Europe Unveils Biggest Space Plan in a Decade

On December 16th, a significant milestone in space exploration was marked as the European Union (EU) launched its largest space initiative in a decade, aiming to invest over €10 billion to compete with the United States' technological titan Elon Musk's Starlink projectThis ambitious program, named Iris² (Infrastructure for Resilient, Interconnected and Secure Satellites), is set to establish a multi-orbital satellite constellation that seeks to enhance communications capabilities for European governments and citizens, offering high-speed internet and secure communication services.

Iris² is not just a technological venture; it embodies the EU’s strategic need for autonomy in communication networksWith a total contract value of €10.6 billion (approximately ¥81 billion), this initiative marks the third major infrastructure project in space following the Galileo navigation system and the Copernicus Earth observation network

Notably, the EU plans to finance 61% of this figure through public funds, while the remaining will come from SpaceRISE, a coalition led by major players in the satellite communications industry, including Eutelsat, Hispasat, and SES.

The coalition itself consists of heavyweights like Airbus Defense and Space, Thales from France, Telespazio from Italy, and prominent telecommunication companies Deutsche Telekom and OrangeTogether, they will oversee the design, construction, and operation of the Iris² broadband 5G satellite constellation, which will comprise 290 satellites in low Earth orbit (LEO) and medium Earth orbit (MEO). This 12-year plan aims to initiate operations by early 2030, reflecting a robust commitment to advancing Europe's presence in the arena of satellite technology.

The significance of having an autonomous space communication network is underscored by Teemu Pesiäinen, Director of the EU Commission's Defense, Industry and Space Agency

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He has articulated that Iris² is pivotal for bolstering Europe’s strategic autonomy and defense capabilities, enhancing competitiveness, and fostering collaboration between the public and private sectors.

In essence, this initiative positions the EU directly in competition with the giant satellite constellations being established in the United States, notably by SpaceX’s StarlinkThe development and deployment of these expansive satellite networks are crucial for future communications applications, which offer substantial market opportunitiesJoseph Aschbach, the head of the European Space Agency (ESA), noted that the Iris² program is expected to drive innovation within the European aerospace industry, boost European competitiveness, and generate job opportunities across the continent.

Yet, the European space sector faces formidable challengesEarly this month, Airbus, Thales, and Leonardo, three of Europe’s largest aerospace firms, discussed plans to create a new European satellite company to better compete with the realities of Starlink

This initiative, dubbed the "Bromo Project," is still in its early stages, with details yet to be finalizedIndustry analysts point out that these European aerospace giants have historically focused on more complex spacecraft in geostationary orbits, but as the market for low-orbit satellites emerges, they find themselves lacking competitive edge in a rapidly evolving field.

Moreover, low Earth orbit satellites are currently a hot priority for many countriesCompared to their higher-altitude counterparts, LEO satellites offer advantages in terms of low latency, reduced radiation exposure, and lower costsTheir transmission efficiency is noteworthy, as these satellites can provide reliable services in regions where ground-based communication infrastructures are inadequate, including deserts, forests, and oceans.

With Eutelsat as the largest private sector investor in the Iris² project, contributing €2 billion, there is a clear intention to integrate the technology developed through Iris² into the next generation of OneWeb satellites

Despite OneWeb being a UK-based satellite internet company, it has opted out of the Iris² project, leaving SpaceX's Starlink as their primary competitorWith a satellite constellation of 648 units currently in orbit, OneWeb ranks second globally; however, Starlink operates close to 7,000 satellites and caters to over 4 million users across more than 100 countries.

Starlink's user base has catalyzed rapid revenue growth, making satellite communications a significant income source for SpaceXAs of November 2023, Starlink announced it had reached break-even, with projections estimating $6.6 billion in revenue for 2024, an 80% year-on-year increaseFurthermore, Starlink is expected to achieve an EBITDA of $3.8 billion by 2024, marking its first time in positive free cash flow territoryMusk's ambitious vision involves deploying 42,000 satellites that will provide affordable satellite broadband globally — a plan that underscores the viability of satellite communications and internet services in the commercial space sector.

Additionally, as global satellite companies compete for the scarce resource of orbital positions, regulations set by the International Telecommunication Union (ITU) dictate that satellite frequency and orbital usage follows a "first come, first served" principle

Current estimations suggest that about 60,000 satellites could fit into near-Earth orbit, with Musk’s Starlink already claiming roughly one-tenth of that space and continuing to expandMoreover, various countries, including those in Europe, Japan, and South Korea, are outlining their own satellite internet constellation plans.

The rollout of the Iris² constellation may present further hurdles for Starlink as it looks to break into the European market, particularly as earlier this year, Starlink filed lawsuits against Italian telecommunications providers for failing to share critical wireless spectrum data necessary for its network expansionThis situation highlights the increasingly competitive and regulatory landscape in which these satellite networks will operate.

Insights from the private space industry in China have shed light on potential lessons learned from this European initiative

Shen Yan, founder and CEO of the Chinese private space company Yidong Aerospace, emphasized that public funding not only showcases the EU's confidence in the project but also minimizes risk for private investorsThe public-private partnership (PPP) model effectively fuses the stability of public entities with the flexibility of private firms, an organizational approach that could enhance the innovation and efficiency of space projects in the long runHe further noted that China's government has been laying substantial groundwork to support commercial space endeavors, which could encourage deeper participation of commercial firms in national infrastructure projects.

Chinese advancements in aerospace technology have been notable in recent years, with the country’s commercial space enterprises gaining tractionThis past August, China's version of Starlink — the "Thousand Sails Constellation" — successfully launched its first batch of 18 commercial network satellites

A month later, the third orbital plane of Geely’s Future Mobility constellation was launched via a single rocket deployment, marking a historical first for Chinese companies in providing low-Earth orbit satellite communication services aimed at a global audience.

Wang Yang, CEO of Kongsberg, reflected on the intensifying diversity and competition expected in the global communications market as more countries and companies establish their low-orbit satellite networksHe pointed out the need for Chinese firms to improve their production capabilities, particularly in generating satellites at a high reliability and low cost, as well as enhancing launch capabilities to meet the deployment needs of satellite constellations.

According to research from Everbright Securities, China's satellite constellation plans anticipate the launch of over 12,000 satellites from 2023 to 2033, presenting a market opportunity valued at ¥831.3 billion in satellite manufacturing and launching, alongside an anticipated ¥6 trillion in ground equipment market and nearly ¥5 trillion in satellite service market