The global hunger for data collected from space is insatiable. There is an exploding demand for internet bandwidth and space-based earth imagery. As the price of commercial space launches fall, companies, universities, and government organizations are launching more satellites. Current networks cannot satisfy the growing data access demands that are being generated.
Companies are paying for an expensive product that is difficult to use. Space companies are using outdated 1950’s era technology to connect with their satellites. Owners and operators within the space industry currently endure process limitations and challenges that no other modern high-tech sector would accept:
- Only one satellite can be communicated with at a time.
- Data latency (the delay before a transfer of data begins) in transmissions is incredibly long.
This is a captive market with few attractive options. To communicate with commercial satellites, owners and operators have only two options:
- The capital-intensive process of building their own vertically integrated communication infrastructure.
- Purchasing time from oversubscribed Kongsberg Satellite Services or the Swedish Space Corporation.
The data bottleneck (the current way for ground communications):
Existing networks are problematic due to the following:
- Outdated, legacy hardware
- Limited bandwidth
- Lack modern software
- Not automated
- Prone to failure
- Require human operators
Not only are existing networks costly to maintain and operate, but they cannot keep up with the growth of the industry and amounts of data being collected by satellites, forecasted to have a 10-fold increase in capacity (about 17 Tbps by 2026).
Atlas provides a revolutionary approach to satellite communications. In 2017, Morgan Stanley listed Atlas as a top 12 disruptor in the satellite industry, by providing satcom as a service. Atlas modernizes satellite communications by offering a system that is both more advanced and cheaper than competitors’ offerings. Atlas’ advanced technologies allow for satellite owners and operators to:
- Communicate with multiple satellites simultaneously during a single session.
- Seamlessly transfer and process data that reduces latency from up to twelve minutes to eight seconds.
In addition, the company’s satellite systems are approximately 1/10 the cost of competing options.
The result is an easy to use satellite communication system that eliminates headaches for owners and operators.
The Atlas solution:
- Antenna technology that provides for multiple satellites to simultaneously connect
- Software-centric cloud based network that is fully automated
- Allows for more data and faster speeds
- Significantly reduced costs
Atlas' growth will be driven by Big Data. As mentioned above, the amount of data that a satellite transfers is expected to increase dramatically in the near future. Current legacy satellite communication systems cannot handle the exponential increase in data demanded by commercial and government operators.
The amount of small satellites orbiting the earth is rapidly increasing. According to Bryce Space and Technology (an analytic consulting firm to the space and satellite industry), there were 6x as many smallsats launched in 2017 compared to 2012. As the cost of launching satellites continues to fall and the usage of microsatellites becomes more prevalent, it is expected that the number of satellites in orbit will dramatically increase. It has been projected that 3,000 nano/microsatellites will be launched over the next 6 years with 70% being commercial.
The commercial space managed services market is valued at $6.2 billion (as of 2016) and grew at 13-15% CAGR for the previous two years.
- Kongsberg Satellite Services (KSAT) and Swedish Space Corporation (SSC) – both have expensive legacy technology with high overhead costs.
- The cost of KSAT and SSC support is equivalent to building a small satellite which does not make sense for small companies.
- The data latency of these methods is approximately 12 minutes and there are no back-end data processing/interpretation services provided.
- The legacy technologies these companies utilize do not allow an operator to simultaneously communicate with multiple orbiting satellites.
- These two major players are both foreign owned companies which is not preferable for US government contracts.
- Spaceflight Networks – Limited network expansion due to capital commitments and cost.
- RBC Signals – Limited commanding and Russian funded. A US company had data security issues with their service.
- Telesat – Primarily operates and leases time to users of their own fleet of commercial satellites.
- Intelsat – Primarily operates and leases time to users of their own fleet of commercial satellites.
- Audacy – A startup attempting to operate a network of 3 satellites to relay information.
- The minor players listed above are either reselling their own satellite communications or are largely limited in their ability to expand their network.
- Customer Insourcing – Limited to operating needs and requires massive capital outlay to establish.
The Atlas Product
ATLAS Links System and Freedom Platform
- When up to four orbiting satellites come into range of an Atlas antenna array, the Atlas Site Server tunes the array to the appropriate receiving channel and automatically begins receiving raw data.
- The Atlas in a Box (AIB) compiles the transmission received from each part of the array into one coherent signal.
- This data is transmitted as it is received to Amazon Web Services (AWS) which decodes the data into a usable format.
- When the satellite stops transmitting information, the AIB stops the array from receiving information.
- The client may immediately use the data as their business needs dictate.
A description of the conventional satellite communications can be found in Appendix A.
Atlas improves satellite communications by automating the process. Traditional methods result in a data latency of up to 12 minutes. Atlas Space Operations can provide significantly faster data latencies of 8 seconds. This improvement in speed stems from two factors:
- A traditional satellite operator will receive all of the data before transferring it to a client. Atlas will send the data to the client as it is being received.
- Traditional satellite operators will wait until a satellite is out of range before stopping the transmission receiving process and then sends out the data. Atlas automatically stops the data receiving process when the data transmission ceases.
An analogy – Blockbuster (established methods) vs. Netflix (Atlas). The established methods are similar to Blockbuster. One first has to drive to the store; rent the DVD; return home; and then finally begin watching the movie. The Atlas method is like Netflix; one may begin instantly watching the movie as it downloads to their television/computer.
According to the CEO of Atlas, "ATLAS is set up to be the world's premier provider of space to ground communications access. Whether from LEO (low earth orbit), MEO (medium earth orbit), GEO (geostationary earth orbit), the Moon (and beyond), RF data or optical, these companies turn to us for solutions/advice. They also want to form partnerships with us, because of our expertise and plans for global expansion in both RF and optical.
"We have found a way to build multi-channel predictable revenue streams through a single market segment. The customers are companies who launch satellites (Vector), companies who currently own/operate satellites (Spire), companies building satellites (PlanetIQ), and the government (who does all three). We sell managed services through ATLAS Freedom to satellite owner/operators, satellite builders, and launch providers. We sell what we are calling "Direct Access", instead of hardware sales, to companies like Spire and Planet. Direct Access is the sale of the capabilities afforded by ATLAS Freedom/LINKS. We are creating a new market paradigm where no customer should have to purchase, own, maintain, and depreciate hardware. They purchase capability. That is Satellite Operations as a Service. It's the AWS, Sun/Oracle, Drobox way of doing business."
Sales & Distribution
Atlas is post-revenue with 4 main lines of revenue
Current and prospective customers include:
- Government – NOAA, NASA, Air Force
- Network Services – BlackSky Global, Space Systems Loral, USEI
- Launch Support – Vector, Rocket Lab, Virgin, Firefly, Aevum
- Hardware Sales – Telespazio, teleport operators and ground equipment vendors
Revenue Generating Services
- Freedom Access Services
- A subscription service that includes both the Atlas Links system and Atlas Freedom interface.
- Service plans vary according to data usage.
- Freedom Direct Access
- Upfront equipment and installation charge for usage of the Atlas Links system. The customerintegrates the Atlas Links system into their own satellite communication operations.
- Annual cost for access
Atlas will use the government’s validation as leverage as it expands into the private sector
- Contract already executed with the National Oceanic and Atmospheric Administration (NOAA) for up to $4m
- Contract award pending with NASA for up to $50m
- Development contract pending with the Air Force for up to $100m
Commercial traction in the private satellite sector has already started with Master Service Agreements to support future satellites with BlackSky Global, Helios Wire, Astro Digital, PlanetIQ, Blink-Astro, SpaceQuest, Vector Launch and Firefly. Below is the potential for new constellations.
The majority of this Series A round will pay for the network buildout (please see map below)
- 9 locations to be operational by the end of 2018
- 12 additional locations planned for 2019
Commercialization of LINKS (antenna)
- Early targeted adopters include:
- Planet Labs
- Analytical Graphics
- US Air Force
- US Army
Future Business Development in the Big Data Market ($5b market potential)
- Atlas is capable of providing secure data transport and warehousing to support all markets such asgeospatial data consumers (agriculture, oil & gas, telehealth and mobility) and IoT connected devices (75b projected by 2025)
- Target markets include mega constellation companies (i.e., SpaceX, OneWeb (which is projecting 15,000 satellites)), existing constellation owners/operators (i.e., Intelesat, EchoStar, GlobalStar) anddata consumers (i.e., Bayer/Monsanto and ConAgra)
Active industry consolidation
- MacDonald Dettwiler & Associates bought Digital Globe for $2.4 billion and Space Systems/Loral for$875 million in 2012
- Comtech acquired Telecommunications Systems in 2016 @ 11x EBITDA ($431 million)
- Google bought Skybox (Terrabella) for $500 million in 2014
- Planet bought Blackbridge (2015) and Terrabella (2017)
- Swedish Space Corp acquired Universal Space Network @ 11x EBITDA in 2009
- Equity purchase @ 10-12x EBITDA
- Projected EBITDA for Atlas of $84.7 million in 2022 and $123.4m in 2023
- Based on projected EBITDA per Atlas and comps mentioned above, target exit price is between$840m-$1.2b in 2022/2023
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