Racing For Place In The New Space Race: Customers Seek Launch Options

(coauthored with Tim Ellis)

In a transformational moment, similar to the Internet revolution, space technology is bringing the promise of universal global communications to reality for everyone on Earth – and outstripping the capacity of space launch providers in the process. SpaceX’s satellite based Starlink service is now PC Magazine’s top ranked Internet Service Provider, beating the top terrestrial competitors including Verizon’s FIOS. Lynk Global is already providing cell to satellite connections in the remote South Pacific, while AST Space Mobile promises to bring space-based 5G service to the farthest corners of the globe. T-Mobile recently announced a partnership with Starlink to eliminate nearly all the dead spots in the U.S. and Verizon plans to do the same with Amazon’s Kuiper constellation. Apple already has a satellite-enabled SOS feature in their iPhone product, and with SpaceX’s Starlink constellation announcing direct-to-cell capabilities, competition is likely to increase even further with expanded consumer features.

Additionally, global sovereign and strategic interests are exacerbating the demand for launches to space. India’s Reliance Jio recently announced a new dedicated telecom constellation, the latest well-funded entity to announce plans for their own significant capability. This only adds to the European Union’s development of their own dedicated Low Earth Orbit (LEO) and Geosynchronous (GSO) satellite networks, referencing the recent conflict between Russia and Ukraine as an existentially driving need for such a system.

The primary constraint in realizing this communications revolution is the availability of space launch services. In addition to initial deployments, rapid advancements in technology necessitate frequent satellite replacements, often in the 3 to 5-year timespan for LEO satellites versus the 15-year service life of traditional GSO systems. The satellite capex replacement cycles mirror the past terrestrial telecom infrastructure upgrades of 2G Edge to 3G, 4G LTE, and then 5G networks every few years, bringing increasingly capable services and unlocking new markets. This phenomenon has given rise to a bustling satellite launch market, driven not only by the need for telecom but also in-space manufacturing, human spaceflight, lunar missions, and more. A simultaneous boom in commercial remote sensing (imaging and radar) satellites is augmenting this demand. Maintaining these constellations will require a constant cadence of launches, both to send new capabilities to space but also upgrade and maintain existing ones, far exceeding historical launch rates. And the launch market simply can’t keep up at its current pace with far more demand than supply of medium and heavy lift launch vehicles available globally.

The U.S. is currently far ahead of the world in rocket technology and space launch capability, largely thanks to the vision and determination of Elon Musk and SpaceX’s Falcon 9 rocket. Having flown over 250 times, Falcon 9 now accounts for the majority of global commercial launches and most U.S. governmental launches, as well. But interestingly, SpaceX is consuming most of their launch capacity with their own Starlink satellites, having deployed over 5,000 of them. In fact, Starlink is poised to account for a majority of SpaceX’s revenue in 2024, outpacing growth of their launch offerings. In going all-in on Starlink, SpaceX has become the biggest competitor for many of their own customers also looking for rides to space.

While we believe this dominant position has been well-earned and that SpaceX has provided unparalleled value to its governmental and commercial customers, optionality and a competitive market are in everyone’s long-term interests. There is no doubt that the U.S. Government wants multiple systems for its national security launches. It demanded the maintenance of two launch systems when Lockheed and Boeing merged their launch businesses into United Launch Alliance (ULA), two decades ago. The Department of Defense and NASA continue to favor two vendor programs. Apart from government customers, commercial entities also desire competitive, low-cost launches to orbit that are diversified without reliance on a single-source supplier, especially one that is also building a competing telecom network with many of its core launch customers.

So, what other options are there? Not many. Amazon has booked up nearly all the available commercial launch capacity through 2026, securing up to 83 launches for its initial phase of Project Kuiper satellites aboard vehicles from United Launch Alliance, Arianespace, and Blue Origin. Other communications constellation operators are eager for the emergence of a worthy competitor with a launch vehicle that meets their needs.

Elon is betting SpaceX’s future on Starship, the super-heavy lift rocket designed to occupy Mars. On the other end of the spectrum, entrants like Rocket Lab and Firefly are building small-to-medium lift rockets for satellite replenishment. Providing an alternative to improve upon Falcon 9 in the medium-to-heavy lift category – the most commercially successful segment of the market – is the sweet spot, though. And Relativity Space is aiming to capture the strategic opportunity presented by this market gap with their reusable rocket, Terran R.

The race for second place is on.

Written by Greg Autry and Tim Ellis, Co-Founder and CEO of Relativity Space, this piece reflects the opinions of both authors.

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