Enlarge / The Intelsat 901 satellite is seen by a Northrop Grumman servicing vehicle in 2020. (credit: Northrop Grumman )

Facing competition from Starlink and other emerging satellite broadband networks, the two companies that own most of the traditional commercial communications spacecraft in geostationary orbit announced plans to join forces Tuesday.

SES, based in Luxembourg, will buy Intelsat for $3.1 billion. The acquisition will create a combined company boasting a fleet of some 100 multi-ton satellites in geostationary orbit, a ring of spacecraft located more than 22,000 miles (nearly 36,000 kilometers) over the equator. This will be more than twice the size of the fleet of the next-largest commercial geostationary satellite operator.

The problem is that demand is waning for communication services through large geostationary (GEO) satellites. There are some large entrenched customers, like video media companies and the military, that will continue to buy telecom capacity on geostationary satellites. But there's a growing demand among consumers, and some segments of the corporate and government markets, for the types of services offered by constellations of smaller satellites flying closer to Earth.

Enlarge / Intelsat's Galaxy 37 satellite is the last of 12 new geostationary communications spacecraft launched over the last year to clear C-band spectrum. (credit: Maxar )

A SpaceX Falcon 9 rocket launched early Thursday with the last of a dozen new C-band video relay satellites purchased by Intelsat and SES to help clear spectrum for the rollout of 5G wireless services in the United States.

Intelsat and SES, two of the world's largest geostationary communications satellites operators, are on track to receive nearly $9 billion in incentive payments from 5G cell network operators by the end of the year. The payments are due after Intelsat and SES clear the lower 300 MHz of C-band spectrum, which is being transitioned from satellite services to terrestrial 5G under the supervision of the Federal Communications Commission.

The FCC auctioned the C-band spectrum for the rollout of 5G services in 2020. Verizon and AT&T took the lion's share of the $80 billion auction.