Analysts See U.S. and China Keeping Markets Closed to Each Other's LEO Systems

The U.N. Office for Outer Space Affairs counts more than 50 of Shanghai SpaceSail Technology's Thousand Sails satellites in orbit. The constellation is China's answer to global connectivity via LEO, ABI Research analyst Victor Xu wrote in December. His comments came after SpaceSail and Telebras, Brazil's state-owned telecommunications company, announced a memorandum of understanding on satellite connectivity in Brazil. SpaceSail's plans call for deployment of 648 satellites by the end of 2025, with a goal of 15,000 by 2030, Xu said.

Ian Christensen, Secure World Foundation's senior director-private sector programs, told us that China and Western governments see such large LEO constellations and their services as strategic assets and technology that are part of geopolitical competition. Given the way the U.S. has removed market access for Chinese telecommunications companies, Chinese LEO broadband constellations would likely be treated the same way under the rubric of national security concerns, he said.

To satisfy DOJ concerns, a Chinese satellite company wanting official U.S. market access must have no Chinese government interest, a lawyer with satellite and telecommunications experience told us. Unofficial market access is impossible to stop, as there is no way to prevent people from having devices that can access the network on an individual basis, the lawyer added.

Aside from serving China, such Chinese LEO constellations will largely target developing nations, we're told. According to Blaine Curcio of Orbital Gateway Consulting, SpaceSail's initial target markets include parts of Asia, the Middle East and Latin America. Curcio said in an email that smart players in developing nations will play the constellations off one another. He cited the announcement earlier this month by Malaysia's Measat, a Starlink distributor, of an MOU with SpaceSail. For Measat, "having two suppliers of [non-geostationary orbit] capacity is surely better than just one."

Chinese satellite communications operators have "historically been marginal players on the global stage," with APT Satellite, AsiaSat and China Satcom largely acting as domestic operators with some regional exposure, Quilty Space analyst Caleb Henry wrote last week.

But SpaceSail's progress shows that Western satellite operators are likely to see increased Chinese competition in the next two to five years, Henry said. That competition could grow if other proposed Chinese mega constellations, such as Guowang and Honghu-3, also pursue global strategies, he added.

Henry said Latin America, Africa, Central Asia and the Asia Pacific might welcome Chinese operators, "especially in countries where the binary narrative of 'the U.S. or China' is not endorsed." But NATO and the Five Eyes nations -- the U.S., U.K., Canada, New Zealand and Australia -- are unlikely to authorize Chinese operators to provide service within their borders, he said.

Global competition is already developing around LEO broadband, with SpaceSail's Brazil move and Starlink having sought access to India, Christensen said. Both operators have applied for access in Pakistan as well, he said, adding that Chinese infrastructure and telecommunications firms have been active in developing African markets.

ABI's Xu said SpaceSail "represents China's growing influence in global space-based communications." Its partnership with Brazil's Telebras "represents a significant milestone as it is its first major international venture in the global satellite Internet market," with its goal being to challenge established internet providers like SpaceX.