Why are many companies investing in satellite constellations?

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With many companies like SpaceX, OneWeb, and Amazon investing in satellite constellations, many wonder why these companies are investing in them when historically, that business hasn't done too well. Many of these companies intend on using the satellites to provide internet and other services to the world. While many see the satellite internet being attractive to those living in rural communities, according to Statista, 59% of the world population has access to the internet. This leaves 41% of the world without access to the internet. That is a big population of people that would want to subscribe to these satellite internet services. 

Currently, SpaceX is producing 120 Starlinks satellites a month. That's how serious they are about the venture. The reason why they're investing so much and ramping up production at a fast rate for the satellites is that they currently have many people interested in their services. With many players receiving similar amounts of interest in their satellite internet service offerings, there's a good reason why many would allocate a lot of capital into these projects.

To clarify, the satellite companies like SpaceX and OneWeb are building are low-Earth-orbit satellites. Most of the satellites you deal with and see are geosynchronous (GEO) spacecraft.

With 5G rolling around the corner, there are headwinds to the adoption of satellite internet. Because consumers expect 5G to be faster than satellite internet, people will be less reluctant to subscribe to any satellite internet offering. However, because of the pandemic, the rollout of 5G in various places is slowing down. Fewer towers are being upgraded and the decrease in consumer spending is making it harder for companies to sell 5G-enabled devices. The rollout of 5G will be slower than people think, giving the satellite companies more time to deploy and gain customers.

Some might be asking why companies wanting to expand internet access wouldn't consider expanding their fiber optic or cable connections to hard to reach places. According to a report by McKinsey, they found that:

The new LEO-satellite concepts, which orbit 500 to 2,000 kilometers from Earth, offer faster communications (they have lower latency) and often provide higher bandwidth per user than GEO satellites do—even more than cable, copper, and pre-5G fixed wireless.

The demand for the increase in bandwidth is rising as more people are consuming more data. Because these satellite constellations can provide the most bandwidth per user, satellite internet looks to be the more attractive alternative for everyone. Also, because they provide the most bandwidth per user, there's a possibility that more people in areas that already have internet might go forward with the satellite internet rather than the current internet sources they have. 

Since these satellites will be roaming around the Earth and giving everyone similar internet, the future of the internet might be in space. No longer will we rely on our cable boxes, fiber optic cables, and towers for the internet. Instead, we will be getting our internet from space. Plus, satellite internet will make the internet accessible from anywhere. That way, whether you're in San Francisco or in the middle of the Sahara Desert, you will have internet. 

Furthermore, those satellites can be equipped with more capabilities, giving users more service offerings wherever we go. We could have a more accurate GPS service and even better measurements on the weather. These satellites are not only made to provide internet to these companies but they're also positioned to give us a lot more. 

But what if 5G does get rolled out, will satellite internet be able to compete with 5G? Because space companies are starting to roll out their satellite constellations and are starting to provide internet coverage to underserved areas, it will be hard to tell how many of those people in those underserved areas would opt out of satellite internet in favor of 5G. There is a good chance that 5G will provide a lot more bandwidth per user than the satellite constellations. At the same time, the satellites aren't only there to provide internet, they're also expected to provide many other services as well. As long as those satellite makers can have those satellites providing services other than the internet, there's a good chance that they'll still be surviving, and even thriving when 5G arrives. At the same time, because satellite internet comes with much lower latency and the capabilities of 5G haven't been fully tested yet, I'm not sure if satellite internet can continue to compete against 5G when it comes to latency.