The answer is SpaceX. If anything strikes you as out of the ordinary or more extreme than you expect in the satellite industry, the answer is they are responding to the real or perceived threat of SpaceX. In late April, we had the biggest bombshell of all that SES and Intelsat are coming together.
How the two companies will finally tie the knot has been a topic of coffee table conversations between industry insiders for a few years, but after last year’s merger fell through there was a feeling like the moment had passed. The way that has been addressed has been to drop the pretence that this is a merger of equals and for SES to wholly acquire Intelsat.
Like Inmarsat before them, Intelsat will need to keep up appearances that it is an independent company for the regulators while it prepares for the inevitable. What will result once the deal closes will be the largest satellite company in the world, with more satellites than any other company by some distance. At least that would have been true before SpaceX’s explosive entry into the market.
The ability of SpaceX to launch thousands of satellites in a few short years has upended every financial and regulatory certainty about the industry. Its capacity to survive short term losses, build and launch sufficient satellites to deliver the capabilities that the marketing team claimed, and produce terminals that are easy to deploy and use almost anywhere has reset what customers expect from a satellite communications operator.
For GSO operators, the arrival of SpaceX comes as demand for broadcast TV delivered by satellite is declining. While the runoff may be long – potentially decades – there is no more growth, with users turning away from the dish on the house and absorbing content from their broadband connection instead.
With this stable revenue source drying up for many established market participants, new revenue streams are required, and costs managed more aggressively. Consolidation is the only way to survive. OneWeb and Eutelsat have already come together, and now attention turns to who is next. At the same time, smaller players are nervous that investors will get cold feet, concerned that no one can stand up to SpaceX.
A group of satellite operators are trying a different approach by coming together to form the Mobile Satellite Services Association (MSSA). This group of commercial competitors will not only create a tool for joint regulatory and advocacy activity, but also build and launch a jointly owned network that benefits from the combined regulatory approvals of all members.
Whether this approach can be replicated elsewhere is unclear, but expect to see more radical solutions as companies fight to secure their corner in an evolving marketplace.
In these turbulent times, Access Partnership stands as a steadfast advisor with over 25 years of industry experience. We provide strategic guidance, helping companies navigate the complexities of mergers, acquisitions, and market repositioning. Our team of dedicated regulatory experts ensures that all licensing requirements are meticulously managed, preparing your company for the rigorous scrutiny of due diligence processes.
Our regular conversations with policymakers also make us useful allies as companies build pro-active advocacy campaigns to protect or shift their market positioning and use regulatory tools to ensure fair competition continues for the sector. Whether you’re planning a merger, needing to understand the latest regulatory developments, or looking to innovate within this new landscape, our expertise is your advantage.
If you would like to to secure your company’s place in the future of the satellite industry and turn current challenges into opportunities, please contact Matthew McDermott at [email protected].
