Small satellites are at the center of a space industry transformation

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This article originally appeared in the Aug. 13, 2018 issue of SpaceNews magazine.

On Aug. 2, the Aerospace Corp. announced it transmitted data at a rate of 100 megabits per second from 2.5-kilogram cubesats in low Earth orbit.

By itself, the announcement doesn’t seem terribly significant. It is, however, the latest indication that companies and research organizations are continuing to shrink key technologies small satellites need to perform big jobs.

No longer the province of university researchers and technology developers, small satellites are moving into the aerospace mainstream. Although there are still jobs they cannot perform, everyone from NASA and the U.S. Defense Department to Silicon Valley entrepreneurs and investors is taking the sector seriously.

“There are definite limitations to small spacecraft,” said Chris Baker, NASA’s Small Spacecraft Technology program executive. “They are not the solution for everything but they can be part of the solution.”

The space industry is undergoing a dramatic transformation. Demand for large geosynchronous communications satellites has fallen dramatically as companies prepare to launch constellations of hundreds or thousands of smaller, less expensive broadband satellites in low and medium Earth orbits. LEO constellation and small satellite buyers are not looking for satellites they can count on to last 15 years. Instead, they want inexpensive satellites they can buy in bulk.

“It’s a different mindset,” said Marina Mississian, Honeywell Aerospace Space Payloads senior director. “You need to get it up there quickly. It needs to meet the basic requirement and you need to be able to replenish the constellation.”

The new mindset focuses, on cost, capability and scale. Companies like OneWeb and SpaceX are asking suppliers for quotes on hundreds or thousands of the same spacecraft components. Suppliers, in turn, are investing in automation.

“That’s going to transform the communications market,” said Bill Gattle, president of Harris Corp. Space and Intelligence Systems. SpaceX and OneWeb partners will benefit from setting up factories to produce items in quantity, he added, while companies left out may struggle to capture a significant share of the market.

Another recent shift in the market is coming from U.S. defense and intelligence agencies. After years of talking about the need to make space systems more resilient by replacing billion dollar satellites with constellations of small spacecraft, the agencies are taking action.

An Orbital Systems satellite-tracking dish on display at at the 32nd annual Conference on Small Satellites can be seen through one of Tendeg's KaTENna deployable mesh antennas for smallsats. Credit: Keith Johnson for SpaceNews
An Orbital Systems satellite-tracking dish on display at at the 32nd annual Conference on Small Satellites can be seen through one of Tendeg’s KaTENna deployable mesh antennas for smallsats. Credit: Keith Johnson for SpaceNews

“We can see within the military intelligence, national intelligence and DoD budgets that money is shifting to small satellites,” Gattle. “Over the next few years, we expect a lot more demonstrations and prototypes and potentially moving to constellations out of the Department of Defense and intelligence community. That is a large market shift and everybody wants to play.”

Heightened government interest coupled with increasing maturity of the technology is attracting companies not traditionally associated with small satellites. Lockheed Martin increased its investment in Terran Orbital, the Irvine, California, satellite builder that owns Tyvak Nano-Satellite Systems, through Terran Orbital’s $36 million Series B investment round announced Aug. 6. The company did not disclose how much of the new funding Lockheed Martin contributed.

Honeywell established an incubator early this year within its Space Division called the Greenhouse. Housed in the Ontario, Canada, facility that was home to Com Dev International before Honeywell acquired the satellite component builder in 2015, the Greenhouse “is all about innovation, new technology, speed to market,” Mississian said. “It’s a small group of 30 to 35 people working full time that pulls expertise from around Honeywell.”

Harris is harnessing the expertise it gained building 230 hosted payloads for Iridium Next communications satellites to address the small satellite market.

Initially, Harris planned to focus that expertise on hosted payloads but company executives quickly realized customers want to determine the orbits for their satellites instead of tagging along on someone else’s spacecraft and accepting whatever orbital slot is available.

“We transferred that technology over to small satellites,” Gattle said. “Our small satellite business has grown from zero revenue to over $100 million in a two-and-a-half-year span.”

Firms that have long focused on cubesats and small satellites are merging to meet growing market demand. Sweden’s ÅAC Microtec purchased Scotland’s Clyde Space in a deal that closed early this year as a first step in an effort to create a company large enough to fulfill an order, for example, for 50 cubesats worth $1 million apiece.

“That not only costs money but you need the resources to manage a $50 million project,” said Alfonso Barreiro, ÅAC Microtec chief executive. “That can’t be done with a few guys.”

Microcomponents on display in the Field House exhibit hall at the 32nd annual Conference on Small Satellites in Logan, Utah, Aug. 6-9. Credit: Keith Johnson for SpaceNews
Microcomponents on display in the Field House exhibit hall at the 32nd annual Conference on Small Satellites in Logan, Utah, Aug. 6-9. Credit: Keith Johnson for SpaceNews

Experts anticipate further consolidation of the market through mergers and acquisitions.

“When you have a potentially disruptive innovation like cubesats and like smallsats, it tends to be the startups that are able to develop the new technology the fastest and most effectively in the beginning,” Baker said. “Those startups then become attractive targets for strategic investment by larger more established firms when the capabilities of the small spacecraft have increased to the point where they intersect with the capabilities of the established aerospace industrial base.”

This ongoing market transformation never would have occurred without dramatic technological advances. Satellite engineers are reaping the benefits of billions of dollars companies have invested in additive manufacturing and miniaturization of electronics. At the same time, SpaceX’s entry in the launch market pushed prices lower and opened the floodgates for startups developing rockets.

“You have all this miniaturization that has occurred and on top of that you can get into space cheaper,” Gattle said.

Meanwhile in garages, laboratories and aerospace companies, engineers continue to reduce the size of satellite sensors and components, from synthetic aperture radars to thrusters, star trackers and software defined radios, often with the backing of venture capital.

“We are still seeing new companies pop up out of nowhere, both on the small satellite and on the small launcher horizon,” said Bruce Yost, director of the Small Spacecraft Systems Virtual Institute at the NASA Ames Research Center. “That tells me the venture capital pipeline has not been exhausted. I don’t think we’ve filled out the whole landscape yet.”