Author: Andrea Catalano, TeleSemana.com
“With our satellites, we will extend the coverage of mobile operators”
A month ago, the Spanish company Sateliot launched its first satellite from its 5G LEO constellation. It is the first of its kind, focused on the Internet of Things (IoT). In an interview with TeleSemana.com, Jaime Sanpera, CEO and co-founder of Sateliot, explained the company's plan to bring large-scale, low-cost services to the most remote regions of the planet. Although their proposal may sound ambitious, the enthusiasm expressed in the conversation suggests that this possibility has a chance of becoming a reality through strategic collaborations with mobile operators and other prominent actors in the telecommunications ecosystem. It was a highly motivating conversation that helped us envision a better world enabled by this technology.
How was the launch, and what is next for Sateliot from now on?
After several delays, we finally launched on Saturday, April 15th, 2023. We are currently in the commissioning phase, which lasts six weeks, and during which the engineers lock themselves up and refrain from saying anything while testing and verifying that all systems work properly. Then, in four to six weeks, it will start operating and conducting initial tests. It is the first time in the history of telecommunications that this technology is being used!
The ultimate goal of the satellite is to provide connectivity to mobile operators in areas where standard cellular signals do not reach.
We are just a coverage extension provider. We do not sell to end customers.
Which areas will be covered with this initial launch, and how will it change with the remaining five satellites that are expected to launch by the end of the year?
By the end of the year, we expect to launch five satellites, and with them, we will have coverage everywhere. We will be able to receive an average of five to eight messages per day from any point. Although it may seem like a small number, it depends on the applications, as the world of IoT is vast. For example, in agriculture, two data points per day are sufficient. And in other remote last-mile areas, numerous applications can use this service, each with a different frequency.
Will your contracts with over 500 mobile operators take effect immediately once the satellites become operational?
No. With just one satellite, we cannot guarantee a minimum of two passes per day, which is the minimum necessary for customers to enjoy the service. We will wait for the next satellites to be launched by the end of the year so that in the first quarter of 2024, we can provide service to the waiting customers.
In other words, Sateliot guarantees business continuity to mobile operators. So what is your commercial strategy to ensure that everyone benefits?
We are closing agreements with end customers, and then, we transition them to the mobile operators because they are the ones who will operate the service, and they are already present everywhere. Therefore, what we do is facilitate the incorporation of customers, who will pay an additional two to three euros per month to have coverage in any location where they currently do not have it.
Does this differ from companies that provide LEO constellation services without involving mobile operators?
Exactly. It is different from what has been offered for years. Traditionally, satellite operators have worked with manufacturers, which means they have their own equipment, like the case of the Iridium network, which offers excellent capabilities. But these traditional providers don't offer a dual mode, meaning someone who works with other devices and wants to connect to a different mobile network or another that is not land-based won't be able to do it. The general problem is that until now, we haven't had any economies of scale in satellite operators. Therefore the overall price is very high, and their equipment continues to cost hundreds of dollars. So our offering of a 5 euro device that allows you to have connectivity everywhere is absolutely disruptive.
Which sectors do you think will embrace this type of service most strongly? It seems like agriculture seems to be the ideal one.
In this initial phase, we are seeing a lot of interest from the agriculture and livestock sectors. There are millions of grazing cows, and there have been several IoT pilots where early detection has reduced disease-related deaths by 25 percent. There are also many infrastructure-related areas, such as high-voltage power lines, energy, and gas pipelines, which sometimes experience breakdowns or damage due to natural events. It is crucial to have them monitored. We have bridge monitoring, road monitoring, railway monitoring, as well as logistics and container monitoring.
We have been in discussions with some of the world's major logistics operators, and they are highly interested in our service; for example, a refrigeration system failure can lead to food waste. The same goes for container security and other maritime activities, such as fishing practices with a potential environmental impact, or even integrating connectivity into life jackets. When someone falls into the sea and needs to be rescued, the costs and the stakes are very high.
However, these devices can precisely indicate the exact location to the rescue team, facilitating a quick and accurate response. This seemingly obvious application will spread rapidly, and there will be more and more cases of practical applications in which our technology can be implemented. Every week, we have a team of 10 people working with the market, analyzing cases and potential applications so that when our network is fully operational, we can cater to new and emerging demands.
We have also made agreements with NGOs such as the Amazonia Foundation to provide them with free access to our network, and the same with organizations that track endangered species. This can be a spectacular business opportunity that can also change the world for the better, benefiting everyone.
How much have you invested so far in these developments?
We have invested nearly 20 million dollars in pure R&D, a significant budget, but we had to modify the standard and develop an innovative, disruptive solution. As members of the 3GPP, we contributed to developing the standard from within. The great news is that there is already an ecosystem developing IoT solutions within the coverage areas of mobile operators, and now it can be extended to the rest of the globe's surface!
Will it be complemented and enhanced by 5G? How?
It will be complemented. Today, there are networks deployed in non-profitable locations due to obligations or pressures from clients or public administrations. Terrestrial solutions, provided by mobile operators, and non-terrestrial solutions, such as satellite solutions, complement each other perfectly. It's fascinating to see the evolution of standards like 6G, which is a system that starts from scratch, integrating terrestrial and satellite networks into one. Soon, they will no longer be separate industries but two industries working together. Mobile operators and satellite operators complement each other perfectly.
Once these five satellites are launched, what is the next step for future deploymentst?
We will continue to increase the density of our constellation with 64 satellites and reducing latency to just 15 minutes. By 2025, we aim to reduce this indicator to less than five minutes, and then, to almost real-time. We will continue to increase the number of satellites deployed to provide real-time services. When all mobile operators use the same standard, they will be able to sell connectivity worldwide under the coverage of any operator. There are already very interesting applications, such as logistics for last-mile delivery, or future applications, such as connecting a mobile phone directly to the constellation. Mobile phone chip manufacturers are already working on it, and it is incredibly disruptive. However, Sateliot can take it even further by enabling SMS or WhatsApp messaging (not broadband) to any standard mobile phone for a cost that is one-tenth of what is available at the moment.
That's a valid point you bring up. So far, there have been two launches of phones that communicate directly with the satellite, but only for emergencies. Are you seeing this becoming widespread, especially in anticipation of 6G?
Exactly. When we explain to manufacturers the economy of scale that can be reached and how this reduces costs, it will become clear that sending an SMS will not only be for emergencies but also for real-time situations. For example, it can be the case that someone is delayed during a hike in the mountain, and now will be able to inform their family about the delay so that they don't worry. We are talking about a few cents per message. This will become widespread, not only in developed countries but also in areas with limited coverage, such as many regions in Africa. This will represent a quantum leap in the telecommunications development of many countries.
And how does the investment process continue beyond the R&D investment you mentioned earlier?
It's a highly capital-intensive industry. Deploying 256 satellites requires several hundred million dollars, but the business case is so compelling, and the ability to provide services with a few satellites allows us to quickly generate cash flow and finance part of that deployment.
What revenue do you expect to achieve in the first year of operations?
By 2026, we will generate around 1 billion euros in revenue through a revenue-sharing agreement with mobile operators. This gives us a net gain of 508 million euros with an EBITDA of over 350 million euros. It's a company that will grow rapidly thanks to the scalability that allows us to connect existing equipment with the available ecosystem and to the distribution channels of mobile operators.
Where will you be providing the first services?
The first trial is being conducted with Telefónica in Spain, but we have permits to operate in various countries worldwide. We have already provided services in Brazil, the United States, Norway, and other countries with exciting potential applications for standard development.
How does Sateliot handle security issues, considering the relationship between mobile operators and data generation?
Security is crucial and of paramount importance in the current situation. It's a concern. For example, when roaming in a foreign country, the third-party operator doesn't know the identity or data transmitted. This data is encrypted from the device to the main operator. As a roaming operator, the same applies: I won't see if it's a container belonging to a specific person; instead, I will only see data that belongs to Claro. In my roaming policy, this encrypted data travels to the main core and is decrypted from there, establishing a security mechanism that is highly effective.
Read the original interview at TeleSemana.com: