The cost of LEOs contrasts starkly with the costs of medium Earth orbit satellites (MEOs) and geosynchronous equatorial orbit satellites (GEOs). The table below summarizes the costs of satellites by orbit type based on a May 2023 report from the U.S. Congressional Budget Office (CBO). LEOs for communications can be up to 16.7 times cheaper than MEOs and 33.3 times cheaper than GEOs. Additionally, the CBO data shows that launching LEOs is one-third of the cost of launching the other types of orbits and yields six times as many satellites in orbit. LEOs’ better overall coverage comes with a downside, as 72 satellites are needed to build a constellation. While the launch costs for an LEO constellation and a GEO constellation are equivalent, the production savings with the LEO are significant—and LEOs’ decreased cost overall has allowed more middle market players to enter space telecommunications.

The importance of fast, global communications has become more apparent amid recent global events and conflicts. Federal funding may partially offset the private costs associated with building an active satellite constellation, including $20 billion of awards from the U.S. Space Force in 2024 to advance its extraterrestrial communications.

Rising satellite numbers combined with current life span will result in space junk

According to the CBO, LEO satellites have a typical life span of four to six years, limited primarily due to atmospheric drag. With the growth in launches, fears have grown that overcrowding of the orbit range with spacecraft and debris will result in Kessler Syndrome, in which Earth’s orbit becomes so crowded that satellites cannot function in certain areas.

As of January 2022, NASA estimated that over 9,000 metric tons of space junk are orbiting Earth, with over 100 million particles larger than 1 millimeter. Most of these particles are in low Earth orbit and typically travel 7 to 8 kilometers per second—about 5.8 times faster than the speed of a bullet. Even small collisions can have large impacts at these velocities and disrupt communications. Collisions of debris, while infrequent, exacerbate the space junk problem by generating thousands of pieces of additional, potentially disruptive debris.

The chart below shows space debris buildup over time. The red circle highlights the first-ever collision of two satellites, in the LEO space in February 2009. Other significant spikes in debris have been driven by antisatellite tests.

FCC sets new rules for de-orbits and fines satellite provider; signals more regulation to come

Part of the reason space junk has proliferated is the lack of jurisdiction in space, leaving the frontier as the “wild west” of telecommunications. However, the Federal Communications Commission (FCC) has begun to tighten regulations and enforce fines to rein in space junk. In September 2022, the FCC voted unanimously to shorten the required de-orbit period from 25 years to five years after the end of an LEO satellite’s mission. The order will go into effect in 2024 for U.S.-licensed satellites and those seeking U.S. market access.

The FCC has also enforced de-orbit mitigation for non-LEO satellites. In October 2023, the FCC levied the first-ever fine of $150,000 for a provider’s failure to comply with the agreed-upon de-orbiting plan. Previously, regulation and consequences for the extraterrestrial providers had been almost nonexistent. The current FCC chairperson believes this is a crucial focus area for the commission in its coming terms. To aid in addressing space communication regulation, the FCC launched two new departments in April 2023: the Space Bureau and the Office of International Affairs.

Risks range from cyber to physical for satellite service providers

As use cases for satellite-based telecommunications become more prevalent, providers will need to tackle security risks as well as physical challenges. Risks include signal jamming, spoofing and meaconing (rebroadcasting signals on the same frequency to confuse navigation). A recent research partnership between the European Space Agency and a German university showed that of the LEOs evaluated, basic security functions present in most smartphones—including separation of code and data—were not found. The researchers concluded, “… the simple nature of these vulnerabilities is a main reason for concern and shows that little security research from the last decade has reached the space domain.” The researchers attributed the lack of research to “…now outdated assumptions on achieving security by obscurity.”

The potential risks are so great that the U.S. National Counterintelligence and Security Center issued an advisory warning in August 2023, stating that bad actors could target vulnerabilities in satellites to obtain sensitive data or exploit networks. This is a significant concern to federal governments, as private satellite companies play an outsize role in national security by facilitating space communications.

The lack of clarity of jurisdiction in space creates further complications, likely resulting in disputes as the skies become more crowded with LEOs.

Looking to the future

The meteoric rise of LEO constellations is transforming the way we communicate. For example, satellite internet service providers (ISPs) are expected to gain broadband market share (as of 2021, satellite ISPs accounted for only 1.4% of the U.S. market). But the benefits stretch beyond home connectivity or the Internet of Things. In September 2023, the first 5G direct-to-device (D2D) signal from space to a cell phone was successfully demonstrated. Since then, cellular and satellite companies have raced to build out or partner on capabilities for D2D services.

Companies that can successfully navigate a changing regulatory environment while managing the potential physical and cybersecurity risks will reap the rewards of this emerging technology. Those that fail to meet these challenges could experience a negative financial impact. Further, companies must be aware of the environmental concerns. Avoiding Kessler Syndrome is more than being a good custodian in space, it’s ensuring the industry can continue to operate at its highest potential.