Space is Getting Crowded, and Policy Governing Low Earth Orbit is Broken

In November, Google announced Project Suncatcher, a project to harness a constellation of solar-powered satellites to support orbital data centers—in other words, an attempt to power AI from space as resources on Earth grow thin. Amazon, SpaceX, and startups have joined the race as well. Once mostly limited to communications, satellite operators’ ambitions are growing to include data centers, navigation systems, and computing infrastructure—many of which could float just a few hundred miles above our heads in Low Earth Orbit (LEO).

In that small slice of the universe, satellite constellations are exploding in size, with SpaceX’s Starlink alone reaching 9,000 satellites by late 2025. Starlink has an application for tens of thousands of new satellites pending before the FCC, and Amazon Leo is now launching as well. Global satellite data capacity reached 27 terabytes in 2023 and is projected to skyrocket to 240 terabytes by 2028, with non-geostationary orbit systems (NGSOs) such as LEOs expected to account for 97 percent of that growth. LEO satellite systems are already connecting households in remote areas where traditional broadband infrastructure is too expensive or impractical to build. On a global scale, their impact has been substantial—such as the free Starlink service being provided in the midst of Iran’s recent internet blackout. They’re powering direct-to-cell services, connecting vehicles in motion, and they may provide a potential source of positioning and timing for infrastructure dependent on GPS.

But while outer space grows crowded, the US policy that guides LEO satellites remains outdated and constrained. Regulators haven’t begun to address these new use cases. Current policies don’t effectively allocate the limited resources satellites depend on, and the state of competition in the field remains widely unaddressed. Orbital data centers are just the latest technological advance whose implications regulators haven’t begun to understand. When will policy catch up?

Late last year, the Wireless Future program at New America partnered with the International Center for Law and Economics to lead a working group addressing these growing policy gaps. A recent report from the group identifies reforms across three critical areas of LEO satellite policy: access to spectrum, competition in the satellite market, and bridging the digital divide.

Spectrum access

Like the mobile phone providers that wirelessly connect us, LEO satellites send data using spectrum—the radio frequencies that enable wireless connectivity. Under international law, NGSOs such as LEO satellites can’t buy exclusive spectrum rights like the big mobile carriers do. Instead, they’re expected to coordinate and share certain frequencies, which becomes more difficult as the bands fill up with users. And the licensing system that gates their access to the bands is burdensome and bespoke, with unreliable timeframes and inconsistent licensing conditions imposed in return for use of the spectrum.

Some of this burden could be eased with a process that prioritizes timeliness and predictability. This revamp could include the presumption that NGSO applications are generally in the public interest (so long as they comply with existing FCC rules), reducing the need for individual review and conditions; implementing a shot clock for application process timelines; and moving to incremental deployment milestones tied to enforcement penalties and incentives. To fund additional staff needed to speed the application process, application fees could be increased. The goal should be to weed out applicants with no intention of building while lowering barriers to entry for committed ones.

For satellite spectrum licenses that do go unused, further reforms could help create a functioning secondary market—such as relaxing interference metrics and allowing operators to trade or negotiate interference rights.

As more LEO constellations launch and expand, more satellite spectrum will be needed to enable them—and to sustain the increased capacity, higher power levels, and coexistence necessary for satellite connectivity to innovate and grow. The FCC has already opened several regulatory proceedings intended to do just that. The FCC should prioritize freeing up more bands, including spectrum for mobile use cases like direct-to-device connectivity that will allow smartphones to communicate from anywhere on Earth.

And although much of the communications space race is taking place in the sky, bottlenecks are emerging on the ground as well. A slow and restrictive registration process for the ground infrastructure that relays satellite data traffic reduces quality of service. A simple database could be used to automatically register earth stations using spectrum above 28 GHz, streamlining the licensing process and ensuring satellite constellations have the infrastructure needed to support them.

Competition in the satellite market

As LEO satellite networks evolve into critical infrastructure, the need for competition policy becomes acute. The overwhelming dominance of SpaceX in today’s markets for launch and LEO satellite broadband is a warning sign. But rather than trying to predict or prescribe certain market outcomes, regulators should identify likely market failures and focus on adaptive interventions. They can start by keeping policy frameworks up to date—for example, by ensuring regulatory classifications and service definitions reflect the reality of what LEO satellite technology can do.

They should also keep an eye out for potential anticompetitive risks—like the vertical integration already evident in SpaceX’s control of most US launches today. This chokepoint could be addressed by expanding US launch and manufacturing infrastructure.

Similarly, tying and bundling—which Amazon Leo is positioned to do for consumers of its upcoming satellite service, AWS Cloud, and Prime membership—runs the risk of anticompetitive behavior if low prices push other providers out of the market. And merger activity and consolidation are both likely outcomes in a market with high capital requirements and economies of scale.

While regulators should keep an eye out for these harms, and intervene on conduct that causes harms to consumers, they should avoid overzealous regulation that stymies progress before it gets off the ground. This is complicated by the fact that the largest planned non-US constellations are being heavily subsidized by China, the European Union, and other countries around the world.

Bridging the Digital Divide with expanded connectivity

LEO satellites offer communications services in areas where other technologies can’t reach, and the ramifications are huge: With proper policy guidance, gaps in broadband infrastructure could close for good. But fitting LEO satellite service into the traditional terrestrial communications landscape now means retrofitting policies and regulations to accommodate this shift—and to both maximize consumer benefits and guard against potential harms.

In the short term, reporting requirements to track satellite service commitments should be updated and standardized across programs, and project managers like state broadband offices should be given the tools to verify that providers are meeting their buildout obligations. Standardized metrics around projected uptake, current capacity, and planned expansion could help regulators evaluate proposed networks. And since satellite differs from other technologies in that the “deployed” service is speculative until consumers actually buy a subscription and switch the service on, this could mean using different evaluative metrics—such as adoption rates—rather than the physical network buildout that’s normally assessed.

In the longer term, consumers need a federal affordability program that brings monthly costs to levels that consumers can afford. For consumers of satellite service, the expense and installation of consumer premises equipment—which needs to be installed on the roof or somewhere with a clear view of the sky—is a significant upfront cost in addition to the monthly fee. These costs should be subsidized alongside the necessary training and installation for on-the-ground equipment.

Policymakers should also figure out how to accurately incorporate satellite coverage into broadband mapping, which remains the best source of broadband coverage data and guides federal deployment funding. If that proves impossible, they should move onto a different form of data collection altogether.

Just like every other broadband technology, LEO service has particular use cases, and it works best in low-density areas where other technologies would be too expensive to prop up. While deterring LEO satellite use means leaving service on the table, overextending its reach can strain the technology past capacity. Policymakers should enable its growth but avoid over-inflating it as a one-size-fits-all solution.

In the near future, policymakers should start considering additional policies to govern LEO satellite service’s potential role in related fields—such as mobile connectivity, community networks using hotspots, and now, space-based data centers. The technology is already forging ahead, whether policy evolves to keep up with it or not.

The working group’s reforms aren’t comprehensive, but they’re an important start. Implementing some basic changes like modernized spectrum policy and subsidy programs that work in Low Earth Orbit will help regulators get on track to ensure satellite policies help guide, not stifle, progress.

The alternative is watching as satellites continue to launch overhead while regulations lag behind—relics of a policy era the technology has already made obsolete.