Quantum Communications’ Key Verticals to Reach Full Speed

The rate of technological development seen in the domain of quantum communications is remarkable. The technology is in many cases still taking its first steps out of the comfort of academic circles, but this is quickly changing, both terrestrially and in space on a global scale.

Indeed, things are moving quickly and NSR’s Quantum Communications via Satellite report forecasts a total of $1.8B in cumulative quantum communication services by the end of the decade. The bulk of the services are expected to be delivered by Quantum Key Distribution (QKD) services, which has sparked wide interest from all players concerned with security. And for this, satellites are a critical component for the global distribution of these keys. But is the commercial market already operating at full speed? It’s more like there’s a foundation with some key verticals that are more advanced than others to help drive the market.

Taking The Lead

Recently, British Telecom (BT), conducted the world’s first trial of Quantum Key Distribution (QKD) over hollow-core fiber. With the emergence of primary customers such as governments supporting the R&D, and commercially telecom providers, major banks, and energy companies – the Quantum Communications domain is about to crack wide open.

Due to the increased frequency of malicious activity around the globe, a breach in security on the highest level can be detrimental. So, finance actors in China, for example, have already used quantum communications , and the banking, energy and Gov/Mil sectors are main target markets expected to adopt and pay a premium for quantum communication via satellite services in the near future.

Their demand for best-in-class security will be one of many reasons leading to rise in demand of secure and QKD enabled services.

A Quest for Quantum

The large customer base of today’s telcos represents a significant revenue opportunity, be it for quantum-secured conference calls, Wi-Fi on your next flight, or quantum clocks for network synchronization. Backhaul and Trunking via satellite rely on Telecommunication companies to provide the service. It is unlikely all Backhaul and Trunking in the world would be transferred in a quantum secure way, but the reach associated with the large customer base makes it a relevant target market due to sheer capacity requirements and traffic involved.

As such, telecommunication companies are expected to be an instrumental component in bringing quantum-secure communications to the masses. NSR believes it will be one of the main target markets for the satellite-based quantum communications opportunity to be pursued with $393M in service revenues derived from Backhaul and Trunking expected by the end of the decade.

A word of caution however should be added: only a very small share of Backhaul and trunking as we traditionally understand it will be expected to be quantum-enabled. Do not expect Netflix to quantum secure all their data…just yet.

Partnerships for Securing Networks

But much like the BT, telcos around the world are on a quest to actively position themselves to take advantage of this technology, which allows them to charge customers a premium based on level of security and the related revenue opportunity. Deutsche Telekom and South Korea Telecom, have both made strong investments in QKD player IDQ as an important layer to improve network security for their customers. Moreover, further telco’s involvement is foreseen with Arqit signing both BT and Sumitomo for reseller contracts in their respective operating countries, allowing QKD services to be utilized to lower significantly threats to national security and to commercial networks.

Beyond Arqit’s SaaS Quantum Cloud product, Aliro Quantum offers Entanglement as a Service (EaaS), connecting users of quantum networks with entangled quantum bits. As the technology matures, the next step will likely lead to the testing of the business models to take advantage of this rapidly maturing technology.

Telcos provide an interesting perspective to this market, bringing with them a colossal customer base, and are heavily invested in bringing the technology online to provide enhanced services, be it for their government customers, or just as a marketing tactic to convince switching.

Bottom Line

With Gov’t/Military, Banking, Energy and Backhaul & Trunking as the first markets looking to get the edge in their network using quantum security technology, there is a solid foundation to work with, due to their high security requirements associated with these verticals’ infrastructures.

These will be key in helping leverage advancements in quantum terrestrially and provide added incentives for ‘space’ players to launch quantum-supporting communications assets and infrastructure to fully leverage the global QKD systems and bring the market to full commercialization.