Satellite Operators Stake Their Place in the Global Telco Ecosystem
March 23, 2022
Major satellite operators continue to wrestle with their transformation from a mature industry focused on broadcast delivery of regionalized TV services, into a fast-growing, constantly transforming slice of the global telecommunications sector. As this change takes place, video remains a strong part of the business, and some operators saw video gains during the COVID period.
“The COVID period has actually been good for our customers. It's been good for broadcasters,” SES CEO Steve Collar told the session “Satellite Operators: Building Connectivity Services.” Increased demand for at-home entertainment from locked-down consumers stabilized the previously declining direct-to-home (DTH) satellite TV market. “Actually, we've seen a number of DTH platforms grow over this period, which is super encouraging,” said Collar.
But the underlying maturity of the DTH market hasn’t changed, added newly appointed Eutelsat CEO Eva Berneke, who joined the European operator this year from Danish IT and software company KMD. “You're at this crossroad where you still have a video broadcasting business that’s important and that will exist for a lot of years. There will be a lot of work to continue to innovate in that space. But it's not going to see the same growth cycles as we've seen when you go back five or 10 years.”
The new role for the satellite industry will make different demands, she said. “It's a different type of metrics, when you move into the broadband connectivity or the networking space,” she explained, comparing it to the pivot point many tech companies face. “It’s like a lot of other big tech industries — all of a sudden, they meet this kind of crossroad of usage cases and application cases that also require a different set of competencies.”
As part of that transformation, operators are increasingly seeking deals with telecommunications companies and mobile network operators, not just for backhaul, but to deliver connectivity directly to consumers’ cellphones in the future, according to Mark Dankberg, executive chairman and co-founder of Viasat.
“The thing that people are talking about now is space directly to your handheld phone. That's what the L-band system is about. The technology behind that has been available for years. The only thing that's been missing is getting the right chips in cell phones or the IoT devices — and now that's coming,” said Dankberg.
Viasat had worked for years to develop L-band technologies such as beamforming, Dankberg said, but never had access to the spectrum resources. The company’s acquisition of Inmarsat, expected to close this year, has changed that, Dankberg said, “We're very excited about the prospects of combining broadband coverage with global narrowband/IoT/voice coverage.”
SES had also been “obsessed” with how to integrate its satellite capabilities with world-leading terrestrial telecoms technology, Collar said, and has explored a middle ground between backhaul and direct-to-handset. “We think that aggregating satellite services through larger local sites that then distribute them terrestrially is a more cost-effective way to get to end users,” he said, adding that it “also drives interesting integration between ourselves and telcos or local service providers.”
He gave as an example the recent SES deal with Reliance Jio, which plans to use SES’s multi-orbit architecture “to drive into parts of India that they can't otherwise reach,” said Collar. He believes Jio is “more disruptive than any telecommunications player on the planet right now.”
SpaceX COO Gwynne Shotwell said that she finds such international partnerships to be one of the more fascinating parts of the business as SpaceX looks to grow the service footprint of its Starlink Low-Earth Orbit (LEO) constellation. Notably, Shotwell was part of the operator panel at SATELLITE versus the launch panel.
“Moving into a new country, learning what those customers want, what do they need? What can they afford? And how can you build a product that is helpful to them?” Shotwell said. “We know that what works in the U.S. and Canada will not work in many nations in Africa. But that doesn't mean that the capability can’t be well utilized by the people there,” she said.
Starlink had won market access and customer acceptance in some markets much more quickly than anticipated, Shotwell noted. “We've been quite pleased with the adoption of Starlink in countries that we thought would take a really long time, like Brazil,” she said.
That is the result of the utility, indeed the necessity, of connectivity, she said. “Many countries have learned over the last two years that connectivity is key for the delivery of health [services], for welfare, for economic growth. Those countries that are leaning in to find the best possible technology to serve their people are the ones I think will end up really thriving,” she concluded.
The key to understanding a particular market and regulatory environment in any given country is to find good local partners, said Pradman Kaul, president of Hughes Network Systems, “[You] can't beat that because you’ve got people who have been in that business in that country for a long time and understand it,” he said.
To that end, Hughes Network Systems recently formed a joint venture with Bharti Airtel to provide satellite broadband services in India.
Understanding new national partners goes beyond just deciding what to sell them, said Dankberg. “One of the things we learned [through our partnerships] is that many countries in the world have their own aspirations for space. They are really not looking just to pay rent to use somebody else's system, but they want to get all the benefits of being a participant in space. And that means — it varies from country to country — but often it means technology development, manufacturing, operations, launch capability in some places. One of the things we’ve learned is that we can help them achieve their ends in space and still have a good business.”
Collar sees this desire for space capability as “part of a broader trend, which is countries really understanding the strategic importance of space and understanding that it can be an important way to maintain sovereignty.” This has been brought into “sharp focus” by Russia’s invasion of Ukraine, he added. VS