thought it was fascinating that a company like Coke could see the opportunity for them to be able to connect to their vending machines in rural markets where they otherwise may not have the ability to monitor,” he says.
Limits to satellite broadband
However, there are hurdles satellite broadband needs to overcome before it can become fully transformative, says Jeff Loucks, executive director of Deloitte’s Centre for Technology, Media and Telecommunications. He thinks that 5G technology may have the edge for infrastructure that requires higher latency or supports many devices.
“One of the key uncertainties is what are the service levels going to be,” he says. “Will these constellations of satellites be able to deliver speeds fast enough for things like high-definition video, or the ability to really control networks of IoT devices in real time?”
Although, he adds, the ever-increasing importance of the cloud for business means it could power digital transformation further down the line – so long as the price is right and it is viable to build the supporting ground equipment.
“I don’t think that traditional telecommunications companies are necessarily going to be disrupted immediately,” he says. “But, over time, satellite broadband could prove transformational. It’s early days, but it definitely bears watching.”