Low-Earth orbit satellites let you connect anywhere, at any time, with anyone

Emerging low-Earth orbit (LEO) satellite constellations are a significant change from more traditional satellite systems. They are able to deliver services comparable with traditional terrestrial broadband services, enabling them to provide universal connectivity. This can help regions such as the European Union to meet their universal service goals to provide everyone with broadband internet access, while also filling the capacity gap in low-income countries to help close the digital divide.

LEO constellations and their characteristics 

LEO constellations are networks of satellites that orbit the Earth at altitudes below 2000km. Major existing and upcoming LEO constellations include Starlink, OneWeb, Amazon Kuiper, Thousand Sails, Lightspeed and IRIS2. These constellations are designed to provide global, local and universal connectivity, especially in remote and underserved areas. Here are some of their key characteristics:

• Low latency and high bandwidth. LEO constellations offer low latency (a fast response time) and high bandwidth compared to traditional geostationary-Earth orbit (GEO) satellites, which orbit at altitudes over 35 786km. Thus, LEO constellations are more comparable to terrestrial networks than existing satellite solutions.
• Global or near global coverage. To achieve global coverage, LEO constellations require dozens to thousands of satellites in multiple orbital planes. This increases the overall complexity and cost of deployment, but ensures high throughput or bandwidth, and a ubiquitous connectivity network, making them suitable for key applications such as consumer broadband and wireless backhaul (the ability to carrying data from users back to the core internet).
• Shorter life span. LEO satellites’ typical lifespan is 5 to 7 years, so frequent replacement is needed, resulting in continued capital influx. But this also allows LEO players to upgrade and innovate at a rapid rate. For example, Starlink is now moving to second and third versions of its satellites with higher throughput and advanced technologies.
• Lower prices unlocking untapped markets. Innovations in manufacturing and launch systems have significantly reduced the LEO wholesale and retail prices per megabits per second (Mbit/s) compared to GEO prices, which has expanded the satellite communications market. LEO offerings are well positioned to enhance terrestrial networks in partnership with telecoms operators and sustainably address connectivity gaps in remote or rural areas.

LEO constellations offer a more cost-effective solution compared to traditional terrestrial technologies 

LEO constellations are becoming a key solution for providing last-mile connectivity, especially in remote and underserved areas such as islands, mountains and dense forests, where terrestrial networks are impractical or non-efficient. 

LEO satellites operate at a fixed cost that is not significantly affected by population density or geographical challenges. This makes them more cost-effective than traditional fixed fibre-to-the-home (FTTH) solutions, which face exponentially higher costs in the most difficult-to-reach households. A report by Analysys Mason found that there are compelling reasons to consider complementary technologies such as LEO satellite to serve more remote areas in a cost-effective manner. The same is true for mobile services in the rural areas of low-income countries where demand is currently too low to justify costly deployment.

In spite of these advantages, the LEO market is in a formative period. Market penetration levels are expected to improve as more LEO players launch their constellations and telecoms operators efficiently integrate satellite capacity into their networks, working also with governments. 

Partnerships will help LEO constellations close the digital divide

Despite the shorter satellite lifespan and complex in-orbit operations associated with LEO networks, established terrestrial players are securing capacity through strategic partnerships. This hybrid approach combines satellite and terrestrial services to create a cost-effective and scalable solution for reaching rural and ultra-rural end users. Different countries are addressing the digital divide through varied strategies, such as direct-to-household satellite services supported by region-specific pricing and subsidies, or partnerships between regional telecoms players and LEO solution providers.

Regulators increasingly recognise LEO as a viable immediate solution for broadband connectivity in remote areas. By blending satellite and terrestrial solutions through appropriate business models, LEO networks can accelerate digital, social and economic inclusion, helping to meet ambitious universal service targets in both the developing and the developed world.

The growing need and demand for universal connectivity, driven by increased reliance on digital platforms, further boosts the attractiveness of LEO solutions. Given the challenges of terrestrial connectivity, flexible and affordable LEO solutions are key to bridging the digital divide and achieving global connectivity, as discussed in our strategy report on the addressable market for satellite fixed broadband.