• There are now 6,371 LEO satellites in orbit out of roughly 10,000 in total.
• LEO satellite operators will need to seek new ways to utilize their increasing capacity.
• IoT solutions that need mobile and low-latency communications are emerging as the “sweet spot” for LEO-based connectivity.

The growth of Low Earth Orbit (LEO) satellites continues to be remarkable in 2024. There are now 6,371 LEO satellites in orbit out of roughly 10,000 in total. This market has been pioneered by SpaceX and continues to be dominated by the company. But SpaceX is by no means alone in the sector. China is entering the new space race aggressively, with state-owned Shanghai Spacecom Satellite Technology (SSST) beginning to launch its LEO satellites in August with an aim to have over 26,000 in orbit by 2030. Eutelsat Group’s OneWeb LEO satellite connectivity service, backed by SoftBank, will launch commercial operations in December, while Amazon’s Project Kuniper is preparing for its launch, which will likely see the e-commerce giant aggressively enter the ISP market.

New monetization schemes are needed
LEO satellite operators will need to seek new ways to utilize their increasing capacity. The base use case for the satellite industry has always been providing connectivity in remote areas, as 80% of the Earth’s surface still lacks cellular coverage. Hence, rural connectivity, defense, marine communications and scientific research have always been mainstay services in the sector. But going forward, LEO constellations will need to find new revenue streams to become profitable and for this reason, we believe that there will be an increasing focus on the IoT connectivity sector.

LEO benefits for IoT services – Lower latency is the game changer
LEO satellites can improve existing IoT service offerings. Satellites have often been used to create internet connections, particularly in remote areas, but have never been particularly cost-effective compared to terrestrial solutions. The rapid increase in the number of satellites in orbit is lowering costs as economies of scale start to take effect, but LEO satellites potentially offer another massive benefit to IoT solutions in that they can offer lower latency than other communications mediums.

As seen in the chart below, LEO satellites can potentially offer much lower latency than 4G and 5G networks, and significantly lower latency compared to GEO satellites as they are much closer to the ground. Wi-Fi has a lower latency on average but is not designed for seamless connectivity over large areas. Therefore, IoT solutions that need mobile and low-latency communications are emerging as the “sweet spot” for LEO-based connectivity. This includes sectors such as logistics, autonomous driving, drone operation and agriculture.

Latency Levels

Source: Counterpoint Research

An emerging ecosystem
Given the large expected push for IoT services delivered via LEO satellite constellations, the LEO-enabled IoT device space is witnessing increasing activity. It is building on 3GPP Rel 17 specifications and will become further advanced with Rel 18. IoT satellite-compatible modules have already been launched by players such as Quectel and u-blox, while enabling gateways are starting to be installed around the world by many leading telecom operators. Further, there is renewed interest in the LEO-connected smartphone space from chipmakers such as MediaTek and Qualcomm. Some startups such as Spain’s Sateliot have even launched LEO satellites which are exclusively providing 5G-NB IoT connectivity. While the ecosystem is still relatively young and dominated by proprietary technologies, significant growth across the supply chain is expected in the near future.