Extra-Terrestrial Battlefront: Satellite Internet, the GPS War and the Future of 5G

The Soviet Union rocketed Sputnik into space in 1957 but the recent success of SpaceX has reignited interest in the industry. Since 2006, the global revenue of the satellite industry has increased year-on-year from $106 up to $271 billion in 2019, with satellites constituting a majority 79% share of the total space economy*. As this has continued to grow, so too has the strategic value of developing satellite jammers, now the main telecoms battleground of the multifaceted proxy war emerging between the US and China alongside the roll-out of 5G satellites.

Revenue of the global satellite industry from 2006 to 2019: Source Statista

There is growing evidence and a belief in US military circles that China has been developing the capability to take out US satellites and wants to replace the US as the main global player in satellite telecommunications, strengthened by its July 2020 completion of its own satellite navigation system to rival the US GPS system: BeiDou Navigation Satellite System (BNSS). The Pentagon’s annual report outlines the US belief that China has made progress in developing weapons capable of destroying spacecraft in geosynchronous orbit, the orbit which matches Earth’s rotation and is crucial for stationary coverage satellites.

The Financial Times reports that senior US military officials are said to be making the case for a new generation of space weaponry and this could foreshadow a 21st century space race. Wang Yiwei, an international relations scholar at Renmin University in Beijing, is more cautious: “As for whether China will try to take out GPS, I don’t think China has the ability or the inclination. That’s how America thinks”. It comes at a time when the Pew Research Center have released its findings that 72% of Americans think “that it is essential the US continue to be a world leader in space exploration”.

In these instances there is a strong historical precedent for huge investment into defence, technology and R&D, with the US spending between 5 and 10% of its GDP on defence during the 60s and 70s and $16 billion for all civilian and military space programs in a typical year during the 60s and the USSR between $6 and $10 billion**. This time much of the footwork will be done by private companies with competition between Musks’ SpaceX, Bezos’ Blue Origin and Calhoun’s Boeing propelling the field forward.

Military expenditure as share of GDP between 1960 and 2017, an indicator of Cold War tensions: Source World Bank

For its part, China has taken an overt state-approach. Chairman Xi Jinping has set out his plans to make China an “all-round space power” by 2030 including establishing a permanent lunar research station by 2035. It has incentivised the use of its BNSS technology by offering loans and free services to other countries, beginning in 2013 with a $297 million agreement with Thailand. In addition to the US GPS system, they face competition in the form of Russian GLONASS and the European Galileo systems which they will face with state-subsidies. However, US tech investors shouldn’t be too concerned about the technology taking root in the West, as the BeiDou technology, not dissimilar to other Chinese tech players, has faced criticism over security concerns.

The problem this time is the bidirectional nature of Chinese satellites which both emit and receive signals and therefore feedback the user’s location. This makes it less attractive globally especially in countries which saw a backlash against Huawei on security grounds. The bidirectional feedback is ubiquitous in the West already but concerns exist over how China could use this location data. On the other hand, some countries, particularly less-developed countries such as Thailand, may well find it difficult to resist the allure of low-costs and financial incentives.

In the US, the giants SpaceX and Amazon are launching, or in the process of launching, satellites that can carry the extra bandwidth demanded by 5G technology and are in competition with the Unicom-Huawei collaboration that wants to develop LEO satellites, bringing web services to remote areas not previously covered by land-based technology. Full-Earth coverage is the other battleground.

5G satellites and full-Earth coverage satellites represent the two biggest forecast growth areas for the early 2020s, capturing a slice of the global 5G technology market which is projected to grow from $5.53 billion to $667.90 billion in the next six years: a compound annual growth rate of 122.3% according to Allied Market Research. Sector control is about more than pure economic value to these powers. Societies are more dependent than ever on signals directed through constellations of governmental and commercial satellites. China point to the 1996 Taiwan Strait Crisis in which they allege the US cut GPS signal to the Pacific, which China was reliant on for missile tracking as a strong motivator for developing their own positioning satellite system.

Threats to satellite systems : Source FT

5G ushers in a new age of ultra-fast communications with low-latency (a 10-fold decrease in transmission time) and high-volume communications which according to Deloitte will have applications to manufacturing, health care (in the form of telemedicine), transportation, education, edge computing and retail – an industry for which good news cannot come quickly enough. Absence of 5G technology also makes the financial industry poorer, as it relies on ultra-fast communication. The US has rejected Huawei in place of homegrown companies AT&T, Verizon and T-Mobile which began deployment in 2019 with Verizon’s Vestberg claiming that half the US will have access to 5G by the end of 2020. The FCC Chairman Ajit Pai has also proposed a $9 billion package to bring rural parts of the US to parity with urban segments.

China is substantially ahead of the US in its deployment of 5G and recently launched a program at a hospital ward staffed by 5G-powered robots to protect staff. Rolling out 5G could provide a timely boost and the US should be weary not to miss out on the spoils.

* Data from European Space Agency

** According to CIA Historical records released in 1998