Fleet signs up 1m IoT devices in a day, so is world hungry for nanosatellites?

Fleet Space Technologies apparently signed up a million devices within 24 hours of launching its Project Galaxy registration, with another 2m on the waiting list. Drawn in by the promise of annual fees from $2 per year, the company is offering a very cheap way to provide backhaul for terrestrial LoRa networks – so is the time of the IoT nanosatellite here?

CEO Flavia Nardini said that several Fortune 500 companies were interested, with agriculture, energy, mining, and construction accounting for most of the interest. About 40% of interest came from the USA, with the rest split fairly evenly between regions.

The common thread between these sectors is that they often operate in areas that struggle to have network connectivity. In the absence of low power cellular (L-LPWAN) options, these companies can turn to Unlicensed LPWAN networks that are connected to the rest of the Internet by a satellite link.

In terms of network architecture, this would allow a rural farm to use trackers on a U-LPWAN like LoRa for livestock monitoring, where the tags connect to a gateway attached to the side of a barn or grain silo, and this gateway uses a satellite link to connect to the internet. To be clear, Fleet isn’t able to offer satellite connectivity directly to the cow-tracking tags, in this example, rather to the network that they are linked to.

Now, it’s certainly possible for an MNO to provide coverage to these areas, or for a LoRa network’s backhaul to be provided by a fixed telephone line’s broadband capabilities, but if the price of $2/year is actually realized, then it is hard to imagine how or why an MNO would be clamoring to compete at those price levels. Even U-LPWAN network operators aren’t going to find much appetite to chase those sorts of margins.

For Fleet, the low cost of its tiny satellites and the historically low cost of launching these payloads that is enabled by the likes of SpaceX are the drivers behind the business model. These technologies have advanced sufficiently that a company like fleet can likely achieve profits on launching and maintaining such a network, in a manner that was unfeasible a decade ago.

Fleet is planning to launch 10 more satellites by 2020, after successfully launching its first last year. It is also far from alone in these ambitions. The current list of nanosatellite firms with an IoT plan reads: Astrocast (Switzerland), Audacy (USA), Fleet (Australia), Hiber (Netherlands), Kepler Communications (Canada), Myriota (Australia), Sky and Space Global (UK), and Swarm Technologies (USA). Tesla’s SpaceX also has plans to launch over 5,000 satellites.

As Fleet’s CEO described the opportunity: “For years, the market has faced systems that are too expensive, plagued with limited bandwidth or operating in technology silos. Industrial IoT solutions are no longer out of reach, we’re thrilled to be a pioneering ultra-low cost IoT for business across the globe.”

The nanosatellites, as the name suggests, are far smaller than the conventional communications satellites that are in orbit around the earth. The craft are small enough to be carried by a single person, and to this end, it is much easier to launch them into orbit, as multiple satellites can be deployed on a single rocket-powered trip.

Of course, there are concerns that filling the space around the earth with tiny satellites is only going to worsen the space-junk problem that we have. Similarly, the likes of Swarm drew criticism from the FCC because the satellites were too small to be tracked with the Space Surveillance Network (SSN). Swarm’s decision to bypass the FCC and launch via India has also landed it in major hot water, and we might soon be removing its name from the list of nanosatellite hopefuls, depending on the FCC’s next step. Swarm could prove to be the textbook example of moving too fast and breaking things the wrong way.

But the question of whether there’s going to be enough room for all these startups is quite pertinent. If Fleet’s $2/year pricing sticks, then it looks like it’s only going to be racking up $2mn annually per satellite, if it doesn’t have ways to boost the capacity of the network to support more devices per satellite. Sure, that’s plenty of revenue to get a return on the investment over time, but there has not been much in the way of public discussion about the scope of global demand for such services.

The worst case scenario for these startups is launching a constellation and then finding that nobody want to subscribe. As LPWAN coverage fills in the gaps on the ground, the need for satellite connectivity is going to diminish. What’s more, consolidation between the rivals could be tricky, given the differences in technological approaches, and if the dozen or so firms follow typical VC hit-rates, expect only one or two to still be around in five years.

However, it’s a market with big upsides. There are vast swathes of the world that are going to be without cellular or fixed-line connections, due to the cost of installing a network in remote or inhospitable environments. Maritime applications are another great opportunity, as are any deployments in rural areas, but there’s a definite chance that the nanosatellite community is biting off too much for it to chew.