The key themes emerging from the three major conferences held in Europe this September, (World Satellite Business Week, IBC and VSAT Global and Next Generation Satellite Applications), were: change, innovation and flexibility. Change is all around. Change for manufacturers as demand shifts from Geostationary Orbit (GEO) to Non Geostationary Orbit (NGSO). Change in the structure of the industry. Lockheed is tracking 975 new space startups. Change in the manufacturing process. Satellites are getting bigger, and smaller. Electric propulsion is now an accepted technology; software defined satellites are moving from concept to reality, although we are still some time away from an in-orbit fully reconfigurable satellite.
Pacome Révillon CEO of Euroconsult, opened Satellite Business Week, by likening HTS for the satellite industry to 5G for the telecoms industry. The first HTS satellites came into operation in 2011-12. Their capacity varied from 70-140 Gbps, ViaSat-3 satellites, due to be launched in the early 2020s will have a capacity of over 1 TB. Euroconsult pointed out that in 2017, HTS capacity leased, increased by 38% whereas leasing of regular satellite capacity only increased by 3%. Going forward, data is the name of the game. Euroconsult is expecting a slight increase in video capacity leased to 2021 but a decline in revenue, from ~US$7 billion today to ~US$6 billion in 2021. Conversely on the data side, both capacity leased and the market value are increasing: from around US$6 billion to just under US$9 billion. Steve Collar CEO of SES went as far as to say, that whereas right now, two thirds of SES’ revenue, comes from broadcast video, he is expecting an equal split between broadcast video and data, in a few years’ time.
However, most of the major operators are still very bullish on video. Rupert Belmer, CEO of Eutelsat, stated “we’re very strong on video, the number of channels is still growing by 5% per year. What we sell to our customers is not bandwidth, but the position of our orbital slots.” Collar, agreed, also stressing the importance of orbital slots. He also pointed out that the technical capabilities that SES offers are also important. The CEOs of SES, Eutelsat, Intelsat and Telesat were all in agreement about the necessity of maintaining presence in the OTT market. As Steve Spengler, CEO of Intelsat said: “As customers do more OTT they are adding more cost to their business. This creates an opportunity for us to help them make their business more efficient.”
Flexibility is the name of the game, going forward. Linear television has not gone way, but its growth has slowed. Euroconsult are projecting 1-3% per annum over the next few years, meanwhile the demand for OTT continues to grow at an ever increasing pace.
Satellite operators, are not standing idly by, when it comes to OTT and many, if not most are looking for ways to participate in the delivery of these services. Jacques Le Mancq, CEO of Broadpeak, and described by Thomas van den Driessche, CEO Newtec, as “the savior of satellite,” pointed out that the issues with OTT, namely latency and buffering, were not caused by inherent problems in the OTT service itself, but by the limitations of broadband. Given that OTT is effectively delivered as a one to one experience, the more successful it becomes the more congested the broadband “pipes” become, causing the aforementioned issues.
The Broadpeak solution, known as nano-CDN uses adaptive bit rate streaming (ABR) over satellite, to transform the unicast OTT video stream to multicast at the headend for delivery over the network. At the home it is transformed back into a unicast stream for viewing on WiFi connected devices. Eutelsat is utilizing nano-CDN in its Cirrus service. Gerry O’Sullivan, EVP, Global TV and Video, Eutelsat, likened OTT and Linear TV to reading books and going to the cinema: people do both.
At Satellite Business Week and VSAT and Future Satellite Applications, there was also considerable interest in emerging economies and the unconnected, who now number nearly four billion. Collar mentioned that with O3B, SES had made partners for life by providing connectivity. “Every time we make a new connection, we fundamentally change the lives of people. Mark Dankberg, Chairman of the Board and CEO, Viasat, went further to say that “the cost of being unconnected is far higher than the cost of being connected.” ViaSat-2 has a partnership with Telebras in Brazil. “ Telebras have a brief from the government to provide connectivity and by working with them to create Wifi hotspots, we can help fulfil this brief.”
At the VSAT 2018 conference in London, during a panel that I moderated on “Connecting the Unconnected,” John Morris, Co-founder and Director of Geeks without Frontiers, talked about one of the initiatives Geeks is working on, in conjunction with Eutelsat, to deliver video and connectivity into a refugee camp in Jordan. Given that the average time spent in a refugee camp is 20 years, one can understand the necessity for this. On the same panel, Stein Skjorshammer, Founder and CEO of SunErgy, talked about the villages in the Cameroon, that SunErgy is supplying with solar power, television and internet, for the equivalent cost of bottle of local beer a day.
Unsurprisingly 5G was also a major talking point at all three conferences. Steve Spengler described it as a “huge game changer. There are multiple ways that we can participate in 5G, not just LEO or GEO, it could be via high altitude platforms (HAPs). It will have a huge impact. It’s the first-time satellite is being integrated into the standard.” The operators were divided in their attitude and approach. Rupert Pearce, CEO of Inmarsat, stating: “We don’t do a good enough job as a community to explain why the mobile industries need us, nor do we do a good enough job of fighting for spectrum.” Both Telesat and Eutelsat, stated that their investment in LEO constellations had been driven by 5G. Belmer stating that Eutelsat has a strategy to become “a privileged partner of large telcos, to enable them to provide full services in all geographic areas. The definition of satellite is that we go where telcos can’t, that is why we’re doing a LEO system.” Dan Goldberg, President and CEO, Telesat, echoed this statement: “We won’t be able to get involved unless we can match latency, which is why we’ve been reluctantly driven in that (LEO) direction.” Steve Collar was the most enthusiastic. “When you combine 5G with the cloud, artificial intelligence and analytics, it becomes super interesting. If we can do that, our big challenge will be scale. How do we grow quickly enough to put that needed capacity out there?”
There was plenty of talk about the LEO constellations. Eric Béranger, CEO of OneWeb, said that company has raised US$1.7 billion in equity so far, and is still moving forward. Given that the cost of the constellation is now rumored to be closer to US$6 billion, than the original US$3.6 billion, it still has a way to go. Nevertheless, he reported that the first ten satellites should be launched and ready for service soon. OneWeb is focusing on the 5G market and the system has been built around a 3GPP core.
LeoSat’s has a totally different strategy. Its customers will be large enterprises and an end-to-end service, totally bypassing the internet will be supplied. The total cost of its system is around US$3.7 billion. So far Hispasat and JSat have both invested an unspecified sum. Mark Rigolle, CEO stated that LeoSat should close its series A (US$100M) by the end of the year. This statement was reiterated by Ronald van der Breggen, COO in London. He pointed to the fact that LeoSat had made a decision to have no strategic investors, as the reason why it was trailing OneWeb in raising funds. He also stated that LeoSat has over US$1 billion in customer commitments.
There were very mixed feelings, particularly on the manufacturing side, when it came to the GEO vs LEO debate. In Paris the manufacturers were asked, if they were concerned about the long-term sustainability of the GEO market, given that last year there were only seven orders for commercial GEOs, and with only six to date, this year isn’t looking any better. Chris Johnson, President Boeing Satellite Systems, stating: ” We don’t expect to return to the old world, but GEO is beachfront property – it’s here to stay and we’re committed to see through this downturn and come out the other side.” Lockheed has integrated commercial and government manufacturing and currently has 21 GEOs going through the factory. Lisa Callahan, VP & GM, Commercial Civil Space, Lockheed Martin Space commented: “we see an ebb and flow between commercial and government, that is why we’ve gone to a common manufacturing base.”
SSL, however, appeared considerably more pessimistic than the others. Dario Zamarian, Group President SSL, stated that SSL/Maxar believed that “we have reached a new structural low…..we haven’t made any decisions, but strategically we’re exploring alternatives for our GEO comsat business.. We have a business built on volume so we need to examine what to do.” Since it had already been reported that one of the options under consideration is withdrawal from the GEO market, many of us were hoping for clarification one way or another. But the only thing that was clear, is that as yet, no decision either way has been made. The company says it will make a decision by the end of the year.
Interestingly at the conference in London, I took the opportunity to ask the approximately 200 delegates if they thought the LEO satellites signaled the end of the GEO era. About six hands were raised.
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Elisabeth Tweedie has over 20 years experience at the cutting edge of new commmunications entertainment technologies. She is the founder and President of Definitive Direction (www.definitivedirection.com), a consultancy that focuses on researching and evaluating the long-term potential for new ventures, initiating their development, and identifying and developing appropriate alliances. During her 10 years at Hughes Electronics, she worked on every acquisition and new business that the company considered during her time there. She can be reached at etweedie@definitivedirection.com.
