Peeling Back The Onion: Possible 2026 SpaceX IPO - Part 1

The LEO satellite business model is one of the most interesting topics in telecommunications today. LEO satellites are not a 'new technology'. It is really just a new approach to providing Internet access without any intellectual or patent moat to prevent the entry of new competitors. There could be a know how moat, but the number of LEO satellite networks entering the market over the next 5 year suggests it is very shallow. LEO satellites provide Last Mile access using low Earth orbits ranging from 300 kilometers (180 US miles) to 2,000 kilometers (1200 miles). Each bird as they are affectionately called in the industry takes only 90 to 120 minutes to complete an orbit. Their orbits can take a variety of shapes. For example, a LEO orbit could be elliptical in order to achieve a closer approach to the Earth at some points along the path for more detailed image or data collection. Or the LEO could fly longitudinally from North Pole to South Pole and back again. Hence LEO satellites are much more flexible in terms of orbital deployment than the traditional geostationary birds which must orbit the equator to keep a fixed position relative to the Earth. 

Satellite service providers have traditionally used geostationary satellites in order to provide continuous coverage of a selected region. Broadcasting standard one way video services is a highly efficient use of radio spectrum. It was one of the first mass media markets. A geostationary bird orbits 38,000 kilometers above the Earth's equator. Their orbits do decay, but so slowly that they can remain in orbit for centuries. So GEO satellites are highly efficient broadcasting and monitoring devices. Lifespans are generally 15 to 25 years. The factor limiting their life expectancy is fuel to adjust direction and speed to main a constant position. Small propulsion burns are required to offset gravitational interactions due to the moon and sun or to avoid collision with debris. Once fuel is depleted, the GEO will drift into a graveyard orbit. 

The big drawback of geostationary birds is latency, but also low effective bandwidth per user. The round trip delay is 500 to 600 milliseconds, which is acceptable for video streaming or general web browsing. But bandwidth is also limited because the GEO is sending the signal to such a large area. Dividing bandwidth by the Earth's surface area gives us the average transmission capacity available. For a Geo that is a very small figure. So providing fast transmission speeds to a mass market is challenging when geostationary bandwidth is limited and the latency high.

Diagram Illustrating GEO, MEO, & LEO Satellite Orbits




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