Inter-Satellite Links: Is It Time for Lasers Yet?

The market for satellite-based free space optical communication continues to evolve, with an active ecosystem of laser communication terminal manufacturers at various stages of development. Over the past few years, this market has hinged on the promise of yet-to-arrive high volume demand from LEO-HTS constellations, specifically those with plans for inter-satellite optical links. 

As seen in NSR’s forecasts, only as the volume demand rises will terminal prices eventually decline to competitive levels. Non-recurrent engineering costs for high volume production of optical terminals are high, and only when manufacturers push past this phase will wider adoption happen. Prices right now are much higher than their RF alternatives, owing to costs of early-stage technology and low volumes of production.

Close to 26,000 satellites are planned for launch over the coming decade cumulatively, targeting a variety of applications from Communications to Earth Observation and Situational Awareness, among others. While interest in constellations remains high throughout the satellite industry value chain, many challenges remain to be overcome, whether business, technological or regulatory. On the other hand, the use of Optical Inter-Satellite Links (OISLs) come with multiple advantages: a reduction in ground stations required, an ability to circumvent regulatory hurdles related to landing rights, and lower terminal SWaP.

The market for OISLs is gaining traction: at least 5 technology demonstrations planned in 2021, 7 in 2022 and more after. Multiple satellite systems are designed with optical ISL capabilities, ranging from the high-volume LEO-HTS constellations to data relay systems and orbital cloud related infrastructure.



On the open market, NSR’s Optical Satellite Communications, 3rd Edition report forecasts demand for upwards of 8,700 terminals through the coming decade. While these will remain only in the low hundreds over the next 3 years, demand is expected to increase drastically by 2025, at over 1,000 units in every year that follows, driven by a ramp up in the launch of more non-GEO-HTS satellites. In nearly all cases, non-GEO-HTS constellations are mesh networks and will require 3-4 terminals per satellite depending on the operators, to provide competitive satcom services.



Most of the non-GEO constellations driving this demand target a diverse range of communications demand (Starlink, Telesat LEO, Kuiper, etc.), This is in addition to government & military requirements as is the case with the SDA’s upcoming Transport Layer constellation. This envisions up to 500 satellites in LEO connected by OISLs  to in effect decrease significantly latency for time-sensitive operations. In the commercial world, these players are expected to target premium low-latency applications, particularly for backhaul and trunking services, and might sometimes extend to include relay network operators.



Despite the lower number of terminals forecast to be launched in the next 3-4 years, the price for non-GEO terminals is significantly higher. Thus, it is only in the mid-term that the revenue opportunity for OISLs will stabilize, at around $350 million annually. 

While this forecast discounts vertically integrated players as a captive market, the opportunity could well be higher going forward as terminals developed by various vendors mature in the coming years. Through the coming decade, this is seen to be a global $3 billion opportunity. Vendors who win “first” contracts with specific operators will have a distinct first-mover advantage, as satellite operators get “locked-in” to their ecosystem and can push for further follow-on contracts with these operators. Vendors with flight-proven technologies such as Tesat, ones with initial contracts (Mynaric) or others with existing manufacturing pipelines and legacy tech that can be leveraged (Ball Aerospace, Honeywell etc.) could be looked upon as potential first-movers.

In the near-term, growth will be sustained by demand from satellite operators for initial demonstration missions and first-generation satellites. SDA’s Transport Layer Tranche 0 of 20 satellites awarded to Lockheed Martin and York Space Systems is one such near-term program. DARPA’s BlackJack program and various commercial operators (from Cloud Constellation Corp.'s SpaceBelt and Telesat's LightSpeed to LaserLight Communications' HALO network) form up the rest of this segment. As the market matures towards the end of the decade, pricing and market pressures will ensure a stable forecast going forward. 

Still, today's LCTs are power hungry, with a heavy mass compared to clients' smallsat form factor and ultimately too highly priced to make a meaningful dent in other segments such as Earth Observation. Indeed, current prices for OISLs run in the low 7-figures, but as the market evolves, NSR expects this to reduce to around a quarter of a million dollars by the end of the forecast. As such, until the optical ground segment evolves technologically, the use of space-based laser terminals will be limited primarily to inter-satellite links. Adoption of OISLs will need to also overcome many challenges: the harsh space environment, highly accurate PNT requirements, control accuracy at range and reliability of hitherto unproven terminals.

 

The Bottom Line

Multiple manufacturers/vendors continue to evolve optical satcom products either from scratch or out of heritage research. Combined with the new wave of constellations touting high bandwidth inter-satellite links via lasers, this makes for a market in its early years, waiting for the right distribution channels and value propositions.

Given the sheer number of satellites planned to be launched, mainly from constellation operators, this makes up a separate segment with its own dynamics and will drive the entire market for LCTs. Overcoming challenges such as launch availability, manufacturing cadence and regulatory approvals will also play a key role, once the problem of volume production has been addressed and the size, weight and power efficiency reach greater TRLs, thereby resulting in lower-priced terminals.