It boosts digitisation by creating the infrastructure needed for digital innovation in many areas and helping narrow the digital divide through satellite internet. It innovates business models, attracting a growing number of start-ups, who were able to raise $4.8 billion in international funding in 2020 alone. It sets the stage for new and innovative services, with experiments in a number of traditional sectors such as healthcare, agriculture, utilities, insurance, logistics, transport, and other frontier sectors such as space mining and tourism. The number of satellites in orbit is growing: roughly 6,000, of which nearly 2,800 are operational, 54% for commercial use, 16% governmental, 13% military and 5% civil; half are telecommunications satellites (49%), 29% are actively monitoring the planet and its atmosphere, 12% in technological development and 6% in satellite navigation.
Today, the space economy, which generates innovative value-added products and services based on space infrastructures and digital technologies, is no longer just the frontier of technological innovation, but also of business innovation, with substantial opportunities for companies, institutions and citizens. The companies forming the space ecosystem, the traditional space industry, digital service providers and end-user companies interested in end-use applications, have only just begun to tap into its potential.
"An increasing number of diversified players are turning to the space economy with growing interest because of the impact it can have on various sectors", explains Paolo Trucco, Professor of Industrial Facilities and Business Organisation at the Polytechnic University of Milan.
The convergence of space and digital technologies will yield radical transformations at an industrial level, innovating processes, products and services, business models, spawning new companies and bringing in new players that traditionally had no ties with the space industry. Companies able to seize the opportunities will increase their competitiveness in global markets and be more capable of responding to society's future needs".
At a global level, government investment in the space economy amounts to some USD 90 billion, of which just under half is in the United States. Investments in Italy are much lower (1.13 billion in 2018), yet space is very much at the heart of the country's strategy: Italy is just one of the seven countries whose space agency has a budget of over one billion, ranking fifth worldwide and second in Europe in terms of space economy expenditure as a proportion of GDP (0.55%). It is also the third largest contributor to the European Space Agency in 2020 with €665.8 million, behind Germany (€1,311.7 million) and France (€981.7 million). The government also launched the National Strategic Plan for the Space Economy, worth €4.7 billion to further boost its development.
"The space economy is no longer solely reserved for space industry insiders. We are talking about a real new economy involving service providers and companies from very different sectors", points out Angelo Cavallo, director of the Space Economy Observatory at Polytechnic University of Milan's School of Management, "numerous experiments are under way, some of which are at a mature stage. However, the market is at an early stage and the potential has yet to be tapped. Many companies today are still unaware that they can implement space-based services: a way to innovate their offer and be more efficient, leveraging space technologies appropriately combined with digital technologies".
Space economy areas
There are four main areas of operation for the players in the space economy ecosystem. Earth Observation, which is the infrastructure and services that let users monitor the Earth and its atmosphere by processing data obtained from satellites, can be used to define value-added services in sectors previously untouched by these technologies, such as agriculture, meteorology, fisheries, insurance, finance, energy and health. Satellite Navigation, i.e. the infrastructure and services enabling users to determine their position, speed and time through satellite position data, particularly used in transport. Satellite Communication, i.e. infrastructure and services enabling the transmission of radio telecommunications signals. Finally, Access to Space is all the activities for space exploration, from the launch of satellites and probes to the control of operations.
The market
While we know how much government budget is dedicated to space, estimating the size of the space economy globally is complex because so far few studies have been conducted. According to the Satellite Industry Association, the space economy will generate revenues of around USD 366 billion in 2019, of which 74% (USD 271 billion) will come from the satellite industry. In greater detail, nearly 34% of the total (i.e. €123 billion) is attributable to telecommunications satellite services (roughly €92 billion from satellite television), navigation and Earth observation (value generated tallying some €2.3 billion). 36% (130.3 billion) is linked to products related to Earth-based equipment for managing and delivering satellite services, such as Earth-based network infrastructure or sensors and antennas, including GPS installed on mobile devices. There is a 26% (EUR 95 billion) share of revenues generated by the non-satellite industry, mainly comprising the value generated by investments financed by government budgets: The most significant include the 57 billion from the United States, then 12 billion from Europe and 11 billion from China.
Innovative services alongside the space supply chain
The space economy is ripe for new innovative applications and services among both traditional space industry players and providers of space technology-based digital services. One of the main developments in the first segment concerns greater accessibility of space, with new ways to build and launch vehicles and satellites into orbit, resulting in lower costs per kg sent into space, such as the use of nano-satellites and lighter carbon fibre materials. Further trends include simplifying the pre-launch process, for instance through online launch date booking, or the concept of a sharing economy, by launching a single vehicle containing several satellites that can be placed on different orbits, thus allowing missions with different objectives to be combined and thus lowering costs for the client company. A subscription-based revenue model for accessing services is also gaining ground, enabling more efficient and stable investment planning. The services related to space exploration and mining and tourism remain at an embryonic stage.
This second group includes space-based services, which use satellite data processed with digital technologies, such as artificial intelligence and data analytics. In precision farming, for example, Earth Observation images can be used to monitor pesticide use on crops and analyse soil fertility, improving profitability, or to decide which crops to sow based on the collected data. Satellite imagery is also useful for near real-time monitoring of energy distribution networks, often located in inaccessible areas, to prevent damage and avoid costly network disruptions. Continuous monitoring of goods and assets is also essential in the logistics and transport sector to assess the shortest and most profitable routes, and to render loading and unloading more efficient. Insurance companies are looking to space-based services to improve risk prediction models and deliver customised policies.
Satellite technologies
The space economy is also growing in terms of satellites in orbit, especially small ones (under 500 kg), which account for 80% of all cargo launched in 2019, even though they are only worth 11% of the mass in orbit. Several companies are developing micro-launchers specifically designed to address this new market. There were 102 launches in 2019, of which 33% were made by China, followed by 21% by Russia and 20% by the US.
Some of the most popular technologies include satellite-based planetary monitoring, based on SAR (Synthetic Aperture Radar) sensors, which can be used even in low light conditions, or optical or multispectral sensors, which are mainly used during the day. Future missions are expected to improve resolution and reduce revisit time through the use of multiple satellite systems and satellite 'constellations'.
There are roughly one hundred companies across Europe involved in satellite data processing and exploitation, mainly concentrated in the UK and France. The sectors most affected by these activities are energy production and distribution, agriculture, land and sea transport, and environmental protection. Many companies also provide specific consultancy to develop ad hoc services based on customer requirements and operating across different markets.
"Satellite applications have undergone a major transformation in recent years", adds Antonio Ghezzi, Professor of Management Engineering at the Polytechnic University of Milan, "space is now becoming accessible not only to the sector traditionally associated with the space industry, but to a multitude of players who are now able to secure possession and performance of a satellite, however small or miniaturised it may be. The challenge is to achieve real-time monitoring and many companies are trying to do this by approaching the world of constellations to increase data availability and frequency".
The future of the space economy
There are two main future trends. The first entails a progressive reduction of costs for space companies because of the longer lifespans of space assets and their greater interconnection to improve performance, as in the case of satellite constellations. Vehicles will be increasingly reusable in subsequent missions to make them economically and environmentally sustainable. Sustainability is another element that will characterise the space economy in the future: Space technologies can contribute to the sustainable development goals of the UN 2030 Agenda, for instance, by helping develop satellite internet, which could create opportunities for inclusive development and eliminate the digital divide between areas with high and low connectivity. Connectivity, data availability and digitisation are also key to driving the growth of the space economy, many of whose services rely on the ability to collect and exploit data. Another aspect of digitisation is the creation of user-friendly services and interfaces that are also accessible to less technical profiles. Reaping the opportunities offered by these trends, however, will only come about with innovation-friendly regulations which will allow the national supply chain to operate at a competitive advantage and attract capital.
