Major Driving Forces Propelling the Demand for the 5G Satellite Communication Market
Internet connectivity and communication are fundamental tools of all advanced modern technologies. Since the inception of the world wide web in 1989, internet technology has grown manifolds.
As we move forward with discoveries such as satellite communication, smartphones, artificial intelligence (AI), the Internet of Things (IoT), and many more, the demand for a stronger, faster, and more feasible connective network is increasing.
In 2022, the world is witnessing the fifth-generation (5G) standard in telecommunication for broadband cellular networks. 5G is the successor of the 4G network currently used in most devices worldwide.
5G satellite communication refers to integrating communication satellites with 5G infrastructure. This development will enhance the transmission speed, lower the connection latency, widen network connectivity, and the possibility of implementing virtual networks (network slicing).
In the current satellite market, satellite capacity is growing faster as next-generation satellite technology is evolving to multi-orbit constellations. According to the BIS Research report, the global 5G satellite communication market was valued at $2.708 billion in 2021. It is estimated to reach $43.215 billion by 2032, at a compound annual growth rate (CAGR) of 28.12% during the forecast period 2022-2032.
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Business Drivers of the 5G Satellite Communication Market
The growing demand for the 5G network is driven by various factors, such as its growing applications in various industries, rising connectivity needs, and increasing use to enable upcoming technologies. Few application-based business drivers of the 5G satellite communication market are mentioned as follows:
1. Increasing demand for IoT in defense and commercial industries: Due to the growing complexity of geopolitical situations worldwide, all developed and developing nations are working toward strengthening their defense system.
The advanced technology has made the defense systems as vulnerable as it has made them stronger. Highly confidential data is prone to breaches. Hence, all defense agencies require a reliable, secure, and effective communication channel.
Advanced 5G network can provide strong and quick connectivity to remote and rugged terrains such as mountains, oceans, and deserts. The demand for a fast and secure communication channel has intensified the need to adopt satellite-enabled IoT in the defense sector.
Innovative 5G satellite communication enables the agencies to connect multiple systems into a single broader network and share real-time information, enhancing the decision-making and strategic capabilities of defense agencies.
The defense ministries of many countries, including the U.S., are aiming to increase their reliance on low Earth orbit (LEO) satellites, medium Earth orbit (MEO) satellites, pseudo-satellites, and unmanned aerial vehicles (UAVs) to extend the range of communication. For instance, in February 2022, the U.A.E’s defense company Halcon announced that its tube-launched Hunter 10 drone designed for investigation and attack missions would enter the markets in early 2023.
Additionally, the applications of 5G network and 5G satellite IoT solutions are promising in enterprises and commercial markets such as oil and gas industries, mining, agriculture, logistics, and shipping. The industries are already adopting the 5G technologies.
According to the BIS Research market report, nearly 25% of businesses adopted IoT in 2019. Furthermore, this share is expected to increase significantly over the next ten years as 5G will create a pool for new applications and experiences utilizing augmented reality (AR) and virtual reality (VR).
Meanwhile, the healthcare and automotive industries are also actively adopting IoT in their business models. For instance, the 5G communication technology is crucial for the further growth of the automotive industry as it will enable robust communication for data transmission between the tire and the vehicle.
2. Increasing demand for better connectivity in remote locations: With the onset of 5G networks, the remote and rural parts of the world will have a better opportunity for a high-speed connection. It can provide more cost-effective and efficient broadband systems in remote areas worldwide.
This connectivity will help industries and businesses reach many consumers left behind until now. It will also create growth opportunities for the people in remote areas as technology enables better learning and work platforms.
However, it is challenging for remote areas with no existing network, broadband, or connectivity to immediately adopt a 5G network. Many countries in Europe, North America, Asia-Pacific, and Africa are operating 2G/3G networks or have recently entered the 4G network market.
To address this, in countries such as Brazil, the government has mandated that companies are required to provide long term evolution (LTE) service in remote areas to win the 5G spectrum. This approach is crucial for rural areas to benefit from 5G services and reduce the digital divide, along with ensuring that the digital gap does not widen as 5G becomes more prominent.
Few companies, such as Avanti Communications, OQ Technology, OneWeb, and Skylo Technologies, are working to meet the demand of their diverse end users for high-speed connectivity in remote areas.
As the demand for next-generation satellite communication is growing, the companies are working toward integrating 5G network infrastructure. According to the BIS Research market report, global companies, such as Huawei, T-Mobile, AT&T, Ericsson, and more, have started deploying 5G networks from 2019 onward.
Equal distribution of connectivity is crucial for the growth of upcoming technologies as well as for minimizing the digital divide in remote areas. Although the market faces certain challenges such as shortage of semiconductors in the supply chain, high costs of infrastructure, existing digital divide, and lack of digital literacy, 5G satellite is the future of communication.
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