Unlike the IBC, which was canceled at the last minute, World Satellite Business Week organized by Euroconsult, went ahead in December 2021 in Paris as planned. Normally an in-person only event, held in September, the December event was both in-person and online, resulting in close to normal attendance. Euroconsult took extraordinary precautions, including making on-site Covid-19 testing available.
Nathan de Ruiter, Managing Director Euroconsult Canada, opened the conference with some rather disturbing news. Namely, that the 25% growth in satellite data consumption was still not enough to compensate for the overall decline in video, caused by viewers transitioning from direct-to-home service to over-the-top (OTT) and streaming services. In the four-year period to 2020 total satellite revenues (operating and service) declined by 7%.
Looking ahead, Euroconsult is projecting that there will be 4.1 terabytes of capacity in orbit by 2025, the majority of which will come from the non-geostationary orbit satellites (NGSOs), and will be relatively low-cost. It believes that there are three main markets for this capacity. Firstly, the unconnected three billion people on earth. Euroconsult has done some analysis and believes that ~700,000 of these are addressable by satellite. This could mean residential broadband, WiFi hotspots or cellular backhaul. Secondly, mobility markets, of the 250,000 maritime vessels and planes only 15% are currently connected, leaving plenty of room for growth, particularly if prices decline. And thirdly, increasing data requirements in all markets; some growth has already occurred, and Euroconsult is expecting demand to triple over the next few years.
We’ve been talking about changes in space for many years now, as the processing power of satellites exploded and commercial satcom moved from primarily geostationary orbits (GEOs) to encompass NGSOs delivering broadband services; firstly, with O3b and more recently with Starlink and OneWeb. Innovation in space has to be accompanied by innovation on the ground, without this, new space would be dead space.
The View from the Ground Segment
One of the panels with the rather odd title of “Virtualization, Constellations etc.: A revolution for the ground segment” brought together all of the major ground segment providers (with the exception of ViaSat) to discuss this innovation in the ground segment. The conversation centered around the physical growth in the ground segment driven by the new constellations. NGSOs need more gateways with more antennas in each one than a geostationary satellite with a limited footprint does. OneWeb for example, has 42 gateways. The sheer volume and complexity of data generated and needed to support these networks, is one of the key drivers towards software defined systems and virtualization. As much as possible needs to take place in the cloud, as Thomas Van den Driessche, President and CCO of ST Engineering iDirect pointed out: “Today we have a task to do multiple architectures and multiple instances of types of deployments. We already have cloud architecture for processing using virtual machines……but our ultimate goal is not just to share our technology with cloud service providers, although that is part of the goal, but also to do edge service. 5G can help with this……and we can learn from the standardization that has been done on the ground. We are trying to leverage all of this to come up with the ultimate solution. It’s not trivial….we need to add our “special sauce” on top of the cloud solution.” Phil Carrai, President of Space, Training and Cybersecurity, Kratos summed it up by saying: “you have to be virtual, you have to be dynamic, you have to be open and orchestratable by others, the telecom sector for example.” He went on to echo Van den Driessche’s point saying that the satellite industry has an advantage by being able to leverage what has already been developed by terrestrial networks and just needs to lay software that deals with space specific issues on top of that. David Gelerman, CEO of Spacebridge Inc., was particularly adamant regarding the importance of moving towards fully software defined infrastructure and being able to build upon terrestrial systems to derive economies of scale. Another advantage of software systems was mentioned by Paul Gaske, EVP and GM Hughes Network Systems, namely that all software systems require updating, which creates the opportunity for an on-going relationship with your customer.
Regulatory Issues
Discussions in Paris, also focused on the responsible use of space. As well as many existing filings for LEO constellations that we hear little about, there have been another spate of these filings in recent months. There are two potential impacts from this: economic and physical disaster. Michel Azibert, COO, Eutelsat, pointed out that between them by 2030, the known NGSO constellations (O3b mPOWER, OneWeb, Starlink, Lightspeed and Kuiper) and new GEO satellites will add 80TB of capacity of which 50TB will be for broadband. Demand for broadband is projected to be 20-30TB, so already there is overcapacity. Azibert, however felt that growth in the market would make this a manageable situation. Add in all the “extreme,” or “exuberant” filings, as Steve Collar, CEO, SES, called them, which would double or triple capacity and there is potential for not only an economic disaster, but also a physical disaster, should any of the LEO satellites collide. Space, particularly at the LEO orbit is becoming very congested. As Azibert said: “Even if we develop the technology to remove all the debris, we still risk the Kessler effect.” Many people think we are already at that point. Collar pointed out, that with no penalties for “bad behavior” it was up to the industry to act responsibly. Mark Dankberg, Executive Chairman, Viasat, agreed, but added that we had now reached a point, where ITU filings effectively don’t mean anything, securing the landing rights is the real issue.
Industry Prospects are Mostly Good
In spite of the overall decline in revenue mentioned at the opening of the conference, all of the major operators present (SES, Eutelsat, Telesat, Viasat and Hughes) for the session “Global Satellite Business: new horizons” described 2021 as being as good or better than expected. Opinions were divided as far as video is concerned, with Collar, saying that video revenues were well ahead of expectations, whilst Azibert, indicating that video revenues had fallen relative to the previous year.
Interestingly, in spite of differences of opinion in the past, this year all the operators spoke enthusiastically about their belief in a multi-orbit strategy and the importance of low-latency. However, given that one way or another, all of the operators now own or have investments in NGSO constellations, this is hardly surprising.
The operators shared Euroconsult’s view that there will be sufficient demand to use the 4.1 TB of capacity coming on line in the next three years. Dan Goldberg, CEO, Telesat pointing out that the majority of that new capacity is going to be used for broadband applications in all sectors: consumer, enterprise and government, echoing a statement made by Jonathan Hofeller, SpaceX, VP of Starlink and Commercial Sales in another session (Broadband Constellations in the Fast Lane). Hofeller described Starlink’s market strategy as a three-legged stool: consumer, B2B and government, saying that whilst many people considered Starlink to be a consumer service, as well as the more than 100,000 consumer subscribers there are Starlink antennas on planes, cell towers, schools and hospitals.
Consumer demand for broadband capacity continues to grow in all regions; there are, however, two obstacles to be overcome to meet this demand. Growth in satellite capacity is never linear, there is always a step change as more satellites are launched, and it’s not always possible to get them launched in sync with growth in demand. Hughes is currently dealing with this issue, as is out of capacity over north America until the launch of Jupiter-3 next year. In developing regions, the challenge is to meet the demand at a price that consumers can afford. As Revillon explained, the real untapped market is closer to 700 million, not the 3 billion that everyone refers to, this diminution is largely due to affordability. Mark Dankberg, Executive Chairman, Viasat concurred saying: “There is a constant increase in demand. If you can deliver bandwidth at cost points that customers can afford, there are some big opportunities.” Viasat is also focused on mobility markets as an important segment for expansion. Inflight connectivity (IFC) has long been an important market for Viasat, and the industry as a whole, but at approximately 20% penetration there is plenty of room for growth. Land mobile is the lagging mobility sector and one that Viasat intends to focus on in the next few years. With the recent acquisition of Inmarsat, Viasat will have narrowband capacity for the first time, making the internet-of-things (IoT) market another area of focus for the company.
The world is still dealing with a very cunning virus, that unfortunately has the ability, to change the trajectory of things in a very short timescale. At the beginning of December, when World Satellite Business Week took place, omicron was causing havoc in a few countries, but had not become a global phenomenon. The general view was that the IFC and Cruise markets would continue their rebound in 2022. Less than three weeks later, we are dealing with thousands of canceled flights and cruise ships returning to port due to Covid outbreaks onboard. Right now, all we can do is hope that this setback, will be a short term one, and one that does not leave a lasting impact.
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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
