It wasn’t that long ago we were talking about the 3G revolution. That has rapidly gone to 4G and now 5G as mobile communications continue to advance at a blistering pace. However, as the demand for bandwidth spikes ever upwards, telcos must find ways to reduce the digital divide and make sure we don’t have a society split between the haves and have-nots. Here, we talk to a number of major players in the telco space about whether satellite will become more or less important for them in the future.
Telefónica is one of the world’s largest telcos with a strong presence, particularly in Europe and Latin America. In Latin America, it has a strong need to connect people away from big cities, and expects that satellite will be even more part of its future. Gustavo Arditti, Satellite Business Unit director and Chile manager for Telefónica International Wholesale (TIWS), admits that the satellite business in the Telefonica group is in a process of convergence, and that the telco considers satellite cellular backhaul as a way to extend 3G and 4G coverage in the geographical areas where it operates, especially in Latin America. “We think that the satellite business will grow in the coming years, especially due to 5G coverage and new [Internet of Things] IoT applications. We believe the opportunities for satellite are enormous,” he says.
Arditti admits that Telefónica believes the business model for satellite operators has changed since the launch of High Throughput Satellites (HTS), where, he says, operators have migrated from their traditional portfolio to offer managed services. Cellular backhaul demands a large amount of Gbps.
“For this reason, [satellite] operators have segmented their offer to this type of services in a wholesale model, which helps the use of the large capacities available. On paper again, the incorporation of [Low-Earth Orbit] LEO technologies that make the use of spectrum cheaper, we believe will create an opportunity to expand the footprint and the range of solutions that we can cover.”
Telefónica believes that several trends will define the future of the cellular ecosystem. Arditti talks about the implementation of new 5G networks based on Open-RAN networks. “The Internet of things will be the key and generate connectivity needs in locations that can only be reached by satellite. I am convinced that the new LEO satellites constellations will make available and support the growth of bandwidth in this new connected world," he says.
The LEO Question for Telcos
The news of OneWeb’s descent into bankruptcy was bad news for the satellite industry. In theory, its main target market was telcos looking to connect the unconnected. A top executive at a major Asian telco which has operations all over the world, but wished to remain anonymous, told Via Satellite that satellite will always have a role to play as there are many places which will not see fiber over the next decade. “Satellite is an option. Satellite capacity is expensive, so it all depends on the availability of fiber. If more fiber comes, there will be less satellite. But, there are many places around the world that won’t see investments in fiber infrastructure,” the executive said.
This executive believes satellite will have a large role, whether it's with Geostationary Orbit (GEO) satellites or the newer LEO and Medium-Earth Orbit (MEO) satellites. “For 2G backhauling, we were using GEO satellites. Now, moving from the 3G to 4G and ultimately 5G, we were looking at the LEO constellations in place. We were looking at OneWeb. You have LeoSat gone as well. Cellular backhaul over satellite will have a tremendous role to play. Telcos likes Airtel and Vodafone in Africa will need to use satellite for their backhaul. All the cities are connected. Most of the telcos are using C-band, Ku-band and Ka-band. Satellite will also have a big role to play in the future,” he says. “If you have seen the latest FCC mandates on this, satellite players are being made to give C-band for 5G in the U.S. So, the situation is changing. Latency will decrease on these new satellites. It will significantly drop. It is like fiber in the sky. It will be cheaper, and more reliable from what we have seen from satellite technology before. There is definitely a strong future for satellite in backhaul.”
When this telco starts a conversation with a satellite operator about a collaboration or a business opportunity regarding backhaul traffic, it evaluates the market scenario of a country, and the potential Average Revenue Per User (ARPU) and potential subscriber numbers. The Telco also considers Return on Investment (ROI), if potential subscribers will be sustainable and able to pay for services. “There are some regions where we may only have 10,000 subscribers, and we know out of these 10,000 subscribers only 10% can pay for the services. There are technical and commercial scenarios. Can we provide services at cheaper prices using satellite to justify ROI? We need to sometimes do a cheaper modelling when customers have less buying power,” the source said.
Another major telco, Softbank is also a keen acquirer of satellite capacity, and it is perhaps better known for being a major investor in OneWeb. Akihiko Tajika, deputy director of Softbank’s Advanced Technology Research Office believes satellite communication systems will take a more important role than before, much like the adoption of smartphones.
The company has been using satellite-based backhaul in Japan. Tajika says the market has two major themes — the potential of LEO constellations, and High-Altitude Pseudo-Satellites (HAPS). “HAPS fly at 20 km altitude. This height is very close to land and HAPS can communicate with cellphones directly. The conventional GEO distance is 36,000 km. The LEO distance is more than 7,000 km. HAPS' energy issues are not clear for now, but in several years, we expect the energy issues will be resolved. We are keeping a close eye on these two themes. Mobile operators will achieve 100% geographical coverage in the next decade via GEO, LEO, and HAPS. This is the responsibility of the governments and Mobile Network Operators,” Tajika says.
Tajika predicts a bright future for satellite. “I think satellite communication systems and technologies will be upgraded continually. 10 years ago, no one thought satellite communication speeds could achieve over 100 Mbps, and experts didn't think such a high-speed system would cost less than $1,000. Going forward, the respective roles of GEO, LEO, HAPS will become more clear,” he says.
Importance of Connectivity in the COVID-19 Era
Jean-Luc Vuillemin, executive vice president of International Networks for Orange admits the current crisis shows the importance of telecoms networks. “Do you have an idea about the amount of bandwidth that Orange has had over the last five weeks? On our international network, we have had 8 TB of traffic. To put that into context, that is what we were expecting over a six month period, and instead we had it over five weeks. The network is key. Everybody forgets that. Everything starts with connectivity. It is the blood of the economy,” he says.
Vuillemin believes there are a lot of possibilities for satellite. However, he states that satellite operators will need to change their mindsets in order to further develop relationships with telcos. “They need to provide solutions based on what we need. However, I am not optimistic about the situation. Not much has changed over the last ten years. I don’t think they really understand the situation, and that is why I don’t think it will change,” he says.
Vuillemin admits when you speak about satellites and mobile networks, most people think of remote areas. However, he doesn’t see why in 5G why a telco like Orange can’t use satellite to provide coverage of urban areas, which will be much more advanced in terms of economic criteria. “You have some areas in Africa, for example, where producing mobile data is very expensive in urban areas. You have to provide a lot of security features in towers for example. You have a lot of costs involved. This costs a lot of money. You could imagine to complete the overall 4G and 5G solution by using satellite, for example. This will be much more cost-effective. This will be a complementary approach. But, this links back to the cost of the satellite,” he says.
However, with a lot of satellite operators vying for their business, the situation could be described as confusing when examining their potential satellite strategy. “We have too many satellites and too many bandwidths compared to the needs. But, none of the satellite operators are trying to make a breakthrough in terms of producing a lot of data at an inexpensive cost, in order to stimulate the growth. They still try to maintain the cost of bandwidth at a very high cost and they remove part of their satellite capacity, to maintain the artificial high cost of bandwidth. As a consequence, this limits the use of the bandwidth. If they try the opposite strategy, which would means to decrease the cost of bandwidth and stimulate the market and increase the use of bandwidth, this could be more of a win-win approach. But, as far as I know, no one is trying to do that,” he says.
So, can satellite have an even stronger position in the market? Vuillemin says this will depend on the attitude of the market, and he doesn’t think its in Orange’s hands. “We are able to evaluate solutions and compare them to other solutions. It is a little bit like the history of satellite and submarine cable. When you see the history of submarine cable/satellite/wireless, it is switched between technologies in terms of which has been the most popular. But, at the moment, submarine cable has been used a lot, so the use of satellite is currently very low. But, that can change again. The market can evolve and change again in terms of its characteristics. We are always interested in comparing different solutions. I consider the possible increased role of satellite in telecoms networks could happen, but the conditions are not there yet,” he says.
In terms of mobile backhaul, Vuillemin believes it is a question of cost and standardization. He believes telcos cannot afford to have an industry where you move from one satellite to another, you have to change all your modems, and telco equipment at the cellular tower level. “We need to find a way to have an open market with interoperable equipment from various satellites and satellite operators. It is also a question of cost. In Africa, the cost of telecoms is low. Microwave is quite expensive in Africa. Maintaining microwave equipment in Africa is very expensive. We would be delighted to replace this infrastructure by some satellite links. It is a question of interoperability of the satellite links and costs. Today, the satellite is a very costly technology. Nobody has been able to move from the niche market of high price unlimited usage to a mass market which would gain huge usage and lower costs,” he adds.
When looking at the gap between technologies and standards, Vuillemin believes what is interesting is the gap between 4G and 5G, and that it is not similar to what we had in the past. He says when you look at the gap between 3G and 4G everything was about throughput, and that the idea was just to have more throughput. “A lot of people think something similar between 4G and 5G. This is partly true. One of the biggest interests in 5G will be the use of 5G in industry, and this will be the biggest change between 4G and 5G. 5G will be at the core of the future industrial landscape. A lot of factories, plants, processes, will be built on 5G. This is a huge change. I do believe this will be an opportunity to expand satellite in some areas. You can have remote production plants that can be completely connected for example using satellite. It is not just for backhaul, but also for access,” he says.
A Myanmar Case Study
Southeastasianet Technologies Myanmar Co. (Seanet), aims to bring digital connectivity to Myanmar, a country that has a population of around 55 million people. With its current network, it provides backhaul connectivity over satellite for many sites across Myanmar as primary and backup links where satellite backs up fiber at certain locations where fiber is unstable.
Pushpender Singh, Seanet CTO, says in Myanmar the company still mainly uses C-band satellites for backhaul when it comes to satellite connectivity. As it rains around half the year in Myanmar, Ku-band is not considered a good option. In terms of others, Singh adds, “LEO services are off course not available but we have seen some MEO services used on an occasional basis.”
4G services have been deployed in major cities in Myanmar. Singh believes one of the benefits Myanmar has had is telcos have been able to leapfrog technologies and perhaps move to 4G quicker than perhaps could have been expected. 4G is even available even in many remote locations. “At Seanet we have been serving many sites with satellite backhaul providing 4G and LTE services to end users.”
Singh also believes ultimately that LEO could have a strong impact within Myanmar. He adds, “Satellite technology has its own niche for sure and the advancements in satellite technology from equipment manufacturers and satellite operators are contributing technology to be more robust and competitive compared to what we had earlier. While the room for improvement still remains broad and with the help of newer technology such as LEO, we hope to see much higher capacity to be delivered at way lower cost. With end users even in remotest parts of the countryside asking for high bandwidth, the satellite industry will need to try and meet these demands. We hope to see LEO bridging that gap soon.” VS