Oligopoly Competition Between Satellite Constellations

Significance

• Rapid concentration of orbital space among few commercial operators managing large fleets of satellites.
• Safety management requires numerous collision avoidance maneuvers.
• Economic competition impacts orbit use, reducing economic welfare compared to public utility systems.
• Need for regulatory policies to promote efficient orbit use in public interest.

Abstract

• Orbital space supports crucial services like weather forecasting, communication, navigation, etc.
• Increasing launch of satellite constellations into low-Earth orbit (LEO).
• Oligopolistic markets affect orbital space allocation.
• Analysis of two firms operating constellations; public utility systems increase welfare by 12%.
• Distortion depends on constellation-related environmental damages.
• Future research direction: policy-relevant orbit-use management.

Key Points

Growth and Challenges

• Exponential growth in satellite launches, significant portion by single entities.
• New megaconstellations are underway for global telecommunications.
• Concerns over space industry’s environmental impacts: debris, collision risks, and atmospheric effects.

Economic Impacts of Concentration

• Market dominated by few operators, raising competition concerns.
• Economic theory suggests market concentration can affect prices and quality.
• Need for coupled physical and economic models to address allocation and quality issues.

Model and Analysis

• Use of physicoeconomic model to quantify welfare loss and allocation distortion due to duopoly.
• Public utility approach maximizes welfare by balancing service benefits and externalities.

Satellite and Service Quality

• Determinants of service quality: availability (coverage, congestion), latency, and bandwidth.
• Satellite location and size decisions affect telecommunications quality and congestion.

Competition and Consumer Dynamics

• Two-stage firm competition: location/size choices, and price-setting.
• Consumers choose based on utility maximization.

Scenarios and Results

• Duopoly vs public utility constellations.
• Public utility constellations increase welfare but also congestion.

Figures and Tables

• Figure 1: Recent growth and concentration in satellite operations.
• Table 1: Comparison of constellation designs in duopoly and public utility scenarios.

Environmental and Policy Implications

• Greater environmental damages lead to changes in constellation sizes and economic welfare.
• Oligopolistic competition leads to inefficient orbital-use patterns.
• Public utility regulation could improve welfare as space use becomes more congested.

Limitations and Future Research

• Assumptions on collision avoidance may need adjustment as technology and debris dynamics evolve.
• Inclusion of debris and congestion from replenishing constellations is an area for further study.
• The role of environmental damages in shaping optimal use needs further exploration.

Conclusion

• The growing role of commercial motives in the space sector emphasizes the need for regulatory frameworks.
• Imperfect competition can alter satellite constellation dynamics, calling for models that account for economic and environmental externalities.
• Public utility systems may mitigate some inefficiencies but need careful design and implementation.

Acknowledgments

• Provided by J.G., A.R., and S.R. for research and writing.
• No competing interests declared.

Data Availability

• Data and codes are available in Middlebury Institutional Repository.