Routes to Market Report 16 - Satellite Technologies for High Altitude Pseudo Satellite Communications
Contents
1. Introduction and Scope ...... 2 2. Market Opportunities ...... 2 2.1 Background ...... 2 2.2 Application of HAPS ...... 3 2.3 Satcom Market Opportunity ...... 3 3. Customer and End User ...... 4 4. Value Proposition for the Customer and End-User ...... 5 5. Market Competitiveness ...... 5 6. Role of UK Companies ...... 6 7. Revenue Projections ...... 6 8. SWOT Analysis ...... 7 9. Opportunity Enablers and Actions ...... 7 10. Market Dynamics ...... 8 11. Market Trends ...... 9 12. Five Take-Aways ...... 10
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The market for High Altitude Platforms is only just emerging following many years of false starts. Several propositions are being developed between now and 2020 that may finally establish the business case for their use. However, the platform population will remain modest so the satcom opportunity for equipment and service supply will reflect this.
1. Introduction and Scope
This briefing covers the use of satellite communications in the High Altitude Pseudo Satellite (HAPS) sector. The sector covers long endurance platforms that remain on station above regulated air space and are used to provide communications and surveillance services. These are also called High Altitude Long Endurance (HALE) platforms.
This market briefing addresses the need for satcom connectivity beyond line of sight, either for command and control or backhaul of communications from the HAPS platform. Consideration is given to the global opportunity over the period 2017 to 2030.
As an adjunct to the sector, the use of sensor technologies and processing applications developed in the space Earth Observation sector is considered for surveillance applications from HAPS, particularly in the military sector.
2. Market Opportunities
2.1 Background High Altitude Pseudo Satellite (HAPS), or originally High-altitude platforms (HAPs), are aircraft positioned above 20 km altitude, in the stratosphere, in order to support a telecommunications network or perform remote sensing, for civilian or military applications. These aircraft may be airplanes, airships or balloons, manned or unmanned.
HAPS have been around for a long time with much promised but not a great deal delivered yet. NSR released a market report at the start of 2017 than identifies the current state of play:
' Over the past two decades, HAPs have been slow to reach maturation for many applications. Some areas even saw a decline due to confusing regulations. But the current momentum in funding and market demand looks to carry the HAPs industry forward”
At the World Radiocommunication Conference 1997 (WRC-97), the term “High Altitude Platform Station” (HAPS) was established, defined as a telecommunications station located at an altitude of 20 to 50 km and at a specified fixed point relative to the Earth. This shows that, at the time, there was a growing interest in HAPs as a complement to terrestrial and satellite-based communications networks.
The altitude range adopted for HAPS operation, around 20 km, is chosen because at these altitudes the wind speed is less intense and, as a consequence, the HAP requires less power
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to maintain position. Other important advantages are a large coverage area for telecommunications and a location above normal commercial airline traffic. The maximum altitude for controlled airspace varies from country to country, 20 km (65,000 ft) being a typical value, set at the time of Concorde commercial supersonic jet operation.
2.2 Application of HAPS The main HAP applications are in telecommunications and remote sensing, both civilian and military. In telecommunications some of the advantages of HAPs in relation to terrestrial networks (relay towers) are larger coverage area ((250 km to 400 km), less interference caused by obstacles (buildings, ground elevations) and shorter time to deployment. Compared to satellites, HAPs have the advantages of lower latency (transmission delay) and the possibility of return for maintenance or payload reconfiguration.
For remote sensing, HAPs have an important advantage over satellites with the ability to remain continuously over an area for very long periods (persistence). Another advantage is better resolution images, because they are closer to the covered areas.
According to the NSR report, the main driving applications for HAPS are:
Communications (28% of market) – provision of a radio communications node to users on the ground remote sensing and surveillance using imaging and sensing payloads (26%) navigation – provision of a local reference (5%) scientific research and technology testing (33%) There are also emerging applications, predicted by NSR to cover 8% of the market, including adventure tourism, orbital access and entertainment.
Credence Research takes a different view:
The market for high altitude platforms (HAPs) is dominated by the surveillance systems segment with a market share of more than 70%, in terms of revenue, globally. Nevertheless, communication systems segment is predicted to witness the highest growth in the coming years. During the forecast period, the communication segment is expected to expand with a CAGR of 11.4%, globally.
If the sensing and scientific sectors of the NSR forecast are combined to give a 59% share, this may enable the two views to be reconciled, with the faster growth in communications increasing its overall share.
2.3 Satcom Market Opportunity In some respects, the communication node could be seen as a competitor to satcoms, providing a mobile phone cell or broadband node on a temporary basis to a remote area. For satcoms the opportunities arise from the need to relay communications beyond line of sight
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(backhaul from the HAPS) and the possible adaptation of satcom terminal equipment to HAPS payload use.
In the case of HAPS backhaul, the satcom opportunities are:
Provision of satcom terminals to the HAPS Provision of the satcom service from the HAPS to the operator position, via a ground station In addition, as the largest application for HAPS is predicted to be surveillance, there may be synergy with sensors and applications developed for the Earth Observation sector.
The NSR report shows a market worth potentially a few hundred million dollars a year by 2025; a similar number has been derived from reports by Credence Research. However, the addressable market for satcom equipment and service providers is only a fraction of this. Although not a large market, UK industry is investing in HAPS with the Zephyr programme, privately funded dirigible activities such as Airlander 10 and the purchase of UK manufacturer Ascenta by Facebook. This provides is a knowledge base in the UK that could be exploited by the UK space industry.
3. Customer and End User
The customers for satcom enabled HAPs (potentially greater than 54% of HAPS applications) divide into the:
Platform manufacturer for the satellite terminal equipment Platform operator for the delivery of the integrated communications service Platform manufacturer for the EO based payload
From an analysis of available data on the 12 major HAP projects of the past ten years, it is noted that seven were closed without achieving results that would ensure continuity but that five are in progress with some prospect of commercial sustainability:
Airbus Zephyr (military comms and surveillance) Thales Stratobus (Defence but with wider application) Google Loon (Internet access in remote areas) Google Solara 50 (Internet access in remote areas) Facebook Aquila (Internet access in remote areas)
Aquila is of interest in that Facebook purchased a small UK company to develop the platform. In addition, China is undertaking more research on HAPS that all other nations combined although there is little detail on active programmes.
Globally, NSR estimate that 30 platforms are in development or production and that this number will grow over the next five years to around double. A separate study predicted 137 operations platforms by 2025. Each will be a potential customer for a satcom terminals and
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with a requirement for satcom beyond line of sight satellites links, possibly with high throughput for data backhaul.
4. Value Proposition for the Customer and End-User
The proposition is based on:
Providing satcom backhaul for Internet access HAPS and for retrieving sensor data from surveillance HAPS. Satcom could provide high capacity connectivity, particularly at Ka band. Providing communication payload equipment that is either a satcom terminal or derived from satcom technologies, integrated with other communications media such as 4G or 5G terminals Providing imaging and sensing payloads and processing applications based on space EO products and services There is a technology overlap with satcoms which could provide access to this market, but three significant considerations for suppliers of satcom equipment and services are:
Low size, weight and power (SWaP) particularly for aircraft based HAPS Antenna size and location for line of sight to the satellite Provision of end to end service including ground station access and terrestrial connectivity to the HAPS operations centre or the local access point of presence for Internet connectivity This indicates an equipment supply proposition, a satcom service proposition and a managed end to end communications service proposition as the possible satcom offers to the market.
5. Market Competitiveness
In some respects, HAPS are competitors to satcom, providing communications coverage to underserved areas and persistence for EO type applications.
However, the high altitude and long endurance favours satellite backhaul where the HAPS is beyond line of sight of the control centre and communications hub. In addition, for EO and Internet access applications, backhaul could be important where:
The operations centre is not in the HAPS coverage, often the case with military sensing applications High capacity backhaul is needed for 4G/5G and Internet backhaul to a switching centre that is located on high capacity terrestrial infrastructure which may not be the case in underserved areas In some applications, the large coverage (up to 400 km) may mean that control centre and hub are within range of the HAPS, but for many of the internet service based applications this may not be the case.
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6. Role of UK Companies
UK companies can be equipment providers, satellite service providers and complete communication services providers. The market is still in its infancy but one benefit for UK companies is that several initiatives (Zephyr, Airlander, Ascenta) are UK based which could provide a technological lead and potentially, access to market. The opportunities are:
Manufacture and integrate the satellite terminal Act as service provider for an integrated communication solution The UK is home to many innovative terminal manufacturers and satellite service providers that could be well placed to address this market. 7. Revenue Projections
Figures are $ million 2016 2020 2025 2030 Build, Operate and Service provision 402 584 857 1202 Satcom Service 0.1 1.3 8.9 21.5 Imaging Services 45 75 146 264 Comms and payload equipment 0.02 0.07 0.16 0.26 Table 1: Global HAPS Revenue Projections (Euroconsult, NSR and Sunwynd)
Most of the cost is in the build of the platform and the ground operations. To assess the possible revenues for terminal provision, a model was build based on the following assumptions:
Number of platforms based on market figure rising to 137 cumulative by 2025. This is more optimistic than NSR who predict a number less than 100 by this point. Post 2025 an annual build rate of 16 is assumed Satcom adoption by platform is assumed low initially (5% penetration) but is assumed to grow to 65% by 2030 on the basis that all aircraft or airship platforms will require it (the rest being scientific balloon platforms) Number of terminals is based on one per platform with a supply cost of $25,000 per platform Service revenues are based on a conservative 120 operational days a year per HAPS with a communication service cost of $2400 a day ($100 an hour) Imaging services estimates are taken from the NSR report. The resulting revenue numbers in Table 1 are low, because the predicted platform population will be small which means a low level of activity for terminal manufacturers.
Satcom service provision is higher but only reaches towards the low tens of millions. Doubling of communications charges would still not reach a global market demand of $50 million a year.
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Imaging services are of more interest as they may draw from Space EO capabilities. If the UK EO sector could acquire 10% of these revenues that would represent annual revenues of $26 million by 2030.
For satcoms, even a 25% share of the satcom product and service revenues would be just over $5 million per annum by 2030, indicating that this is not a market of great interest to the UK satcom industry.
8. SWOT Analysis
This applies to the use of satcom by HAPS platforms.
Strength Satcom is the best option for beyond line of sight use for command and control and operations Newer satellite service business models (HTS/Ka band on demand) can provide higher throughput for backhaul connectivity from HAPS
Weakness SWaP is critical for use on HALES airframe Line of sight may also be an issue for balloon/airship HAPS Limited number of platforms, not all of which require satcom HAPS business models still evolving Military users may be a difficult market to access
Opportunity Ka band and lower SWaP terminals Growth in HAPS Internet proposition may need significant backhaul Longer ranges and time aloft may mean operations centre is out of line of sight
Threat HAPS business models may ultimately fail Market may be closed as manufacturers also supply comms solutions Internet and 4G/5G may be used in place of satcom with hub/base-station within HAPS coverage as self-contained eco system
9. Opportunity Enablers and Actions
The biggest market enabler will be the successful introduction into service of a HAPS solution. Over the next two years there will be several demonstrations of the emerging systems but it may be 2018-9 before there is significant movement in the market.
There are also regulatory hurdles to overcome:
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The International Civil Aviation Organisation (ICAO) may not have amended international regulations applied to unmanned aircraft until 2019 Frequency co-ordination within coverage and for backhaul will need to be considered depending on the operational concept It is only as commercial uses begin to emerge that the communications requirements will become firmer and the satcom opportunity will clarify.
The only real actions are to:
Track the evolution of the market and the take up in export markets – note ESA is currently studying HAPS which may provide some insight (High-Altitude Pseudo- Satellites for Telecommunication and Complementary Space Applications) Engage with UK suppliers (Airbus, Ascenta, Airlander) to assess their communications requirement and how they see it developing Encourage potential suppliers of equipment and services to engage with HAPS manufacturers early to understand their communication needs 10. Market Dynamics
The market is best understood by examination of some of the more sustainable propositions:
In 2013 Airbus Defence and Space purchased the Zephyr Project from QinetiQ. Airbus is developing the Zephyr S version keeping the payload in 5 kg, but with greater autonomy. A future version, Zephyr T will have a payload of 20 kg with an increase in the wingspan. The first flight of a full-scale Zephyr T is planned for 2018. In February 2016, Airbus received from the UK Ministry of Defence a request for the production and operation of 2 Zephyr S, worth £13 million, with flights scheduled for 2017. This is the first contract in the world for providing an operational HAP. Of note is the limitation on payload (and power) which is a very challenging SWaP envelope for provision of a satcom terminal should they choose to go down this route. The Thales Alenia Space StratoBus is a stratospheric unmanned airship 100 m long, with 33 m diameter, a total weight of less than 5,000 kg, with 250 kg and 5 kW available for payload. The operating altitude is 20 km, in one-year flight periods, limited by maintenance stops. Planning is for two years for development of key technologies, two years to build the first prototype and one year for flight tests. The forecast is that the product may be offered to the market after 2020. In April 2016, the project received an investment of 17 million euros (about 19 million dollars) from the French government for the 2-year key technologies development phase. A demonstrator flight is scheduled for 2018. The size and operating range of a Stratobus type HAPS would be suitable for satcom terminals. Project Loon, from Google, started in 2012 and has the objective to create a network of stratospheric balloons to provide Internet access in remote areas. Each balloon is of the super pressure type with 15 m diameter. The flight altitude is about 20 km, lasting up to 100 days, using energy from solar panels. The idea is to launch a
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constellation of several balloons. Several tests have been conducted with the release of dozens of balloons, in places like New Zealand, Australia and Brazil. In February 2016, following an agreement with the government of Sri Lanka, Google started tests to provide Internet access services in the country using the Project Loon balloons, in a joint project with local operating companies. This payload limitation and possible obstruction of line of sight probably rule out use of satcom. In April 2014, Google bought the American company Titan Aerospace, a developer of the Solara 50 high-altitude UAV. The aircraft has a wingspan of 50 m and a total weight of 159 kg, with 32 kg payload. It is expected that the Solara 50 will be capable of flying at 20 km for up to 5 years. In May 2015, the prototype of the Solara 50 was destroyed in an accident on its first flight, shortly after take-off, in a test area in New Mexico, US. Google announced that it will continue the development of the Solara 50. This type of HAPS could be suitable for integration of a satcom terminal. In March 2014, Facebook announced the purchase of the British company Ascenta, in a deal valued at 20 million dollars. The Aquila UAV, being developed by Facebook, is a flying wing with a wingspan of 42 m and a total weight of about 400 kg. The aircraft has four propellers driven by electric motors, with power supplied by solar cells during the day and rechargeable batteries at night. The Aquila will fly between 18 and 27 km altitude, for a period of 3 months. It will be taken to the stratosphere by a helium balloon. This type of HAPS could be suitable for integration of a satcom terminals. In summary, the market is likely to develop around a small number of Platform suppliers that will oversee integrating payload technology. They would be the customers for satcom equipment and in many cases, may be able to supply themselves as companies such as Airbus and Thales are satcom terminal manufacturers.
Provision of satcom services will depend on area of operations. In addition, how the HAPS will be owned and operated is not yet known – it is possible a small number of specialist platform operations companies will emerge who would then be the customers for satellite services. Until these emerge, the route to market for service providers is not clear.
11. Market Trends
The market for high altitude platforms (HAPs) is dominated by the government and defence segment with a market share of more than 70%, in terms of revenue, worldwide. The demand for HAPs can be directly related to the budget of nations in defence and homeland security sectors. HAPs such as tethered aerostat systems and HALES provide excellent surveillance over large areas. Most of the countries worldwide are focused towards deploying reliable and persistent HAP-based surveillance systems to monitor any activities within/pertaining to their territories.
Due to rising threats from terrorists’ activities and border conflicts, the expenditure over HAPs for surveillance systems is predicted to remain strong in the coming years. Thus, the government segment is likely to retain its dominant position, in terms of revenue and
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adoption. Nonetheless, due to increasing adoption of HAP-based wireless communication, the commercial segment is expected to witness the highest growth in the coming years.
The current expenditure on developing HAPS is dominated by the United States at about 35% of global expenditure, followed by Asia Pacific (25%), Rest of the World (22%) and Europe (18%) (source: Credence Research).
The size of the market relates to design and development cost of the platform. As noted in previous sections, these would be the customers for satcom equipment and services. The future demand for HAPs is mainly expected from countries such as China, India, South Korea and Japan. In addition to surveillance systems, the demand for HAPs is also expected to be driven by communication applications in Asia Pacific.
It is noted that in February 2016, India telecommunications authorities denied permission to Facebook for deploying the “Free Basics” service in the country. There is no information whether this denial will affect Facebook’s plans for Aquila.
In summary, the market is seeing increased interest but the expenditure is on the development of the platforms with a strong military drive. The emergence of commercial telecommunications and EO applications could drive a modest demand for satcom equipment and services but this is yet, unproven.
12. Five Take-Aways
The HAPS market outside the military domain is yet unproven and in some cases, HAPS may be a direct competitor to satcoms and space based sensing Several propositions are being explored backed by leading industry players for deployment in the next five years Satcom may have a role if it can fit within tight SWaP constraints on the platform If the commercial propositions succeed, the satcom opportunity is very modest There may be opportunities for space base EO companies through synergies with instruments, applications and processing may be of greater interest
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