Realistically you can't make them much smaller than that. I know everyone's excited about "cubesats" that are shrunk down to ten cm on a side, but those things are always part of some "swarm" experiment that runs for a short period of time (usually hours) and ends. Here we're talking about something that needs to work for an extended period. And it's not some made up task like "Let's see if we can get ten tiny satellites to fly in formation!" You're actually going to be slinging RF energy around. So you're going to need:

1) Power. How much really depends on what's going to be on the ground. If your customers are going to be using twelve foot tracking dishes (they won't), you can get away with maybe a quarter watt or less. I'm not exactly sure what they'll need, but remember you're trying to communicate with something that's 100+ km away, minimum. Nobody's going to let you put up 700 plutonium RTGs, either, so that means solar cells and probably some sort of mechanical deployment system. And batteries - you still need power on the night side.

2) RF antenna(s). The more you skimp on your antenna, the more power you need. And vice versa. And you'll probably need at least two - one to point at your customers, and one to point at whatever you're using as a relay.

3) Thrust. Probably small, light thrusters and a comparatively large, heavy fuel tank. The lower your orbit, the more you need.

4) Stabilizers. Of some sort. Your antennas need to be pointed in specific directions, and your solar cells need to face the sun. So... gyros (and more electrical power). Plus more fuel, because you need to keep the gyros in their design range.

You're not going to be able to fit all this in a twenty pound satellite.

250lbs was from the article.