Swarm Technologies is the most important satellite IoT company you’ve never heard about.  The Silicon Valley startup has innovative technology in the small sat space, U.S. government small business funds, potential trials with two Fortune 100 companies, and plans to deploy up to 500 terminals for testing.  But a failure to heed the Federal Communications Commission (FCC) will cost it dearly.

Why is Swarm important?  It was making fast progress in building “the world’s smallest two-way communications satellites” for a low-cost IoT network.  The first four SpaceBEE satellites are roughly the size of a slice of Texas toast – 10 cm x 10 cm x 2.5 cm thick, packing in radios, storage, batteries, solar panels into a compact package.  Everyone else with a nanosatellite play has been building satellites 10 x 10 x 10 centimeter 1U “cubes” or larger.

Swarm could effectively build and launch satellites at least one-fourth the size of any competitor.  That’s a significant advantage, since it means Swarm needs fewer launches to start service trials and ultimately build a larger constellation of a couple hundred satellites.

But, smaller potentially means harder to track in orbit.  Satellite operators need to know precisely where things are in space to prevent hardware-destroying collisions between objects.  Collisions also create more space debris, which, in turn, could threaten more orbiting satellites.

The FCC historically issues launch licensing due to its management of radio spectrum – satellites use radios to communicate with the ground, after all – and also is charged with worrying about the potential for space debris for satellites.  If the 0.25U cubesat gets close to another, larger satellite, the larger satellite would have to move to prevent a collision.

At a quarter the size of a 1U cubesat, the Swarm Tech SpaceBEEs are smaller than anything else launched to date.  Regulators were concerned about the space community being able to successfully keep track of the satellites in orbit and did not grant FCC permission to launch the hardware, reported IEEE Spectrum when it broke the story on March 9, 2018.

Swarm quickly filed a follow-up plan with the FCC to launch a couple of traditional-sized 1U cube sats, plus requesting permission to operate up to 500 IoT terminals and two more ground monitoring stations.  However, it didn’t tell Spaceflight, its launch broker, to pull the four SpaceBEE satellites from a January 2018 launch onboard an Indian PSLV rocket.

The satellites were successfully launched into orbit without an FCC license.  At some point, the FCC became aware the four 0.25U SpaceBEEs were in orbit and might have been actually operating them.  On March 9, Swarm’s pending license to put up the pair of 1U cubesats, add two ground stations, plus roll out up to 500 ground terminals for IoT use was put on hold.

Swarm Technologies finds itself in an unprecedented situation.  Without FCC radio licenses, it can't legally operate its currently flying satellites or put up new ones.  The company said it had two Fortune 100 companies lined up for paid pilot programs, plus another 15 businesses and the U.S. military interested in the technology.  Another 125 potential customers, plus National Science Foundation (NSF) grant money was in the wings.

Without licenses to operate, Swarm is dead in the sky.  But, the damage may be worse.  In theory, the company could pack up and move to another country, but regulators of any other nation would presumably hold Swarm to the same standards and be leery about dealing with a company that had already defied the U.S.  In addition, Swarm would still need permission from the FCC to "land" its service in the U.S., one of the largest markets in the world.

Launch brokers and launch services are also going to look at Swarm as a bad actor, and may insist on additional documentation and charge more to fly their payloads moving forward.  The satellite industry is very concerned about Swarm's actions and worries it may affect small satellite companies  by trigging heavier regulation and certification to prevent the launch of unlicensed satellites.

Swarm has said nothing publicly on its actions and most likely won't until it gets straight with the FCC. It may have to pay fines or even have to wait to get a new license until the existing  SpaceBEE satellites deorbit – not expected to happen for at least five to seven.   The company is in uncharted territory and there's little sympathy for its predicament in the satellite industry.