Optical Satcom: Into the Light

As satellite communication technology has caught up to the market through past decades, one of the key demand drivers has been that of ever-increasing capacity and data throughputs. High-throughput satellites have become more common, powered by high data rate inter-satellite links in the case of non-GEO constellations, and earth observation sensors have improved tremendously, necessitating higher downlink capabilities. It is at the cusp of this market that laser communication terminals sit – they bring numerous technological advantages over traditionally used RF satcom terminals. The supply side is comprised of several commercial optical satcom providers, ranging from specialized manufacturers to vertically integrated data relay system / ground network providers that are looking at in-house development of lasercom terminals and solutions.



The market has moved on from being a nascent equipment-centric ecosystem a few years ago to now having a healthy dynamic of emerging companies with different LCT offerings, varied in capabilities related to data throughput, range, SWaP, pointing accuracy and modularity, amongst others. The advantages of optical satcom, and thereby, the attractiveness of such a solution to the satellite services market is twofold: higher bandwidth and throughput capabilities, and improved security.

On the other hand, market adoption is not simply a matter of technological advancements. These advantages need to be considered carefully alongside cost and technology fit from a market maturity perspective to identify and target the right addressable market.

The Tech Stack: In Space and on the Ground

Given the high data volume requirements of both satellite communications and earth observation, the LCTs currently under development have data rates up to 100Gbps, which is many-fold higher in comparison to RF solutions. For instance, data rates for Ka band are generally up to 2.5 Gbps. In addition, LCT terminals have low SWaP compared to RF terminals, low latency, high reliability (space-space) and security.

Moreover, the optical wavelength allows for improved directional sending and receiving of information, i.e., higher antenna gain when compared directly with RF. On the other hand, such narrow beams also impose the need for high pointing, acquisition and tracking accuracy for the satellites.

In the case of space-ground links or direct-to-earth (DTE) links, atmospheric turbulence remains a major challenge. However, this can be compensated utilizing adaptive optics, spatial diversity and increased on-board storage to allow data downlink in favorable weather conditions or locations. Due to this element of uncertainty, optical space-ground is rather a complementary solution to RF rather than a standalone solution.



Thus, adoption of LCTs for DTE is expected to be much lower when compared to that of optical inter-satellite links (OISLs). In the case of OISLs, the demand is higher mainly for communication applications, followed by earth observation and data relay systems.  On the demand side, the number of LCTs used on-board satellites also relies heavily on the network architecture being used, whether it be ring/mesh/hybrid/otherwise.

The highly directional property of optical communication terminals also makes them suitable for long distance communication, especially in the case of Lunar, Martian or deep space communication applications of the future. This has driven interest into optical communications from the ground segment community. Established ground station operators such as KSAT are working toward such applications for long range communications. More investment in developing next generation optical ground stations (OGS): KSAT, for instance, setup its first commercial OGS in Greece as part of the ESA-ESOC Optical Nucleus Network.



However, the current opportunity for OGS providers is mainly in terms of testing of satellites as opposed to constant data downlink services. This is primarily due to the lack of demand for high data rate commercial downlink services, owing to prohibitive costs and lack of such technology at scale. This market is further constrained currently by the lack of cost-effective high data rates modems on the market. As such, the opportunity for optical space-ground communication link services is expected to increase only in the long term, as the number of operational in-orbit terminals increases and more effective service models.

Varied Business Models

Multiple players have moved on from the tech-dev phase to in-orbit testing, with a few established manufacturers such as Tesat with operational Optical Inter-Satellite Links already. While a majority of the manufacturers exist as pure play equipment vendors, this market also includes a handful of commercial data relay providers that are expected to develop service-oriented business models as satellite operators, sometimes leveraging a hybrid configuration of both RF and optical comms technology.

Some vendors are focused on large-volume production, either by insourcing critical components and setting up facilities capable of manufacturing a few hundred terminals per month. This kind of verticalization at the service and manufacturer layers is driven by the lack of a well-established supply chain for optical satcom components in the market, as in the case of RF terminals.



For new and experimental tech in the space and satellite industry, government customers have traditionally been early adopters. This is true for optical satcom as well, with other vendors choosing to target USG contracts, particularly with the Space Development Agency’s Transport Layer expected to launch more satellites in the coming years. Yet another approach involves partnerships and revenue-share models to establish new delivery channels to reach customers. There is ample room for business model innovation in this market, allowing for end-to-end service providers like Xenesis to exist, as well as bringing the optical comms market closer to the end customer for these services.

The price of the terminals is another important factor expected to drive this market: the rates need to be comparable to RF terminal prices or bring in significant advantages in terms of data throughputs or security specs for higher market adoption. Currently, the terminals remain priced at a significant premium, primarily due to the lack of a sizable addressable market. This is expected to shift in the near-term, as commercial and government non-GEO constellations with plans for laser inter-satellite links.

The Bottom Line

Adoption of LCTs is expected to accelerate in the mid-term once the problem of volume production has been addressed, and the size, weight and watt efficiency reach greater technological maturity levels. Most constellations with plans for optical comms include anywhere from 1 to 6 terminals per spacecraft, depending on the use case.

Pricing and market pressures in the long term will ensure that as the market matures, optical comms adoption stabilizes. As more systems come in-orbit, plans for future launches and replenishment satellites, combined with technology improvements will sustain demand. Market adoption will follow a slow growth in the next few years, due to prohibitive prices and low volume demand. However, as satellite manufacturers move further along their schedules, high volume demand from multiple operators is expected to drive prices further down, with LCT vendors expected to bring down prices as more contracts are won.