With demands for data increasing at an exponential rate, the demand for bandwidth continues to surge. In emerging markets, a lack of infrastructure means satellite is once again increasing in importance as a way of helping telecommunications companies and cellular operators serve customers.

Telcos ponder the satellite question

It wasn’t that long ago that people frequently buried their noses in a good book — it was the preferred solace from busy work schedules and the mania of everyday life. Now, rather than the pages lined with escapist intrigue, it’s a warm glow that we fixate on. The shining screens of our mobile devices have well replaced the once-loved novel. As we bask more and more in this illumination of digital data, you can only expect the mobile connectivity market to grow.

But while growth offers new opportunities, which every cellular service provider would welcome, it also poses challenges. Considering how saturated developed markets are, the room for significant expansion is in emerging markets and remote, underserved areas — enter the challenges. How best can operators connect customers hungry for mobile data in regions starved for fiber and infrastructure, all while keeping the price right to feed this appetite? At the same time, operators in bottlenecked markets also need to overcome the challenge of meeting the swelling capacity requirements of users increasingly demanding bandwidth-heavy applications and video-rich content.

Increasing capacity capabilities is a significant challenge, but it’s also one that only worsens without prompt action, says Peter Distefano, risk management director and managing partner at MTGD Electro-Mechanical Engineering. Distefano is currently working in partnership with Chinese telecommunications equipment and systems manufacturer ZTE to erect cellular towers in Ethiopia. The collaboration began in July 2014, after the Ethiopian government awarded ZTE the contract. Installation is expected to begin within the first quarter of this year.

Crucial Role

Satellite, adds Distefano, is to play a crucial role in overcoming some of the challenges facing telecommunications companies, especially in developing markets. A practical solution for remote areas, satellite can be the leg up needed for cellular operators to meet new demand. Additionally, he says, High Throughput Satellites (HTS) have the potential to reduce some costs while increasing speed and raising customer satisfaction.

“Traditional wireless networks are way over capacity as we speak due to the failure on the part of theprovidersto recognize user demands. Due to their inability to move fast enough to catch up with demand, we have already seen major drops in service. And still some providersare moving at a snail’s pace while raking in high profits,” Distefano says. “It is clear that both the consumer and enterprise customers are increasing usage dramatically right now. Within the next two or three years it will again triple and even quadruple. The serviceprovidersthat don’t move at a faster pace to expand bandwidth, accommodate greater wireless subscribers and improve pricing will be gone. At the same time, demand for satellite services will be on the rise.”

Within developing markets, across Africa particularly, telecommunications need to leapfrog over land lines to mobile connectivity in order to catch up, says Distefano. While this is possible, he explains, catching up can only prove beneficial if there is competitive pricing for services, and in emerging markets there tends to be a government telco monopolizing the industry and hampering real growth.

Ethiopia & Southeast Asia

“In Ethiopia, like most of the world, demand for mobile services is increasing geometrically. In the next few years in Ethiopia, as the cellular towers and complementing electrical systems are erected, the government expects to distribute 500,000 mobile phones. Developing nations cannot — and should not — think in terms of land lines due to cost whereas mobile phone service can be accomplished virtually anywhere.

“The problem in Ethiopia, though, is simply that the government has totalitarian control over everything. This means there is only one mobile phone company, Ethiotel, which is owned by the government and without competition; ergo no real growth,” says Distefano, adding that 3G and 4G are also points to consider in the game of catch-up and growing bandwidth.

Similarly, Desmond Looh, executive director at MajuNusa, a Malaysian provider of IP telecommunications solutions, sees customer demand for 3G on top of 2G doubling bandwidth requirements. Then there is also 4G and LTE requirements to consider, he says, pointing to satellite services as a way to accommodate the large bandwidth needs. According to MajuNusa, there has been strong demand for cellular backhauling via satellite across Southeast Asia in recent years and this is expected to increase. This anticipated growth will likely be boosted by HTS, explains Looh.

The problem in Ethiopia, though, is simply that the government has totalitarian control over everything. This means there is only one mobile phone company, Ethiotel, which is owned by the government and without competition; ergo no real growth.

 — Peter Distefano,
MTGD Electro-Mechanical Engineering

“The demand for satellite backhauling is increasing year after year in the Southeast Asian region. With increased HTS in the sky, we see demand for satellite backhaul increasing in the near future. To serve our customers we are currently working with two satellite operators, Indosat for Palapa D and Measat for Thaicom 4. Additionally, we have one O3b beam to serve high bandwidth demand,” says Looh. “We are looking forward to having HTS for the Southeast Asia region. The key challenge is price and we hope that HTS will overcome this as demand continues to increase.”

As for wireless subscribers, MajuNusa currently serves around 600 sites with bandwidth of 5 Mbps and 100 sites with 15 Mbps, with demand for wireless services being driven by projects from the government sector. The company serves more than 200 GSM sites for various customers with 2G services providing voice and data to end users.

“Demand for 3G is catching up at these sites and we see it soon driving bandwidth demand to at least double. The 4G and LTE requirements are coming in from various customers and we expect the very large bandwidth required to be accommodated with our O3b services,” adds Looh.

Applications

Looh says the trends toward using certain applications on a smartphone is really having an impact in terms of bandwidth usage and demand. He highlights the fact that video is getting more and more popular, not only with urban customers but also for suburban and rural users.

“Widespread applications such as Twitter, YouTube and Whatsapp, among others, are becoming increasingly popular, and this is driving bandwidth demand. Generally speaking, all the telecommunications and cellular operators see the heat coming in from these applications. This demand seems to be met by all the types of transmission sources, and satellite also needs to contribute to this,” he adds.

As the hot trend for video and voice applications is poised to continue burning for quite some time, the opportunity for satellite to be increasingly used as a transmission source remains healthy. However, this will not detract from satellite’s own niche, explains Looh, adding that cost is the main obstacle possibly preventing satellite from exploiting this period of peaking bandwidth demand. According to Looh, satellite will always have its own niche. He believes it will primarily continue serving the remote and rural regions except in the cases when services include a specific application that demands the installation in urban areas.

MajuNusa currently has about 280MHz bandwidth booked and used on Ku-band satellites and one additional beam from O3b Networks, which can provide around 700Mbps bandwidth. At this stage, the company plans to use this before moving forward with more bandwidth.

“Price remains one big challenge which seems to restrict the total bandwidth deployed at site. Customers may need more bandwidth; however, due to higher costs, they are restricting these sites to lower bandwidth. These customers are looking to use satellite until there is some other kind of transmission mode available at that particular site. The challenge of availability of transmissions modes, of course, also plays a keep role in this situation,” adds Looh.

Total Bandwidth

While the ugly notion of high prices surrounds satellite, there are other less attractive aspects too, such as interference — the industry’s infamous black eye. Rain fade in particular can be a major deterrent in specific regions, points out Prashant Gokarn, chief strategy and planning officer atIndosat. As capacity can be degraded in heavy rain, and this aspect remains a significant technical challenge for satellite, he says.

With around 60 million wireless subscribers, Indosat provides voice, SMS and data access services. Additionally, the Indonesian telecommunications network offers a range of content services over these access services. Demand is stable, says Gokarn, but the company is anticipating growth in data services rising in parallel with 3G coverage. This growth, he says, will not include SMS.

“Demand for voice is stable while messaging will increasingly move to data rather than SMS.We see massive growth in data services and this growth will accelerate as we further roll out our 3G coverage,” says Gokarn.

Customers have a seemingly insatiable appetite for data, but at the same time customers also expect connectivity on the move. Data access, video and rich content have become very important to Indosat in the last few years, with the company increasingly focusing on delivery of richer content on its 3G network, explains Gokarn. Richer content means greater capacity, which is one challenge, while increasing demand means more traffic, another challenge. However, rather than a strain, Indosat views this as being better for business.

“Our focus on richer content includes sports, music videos, live television, music streaming and rich applications for e-commerce. With the move to 4G, this trend will further accelerate. With customers wanting video applications, new apps, as well as data services, I wouldn’t necessarily call this a strain on traditional wireless networks. We want customers to use more data services. However, we need to provision for the capacity and examine whether we need to prioritize some classes of services, such as voice over P2P downloads, in the peak capacity hour,” says Gokarn.

High capacity 3G and 4G networks require much greater backhaul capacity, which Indosat prefers to do over fiber due to present prices and capacity capability, according to Gokarn.

“Currently, fiber is the preferred mode for backhaul provisioning to our network base stations. The satellite capacity requirement for remote sites with 3G will increase, but this number will depend on the business case, as satellite backhaul operating costs are much higher than fiber or microwave,” says Gokarn. “We use backhaul for remote sites and mainly remote 2G base stations that we are unable to connect economically with either microwave or fiber.At present, we use capacity from both our own satellite, the majority of which is for backhaul, as well as capacity from other satellites in the region.”

HTS Impact

At present, Indosat is evaluating the potential impact of HTS. While the advantage would be the massive available capacity, this can only be celebrated after ensuring technological compatibility and overcoming the uncertainty of rain fade in tropical climates, explains Gokarn.

As for demand for satellite capacity in the next few years, Gokarn expects business to remain strong, noting the maritime and broadcast sectors as avenues of increased activity.

“It is likely that demand for satellite capacity will remain robust over the next two to three years for both C-band and Ku-band. For C-band, Indonesia has many remote islands and VSAT is the main mode for connecting these islands. It is also likely that there will be increasing demand from the maritime market, and we have seen increasing demand to our satellite business,” he says. “For Ku band, as more and more channels move to HD, satellite direct-to-home operators will need increasing capacity in order to offer these channels to their customers.”

Like Indosat, Northern Sky Research (NSR) sees demand for satellite services remaining strong in the coming years. According to NSR, satellite is set for steady growth — but it’s not all smooth sailing, notes Jose del Rosario, NSR’s research director.

del Rosario adds that government initiatives could help underserved communities catch up to the more connected, developed markets. This would benefit the inhabitants and boost business developments for satellite players looking to invest in these areas.

Pressing Needs

del Rosario says he sees the most pressing need is to connect remote, unserved and underserved areas to narrow the large and growing gap within the digital divide that is prevalent in many counties around the globe; this includes both wealthy and developing nations. He believes it is equally important is to provide 3G and 4G services to these areas and populations to be in equal standing with their urban and suburban counterparts.

NSR sees the potential demand for satellite services is large given that there is a lot of pent-up demand in the market. “Of course, a large percentage of the addressable market resides in poor communities, such that this is a big restraint on the growth potential based purely on free market dynamics. If governments were to get involved via digital divide projects, spending Universal Service Funds (USF) and implementing Universal Service Obligation (USO) requirements, the market potential will be much higher,” says del Rosario.

NSR sees the demand for satellite capacity growing at steady levels based on pure market dynamics. However, del Rosario believes this could change and grow at more robust levels if two things happen: First, if governments take a more active role and start funding digital divide projects; and second, if government-backed digital divide implementations are put in place using HTS for 3G/4G and video offload services, he says.

del Rosario attributes a significant amount of rising capacity demands to video applications and data. NSR sees HTS having a big impact on these strong market trends.

“Video will continue placing tremendous strain on wireless networks. Video needs to be offloaded and here we see satellite as having a tremendous opportunity to tap into this emerging market requirement. We see HTS as having a big role in the video offload market due to the favorable cost considerations it offers,” del Rosario says. VS