US, WASHINGTON (ORDO NEWS) — The COVID-19 pandemic is leading the world not only to a health collapse, but also to economic decline: The International Monetary Fund has already confirmed that the global economy is now in a worse recession than during the global economic crisis of 2008-2009. We spoke with Iridium CEO Vladislav Shpilev about the impact of the situation on the space and satellite industries and how the virus will push the development of certain areas of the satellite industry.
The most actively developing areas of the space industry in recent years are global satellite communications, satellite navigation and the formation of a group of spacecraft to provide a worldwide open Internet accessible to anyone regardless of their location. By the beginning of the 2020 pandemic, part of the satellites had already been sent to space for these purposes, both by the British OneWeb corporation and by the Starlink project Ilona Mask. Of course, the global crisis and all kinds of restrictions due to the pandemic have affected these projects, and making forecasts is now quite difficult.
Satellite operators have taken all precautions to protect their employees and ensure the smooth operation of their space and ground infrastructure. As high-tech companies, operators have highly effective tools for remote work and communication with partners and customers.
The industry is feeling the negative effects of the pandemic and restrictions. Global commercial air travel decreased by almost 70%, while satellite services are located in the cockpit and in the cabin of many airliners. Satellite communications services are also widely used by companies to check the condition of vehicles and cars, and since businesses are massively suspending their operations in a pandemic, there are revenue losses in this area of the satellite industry.
In any case, the economic downturn and potential insolvency of some subscribers will affect the satellite communications business. The sales structure will change. For example, the mobility of people and transport has declined due to the closed nature of countries, respectively, satellite telephones and personal communication devices are in less demand. The decline in demand is traditionally offset by other segments, with Iridium – by government customers, merchant ships.
In the midst of the pandemic, the bankruptcy of OneWeb, the operator of the mega-grouping of satellites for public Internet from anywhere in the world. The failure of this project is not related to the general crisis, although this has affected an important round of financing the company. This bankruptcy is different from other well-known bankruptcies of satellite operators: in the case of OneWeb, investors abandon the project until the completion of the satellite constellation.
This event speaks more about the specific circumstances that OneWeb has experienced than about the situation in the satellite industry as a whole, which is feeling quite well even now. Failures at startups are not uncommon, but here in the case of global satellite constellations, gigantic funds are spent until the moment when you can even judge a little about the viability of the project, and such a failure inevitably attracts attention.
Nevertheless, one cannot help but regret what happened with OneWeb. Any successful project in space is primarily the result of the patience of shareholders, and not just the amount of invested capital. Satellite systems, as a rule, are expensive and take a long time before the payback begins. The Iridium example shows that if you show patience in building and improving a business model, you can turn a project into a profitable business in 30 years. If someone can go this way twice as fast, then anyway the period will seem too long for most investors.
Entrepreneurs in 2020 generally have a difficult time. Analysts at the Economist Intelligence Unit predict a 2.2% drop in the global economy, although it was expected to grow by 2.3%. With the most optimistic forecasts, the Russian economy will face a long-term recession.
However, if you look at the pieces of the puzzle, and not at the picture as a whole, you can identify individual areas, the active development of which the current situation only contributes. For example, there is significant growth in the IoT segment: compact “smart” devices capable of supporting two-way connection for transmitting, monitoring, tracking and managing data around the world are more relevant than ever during forced distance. In conditions of danger to human health, reduced travel and flights, employers will be more concerned about the safety of employees and actively introduce non-contact methods of monitoring and managing equipment and facilities.
Only 10% of the planet is provided with traditional terrestrial communications, the rest of the main assistants are satellite technologies that can ensure business continuity even in such a difficult period. For Russia, this is especially true given its vast territories. On the domestic market, there are already existing examples of mining companies that install satellite equipment on industrial mining equipment and receive analytics from remote corners of the country, and many other examples from different industries.
The pandemic also drew additional attention from the state to the safety of the population living in remote areas. In particular, we are talking about the small indigenous peoples of the North, who in calm times relied on communication to solve everyday problems, emergency situations, and efficient housekeeping, such as preventing herds from breaking off in reindeer husbandry using satellite sensors on animals. And in a pandemic, it is vital to inform many thousands of such families about the situation with the virus on a par with the urban population, and in a timely manner, in a distance of many kilometers from the nearest settlements, it is possible only by satellite phones.
The program “Protecting the rights and legitimate interests of the indigenous peoples of the North of the Yamal-Nenets Autonomous Okrug, ensuring their social and spiritual needs” helps to ensure that as much as possible of the country’s population can take full advantage of satellite telecommunication services, regardless of their territorial location and remoteness from large network infrastructure nodes. At the beginning of the pandemic, the system of monitoring the movements of the indigenous nomadic population, organized as part of this program, made it possible to quickly notify the nomadic population of the dangers of visiting villages and to prevent the spread of the disease in hard-to-reach places where the provision of highly qualified assistance is difficult.
Satellite communications are used in a wide variety of important processes, ranging from emergency operations, travel, logistics and mining, to research and global social programs to provide the entire population of the Earth with the opportunity to contact loved ones or call for help. That is why the growth of space and satellite industries is still projected, although not as fast and perhaps not in such obvious scenarios as last year.
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