Regional Operators: What is Their Place in the New Satellite World?
November 28, 2022
There is a new world order. People around the globe want, need – no, rather must have – data. And lots of it. Regardless of where you live, work or play and the disparities that exist, people are unified in their demands and expectations. A quality connection readily available is the new black of yesteryear. In parallel, the era of Low-Earth Orbit (LEO) constellations has dawned, and consolidation is strong and unnoticeable.
Naturally, with the need for connectivity almost matching people’s need for oxygen and water, there is rapid innovation giving rise to new applications and capabilities that, in turn, need satellite. Once considered an inflexible, too-expensive last-resort back-up, satellite is now mainstream. Software-defined payloads that are fully programmable and digitized, very high throughput satellites [VHTS], scalability, an enabling role in 5G, cost-effective media distribution, backhauling and trunking and more – the industry advancements that have taken place both in the space and ground segments are remarkable.
So, where do regional operators fit in in this new world order of satellite? How will they stay relevant and compete against the constellations? How are they adapting to meet surging data demand? How do these operators find the flexibility needed to serve evolving market requirements and new use cases? Is this why we’re in a time of consolidation? If so, can regional operators do it alone?
The Partnership Model: Win-Win
Thaicom has embraced the partnership model. Earlier this year, the operator partnered with Globalstar to provide landing rights, gateway services and distribution of products and services across Thailand and the surrounding region. But this approach goes well beyond a strategy in Non-Geostationary Orbit [NGSO]. According to its CEO, the company has always been focused on providing the best end-to-end solution, and when partnerships help achieve this, it’s a question of complementary aspects and sustainability. It’s about following the guiding principle of a win-win outcome that is prevalent across many Asian nations. Naturally then, Thaicom is following this to help find its place in the era of multi-orbit constellations.
This doesn’t mean that industry consolidation is a simple task, says Patompob (Nile) Suwansiri, CEO of Thaicom. National security and regulation, among and other constraints in many countries, make strategic alliances a more pragmatic goal. Finding the win-win balance in this regard has seen the operator reposition itself as more of a regional space tech company.
“Apart from growing our core satellite business, in both providing end-to-end managed services and strategic partnerships with LEO operators, we are also embarking on opportunities from the new space economy. Our recent partnership with Orbital Insight, a leading global geospatial intelligence company, opens the door to new opportunities in providing geospatial analytics platforms using AI/ML and other services to our markets,” says Suwansiri.
Roger Tong, CEO of AsiaSat, likewise sees partnerships as a key to developing business in the region. Similarly, it needs to be a “partnership of equals” where all players should have similar values and contribute to the core competences in complementary areas. Along with being treated fairly, this is needed to establish a long-term win-win relationship. To Tong, it’s a long-term commitment and contribution to local economies and not about being focused on just financial returns. This sustainable model breeds growth over time.
“As the market evolves, the scope and depth of partnerships expands, allowing us to integrate our services with our partners and develop our capabilities and capacities as a fully integrated, end-to-end solutions provider,” says Tong.
To provide end-to-end solutions to maritime verticals via its SAILAS service, AsiaSat established partnerships with antenna manufacturers and teleport operators, and collaborated with its channel partners to offer value-added services including VoIP, LTE/4G, 5G, out-of-band management (OBM), L-band backup and cybersecurity. It’s also working on connecting its space resources with land-based data networks. Late last year, AsiaSat entered into a partnership with Turbidite, an edge data center provider, to expand its hosting service and data network to serve the Asia-Pacific region.
Regional players can still grow, says Tong, pointing to the variations in consumer demand. As customer needs continue to diversify, so are regional operators presented with opportunities because global operators will not be able to fully serve these needs.
“I don’t believe all operators must have a non-GEO strategy. The market is diverse and satellite operators are always a niche player compared to terrestrial operators. What is important is to position properly in the GEO market but also explore synergistic areas with non-GEO,” says Tong.
LEO Needs Regional Operators
It’s not that regional operators must have a non-GEO strategy, but rather all should consider a multi-orbit strategy. While LEO, or more generally NGSO, will find its place in the market, there are verticals where GEO will continue playing a dominant role with its established infrastructure and relatively low cost per Mbps. Therefore, LEO needing GEO is just as true as it may be conversely.
“Independent from ITU filings, for LEO market access, it’s mandatory to obtain each country’s landing rights or license for services. However, many countries favor their national operator or at least locally registered companies to serve their national telecommunication needs. Therefore, it’s fundamental for LEO system providers to associate with the local operators. Moreover, access to each country’s customers is mainly served by local GEO operators, making the partnership model for LEO more appealing than getting into full local competition,” adds Kevin K. Choi, CTO of KTSAT.
KTSAT is a member of KT group, which runs more than 40 subsidiaries but is also the biggest South Korean telco, covering both cabled and wireless business in South Korea. KTSAT and KT are preparing for the 6G era, where satellite communications will be fully integrated with its terrestrial counterpart.
“At KTSAT, we believe in multi-orbit, hybrid architecture and seamless end-to-end services for our customers. In this respect, we can call it our unified end-to-end service strategy,” says Choi.
Just as LEO will need regional operators, so does 5G give them relevance. To accomplish the promise of 5G data rates, coverage and availability, the needed infrastructure is much more dense and costly. For nationwide 5G coverage, it will be mandatory for terrestrial telcos to work with the national or regional operators for backhaul connectivity.
Satellite’s Role In 5G
In this respect, regional operators are expected to play a complementary role in 5G infrastructure. Moreover, 5G connectivity for mobility surely requires satellite, particularly in maritime and aviation. Then there is also KTSAT’s projected 6G era, where terrestrial and satellite infrastructure will be tightly integrated according to the current 3GPP standard ambition. In this scenario, LEO players such as Starlink, OneWeb, or Kuiper could benefit from working with the national or regional operators. Similarly, cloud services such as Amazon AWS, Google or MS Azure also potentiate regional collaboration as they help with the expansion of 5G network services.
While the enabling role that satellite needs to play seems clear, there is a lot that needs to be done before these systems become integrated into the 5G ecosystem.
“The sheer volume of capital and technology advancements required make it an uphill climb for the companies involved,” says Ali Al Kuwari, Es’hailSat president and CEO. “We bring our strengths of having worked with 4G and 5G networks across MENA to the table and that is our value add. This is especially true when it comes to backhauling mobile services requiring high-throughput services,” adds Al Kuwari.
With two satellites in orbit, Es’hailSat is and will largely remain a GEO operator, continuing to serve its mainstay broadcast, telecommunications, and government customers. However, it is watching the space and evaluating new opportunities across multiple orbits, particularly for applications in maritime and IoT. In tune with the consolidation taking place, as well as technological innovation happening within the wider space ecosystem, Al Kuwari notes that the company expects to make an announcement about its plans and direction in the near future.
“The goal for SpaceX and Amazon is to provide global service, but the world is not uniform in need. There are competitors with all SpaceX and Amazon lines of businesses worldwide, and that’s what drives innovation and improvements. The world of communications is much broader than the 5G ecosystem; the 5G ecosystem is rather part of the larger communications universe,” says Tong.
Being Close to Local Customers
“Regional operators have a characteristic that is unique: close relationships with local customers and a good understanding of their needs. That is something that global operators cannot offer. We care for our customers, and we provide the best-fit solution for their needs,” says Miguel Angel Panduro, CEO at Hispasat.
Hispasat has been actively analyzing LEO opportunities and was one of the investors in LeoSat. A lesson learned is that while global providers need the local market expertise and close relationships with regional customers, when it comes to investing in the constellation development, it doesn’t necessarily offer a fruitful partnership for the regional operator, particularly when the size of the regional operator yields a minority stake. In this case, the regional operator will not consolidate the results and will have limited decision-making capabilities.
Remaining open to exploring new alliances and partnerships, Hispasat now follows a different strategy, one where it’s positioned as a neutral collaborator for existing constellations. Having acquired AXESS Networks earlier this year has allowed the company to strengthen customer relations. This all works to create a favorable position, says Panduro.
“We have a good market positioning in our main regions and, since we acquired AXESS Networks, are increasingly getting closer to end customers. We could see ourselves using a third-party constellation in order to deploy our services,” he says.
In addition to AXESS Networks, which generates a significant part of Hispasat revenues directly from end users in verticals such as mining and energy, it also acquired Media Networks Latin America (MNLA) in 2021. While verticalization and diversification are growth pillars for the operator, video is an important revenue stream in Latin America.
The Video and Data Market
Panduro sees video revenues falling to 20 percent in 2025, compared to the current 50 percent. In tandem, data services are expected to eclipse 35 percent, with mobility driving the revenues growth.
“We know the future is data service, and we are betting on that. Our next satellite, Amazonas Nexus, is a clear example,” says Panduro.
A replacement bird for Amazonas 2 which primarily serves video, Amazonas Nexus has a radical design change to focus on data and mobility. Instead of widebeam coverage, ideal for video, it will have a multi-spot design to support high-speed data services and will provide increased capacity.
As technologies develop, the line between video and data is no longer clear. The separation of services using media or data may no longer be appropriate. The traditional linear video and one-to-many form of video distribution is in slow decline, says Tong, yet one-to-one video demand is growing exponentially.
In addition to its wide-ranging content distribution platforms across its satellite fleet, the company is expanding into terrestrial IP-based distribution solutions. It utilizes the live streaming platform of its subsidiary One Click Go Live (OCGL) to deliver content to global audiences.
AsiaSat takes the view that video distribution services should not be limited to transmission media or technologies. Rather, it’s an end-to-end service that meets customer needs. It includes but is not limited to facilitating the client’s last mile connectivity to consumers, content aggregation, and management and distribution services.
“Anything we do better than our competitors is a value to our customers. We’ve been helping customers and partners to deliver their channels across the Asia-Pacific. This new content will help fill the content gap for cable head-ends in the region when some major international broadcasters have either cut their services and migrated to OTT service, or consolidated their channel offerings following a merger,” says Tong.
While data demand is surging globally and video growth seems stunted, video in MENA is still robust. This is even with the radical shift from linear satellite distribution to Internet-based OTT delivery that has taken place over the last few years. MENA has a mix of users: some prefer streaming services while “a healthy number” still want to consume premium 4K/UHD content on a smart TV over a satellite DTH service.
Online activities have surged in the last year or two, notes Al Kuwari. Initially, this was because of a forced change in behavior during the COVID pandemic. As people eased into their version of the “new normal”, however, so did their connectivity requirements increase as they learned how much can be accomplished online.
“The net result of this has been that connectivity has become more critical to the lives and livelihoods of people, and robust telecommunication services are now seen as an essential utility. Although the data sector is growing rapidly, in MENA we still see the video market tipping the scale in terms of capacity utilization for the foreseeable future,” says Al Kuwari. VS