In my last blog (part 1) I wrote about Hypothesis 1: The more connected a fighting force is, and more capable its Communication and Information Systems (CIS), the more operationally effective it is. I gave a few examples of why I think the ADF is on the right track to becoming the most operationally effective military in the world by 2025, including Plan Jericho, Plan Beersheba and Plan Pelorus.
I won’t rehash that blog now, but if you haven’t read it yet click here to get up to speed.
Let’s move onto Hypothesis 2:
The rate of commercial innovation in communications and CIS is vastly outpacing that of defence specific innovation.
We are living in world undergoing an astounding rate of innovation. If we just think about our every-day lives for a few moments and the rate of progress of affordable computing in our $500 smart phones. There are some debates about when this computing power will exceed that of the human brain – but somewhere between 2020 and 2025 this will be common-place.
The cost of embedding a computer into every device from your toothbrush to your coffee mug is becoming trivial. According to Utility Week, 30 billion smart wireless connected devices will be present in homes and in the utility industries by 2020. The commercial benefits for companies to do so will be enormous.
Not only will Starbucks be able to see how many pods are left for your personal coffee machine, they’ll know so much about your physiognomy that they will be able to know when you want your next cup and will have a micro UAV deliver it to you when you walk into the office. It’s happening today in LA – by 2025 it will be ubiquitous.
If I come closer to my own world and think about what’s happening in the space business, we are seeing astounding levels of change in the services delivered to users in an incredibly short period of time. This is driven both by massive commercial customer “pull”, funding the business cases for innovation, and by some remarkable leaps forward in technology.
Let’s start on the customer ‘pull side’, which is generating the funding. The ‘pull’ fundamentally comes from the fact that:
(a) Everyone under the age of 25 thinks being permanently connected to the internet is a basic human right, and
(b) The fact that every business in the world wants to connect remotely to its people and its products, because that gives it a competitive edge
Both of these drivers are putting serious demand into the system – sufficient for us to see unprecedented levels of investment in new systems, both terrestrial and satellite.
You may ask ‘why satellite?’
As terrestrial cellular moves from 3G to 4G to 5G and beyond, cells have become smaller and base stations more complex and expensive. As a result, the economics of satellite have continued to remain relevant not only in the air and at sea as we all expected – but also outside of the major centres of population.
In terms of really strong driving market pull commercial segments in satellite, the following stand out from the annual reports of the major operators:
- Fixed land broadband internet/streaming video
- Commercial aviation
- Autonomous shipping
- Connected car
- Internet of things
These markets are driving massive growth in the demand side of the curve and, with that, attracting billions of dollars of new investment to the industry.
Let’s talk briefly about some of the key technology leaps that have been possible because of all of this new commercial funding.
- High Throughput Satellites (HTS)
- Moving up frequency bands
- On-board digital processing & Phased Array Antennas
- The all-electric satellite
- Re-usable Launchers
HTS, not surprisingly, are satellites that have a much higher aggregate throughput than traditional ones. They do this, relatively simply, by breaking up what would have been a single large regional beam into many smaller spot beams that are overlapped. This allows frequency re-use and a lot more overall capacity to be delivered – up to a 100 times more.
You’ll be familiar with this concept from the NBN. The concept has been around for over a decade now, in fact all of Inmarsat’s satellites since 2005 have had HTS architectures, but it’s now become common place across the commercial industry to meet the exceptional growth in demand for data.
Moving up the frequency bands has brought materially more spectrum into play and more orbital slots because of the narrower beam widths. For example, at 3.5GHz, Commercial Ka band has seven times more capacity than the 500MHz available at Commercial Ku.
Interestingly the same dynamics apply in the military bands – so Mil Ka is two times that of X Band.
Moving up frequency isn’t without its drawbacks – you increase the level of rain fade the higher the frequency you go. For mission-critical applications, commercial operators will blend Ka with an L-Band backup to get both speed and ultra-reliability.
On-board digital processing and Phased Array Antennas have been around in the most exquisite of military satellites since Milstar, but satellite manufacturers such as Airbus, Thales and Boeing are now all pushing the envelopes of digital signal processing (DSP) and phased arrays in their commercial designs – with Eutelsat’s ‘Quantum’ satellite and our recently contracted Inmarsat 6 series good examples.
The DSP-based satellites materially increase capacity and flexibility of the satellite designs – allowing them to adapt to changes in commercial requirements as well as increasing their capacity. Our I6 satellites for example, will have three times the L-band capacity of our I4 fleet, with the same spectrum, as well as enabling much higher data rates from ultra-small terminals.
Re-usable launchers, such as Space X’s Falcon 9, are still in their infancy, but they are already driving down the cost of a satellite launch by tens of millions of dollars – even before re-use is in place. Replacing a satellite’s chemical propulsion system with ion thrusters means that it can take six months longer to get a satellite from its initial launch to its final geostationary orbit – but it removes half the weight of the satellite for any specific capacity.
The aggregate effect of these five features are dramatically reducing cost per bit even today. The cost of a traditional X or Ku satellite in orbit delivering, say, 1 gigabit of capacity was roughly $350 million. A Ka HTS satellite in orbit today may cost slightly more at $400-450 million, but will have 150 gigabits of capacity per satellite and potentially terabits by the 2020s.
This rate of innovation shows no sign of slowing. In additional to new HTS launches from all the operators, there is the potential for the arrival of the new Local Environment Observer (LEO) systems by the 2020s. At our last count there were 28 LEO networks in discussion, primarily focused on low cost domestic grade internet.
When I talk to analysts they share a view with me that maybe one or two will make it. But, what’s really exciting is that, as an industry, we win regardless – because the LEO networks are attracting huge amounts of inward technology investment that is subsequently pushing the boundaries at an accelerated rate for both LEO and GEO.
The net effect of all this has been to massively increase the amount of on-orbit capacity, from less than 300GB five years ago, to a terabit today and an expected 27 terabits plus by mid 2020.
With this increase in capacity has been an incredible reduction in price. Cost per MHz of capacity has dropped by 80 per cent over the last five years and the cost per bit for managed services has dropped significantly more than that.
If we look over the next five years we expect to see at least a further 10 times reduction in cost per bit (NSR data).
So, the innovation level in commercial Satcom right now is astounding and it’s massively out-pacing that possible in pure-play military Satcom. But maybe it’s not that surprising when we start to think about the dynamics.
Firstly, let’s think about the simple economics. The total DSTG budget 2014-15 was $408 million. Of that, the amount that can be dedicated to Satcom R&T is a tiny fraction of the whole.
In Inmarsat we spend $500 million each year on delivering new satellite products and services. It’s probably close to double that when you add the R&T of Inmarsat’s supply chain. So, within the Inmarsat ecosystem alone we are probably spending anywhere from five to 50 times that of the Australian government. Add in the other satellite operators and you start to comprehend the imbalance of economics.
But its more than just economics. It’s also the innovation insertion points. Satellites take time to design and they last a long time. A satellite you start designing today has a good chance of still working in 2040.
In the commercial world that’s not too big a problem. We overlap our constellations so we get a blend of performance. We’ve got enough diversity and volume from our Defence and Commercial customers that we’ve got 3rd, 4th and 5th generation satellites in orbit giving services to customers. Our 6th Generation is in build and we are already doing concept studies on what comes next. That gives us a lot of innovation points.
Let’s compare that with Defence Satcom and pick a couple of examples.
I was involved in designing the UK’s Skynet 5 satellites when I was 25. The next opportunity to enhance this satellite will not be until roughly 2025, by which time I will be in my mid 50s. Don’t get me wrong, I’m still extremely proud of that program, and I hope to contribute to the next phase – but that’s a limited number of innovation insertion points.
Inmarsat’s US team is involved in the US Analysis of Alternatives for what follows on from WGS. I understand the working assumption is that whatever this replacement program comprises it will not be before 2028 – so that means it will also have been 15 plus years between innovation insertion points.
Of course, this doesn’t stop you innovating on the ground, and we’ve been doing that in both commercial and Defence – but if you can’t innovate in space you can only play with half the variables. So Satcom is a great vignette to illustrate my second Hypothesis – i.e.: The rate of commercial innovation in communications and CIS is vastly outpacing that of defence specific innovation.