Reporting from the show by Brendan Murray, Product Manager, Commercial SATCOM
On November 11-12, representatives from Avascent Analytics attended the CCW (Content and Communications World)/SATCON show in New York. This year the name of the show officially changed to “NAB New York,” making it something of a junior version of the famous trade show in Las Vegas. Much like its Sin City companion, NAB New York brings together professionals from content production and distribution.
State of the Commercial Satellite Industry
Since 2010, the satellite industry has experienced a “steady as she goes” period of respectable 5% annual revenue growth and relative stability. However the winds of change again appear to threaten established players. Linear TV channel growth is slowing in many regions as Standard Definition TV is starting to yield to their HDTV counterparts and cord-cutting viewers explore terrestrially-delivered Over the Top (OTT) TV options. Teleport partners on the ground have focused more of their CAPEX on new applications and becoming “technological omnivores,” creating more robust hybrid networks for which satellite is just another distribution method. And the rise of well-financed disruptors, like OneWeb, have caused investors to carefully consider GEO SATCOM’s long-term growth prospects. With the means of delivery changing every year, and GEO satellites needing to generate ROI over at least 15 years, operators are challenged to find new justifications for fleet expansion.
The Drive to Lower Cost per Bit
High Throughput Satellites (HTS) are looking to prove their value at delivering broadband to the underserved, and supporting mobile backhaul and in-flight connectivity. But they can also flood a region with bandwidth, potentially driving down capacity costs. This could be key for VSAT and broadband applications, not to mention the increasingly austere government markets. There is evidence to support an overall downward pressure on transponder prices, but some of this may be regional in nature irrespective of the type of technology. Overcapacity in Asia-Pac has led to downward pricing pressure, but that region has very little HTS capacity as it is.
Traditional, non-HTS satellites can provide lower unit costs if they can be built and launched cheaply. ABS and SATMEX (now part of Eutelsat) benefitted from a unique multi-satellite purchase of Boeing’s brand new all electric 702SP. This allows them to pass the savings on to new customers in providing low unit costs for mobile backhaul services in Latin America.
So how does an operator increase profits when capacity prices are being forced down? Telecom service provider EMC acknowledges that they’ve seen price erosion, with price per megabits dropping significantly over the last few years. But that is more than made up for in increased use. The 256 kbps circuit sales from five years ago have turned into 5-10Mbps sales, with demand in offshore and aero connectivity being the main driver.
Recognizing Your Strengths, Incorporating Theirs
Prospective LEO systems such as OneWeb and LeoSat certainly represent a significant threat to traditional and more speculative HTS satellite systems. Rather than fight them outright, Intelsat decided to invest in them even before their first Epic satellite has left the ground. Senior VP Kurt Riegelman felt that OneWeb’s core mission is complementary to Intelsat’s, and that they could bring a new kind of capability to their existing customers that they otherwise couldn’t. And since satellites last 15 years, how do you respond to the more rapidly developing technologies that get introduced? Incorporate them into your network. Another Intelsat partner, Kymeta, is working to make their antennas “plug and play” allowing customers to use them for GEO or LEO, Ku or Ka band. Intelsat is hoping that their early partnership with Kymeta will help justify their investment with OneWeb.
In an increasingly competitive world of hybridized solutions and disruptive technologies, the mantra appears to be “If you can’t beat them, incorporate them.”