Transcript.

Erik: Jaume, thank you so much for joining us on the podcast today. 

Jaume: Thank you for inviting me. 

Erik: Yeah, I'm looking forward to this update. I was just mentioning that we had your colleague, Gianluca Redolfi, on a little bit more than a year ago. That was Episode 133 for everyone who's listening. So if you haven't heard that podcast yet, please do listen to it first. Then today we will be able to focus more on what has happened in the past year and then what are you going to be focused on in the future. But before we do that, I think you, personally, have a fascinating background. So I'd love to just touch quickly on your background. Also, when I'm talking to founders, it's always quite interesting to understand why you decided then to focus your energies on this particular problem in this particular company. I know you've founded something like 10 companies before. Can you just give us a little bit of a potted history and some of the highlights in your career? 

Jaume: Yes, I have, you know, my life. I studied communications engineer. After, I did an MBA. I love startup companies. That's my passion. This is not a work. It's just a full-time passion that takes me all the hours of the week. Yes, I have started with videoconferencing engineering company a long time ago, dot-com companies, some telecom operators around the world in more than 28 countries, satellite, Wi-Fi, 5G by the regulations that we employed. It has been a long-drawn deal to arrive here. And this, with no doubt, is the most promising company I have started since today. It's a company that has a potential of scaling up that I haven't seen before in any of my past companies. 

We started in 2018. If we think that in 15% of the world that is covered by the mobile operators, there are already 5 to 10 billion devices. The other 85% of the world, there are only 5 to 10 million devices. Something is wrong there. There is a potential of connectivity in 85% of the world that is not happening. When you see these numbers, you discover that there is a huge market to be covered. We demonstrate it. Every day it gives us the reason that there is a lot of people that want to connect things in this 85% of the world and today is not doing because of the cost restrictions, mainly. They're non-standard devices. 

Erik: Yeah, that's a fascinating statistic. I guess there's always this question of why now? Here, there's probably two angles. One is the maturation of IoT and just the number of new device categories that are coming on the market. The second is the maturation of the satellite industry which has undergone really an interesting transition in the past few years. But what was it in 2018 that triggered you or that made you believe that this could be a successful business? 

Jaume: Because we know how to move things. Basically, when we started analyzing it, we saw that a 5G IoT device or a NB IoT-device, the standard that is mostly used everywhere in the world around 200 countries, all the countries of the world, 170 countries have NB-IoT deployments. When we look at the standard, what we saw is that the device, the hardware part of the device was able to connect directly to a satellite, to a low earth satellite. But the server needs to be modified. 

Then when you explain that to some of the traditional space companies or satellite companies that we're going to modify the standard in our data, the same devices may connect in a seamless way to a base station or to a satellite, they just did this small smile that we all know. "Okay. Oh, yeah, Jaume, you're going to modify the standard. That's amazing. Good luck." And we did it. For the last four years, we have been contributing to the 3GPP, which is the global organization that's supposed to stand up for the mobile industry. We have been the number one contributor to the new release of the standard. There has been no space company with more contributions than we have had in these last years. 

In order to understand the move, of course, we have done it because it makes sense. Because we got all the back of the voucher chipset companies, because everything has to be moving in that direction. But it was not an easy one. This is something that we believe in underneath since then. Since then, it has been a continuous acceleration of the project from day to day. 

We launched our first satellite in 2021. As you know, we launched the second one this year. Within a few weeks, we are going to test with Telefonica the end-to-end technology for the first time in history — the same device connected to both means. Before the end of the year, we're going to have the first commercial constellation in the world. That was with fully standard devices with nothing in between. People are like, "Oh, yes, but you need a different antenna. You need to modify the device." No, there is no modification. It's the same device that today connects to a base station. When it will run out of coverage, it will connect to our satellite. 

Here, we have some patterns that makes our proposal quite unique. Because we have a 5G core that allows us to do roaming with the mobile operators. In the war of the roaming partners, there is an institution that is called GSMA. We are the first satellite company that is a full member of the GSMA. What does this mean? This means that we are influencing on the new roaming contracts. We will be signing with provider operators. We are writing it. At the same time, we are the only one that we are able to sign. We are the only satellite company in the world that may sign roaming agreements with the mobile operators — a standard roaming agreement. Of course, you may sign whatever you want between two companies. You don't need to belong to any organization. But mobile operators, they are super structured guys that don't want to have a new contract every day. They will have a standardization. When we sit down with the mobile operators, we put on the table. I give you the same contact. We have already signed 100 times before. Again, this is probability. This is a way too easy thing for all the different players. Make it happen in a very short time. 

Erik: Okay. Great. Let's clarify the value proposition quickly. So if I understand it, somebody has an IoT device. It could be a pacemaker, a construction equipment, a sensor on a crate. That device is going to be connected to a mobile connection if it's within network. And if it moves outside that network, then if you have this agreement in place with the provider, it would switch over to satellite connectivity via NB-IoT. Is that roughly the proposition? 

Jaume: Yes, in a seamless way, the final customer, it will be impossible to distinguish if they are roaming to another mobile operator when they are traveling abroad to other country, or they are roaming to our satellite. It would be absolutely seamless. Furthermore, I'm sure that in a couple of years, there will be millions of devices that will be connected to our satellite. The final user will have no idea if it's connected to our base station or to our satellite. 

Erik: I guess, one thing that has always slowed down satellite connectivity in the past is simply the cost. I guess if we're looking at NB-IoT, then certainly that's a much different cost structure than a mobile phone, for example. But what does that cost trend look like of connecting an IoT device? I mean, where are we today? Then maybe in five years, where do you expect it to be in terms of the cost for that connectivity? 

Jaume: That's a super interesting question. Because when you say seamless roaming, it includes cost. Because if the cost is super high, then it's not seamless because you're not going to use it unless you are in an emergency situation. This is part of our proposal. When we say seamless connectivity, it means that the costs have to be very close to what you're paying for a terrestrial connection. 

Why now the contracts that we are signing have an RP of €2.5 device months. This is quite similar of the connection costs while you are in terrestrial coverage. This will be decreasing in time. We expect in two or three years, it would be around €1 a month per device, which is something that is fully affordable for most of the applications. I don't know with that 100%. We are already signing with some people. We have signed with a company more than half a million devices or half a million lines. Of course, the costs decrease with the number of lines. In this case, we are under the $1 amount per device. 

We have built all of our infrastructure. We are working with nanosatellite. Nanosatellites in well-worth constellation means a super cost-effective approach. This is important because everything is designed — we design from scratch in order to be the founder for massive IoT connectivity. We want to be the one that connects its critical IoT application, but the one that connects millions of containers, cows, electricity poles or whatever or water counters. All this is the kind of things that we have designed it for. To do that, the costs have to be seamless, have to be something that you may forget about it. Because the gain that you get in connecting these things is much, much higher than the cost of the connection itself. 

Erik: Got you. Okay. Great. So cost is one big factor here. I guess the other would be performance. Again, if you're tracking a cow or a container, having maybe a one-minute delay in sending the packet information is not going to be as critical as if you're streaming a video and you expect real-time connectivity. But nonetheless, there's probably some aspects that are important there. How does performance compare today via satellite versus terrestrial? 

Jaume: Today the latency of them — we got a unique system that the low earth has to do roaming with a store and forward. What does this mean? This means that when you do roaming, you need real-time connectivity between your device and the main core, which advise you to deploy a full satellite constellation to find a few satellites within the satellite thing in order for that device, it connects to the satellite that connects the mobile in order to authenticate your device. 

We have developed a unique procedure that allows us to do store on four of the keys. This means that with the four satellites that we are launching this year, we may connect devices with roaming procedure. Of course, with four satellites, as you know, when you are in low earth orbit, the satellite goes around the globe while the globe is spinning. This means that you have around, in average, four connections per day. This is perfect for the cows, for agriculture, for some infrastructures. This is far away from being useful for certain applications. But with our growth strategy, we're going to keep launching more and more satellites, decreasing the time between one satellite and the next, to go to near real-time by 2025. 

What we have seen in the IoT market is that, more or less, there is one third of the market that needs two messages per day, one third of the market that needs around one message per hour, and then this one market that go from one message per hour to real-time. Then our unique technology, it was to keep capturing more and more part of the market while we launch more and more satellite constellation. 

Erik: Yeah, it makes sense. In any case, I guess the 85% of the world that you'd be addressing with satellites is the place where these devices that don't require real-time connectivity tend to be located, because it'd be remote assets. 

Jaume: About right. 

Erik: And so, you launched the satellite. I believe it was on April 4. This was your second satellite. You named it "The Groundbreaker." It was the first 5G standard satellite. So tell me a little bit about the satellite technology. What was different between this satellite and your first satellite, and then what are the critical factors as you're continuing to innovate the satellite technology? 

Jaume: The first satellite was a fully-test satellite. It's a satellite that allowed us to do on the contributions to the standard. For example, when you have this continuous coverage like with that one, which is normally new here, the device cannot wake up whenever they want. Now, the device has to wake up when the satellite is flying over the head of the device. Then what this means is that the device needs to have the ephemeral disk on the satellite in order to know when the satellite is flying over. Because one of the key points of NB-IoT, of all the IoT technologies that are straight away, is battery life. Then we might not allow the device waking up to send the message and nothing happening and trying again, and trying again, and trying again to the satellite price. This is one of the contributions that we need to the standard, that it's already part of the standard. It was thanks to this first satellite that we launched in 2021. 

The second satellite is a satellite that already have the version one of our radio. We have the raw power on radio because there was no radio available with the characteristics that we needed. The first satellite we are launching, it's already two of the radio. This radio wants to connect directly with the devices. At the same time, we're testing all the different elements of satellite in order to be it a success when we launch these four satellites. The devices that we are going to connect, they are standard devices. They need to have more than — there is 17 software update. Today, those are 17 for the LEO, for the low earth orbit, it is not still available. It will be available for the second half of the year according to the main chip manufacturers. This means that what we are doing today with this first satellite is not with fully consumer products. Because they are not still there, we're the first satellite that is going to be connecting directly for your standard devices. It's the same that you may buy for $5 in the website of your mobile operator. 

Erik: Okay, great. So you're building new technology into the satellites based on the standards that you established through this prior work. You said and I think you're going to launch another three satellites this year. Then it sounds like by 2025, you'll have a significant constellation to provide near real-time connectivity. In addition to increasing the volume of satellites that you have in near earth orbit, how do you anticipate the technology of these satellites changing? Aside from the satellite standards, what are the key success factors or let's say maybe differentiation factors that you're focused on or your engineering team is focused on? 

Jaume: Of course, we have the radio. It's super important because it's rare that it's multi-carrier and multi-beam, that it may work with different bands. This is super useful. Because when you fly it over the different countries, you're not going to have the same band. The satellite operators are used to having large geo satellites that are unit band that will just in the band. There have been others too. They have been authorized. In our case, when we fly it over Mexico, we may have to use a different frequency that we may fly it over US. Our satellites have the capability of changing from one country to the other in order to have the best use of the capacity of flying over the different parts of the world. 

This is important because it gives us our flexibility when we address the different counties' regulators, which is an entry barrier that is there. It's a matter of time and money. But when you sit down with the regulator and you say, "We need only this, a small part of the spectrum in order that your mobile operators have full coverage everywhere for the final users." This opens up a lot of those when we are deploying our services in different countries. 

Apart from the radio, it's important that the 5G code that you have in the ground. The 5G code is divided into two. One part is in the ground. The other part is in the satellite, which is the one that allows us to do this term forward. Consider that it's unique in the world of the satellite roaming capabilities. The satellite itself, we are building it with standard subsystems. We don't want to put our focus on developing the best power system or the best solar panel. There are people out there that have very nice technology and that allow us to do it faster in a much more deliberate way. 

Erik: Yeah, this is regulatory point. I mean, having a deeply regulated industry is not necessarily a bad thing for business, right? As you mentioned, it means that there's a certain cost to entering. But then, once you successfully enter, you also have some kind of barrier to the market. I saw that you applied to FCC to connect NB-IoT devices in the US directly from space. What is that application? Is that a two-year negotiation, or is it a fairly straightforward process? Then do you have to replicate that across 180 countries? Or is it once you get FCC acceptance, then going to Mexico or going to Panama is relatively simple? 

Jaume: There are very few countries in the world as complex as United States. There is a reason, right? It's one of the biggest markets in the world, and it needs to be regulated. There are very good things that FCC has already included in any one that wants to operate over the county. For example, the need to deal with the satellite. This was not compulsory. The ITU is not already advising you to deal with the satellite once they are out of life. Which means that today, there are a lot of satellites. Now that satellites, they are already not performing anything, and they are still there. If you don't have a proposal in order to deal with the satellites, they may be in the space for 20 additional years. All these debris, we need to clean it up. Because if you want the space sector develop what you want, we need all these data from all takeaways that are not doing anything. 

Then this is an FCC norm that advises to do it. But apart from that, there are others. So then with FCC, we present our digital and our streamline permission that will allow us to launch the first 10 satellites. We are going to present our commercial one that we evolved to go up to the 500 satellites that we have been authorized by the ITU. As you know, the ITU is the International Telecommunications Union that regulates the space. Then we got the first permission from ITU. Then you have to go — in some countries, it's quite easy. In some countries, it's more complicated. Each country is different. In the United States, we present these petition pages, this request in order to start operating next year. 

Erik: Okay. Fantastic. When I talked to Gianluca, you had just recently launched the first satellite. I think, commercially, we're just getting traction. It's been a year since. What I saw on your website now is you have something like 50 MNO, MVNO customers and I guess through them, some multiple of that of end users or companies that are then using your network. What have you seen so far in terms of adoption, in terms of which product categories, which industries? Anything that's surprising in terms of what you expected to see from the market, what you've actually seen in terms of adoption? 

Jaume: Oh, yes. What we have seen is that apart from the — as you were saying, we are an extension of coverage of MNOs. Then our channel will be the MNOs and MVNOs all around the world. We have already signed with 50, which gives us — more than 50 currently. Again, that gives us full coverage and global footprint everywhere in the world, almost everywhere in the world. There are, I think, around 10 counties that we cannot already, where we don't have already any panel there. But apart from that, what we have been doing for the last year, for the last half year, we have been signing with final users. What we have been signing is binding orders. We wanted to start signing these binding orders that we want. We started the commercial service. We're going to take it and to give it to the MNOs, MVNOs in order that they provide the kind of service with the final user. 

Just in these last six months, we have signed with these final customers on two servers contract everywhere in the world. We are already at more than €80 million of ARR. Signed it almost one year before the service of start. This means two things. First is that what we are doing is what the market expects, that our product is the one that fits on the market. The second one is there is a huge market out there. Because it's impossible to sign €80 million of sales one year before it starts your commercial service if the market has not a huge appetite for the product, which is amazing. It's exactly what I was expecting. That's why we are here. But at the same time, you never know. The engineers — sometimes, we invent things that nobody wants. We see it as a wonderful technological and amazing technology to get. But after, we are going to buy again. People will say, why do I want this? In this case, it cannot happen. In this case, what we have discovered is this amazing technology that we are putting on our satellites. We are going to go commercial beginning next year. It's exactly what the market needs. The notation of that is all these orders, binding orders, that we are signing with the final customers. 

Erik: Okay. Well, congratulations to you and the team. I'm sure the engineers are all breathing a little bit more smoothly now. That's kind of a tense thing to spend four years on technology development, and then you see will the market accept it or not. When you look at those orders, what are the big use cases? Are we talking about logistics and marine? Are we talking about agriculture or mining? What are the big use case areas? 

Jaume: Here, well, you have to think that what we are signing today is the order that we are going to be able to serve with these four satellites. This means that we are only signing with customers that are not time sensitive. I want to say that, for sure, logistics will be the number one market. But it's not already there because our service is not already there. Logistics need from one message every two hours to one message every hour. We are going to be there next year. There will be a new satellite that we are launching by the beginning of 2024. Then right now of what you're saying, it's a lot of agriculture, a lot of cattle management, a lot of infrastructures, which is amazing. Because there are very interesting companies that does amazing things in order to reduce the cost of maintenance of overdue adjustments, high power lines. A lot of forestry, we are signing. We were sending a lot of projects for forestry uses, some maritime. These are the main sectors that today are using. Once next year, we go under the one-hour revisit time or one-hour latency, then logistic will slowly — because we are already having a lot of interests from the logistic companies in order to have this service ready as soon as possible. 

Erik: Okay. Fantastic. What else in the industry? I mean, this is an industry I think where there's a lot of different change factors, both in the connectivity side but also in the satellite side. I had a podcast with a company. I'm forgetting the name here, but they support with cleanup of satellites at end of life. Because, obviously, this territory is going to start becoming crowded relatively soon. You're going to go from 2 satellites to 500 at some point in the future. And so, there's going to be a lot of new challenges to face there. When you look at the industry landscape, aside from the MVNOs, who are you working with? On the sales side, on the satellite operations side, how is this landscape evolving today? 

Jaume: The new space sector is exploding. New companies appear every day or every week. We are working with unidentified station as a service, which is super useful because it doesn't make any sense to have your own station. In our case, with a couple of company there, case hat and river space, we are working with all these subsystem manufacturers. In Spain, for example, we have one of the leaders in solar panel, CHF. 

One of the areas that I think we have to evolve, we'll see a huge change is in the launch capacity. Today we are launching with SpaceX in both cases, in last satellite and the four satellites that we are launching before the end of the year. Here, outdoor vision orbit, it seemed to be that the most are close to commercial proposition. It seems not anymore there. I think that we will see a lot of small launches coming into the market in order to offer different possibilities. Competition is always good for the final user, for the consumer. In our case, for sure, it will be good because now we are going to have more capacity, more opportunities to launch in more frequent times. This is important in order to dynamize on the space industry. 

Erik: I guess if you look at the cost structure, I mean, SpaceX has already brought down the cost of delivery quite a bit, right? 

Jaume: Oh, yes, what SpaceX has done for the space. Without SpaceX, the space industry will not be the same. I think that fewer months has failure capacity of disrupting industries. Now, what they have done for the electric car, that now all the car construction companies are following is they have targeted on that. It's already doing exactly the same with the launch industry. It's just the start. Then all would have to follow. You don't want to be completely out of a market. This is something that changed the industries and changed the world. 

Erik: Well, yeah, and it's remarkable. I mean, it's only been a decade or so. The price has fallen by — I don't know. What is it? 5x or? 

Jaume: One tenth. 

Erik: If we look forward 10 years into the future, they'll continue to increase their capacity with larger vehicles. But also, like you said, there'll be smaller players who are providing services for smaller satellites. We'll have a continued decrease. So we have that as a big driver in terms of improving the margins. I guess, on the satellite side, what is the cost structure? I know you have more micro satellites today. But what is the cost structure, let's say, the cost trend for the actual satellite hardware looks like? 

Jaume: What is amazing is that the satellite construction companies that's not the same inducer capacities are in the world. Today most of the satellites, they're still artisanal. They are built one by one. Each one is different from the last one. Then we need production lines of satellites if we want to be okay in the next five years. This is something that is going to happen because the subsystem industry is evolving super fast. But we need more companies like Sateliot that will be in the short term in order to put on the table large number of satellite construction contracts for this. We are visiting different potential providers in order to find the one who has the vision. The vision is to be the one that is going to build up our constellation. 

Erik: Okay. That's interesting point. The industry is shifting from a project base and then, hopefully, to an assembly-line manufacturing. 

Jaume: A big one, a challenge. 

Erik: It will be interesting to see who actually acts there, who actually takes that opportunity, right? Great. Anything else that we haven't touched on that you'd like to share as an update? 

Jaume: No, I think that — the only point that I think is really important in our industry is this super high topic that keeps adding to the phone. What's going to happen here? I wanted to share my vision with you for this. There are some companies that are trying to put broadband, 5G broadband everywhere in the world. It's amazing. The technology they're using is an amazing technology. But the point is the market. When you want your satellite constellation, one of the problems you have is: the satellite in geostationary satellite, your beam may light some Pacific countries. Well, you know that there is business there. When you do a real constellation, the satellite go around the world and you cover everything. Everything means all the oceans, all the countries that have people that may pay for and an account is that people that may not pay for, or they have for identity. Then this is commercially, the challenge then is not only technology but commercial challenge in order to put in the market something that is feasible and is commercially sustainable. 

Our proposal dates, in a couple of years, we'd be able to connect direct to the phone with messaging. We believe that this is the right proper. Because messaging is what we really need. Low-cost messaging everywhere in the world is a huge market. It's something that the people want, and it's something that does not need the investment that you need for voice or broadband direct to the phone. We are designing already these with some of the largest chipset manufacturers in the world. This is something that we believe that will be also absolutely the right thing for the industry. 

Erik: Okay. Fascinating. Yeah, a lot of developing countries are doing financial services like payments through messaging and so forth. That would be a game changer for a farmer in a remote village to be able to have access to an affordable satellite. Well, fantastic. I really appreciate you giving this update. I'm really happy to see the progress that you've made. Maybe we can have another call in a year. I think the industry is moving so quickly. There's always something around the corner. 

Jaume: It will be a pleasure. Thank you very much.