1、 2022 Boston Consulting Group1Satellites Are the Next Frontier for IndustrialCompaniesNOVEMBER 29,2022 By Troy Thomas,Rdiger Schicht,Albert Waas,Sita Sonty,Matt Martinez,Jake Levey,and Amanda WassermanConstant,enhanced connectivityat less cost and with more capabilitiesallows companies to offer new

2、products and services that drive growth andcreate customer value.In the not-too-distant future,a farmer wont start the day by climbing into atractor.Shell start by logging on to a laptop and overseeing a fleet of tractors andother equipment,all operating autonomously.If one tractor encounters someth

3、ing 2022 Boston Consulting Group2unexpected,it will signal the farmer,who can take over and operate the machineremotely until the path is clear and the tractor can resume autonomousoperations.Throughout the day,the machines will communicate with one anotherand send data back for analysisall to help

4、the farmer increase crop yields,minimize the use of fertilizers and pesticides,and improve overall performance.Leaders of industrial goods companies trying to identify their next steps ininnovation need to look in one direction:up.Space is creating unprecedentedvalue for customers and companies.In p

5、articular,satellite communications(satcom)technology is at a tipping point in both cost and coverage,openingdifferent ways for industrial goods companies to offer new products and servicesthat drive growth and create customer value.Leading companies in someindustries,such as agriculture and automoti

6、ve,are rolling out new satellite-enabledservices,and other industriesincluding logistics,construction,energy,andminingwill soon follow.By capitalizing on constant connectivity from space,companies can enable solutions such as autonomous operations,continuous datatransfer and processing,and machine-t

7、o-machine communication.They can alsogenerate new insights from data,improve operations,deliver a better customerexperience,and distribute products and services in new ways.The keys to success in leveraging satcom include prioritizing use cases,determining technical requirements,and deciding whether

8、 to buy connectivityfrom existing providers or create a bespoke service more in line with a companysown needs.Industry leaders can and should push the satcom market to deliverintegrated connectivity solutions provided by different satellite systems anddifferent orbits linked through a single univers

9、aland affordableterminal.Thesatcom market is moving in this direction today,but not at the pace needed tounlock the full value of emerging use cases for industrial companies.Why Satellite Connectivity Now?Much of the world already relies on space to some degree.For example,individualsmay use global

10、navigation satellite systems,such as GPS,for geolocation or watch 2022 Boston Consulting Group3satellite TV accessed through a dish.Common app-based services,such as Uberand DoorDash,derive basic functionality from commercial geolocation platforms.Some may even purchase earth observation imagery for

11、 monitoring purposes.Yetfew take full advantage of satellite technology,let alone integrate those satellitecapabilities into their business models to unlock value for customers and generatenew revenue.Satellite connectivityoffers continuouscoverage regardless ofgeographyin deserts,across oceans,onmo

12、untaintops,and inremote rural areas.In thecoming decade,thenumber of satellite-basedapplications is poised toincrease dramatically,with the space economy projected to grow from$416 millionin 2020 to more than$1 trillion by 2040.Of that total,the biggest chunk will beoperations and servicesthe soluti

13、ons that companies on the ground can providewith satelliteswhich will nearly triple,going from$241 billion in 2020 to$687billion in 2040.Several reasons explain why satellites are becoming a realistic option for industrialcompanies.One is the technological evolution of the satellites themselves:diff

14、erentorbits offer different capabilities.In the past,most satellites were geostationary(GEO).GEO satellites operate at altitudes of approximately 22,000 miles and orbitin sync with the earths rotation,providing continuous coverage to the sameground location.For example,a GEO satellite covering New Y

15、ork City will alwaysbe in the same position to service customers there.GEO satellites have longsupported technologies such as TV broadcasts,weather forecasting,and satellitephone communications,which have been expensive and limited to specificapplications until now.Whats more,these satellites capabi

16、lities are advancingIn the coming decade,thenumber of satellite-basedapplications is poised toincrease dramatically.2022 Boston Consulting Group4rapidly,enabling them to meet connectivity needs of the mobility market toinclude commercial airlines,shipping,and more.At the same time,new kinds of satel

17、lites are becoming a viable option forindustrial companies There are two main types:low earth orbit(LEO)satellites,which operate 100 to 500 miles above the earths surface,and medium earth orbit(MEO)satellites,which operate roughly 3,000 to 7,500 miles above the surface.LEOand MEO satellites do not r

18、emain over the same spot above earth,instead orbitingmuch faster than the earths rotation.They are less expensive than GEO technologyboth in terms of the satellites themselves and the cost to launch thembutmany more of them are required to provide continuous coverage.Theseconstellations are being la

19、unched at a record pace,and more are coming:from2020 to 2029,the number of annual satellite launches will increase to about fivetimes more than in the previous decade,and 90%of those will be smaller LEO andMEO satellites,also known as smallsats.(See Exhibit 1.)2022 Boston Consulting Group5Because of

20、 these developments,existing industrial applications are more robustcapitalizing on imaging and observation and more precise location dataand newapplications are emerging.The segment with the most promise is connectivity viasatcom,including broadband data services.By 2023,total satcom capacity willi

21、ncrease more than tenfold,and the bulk of that will come from LEO and MEOsatellite systems.(See Exhibit 2.)Each satellite constellation will have greaterpotential bandwidth and lower latency.And prices for customers will continue tofall as a result of increased competition.LEO satellites have a shor

22、ter operational lifespan than GEO satellites,needing tobe replaced about every five years,which means that new designs will keep pacewith advances in communications technology and customer needs.LEO satellitesalso offer faster data speeds and greater capacity;current designs can providebandwidth clo

23、se to 3G,but future designs will close the gap with terrestrialnetworks to include enabling 5G and beyond.2022 Boston Consulting Group6Currently,terrestrial mobile telecom networks are cheaper and faster than satellite-based connectivity through LEO networks,but they are generally limited tolocation

24、s with high population density,and there can be gaps in serviceparticularly in areas with very heavy usage and during disruptions due to naturaldisasters.Satellite-based communications,in contrast,are truly global,withcoverage spanning rural areas,deserts,oceans,and other remote environments.Moreove

25、r,satcom can provide redundancy to terrestrial networks.And satelliteproviders are starting to close the gap in terms of bandwidth and cost.Another shi is the convergence of technologies.Currently,each type of satellitetechnology(GEO versus non-geostationary)requires a dedicated terminal to sendand

26、receive signals.For example,if a logistics company wanted to outfit a fleet of500 trucks with both GEO and LEO satellite connectivity,it would need to installindependent GEO and LEO terminalseach of which costs thousands of dollarsin every truck.However,suppliers are actively working to develop mult

27、iorbitterminals,and soon a single device will provide connectivity across differentsatellite systemsalong with terrestrial mobile coverageand switch seamlesslybetween different data signals.The future is not just multiorbit but also mobile,with terminals that allow cars,trucks,boats,planes,and tract

28、ors to be connectedall the time,regardless of where theyre operating.Constant Connectivity Enables New ApplicationsThe main advantage of satcom is constant,enhanced connectivitya step up fromterrestrial mobile telecom networks,which have gaps in coverage,particularly inremote areas.Initially,this co

29、ntinuous coverage enables satellites to serve as abackup to current mobile services and to provide coverage in unserved areas,suchas over oceans and in rural locations.But as capacity grows and costs come down over time,satcom will provideconstant connectivity on its own,and the differences between

30、terrestrial telecomand satellite-based connectivity will narrow.Companies will be able to bundledata from different sources,run analytics against that data,and unlock new 2022 Boston Consulting Group7insightsand valuefor customers.In that way,satcom will enable a wide rangeof new use cases,particula

31、rly in industries with connected vehicles,such asagriculture,automotive,mining,and construction.Specifically,the following use cases become most relevant for those industries:In sum,connectivity creates value.For applications requiring continuousconnectivity,satcom increasingly needs to be part of t

32、he solutions mix.How to Start Leveraging Space ConnectivityThe current satcom evolution is creating opportunities for industrial companies toboth shape the direction of future innovation and accelerate the creation of newvalue for their customers.Leading players are already exploring different busin

33、essmodels for satcom solutions.The most straightforward option is for companies tobuy connectivity as a managed service from existing providers.At the more Improved Operations.Companies can oversee round-the-clock operationsacross dispersed locations and gain real-time access to business intelligenc

34、e.Currently,even connected devices are connected only some of the time,whenthey have access to mobile telecom service.Fleet Optimization.Companies can track assets worldwide and use data-driven products and services,get enhanced information on the performanceof their products,and apply such use case

35、s as predictive maintenance.New Use Cases and Ways to Create Value.Worldwide connectivity allowscompanies to expand the geographic reach of their products and to roll outnew premium services,such as business intelligence that relies on dataanalytics.Enhanced Customer Experience.Companies can be more

36、 attentive tocustomer-owned or-operated assets,respond faster to emerging issues orconcerns,and provide such value-added services as enhanced entertainmentoptions.2022 Boston Consulting Group8complex end of the spectrum,companies design,build,launch,and operate theirown satellites or constellations.

37、Between those two poles of outsourcing andcreating lies a set of more nuanced options.(See Exhibit 3.)To determine whichapproach is best,companies need to first determine their actual needs andconsider the pace of technology for space-enabled connectivity.Define known and potential use cases for sat

38、com,along with theirunderlying technical requirements.As noted above,the continuousconnectivity that satcom provides can help companies better accomplish existinguse casesby filling in the gaps with terrestrial mobile coverageand unlockfuture new cases.Each use case will have specific requirements i

39、n terms of speed,latency,coverage,and other technical aspects.(See the sidebars“Satcom on theRoad”and“Satcom on the Farm.”)SATCOM ON THE ROAD 2022 Boston Consulting Group9One of the key applications for satellite communications(satcom)technology is in the automotive industry,where connectivity can p

40、owernew applications and ultimately support autonomous operations.Mostnew cars and trucks today come with mobility links to land-basednetworks,but those can be unreliable.Consider that only about 60%of theglobal population is connected,and even in developed markets,connections can be faulty or incon

41、sistent:40%of the highways in Europecurrently have poor connectivity or none at all.Satellite-based connectivity can augment mobile networks to offer seamlessconnectivity even when land-based signals drop or become otherwiseunavailable.In that way,it enables automakers to offer a wider range ofappli

42、cations,including autonomous driving,in-car entertainment,enhanced safety features,the prevention,and predictive maintenance.Enabling connectivity at this level will require overcoming sometechnological challenges.One is the vehicle terminalthe antenna thatsends and receives data.Most existing termi

43、nals dont support both land-based mobile networks and satcom.They are also too big and tooexpensive and consume significant energy(which rules them out forelectric vehicles).In addition,increasing data volumes from the broaderarray of applications will require that some of the computation happens in

44、space,rather than in the vehicle.One well-publicized example is Porsche(associated with VolkswagenGroup),which is pursuing a long-term strategy to leverage satcomconnectivity in its vehicles.Porsche has a dedicated satcom team and holdsan investment in Stellar,a European space company focused on pro

45、vidingconnectivity for mobility applications.Based in Paris,Stellar aims to standardize and industrialize the value chainfor satcom specifically in order to support automotive applications by 2025.In addition to Porsche,Stellar has teamed up with other OEMs and isdeveloping its own LEO constellation

46、along with the worlds first hybridterminal,which can switch transparently between land-based 5G andsatellite connectivity while still meeting automotive safety standards.2022 Boston Consulting Group10Stellar will also have edge-computing capabilities,which reduces signallatency and will support new

47、automotive applications,such as autonomousdriving,along with hybrid roaming capabilities to supplement terrestrialmobile service.John Deere has been an early adopter of precision agriculture.Cameras onsprayers use machine learning to identify weeds and other unwantedplants and selectively spray them

48、 with herbicide,which can lead to two-thirds reduction in inputs.The market value of precision agriculture anddecision support is expected to increase at a compound annual growth rateof approximately 15%,reaching as high as$13 billion by 2025.Connectivity is a critical component of precision agricul

49、ture and otherdigital solutions in the industry.Currently,3G is sufficient to meet mostconnectivity needs of the agriculture sector,but mobile service can beunreliable in some regions.For example,up to 25%of US cropland is notcovered by 3G terrestrial connectivity or other cellular options,such as 5

50、Gor LTE.In other markets,such as Brazil,more than 50%of cropland lackscellular connectivity.For this reason,John Deere is pursuing a cutting-edge satcom solution aspart of its overall digital transformation.This broader transformationleverages data,AI,and connectivity to help farmers optimize yields

51、,costs,and sustainability.Satcom will enable farmers to operate a connected fleetregardless of terrestrial mobile coverage.It is expected to unlock billions ofdollars in annual value for John Deeresupported farmers in the US andBrazilian markets alone,with strong potential for additional value creat

52、ionin other markets.Initially,the company will use satcom to fill in the gaps in terrestrialcoverage to support existing use cases.In the future,however,theSATCOM ON THE FARM 2022 Boston Consulting Group11technology can support more advanced applications for smart agriculture toinclude autonomous fa

53、rming.In that way,a hybrid satcom solution has thepotential to transform every aspect of agriculture,from productivity tomaintenance,around the world.Assess the potential value to be unlocked.Each application requires a businesscase that clearly assesses the increased value of continuous connectivit

54、y fromsatcom compared with terrestrial options.By aggregating all use cases,companiescan determine how much net present value they can unlock by investing insatellite technology.Determine the current and future landscape of connectivity options.Next,companies need to understand the various options f

55、or connectivity.That processincludes terrestrial,GEO,LEO,and MEO options.For all technologies,companiesneed to project and anticipate the planned rollout of new capabilities,includingterminals and costs.Assess whether current or forthcoming satcom offerings will be sufficient.In many cases,companies

56、 can purchase satcom connectivity as a service fromexisting providers.Even if current and near-term planned offerings do not quitemeet all the technical requirements for a given application,companies can deviseways to narrow the gap by adjusting the applications they offer customers to alignwith evo

57、lving technology.Bolder companies can even push satellite companies tomake changesfor example,by bidding out capability requirements that includespecific technical changes.Where applicable,design a new solution or retain operational controlorboth.In situations when current offerings arent close to m

58、eeting the technicalrequirements for a given use case,a company may decide that the best pathforward is to design,build,launch,and possibly operate its own constellation ofsatellites.It can alter any specific design parameterssuch as the size and shape ofterminals and antennae,bandwidth,and latency

59、requirementsthat a companyrequires.This approach is significantly more complex and costly than buying 2022 Boston Consulting Group12connectivity from an established provider,and it will likely require partnering withexisting companies in the space industry.It also creates potential new revenuestream

60、sfor example,a company that operates its own satellites could opt to sellexcess capacity to others.Whether outsourcing or creating a solution,future proof the investment byconsidering a hybrid strategy across satcom technologies.Regardless ofwhether a company buys a satellite connectivity service or

61、 creates its ownorsome intermediate step along that spectrumthe ultimate result will likely besimilar.Companies will rely not on any individual category of satellites but on amultiorbit hybridGEO,LEO,and MEO satellites(plus terrestrial mobile whereappropriate)all integrated into a single universal t

62、erminal,with soware that canswitch back and forth among the options to ensure continuous coverage.By doingso,companies can spread their bets across multiple technologies,preserving theiroptions regardless of how satcom solutions evolve in the future.As industrial companies undergo digital transforma

63、tions,they unlock new usecases and applications that rely on databut without continuous connectivity,some applications are worthless.This is particularly true for mobile platforms(cars,trucks,tractors,boats)and for companies operating in remote regions whereterrestrial mobile service is spotty or no

64、nexistent.As satellite technology advances,satcom-enabled connectivity fills connectivity gaps to improve existingapplications.Moreover,satcom unlocks new applications as well.Most industrial companies are still in the earliest stages of integrating satcomcapability into their supply chains.Yet,lead

65、ing players understand the potentialand can benefit from first-mover advantages in their respective market segments.Connectivity creates value,and satellites are the future of connectivity.Forindustrial companies,that future starts now.2022 Boston Consulting Group13AuthorsTroy ThomasManaging Directo

66、r&PartnerWashington,DCRdiger SchichtManaging Director&Senior PartnerZurichAlbert WaasManaging Director&PartnerMunichSita SontyPartner and Associate Director,Aerospace&DefenseWashington,DCMatt MartinezPartnerSan DiegoJake LeveyConsultantNew JerseyAmanda WassermanAssociateNew YorkABOUT BOSTON CONSULTI

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