The private space industry could provide cheap satellite-based Internet access to billions of people not currently online, generating over $1 trillion annually through service revenues and the expansion of e-commerce and digital advertising, f500link]Morgan Stanley[/hotlink] analysts said on Thursday. But the growth will require 20 years of successful development of new satellite networks from companies such as OneWeb, SES’s O3b mPower or SpaceX.
The opportunity arises out of the dramatically falling cost of building and launching satellites, such as the tiny units known as CubeSats, amid a boom of private investment led by a number of well-known billionaires who have an interest in space, the analysts noted. In addition to Tesla (TSLA) and SpaceX CEO Elon Musk and Amazon (AMZN) CEO Jeff Bezos, the well-heeled group of investors also includes Microsoft (MSFT) co-founder Bill Gates, Google co-founder Sergey Brin, and Virgin CEO Richard Branson.
“The elevator changed real estate. Fracking changed energy. Will the reusable rocket and CubeSats change space?,” they wrote. “We see a range of industries that are ripe for disruption, with improvements in technology lowering the cost of access and creating affordable real estate in space.”
The leading company poised to profit from the new space race is Musk’s SpaceX, which has been among the leaders in launching reusable rockets and lowering costs. The startup could be worth $50 billion, the analysts calculated, and will eventually need to go public to raise adequate capital (although the company said in May it had no current plans for an IPO).
Get Data Sheet, Fortune’s technology newsletter.
In the meantime, the analysts highlighted a number of public companies that could also benefit from the growing space market. Communications chip maker Analog Devices (ADI) makes transmission equipment for satellites, for example, and SES (SGBAF) is a leading satellite services operator, the analysts said. Big defense and aerospace contractors like Boeing (BA), Northrup Grumman (NOC) and Lockheed Martin (LMT) could see more business as well. And if the plans succeed and connect billions of new online consumers, Internet giants like Google (GOOGL), Facebook (FB) and Amazon (AMZN) will benefit.
Still, the analyst warned that many things could go wrong and derail their bullish space outlook. In the 1990s, companies like Globalstar, Iridium, and Teledesic tried and failed to build massive satellite communications networks.
“We believe that it may be different this time, due to the lower costs to access space,” the analysts write. “However, satellite stocks have been incredibly volatile, and have historically underperformed the market. The industry is subject to funding risk, regulatory risk, delays, launch failures, operational risk, space debris, cybersecurity risks, and questions about its ability to generate sufficient returns.”
