Traditional Operators Start the Fight Back
SpaceX’s Starlink satellite internet constellation is driving industry rivals to elevate their 'A Game.' How satellite capacity and other factors could expand new business opportunities for satellite operators.
June 26, 2023
Within an impressively short three years, SpaceX has launched more than 4,000 satellites for its Starlink satellite network, blanketing Low-Earth Orbit (LEO) with a constellation that now serves 1.5 million-plus customers worldwide — and counting. This feverish growth is kindling fresh competition among satellite operators, as Starlink eyes markets traditionally held by incumbents.
Yet a slew of recent events — high-capacity satellite launches, operator alliances, mergers and acquisitions, satellite system evolutions, and fresh investments — have shown there are potentially as many opportunities as there are obstacles in the days ahead, as operators undergo operational pivots.
“If you get Jeff Bezos and Elon Musk interested in your sectors, you should expect a little bit of rattling of the cages, and it’s not a bad thing,” says Eva Berneke, CEO of Eutelsat. “Nobody’s asking themselves whether Starlink is working or whether constellations will work. It is really a business that is in a big transformation, being disrupted by a few key trends. If you look at it from a long-term perspective, space and satellite has been around and invested for a very long time.”
The rattling begs a few questions: How will operators stay viable and meet the demands of the future, given Starlink’s growing presence? What tactics and technologies will they utilize to thrive?
Via Satellite talked to leaders from five satcom operators — Viasat, SES, Hughes Network Systems, Telesat, and Eutelsat — to hear their thoughts on what the intersection of changing end user needs, increased competition, and satellite technology evolutions means for the future.
Meeting Global Connectivity Demands
According to NSR’s Global Satellite Capacity Supply & Demand, 20th edition report, the Geostationary Orbit (GEO) and Non-GEO (NGSO) high-throughput satellite capacity demand will grow from 1.9 Terabit per second (Tbps) in 2022 to 46.1 Tbps in 2032 — 80 percent of this demand will be for consumer broadband and satellite backhaul & trunking applications.
NSR also estimates that the non-GEO share of total HTS capacity demand will grow from approximately 21 percent in 2022 to about 52 percent in 2032.
Until recently, “incumbents had better control over the satcom capacity and services pricing,” says Vivek Prasad, a senior analyst with NSR, an Analysys Mason company. “But Starlink moved very fast in the last two years deploying their services in the consumer broadband market and now they are looking to expand their portfolio at competitive pricing, resulting in pricing pressures across regions and applications. The incumbents are also investing in high-density satellites to lower the prices to capture and compete in all these markets.”
Prasad also noted that whenever terrestrial networks upgrade, say, from 2G to 3G or 4G to 5G, demand for faster networks and more bandwidth follows.
“Especially after COVID-19, we noticed that various enterprises are investing in digital transformation. Hence, the bandwidth demand is growing because a lot of their applications are moving from their host servers to cloud servers and incorporating SD-WAN where the various networks can be integrated for operational efficiencies.”
High-Capacity Satellite Launches
Satellite operators are in full launch mode to meet these bandwidth demands.
Viasat launched the first of its three ViaSat-3 high-throughput satellites in April. Each satellite in the constellation is expected to deliver 1 Tbps throughput, addressing rising global capacity needs, and just one satellite is expected to provide 2.3 times more capacity than Viasat’s current on-orbit fleet.
“Collectively, the three-satellite ViaSat-3 constellation is anticipated to provide more capacity than any other telecommunication Ka-band network currently in orbit,” says Viasat’s David Ryan, president of Space and Commercial Networks. “ViaSat-3 can help connect the 2.7 billion people around the world that are still offline. The ability to provide connectivity to unserved locations helps create opportunities and transform lives.”
Ryan cites multiple examples of markets driving new capacity demands, such as aviation and in-flight connectivity (IFC).
“Passenger expectations have evolved, too, especially in recent years as video has become the dominant internet traffic driver,” says Ryan. “Demand for satellite bandwidth across global air travel is heavily concentrated over certain geographical areas, including major hub cities, so the ability to shift capacity to meet these highly concentrated areas of peak demand, such as busy hub cities or popular flight corridors like along the East Coast is one of the keys to providing a high-quality, consistently fast connection.”
Additionally, Viasat is working in multiple continents to bring internet access to places like Africa, Latin America, and underserved U.S. markets. “Connectivity demand/growth has been outpacing available bandwidth for years and there continues to be a global digital divide,” says Ryan.
SES is also hoping the launch of high-capacity satellites will drive new partnerships. In April, SES successfully launched two O3b mPOWER satellites, which joined the first two satellites already launched for the next-generation Medium-Earth Orbit (MEO) constellation.
According to SES, the O3b mPOWER system will offer high-performance network services delivering industry-best throughput, predictable low latency, and ultra-reliable service availability.
“New satellites systems have increasingly closed the gap between terrestrial and satellite performance, making satellite a key integrated part of a seamless hybrid network environment,” JP Hemingway, chief strategy officer of SES, tells Via Satellite, citing satellite’s key advantages over terrestrial networks, such as ubiquitous reach and fast deployment speed.
In turn, these advantages have enabled new business opportunities, such as integrating satellite into mainstream applications such as 4G/5G mobile networks, private 5G (P5G) networks for enterprises, cloud infrastructure and resiliency, and core network repair.
“Next generation, software-defined satellite systems enable enhanced flexibility as beams
can be reshaped and moved to adapt to the customers’ evolving needs,” he adds.
By leveraging software control and open architectures, SES is also enabling its partners to tap into connectivity services delivered via NGSO systems without having to build their own satellite systems, says Hemingway.
SES is also on the cusp of a different type of evolution — new leadership. The operator recently announced that CEO Steve Collar will leave the company. CTO Ruy Pinto will serve as interim CEO and SES is searching for Collar’s successor.
Embracing a Multi-Orbit Strategy
With markets like traditional broadcast shrinking, amid increased demands for connectivity, having the right partnerships has become more important, as evidenced by Eutelsat’s merging with OneWeb and Viasat’s acquisition of Inmarsat.
“Those are six large GEO companies, consolidating before our eyes,” says Glenn Katz, chief commercial officer for Telesat. “A lot of what you'll see is more partnerships between companies and operators that haven’t worked together previously. If they can't do it themselves, they're going to need help from someone else.”
Berneke says Eutelsat merged with OneWeb in order to provide the best optimized network for customers.
“The multi-orbit strategy allows operators to optimize across networks,” says Berneke, when asked about whether a multi-orbit strategy is necessary to succeed. “In telecom, you know that the combination of 3G, edge, and 5G is probably a better-optimized network [from] a consumer perspective than if you only have 3G. Is it easy? No, you need phones that can do all three, you need equipment, grounds, and a network that uses all the best.”
“When we talk to customers, they always want the best of both worlds. But in this example, they actually want price-effective capacity in big chunks,” she adds. “When you talk to Orange, big cruise ships like Carnival, military, they want big chunks of capacity, especially for typically consumer-related solutions or Wi-Fi to villages, but they also want the low latency.”
NSR’s Prasad notes that the pending OneWeb-Eutelsat merger, expected to close in the third quarter of this year, exemplifies the effort to pivot toward collaborative connectivity.
Most end users are orbit-agnostic, says Prasad.
“All they care about is reliability, good speed, and affordable connectivity. Whether multi-orbit or high-density satellites or non-GEO constellations, or vertical integration, the focus should remain on addressing end users’ needs by offering flexible, reliable, high-bandwidth, and scalable solutions at competitive pricing,” the analyst says.
‘LEO is the Future’
Multiple operators are undergoing a radical shift in their focus in response to evolving end user needs and new market pressures, adds Telesat CCO Katz.
Telesat expects to deploy initial satellites for the much-anticipated Lightspeed Network in LEO as soon as 2026, a date that’s been pushed back multiple times due to financing and supply-chain delays. The operator is still working on financing for the constellation.
The LEO constellation, which incorporates next-generation technology including phased-array antennas, space-based data processing, and optical inter-satellite links, can enable a number of enterprise market applications. Telesat says the Lightspeed network will be about 20 times more responsive than today’s GEO satellites, and on par with fiber networks.
“We hope that will change the dynamic of the industry,” says Katz. “We're a 50-year-old satellite operator, and we started as a government entity here in Canada, and eventually privatized and then became a publicly traded company that operates satellites in the GEO world. But five years ago, Telesat’s management realized, there's an inflection point coming in this industry. And somebody's got to do something about it.”
For Telesat, the inflection point was the demand for much higher-speed services that GEO couldn't do economically, or with low latency.
“The market, from the operator’s perspective, years ago, was pretty straightforward,” says Katz. “You could draw lines between all the different providers in the value chain. Now, many of the operators already started moving in and squeezing out the service providers and started creating their own suite of managed services, selling bits per second and selling other services on top of that, like backhaul services around the world. I think that's going to continue. But we decided that while we’ll continue to do GEO services — we still have satellites, we have customers — LEO is the future.”
Diversify and Thrive
For Hughes Network Systems, GEO is still a vital component of its consumer broadband business, while it also embraces new technologies. In September 2022, the legacy satellite communications provider unveiled a low-latency satellite internet offering, HughesNet Fusion, which blends GEO satellite and wireless technologies.
“We don't believe that unless you own a massive constellation, you won’t be successful,” says Ramesh Ramaswamy, executive vice president and GM of International at Hughes Network Systems, the EchoStar subsidiary.
Ramaswamy says Hughes has been able to pivot its business, as it did with its enterprise business 10 years ago when it integrated terrestrial technologies into its portfolio in U.S. and European markets to diversify its offerings.
“Everybody keeps talking about SpaceX and Starlink, but this is not a winner take all game,” he says. “You need to adapt and integrate solutions around your basic offering to stay competitive. Most of our managed services customers use much more than satellite. They’re using terrestrial wireless, DSL, MPLS, cable, or fiber in some cases, as the construct. And then they use [satellite] for remote locations and as a backup if required.”
Hughes recently unveiled a managed services offering in LEO, which offers customers everything necessary for a managed LEO deployment, including terminals, capacity, network management, and a variety of primary and backup plans designed to meet the individual needs of business and government sites, according to a recent news release.
“If you’re only providing GEO-based services for one particular market segment, like traditional satellite operators selling capacity to video operators, or as a broadband operator, you put a bunch of capacity in one area and focus there, you’re not diversified,” says Ramaswamy.
Somebody else could come along with more capacity, offering lower-latency service and your business is now under pressure, he adds.
“But if you said, ‘I have technology that won’t buckle, if I can integrate a terrestrial service and combat the latency problem, my GEO terminals are lower cost, and my customer service is better’— which is the HughesNet Fusion service we are offering — then suddenly you're in the fight.” says Ramaswamy. “That’s one example of how you diversify your offerings to combat [market] pressure.” VS