Beyond Connectivity

A: Currently, China has around five major mega constellations planned. These include China Satellite Network Group’s Guowang (13,000 satellites by 2035), Spacesail’s Qianfan (15,000+ satellites by 2030), and Hongqing Technology’s Honghu-3 (10,000 satellites). In January 2026, the newly established China’s Institute of Radio Spectrum Utilization and Technological Innovation filed for two additional mega constellations, CTC-1 and CTC-2, with a combined total of almost 200,000 satellites, demonstrating China’s long-term ambitions in the space industry. While there are few official details on the purpose of the orbital slots, the filings could be part of a broader strategy to reserve space for future commercial, military and security purposes, rather than leaving those positions open to competitors like SpaceX. Despite the scale of its plans, China currently lags in execution with only a few hundred satellites launched to date, compared with Starlink’s several thousand satellites already in orbit and operational.

In terms of China’s D2D strategy, satellite operators, state-owned telecom operators and the government are coordinated and working closely together to provide D2D services and satellite connectivity to their customers. For instance, China Unicom and China Telecom are already licensed to offer D2D services utilizing the state-owned Tiantong GEO satellite system. China Mobile uses the BeiDou navigation satellite system and plans to integrate with emerging LEO, MEO and GEO constellations to further expand D2D capabilities. Overall, the satellite and telecom industry are closely aligned with national technological priorities and policy objectives.

On the other hand, Western D2D strategies are largely driven by the private-sector and partnerships between mobile network operators (MNOs) and specialized satellite operators. For example, key partnerships include T-Mobile/Starlink, Verizon/AST SpaceMobile/ Skylo, Vodafone/AST SpaceMobile. In addition, their efforts are closely tied to the standardization of 3GPP Release 17/18/19 to enable broader device compatibility, accelerating commercial adoption.

We can see that China’s approach signals a long-term objective to build a large-scale sovereign space infrastructure that supports national digital infrastructure goals (such as integrated land-sea-air-space connectivity and 6G) to complement existing terrestrial networks and advances technological self-reliance.

A: China’s close alignment between satellite operators and state-backed telecom operators is demonstrating a highly coordinated, top-down approach. In late January 2026, China released its 15th five-year roadmap for its space sector, which sets out a unified commercial roadmap across various technological areas such as developing its orbital digital infrastructure (edge computing and AI platforms), satellite mega constellations and their integration with adjacent technological segments amongst other goals. This policy framework enables tighter coordination across stakeholders and ensures that satellite communications development aligns with broader national connectivity and industrial goals.

With strong alignment between satellite operators and telcos, China is treating space assets and infrastructure as an extension of the 5G/6G network, rather than standalone systems which supports a consolidation of spectrum usage, reducing fragmentation and enabling more efficient planning for large-scale satellite internet infrastructure. This integrated approach is designed to support seamless terrestrial and NTN interoperability within China in the long-term. In addition, Spacesail and other Chinese space networks are operating in regions (such as Asia, Africa and Latin America) without Chinese telco infrastructure. They do this by bundling services for enterprises customers – which are then delivered to consumers and end users through a B2B2C business model. This approach supports their commercial rollout beyond China.

The close alignment between both the satellite and telco industry is advancing 5G NTN standardization in China. Some key examples include ZTE and China Telecom completed a maritime 5G NTN trial where data transmission was successful via a GEO satellite. China Mobile has been pioneering 5G NTN field trials to verify terminal-to-satellite connections that focuses on integrating satellite communication with the 5G core network and supporting 5G-A initiatives.

A: A state-coordinated D2D ecosystem and China’s centralized approach to spectrum filings and mega-constellation planning can intensify competition for spectrum and orbital resources at the global level, particularly at the ITU. Large, early filings by state-backed entities such as China Satellite Network Group’s Guowang constellation and newer filings like CTC-1 and CTC-2, imply that spectrum access can be treated as a sovereign strategic tool rather than a commercial asset. China will be able to use a coordinated state approach to secure priority rights at the ITU, which can potentially block Western access in key regions, especially private satellite operators. Furthermore, a vertically integrated ecosystem threatens to bifurcate global standards. By controlling the entire stack – from the satellite chipsets and handsets to the constellations – state-backed players can subsidize hardware to undercut Western rivals. This creates a lock-in effect, where countries are forced to adopt Chinese-specific hardware to access the satellite network, effectively bypassing Western supply chains out of the loop entirely.

In terms of handsets, the state-driven ecosystem forces domestic manufacturers (like Huawei) to design handsets that support native, seamless switching between terrestrial mobile networks and satellite networks. However, these could limit global interoperability, especially for global device makers seeking to serve both the Chinese and Western markets. For example, Huawei smartphones already support satellite messaging via the BeiDou and Tiantong systems, delivering seamless functionality domestically but may risk limiting global interoperability if implementations rely on China-specific frequency bands and network architectures.

A vertically integrated model encourages domestic sourcing of materials, satellite platforms, payloads, launch services, and network equipment, which increases self-reliance and reduces dependence on Western or global suppliers. For Western vendors, this could mean heightened competition from Chinese suppliers in emerging markets (Africa, Latin America, and Asia-Pacific). In these regions, China’s ability to offer an integrated satellite-to-device ecosystem could challenge Western operators that rely on multi-partner deployment models.

A: The demand is driven by the collision of three exponential trends: the downlink bottleneck of Earth observation (EO), the energy crisis of terrestrial AI and the rise of strict “sovereign data” laws.

From an EO data perspective, we are generating petabytes of data in orbit, but the download throughput is a challenge. It could be potentially more efficient to process at the edge in space. Second, terrestrial grids are hitting a breaking point. Starcloud and Crusoe Energy are pioneering a model where high-density AI training loads are offloaded to orbit to harvest “stranded” solar energy stuck in orbit—effectively bypassing Earth’s carbon limits.

Finally, there is a regulatory arbitrage play. Axiom Space and others are exploring “orbital data vaults” that turn regulated data into “unregulated insight” before it ever touches a border. This allows a space-based data center operator to be not restricted by regional and local data center compliance but also take advantage of global connectivity.

In the long term, this looks like an ecosystem play. It’s not just about storage or processing; it’s about an orbital economy. SpaceX reduces the launch cost to deploy these assets. Starcloud and Crusoe are already partnering to offload high-density AI workloads to orbit to bypass the constraints of Earth’s terrestrial energy grid. Meanwhile, Intuitive Machines is building the lunar data relay network (NSNS contract) that will eventually pipe data from the lunar surface back to these orbital nodes, creating a continuous “Earth-Moon digital highway.”

A: To leverage the potential of physics. Space has “free” resources with continuous solar energy and passive cooling. Terrestrial data centers use a significant amount of power, with upwards of 40% or more of total energy consumed on active cooling (fans and chillers). In orbit, we can radiate waste heat directly into the cold void of space. While this requires significant radiator surface area, it eliminates the massive electricity cost of terrestrial cooling, theoretically offering higher energy efficiency.

I could see a number of use cases for these facilities from edge AI for EO and LLM training runs before being sent down to Earth, to sovereign compute (data vaults) like what Axiom space is exploring, to telemetry and navigation support lunar logistics like with Astrolab’s FLEX rover in support with Intuitive Machines data relay.

A: The zero-water advantage is highly realistic because the baseline on Earth is unsustainable. A medium-sized terrestrial data center cycles through millions of gallons of water annually for cooling. An orbital data center consumes zero water. There is also the energy perspective, which Google’s Project Suncatcher research suggests that a constellation of solar-powered satellites using optical links could effectively create a “virtual” gigawatt-scale data center without adding a single gram of carbon to Earth’s atmosphere.

Even so, we would need to evaluate the logistics of getting a substantial amount of data center capacity into orbit, if the objective is to operate data centers in space as a substantial complement to data centers on Earth. Nonetheless, data center computational capacity will be needed for in-orbit operations, lunar operations, and potentially even deep space operations.

A: Again, physics. I did a post on LinkedIn about this and the biggest hurdle isn’t getting there; its keeping the “chips” alive. The thermal management issue in particular is a challenge since dissipating heat is notoriously difficult for high-density GPUs. Furthermore, radiation—cosmic rays—rapidly degrades silicon, creating a shorter hardware cycle than on Earth. This necessitates in-orbit servicing models since maintaining the racks in orbit is a challenge. We anticipate a need for autonomous logistics vehicles—mirroring the model Astrolab is deploying for lunar surface logistics—to robotically swap degraded server components and maintain the constellation.

Despite these engineering hurdles, ABI Research identifies this as a critical growth vector in the New Space economy. We are tracking significant market momentum in this sector and will be publishing our comprehensive analysis on the orbital compute market in H1 this year.

A: In terms of the actual verticals, just coming out of Taiwan, for example, I saw quite a few drone OEMs that were touting critical comms connectivity or PNT. I see drones as one of the higher-volume type of use cases where NTN IoT actually makes sense, because drones are one of those verticals where they move in and out of cellular coverage more frequently than, say, other devices.

When you look at NTN IoT that’s on the market right now, a lot of it’s in GEO through Skylo, and basically that’s one of the considerations that you need to have. You’re going to need to be not so worried about latency. You’re going to need to use devices that connect over the frequencies that are required to work on GEO.

Some operators adopting the standard say they are doing so because they have a core of customers within aviation and some other segments that operate across cellular and satellite network coverage. Their customers began asking about having a solution that could flip between both types of connectivity. Demand was high enough that the operator decided that adopting the NTN standard made commercial and long-term business sense to them.

We’re seeing that across quite a few verticals. Aviation is one of those, and agriculture and maritime among other areas. There’s an argument being made that if using the standard, you can’t really get high-quality, performance connections as opposed to having a proprietary solution. So, some still view that there’s a limitation on where you can actually use the IoT NTN standard. But we’re still seeing demand and deployment across a few different verticals.

A: There’s a perception that a lot of the current silicon that’s out on the market for IoT NTN is essentially catered to GEO—for Skylo and a lot of GEO solutions. That’s what’s been on the market, so naturally the silicon vendors will pump what they can sell and connect. But telcos and other potential users of IoT NTN are concerned about the viability of the business beyond GEO and if there will be a market for LEO as well.

There’s a perception that the ecosystem of silicon, hardware, and different modules isn’t quite adapted yet for LEO. There’s a concern around the adaptation of the hardware for Doppler—since the speed at which LEO satellites move makes connecting to the hardware more difficult. So, there are some concerns the current hardware is only good for GEO links and therefore an IoT NTN standard play today limits versatility, versus just going with the proprietary solutions which can be in LEO or GEO.

A lot of enterprises just aren’t sure yet who the winners and losers are going to be in satellite. They want to make sure they have a partner that isn’t going to go bust in two years and is still going to exist. I think that’s actually the bigger sell here. In a sense the protocol to them is more of a byproduct of who they’re partnering with. It’s part of the reason for a partnership, but it’s not the sole reason.

A: We can all speculate on a lot of the plays that have happened throughout the industry. There’s been a lot of movements that have happened with AST, SpaceX, Omnispace, SES, Lynk. There’s quite a bit of movement that’s occurred that points to MSS spectrum being critical for IoT and for direct-to-device applications. And it supports the argument that these operators would be moving towards a standard. They haven’t come out and declared that they’re going to be using the 3GPP standard, but there’s increasing likelihood that they will. They would be leaving billions on the table if they didn’t. It doesn’t make sense from a business perspective. If you have the network and spectrum required to do the standard, then you would want to tap into that ecosystem and connect as many devices as possible.