Podcast: How The Small Satellite Market Continues To Take Off

A new report projects the smallsat industry will gather about $110.5 billion in market value over the next 10 years. Aviation Week editors discuss the meaning of that growth, new technologies for flying satellites in autonomous formations and the U.S. Space Force’s national security space needs.

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Rush Transcript

Jen DiMascio: 

Hello and welcome to the Check 6 podcast. On August 5th, researchers and industry and government officials will converge on the campus of Utah State University in scenic Logan to talk about the latest in small satellite technologies. It's an industry that's been growing by leaps and bounds as commercial companies and governments ring the Earth with satellites that can observe the planet, help us communicate, or defend our nations. That industry is expected to gather about $110.5 billion in market value over the next decade, according to Euroconsult. 

I'm Jen DiMascio, the Executive Editor for Defense and Space, and I'm here with Senior Space Editor, Irene Klotz, and Space and Emerging Technologies Editor, Garrett Reim. We're here to talk about the market for small satellites and the new technologies to look for at the upcoming Small Satellite Conference, as well as what that means for the launch world. So, to start off, what are the primary drivers of the small satellite market? What's happening? 

Garrett Reim: 

The mega-constellations are really driving this market forward. It's projected there'll be around 26,000 small satellites launched over the next 10 years, according to Euroconsult. And two constellations alone, SpaceX's Starlink and China's SatNet, will account for nearly two thirds of that count. And then you have numerous other relatively smaller constellations that will be filling in the gap. 

Jen DiMascio: 

Well, as these mega-constellations go up and need to be refreshed, what kind of technologies are being discussed? And, Irene, maybe you can give us a little more context about how that all began and has been evolving. 

Irene Klotz: 

Well, to refresh the constellations, it'll be a mix of heavy-lift launch services, depending on how many are going up at a time, and then these small satellite launch companies, which started in business eyeing this market. And really what's happening is that getting all these satellites into orbit, whether in small groups or big numbers, dozens and dozens at a time, has driven up the demand for the launch services to the point where now even the traditional military provider like United Launch Alliance, the partnership of Lockheed and Boeing, now counts 50% of its business in the commercial market, not for the DOD, and not for NASA. That's been a really big change. They're planning on doubling their launch rate. 

Of course, SpaceX is now launching about twice a week, and about half of its launches are just for the Starlink constellation. It's developing its whole heavy-lift, of course Starship for Mars missions, but the initial missions of Starship and also all of its flight tests will be delivering hundreds of Starlink satellites into orbit at a time. 

Jen DiMascio: 

That's amazing. So, Garrett, for the magazine, you're really talking about a lot of new types of small satellite technologies. One in particular that you wrote about is NASA's Starling demonstration of satellites flying in formation. What's that trying to achieve? What is it? 

Garrett Reim: 

Yeah, NASA has a few different purposes for this demonstration program. Starling satellites, there's four of them, they're six-unit CubeSats, they were launched in mid-July and they'll be orbiting Earth in a low Earth orbit. And NASA wants to see can they demonstrate autonomous formation flying with these small satellites using onboard software and then using the star trackers on each satellite, which would usually be used for navigation, using them to spot their fellow travelers and then coordinate their formation flying. And so they'll test out a couple of different formations and they will also be testing a mesh network, essentially a network that can automatically reroute data to whatever signal is the strongest. They'll have radios on each one of these satellites and they'll be testing that as well as, later in the program, a stretch goal is they're going to be doing a advanced space traffic management demonstration in coordination with SpaceX Starlink satellites. And this will be intended to deconflict satellites in space, find ways for them to maneuver so they don't collide. 

So there's a whole bunch of applications for this. Obviously the space traffic management application is increasingly relevant as you have these 26,000 satellites going up over a decade. NASA and the Department of Commerce and others are trying to figure out how do we deconflict and stop these satellites from colliding? But also if you can coordinate small satellites in formation, you can have them act as one big satellite. So that could help you for surveying resources on the Moon, or you could have four small telescopes that fly in a formation and then almost act like one giant telescope and you can get a bigger field of view than you might otherwise get. They could act, these satellites... Autonomously flying formation could act as a relay communications network for deeper space travel or even just moving communications to and from the Moon. And they could also be used for navigation. So there are a whole lot of different applications down the road that may build off of this early test. 

Jen DiMascio: 

That's so interesting. What's the timeline? 

Garrett Reim: 

It's a pretty short experiment. I believe it will just be over the next six months, and then I think after that six month period, then they do the SpaceX demonstration. 

Jen DiMascio: 

Wow. Well, that sounds like it has far-reaching implications. 

Garrett Reim: 

Yeah. Yeah, it certainly does. And obviously the commercial industry is interested in this, when you see SpaceX partnering on this, that they're interested in preserving their constellation as well as the low Earth orbit environment, keeping that safe, because if there were a lot of collisions then that would destroy their business model. So yeah, it could have big implications down the road. 

Jen DiMascio: 

Well, Irene, you were talking earlier about the impact to the launch market. Last week the US Space Force talked about its plan for future National Security Space Launches and its plans to add a third launch provider. I'm wondering if you could take us inside that very significant change and tell us what they're exploring. 

Irene Klotz: 

Sure. So the next phase in the contracting for the National Space Security Launch is, it's called Phase 3, and for this procurement the military is looking at two types of missions. They call them Lane 1 and Lane 2. Lane 1 is very interesting in and of itself, which is a way for companies to basically get themselves on a list, and once you're on the list you can bid for the missions. These are the lower priority, more risk-tolerant, lower-energy missions, and providers do not have to be able to fulfill all of the military's demands, just that mission. These systems also don't need to be certified by the Space Force, but they do need to be proven. So that's a wide-open field and is expected to draw new companies like Rocket Lab and Firefly into the mix of bidders. 

The other one had been following, according to their draft proposal in February, a more traditional approach to hire two companies. That contract is currently held by SpaceX and by ULA. Those companies need to be able to fulfill all mission requirements. And the military had been projecting that there would be 39 of those missions in the upcoming Phase 3 competition. Just by the way, the Phase 3 awards cover missions from fiscal '27 to '32, when the flights would be, and the awards for those start in fiscal '25, so next year. 

So it's all happening pretty quickly, and in mid-July the Space Force announced a rather radical change which was to not have two providers, but three. And the rationale for that is that, first of all, they are expecting a pretty increased demand for its own launch services. They're expecting now 58 missions that would be awarded under the Lane 2 contracts instead of the 39. And what they're going to do is they want anybody bidding on those to be able to do all of the missions. However, if you're in third, if you win the third place spot, you'll be awarded seven missions, five GPS launches, and then two direct-to-GEO missions and that's it. But it does provide a way for a new company, presumably a company like Blue Origin, but certainly they're not the only ones capable of doing this, to get their foot in the door, so to speak. 

And I just wanted to add one other thing, that this whole idea of having dissimilar redundancy to get to orbit, this Assured Access to Space program, started because there was concern about keeping the US launch market humming, and of course that's how ULA was formed, is to keep both the Atlas and the Delta lines in business. Now Assured Access to Space means that the military gets their reserve spots in because there's such a demand for launch services now, if they don't buy in blocks there's no guarantee that there'll be a ride when they have a satellite that's ready to fly. 

Jen DiMascio: 

It's an interesting moment, right now. They're awarding these contracts and a lot of the launch companies have rockets under development that haven't quite been certified yet. How does the contract opportunity address that? 

Irene Klotz: 

Interestingly. So ULA expects to be start flying Vulcan under the current Phase 2 contract, though there have been some delays with that program. Blue Origin, of course, is farther down the road. SpaceX currently is the only one that's flying a rocket that would be eligible to bid for the Lane 2. What the Space Force said it's looking for is, before the awards are made, that there be a good plan for certification. And what they intend to do is to not actually award a mission assignment until the rocket has been demonstrated. So if there are problems with Vulcan, if there are problems with New Glenn, theoretically it's possible that SpaceX, with Falcon, might be the only provider, which would be a little ironic considering how hard they fought to get in and break the ULA monopoly. So I guess we just have to wait and see. 

Jen DiMascio: 

Well, this has been a tumultuous ride so far. Are there any other wild cards out there? What do you think are some alternative options that could arise? 

Irene Klotz: 

Well, I have been trying to get a response from Northrop Grumman to see if they're going to resurrect a version of OmegA, which was a contender in the Phase 2 round, and I don't know what they're doing with that. SpaceX Starship, of course, has some government business, some commercial missions, and then SpaceX's own internal Starlink missions. And SpaceX at one time lost out on some Space Force initial funding in the Phase 2 contract because they bid Starship and the military didn't want it. It may be different now. There may be some other uses for it. 

There's been interest in use of Starship for some specific applications, the NASA lunar lander of course, and point-to-point for some military applications. So that's another wild card. There also may be some other new contenders, heavy-lift versions of systems already in development. I don't think Firefly is going in that direction currently, but who knows what people will do. I do know that there will not be a way for Arianespace, which is about to debut the Ariane 6, to enter this competition. Though obviously very close partners with the United States, after the issue with the Russian rocket engines on the Atlas it's been very clear that this is a US manufacturing supplier program only. 

Jen DiMascio: 

Very interesting. Well, unfortunately, that's all we have time for today. But look for Irene and Garrett who will have ongoing coverage of the Small Satellite Conference and the future of National Security Space launches. And don't miss an episode of Check 6 by subscribing in your podcast app of choice. One last request. If you're listening to us in Apple Podcasts and want to support it, please leave us a star rating or review. Bye-bye.