The role of satellite in today's telecoms ecosystem

No one can hear you scream in space so the saying goes. It’s also not an easy place to steal a communications satellite.

With a telling grin, Christoph Limmer, senior manager, market development Africa at SES; one of the largest satellite communications operators in the world, points out that fibre operators in emerging Africa face a constant battle to ensure the actual physical cable infrastructure is not stolen overnight.

“Zuku TV, one of the biggest cable broadcasters in east Africa operates a wide cable network, but every night someone will dig a hole in the ground, steal the cable and sell it on the market,” he says, before playfully adding: “It may seem a stupid example, but it is impossible to have this same problem with a satellite.”

Reliability is one of the most common words on the lips of executives operating in the satellite communications market today as they passionately defend their position to exist alongside fibre and terrestrial providers.

Roger Mandeville, projects manager at Datasat Communications, believes the simplicity of satellite even gives it the edge over fibre; after all it operates from point-to-point with nothing in between.

“Fibre links can go through two or three different providers by the time you receive service and the complexity of the components within the link means you could be transferred from fibre to copper. Satellite is simple – it leaves one place and arrives at another without anything in between.”

Satellite providers are united in their message – they are not planning to go anywhere soon.

There are, however, some cold hard facts and figures that even the most ardent satellite advocate cannot avoid. The trend in developed markets, like Europe and North America, is towards investing in fixed-line and fibre connectivity to support the huge demand for high capacity data transfer.

This trend has complete support from governments and regulators. The Digital Agenda in Europe, for instance, aims to connect at least 50% of all households in the continent to 100Mbps internet by 2020. While on the other side of the planet, Australia’s NBN project has seen the government set a budget of over A$30 billion for the roll-out of fibre to the country’s population. It’s becoming unthinkable that any country would ever make a parallel investment in its satellite connectivity.

There is, however, undoubtedly still potential for satellite in some emerging markets within Africa and Asia. But even there, companies such as Tata Communications are doing their level best to build out subsea cables to encourage a leap of faith to fibre.

Tata’s “connected world” research and whitepaper indicated that 47% of companies in emerging markets identified Africa as a key focus and area for development. Tata’s president of product management and service development, John Hayduk, has recently stated that there “will be renewed interest in handling capacity demand in Asia and India as internet penetration gets deeper… through continued cable activity and investment”.

Tata’s projections revolve primarily around the upgrade and development of the undersea cable market in both Africa and Asia to serve demand over the next five years. The projections fail to even mention satellite connectivity as a means for offering better access.

Likewise, as part of its Conquests 2015 master plan, Orange is fully committed to making fibre investments in the regions it has targeted for growth. Yves Bellego, director of technical and network strategy at Orange, says: “We mainly connect our customers through 2G and 3G for wireless, DSL fibre in Europe and fibre for enterprise. Backhaul in Africa is predominately catered by microwave links, and in Europe we mainly use fibre.”

Bellego says that while fibre is where most of Orange’s investment is being made, it’s not a simple choice between the two: “Satellite in the past has been adaptive to voice communications but the cost is now focussed on internet access and such high capacity can only be addressed by fibre.

Satellite is complementary to fibre because it is increasingly being used as a back up for fibre cuts, and its major use remains in the realm of broadcasting.”

It may appear that Bellego is lending his support for satellite communications, specifically in emerging markets, but if his views are perceived as an attempt to suggest satellite is now a resiliency tool for fibre, he risks the wrath of the satellite players.

SES’ Limmer flat out refutes analyst’s claims that satellite is increasingly becoming an infrastructure that is used as a simple back up in case the faster fixed-line option fails or cuts. “Taking the emerging markets separately, the availability of fibre networks today is poor and it doesn’t even reach a lot of people.”

Limmer goes one step further and questions whether Africa will ever “reach a roll-out parallel to western Europe or North America”. He says defiantly: “Satellite will play a significant role in the future of connecting people.”

Datasat’s Mandeville agrees, stating that there is a very narrow view in the market of what satellite is being used for. “It’s very easy to dismiss satellite as being a simple fibre back up.”

Datasat, which celebrated its 25th anniversary of operating this year, has built satellite and wireless infrastructure services in the UK, which Mandeville claims is unique because “most things tend to come out of Taiwan and the US”.

The company provides VSAT terminals for national emergency services in the UK that do not have access to fibre or copper connectivity. It also operates a system in Africa for mining and security through a mesh network, providing Tier 1 internet services for voice and data services.

Mandeville states that the theory satellite could one day become fully redundant, or primarily used as a back up to fibre, in the face of increasing fibre access is fundamentally flawed because fibre connectivity simply does not have the capability to reach some of the sectors that satellite does. “If you look at the mining community they tend to be in very remote areas, this is the same with both offshore oil and onshore oil locations and people use satellite because it’s the most reliable source of information,” he says.

While the cost to lay fibre remains astronomically high, its growth in developed economies will be considerably slow. This in turn promotes satellite as the definitive option for connectivity in rural areas.

“If you have a village that is 30km from the main town, the cost of laying fibre between that distance or establishing a wireless link is fundamentally lower than establishing a satellite link. People are finding usage for satellite that was not dreamt of 10 years ago.”

Indeed, if new satellite launches and investment is in decline, someone forgot to tell SatCom powerhouse Avanti. Its HYLAS 2 satellite launch, announced in August this year, will provide high-speed data capacity across the Middle East, southern and eastern Africa and the Caucasus on Ka-band technology.

Avanti claims the launch of the satellite is aimed at providing data services in regions that have left companies, governments and consumers previously underserved. David Williams, chief executive and co-founder at the company, offers a common held view that “traditional land-based telecoms infrastructure is not commercially viable in large parts of emerging market economies”.

He further draws on the fact that there is a fundamental lack of terrestrial infrastructure in emerging markets where people are increasingly reliant on mobile and cellular connectivity.

Williams claims “satellite is now challenging market dynamics”. A bold view, but considering the problems and challenges operators have faced in the US, India and even the UK in acquiring sufficient spectrum to cater to data-hungry consumers, it’s not without merit.

“Only satellite today has sufficient spectrum to cope with very data intensive forms of usage,” he says. “We believe that our markets will sustain demand for dozens of Ka-band satellites so our priority is to fill our satellites to justify the launch of more.”

Williams says the company is planning to follow up Avanti’s HYLAS 2 launch with further investments, which seems to go against the grain of other satellite activity in the news. Two multi-million dollar satellite projects in Indonesia and Russia were recently scrapped after failed launches and fixed-line operator Cable & Wireless Communications divested its VSAT enterprise business Afinis Communications after significant losses.

Williams, like his respective counterparts, defends passionately the future of the satellite market. “Very few people understand that satellite infrastructure is now critical to our modern lifestyles. Anyone that suggests satellite could disappear in developed markets is catering to a far-fetched notion,” he says.

“Tens of millions of people will continue to watch television through satellite because it is the only cost-effective and ubiquitous means of deployment of multi-channel HDTV. Ka-band is also developing to include numerous application benefits.”

The altering role of satellite There are two clear points made in unison by all satellite providers. The first is their main focus lies in the emerging markets, and the second is their businesses are in fact benefiting from increased fibre roll-out because it has created an ecosystem in the market for both solutions.

Telstra Global, which claims to have satellite coverage that covers a mammoth two thirds of the world’s surface, believes that the emergence of Ka-band technology has given satellite the ability to compete with terrestrial solutions in developed economies on both a cost, efficiency and performance basis.

Peter Hobbs, head of voice and satellite at the company, says that satellite providers have had to alter the way they approach the present industry structure of Mobile Satellite Services (MSS), Fixed Satellite Services (FSS) and Broadcasting Satellite Services (BSS).

Each line, he says, is continuing to blur due to increasing pressure on price points for broadband. As a result, Hobbs claims satellite providers, including Telstra, have had to introduce various frequency bands for each standard as operators seek new revenue streams.

Furthermore, satellite services are being used for different applications in numerous regions. “Ka-band satellites in the US, Canada and Europe are providing broadband to the home and it will continue to play the same role in satisfying customer demand in developed economies,” he says. “It is also a primary network provider in countries for cellular backhaul and DTH and will continue

to be so where the cost of terrestrial networks remains high and the roll-out takes too long.”

Limmer says there is a lesson to be taken from Latin America, where several years ago the arrival of fibre along its coast line prompted the market to claim it spelt the end for the region’s use of satellite communications.

“Countries like Brazil are now auctioning different slots for satellite connectivity based on the huge demand for connectivity in Latin America. The sheer demand and the lack of available fibre means there is bigger demand than ever for satellite in the continent.”

Telstra’s Hobbs, however, is under no illusions that the long-term projections don’t look good: “International satellite communications are now coming under increasing threat from the roll-out of submarine cable as well as local ISP/phone companies with innovative wireless solutions of 4G.”

The commonplace view in the market remains that fibre is too expensive to roll out in large geographical areas. There are also uses for satellite that cannot be addressed by other infrastructures. Indeed, satellite is even developing in terms of technology to compete with fixed-line fibre on a service and quality basis.

What cannot be denied, however, is the obvious demand for fibre links across the world. If the issues surrounding the roll-out of fibre can be overcome, it could spell trouble for the satellite providers, particularly in the emerging markets.

In the developed economies, the role of satellite, according to Limmer, is altering to “feed other infrastructures”. Namely, fibre, terrestrial and subsea connectivity.

“Satellite has been in North America and Europe much longer, meaning the market has saturated and growth is slower than emerging markets… growth rates are lower but projections are still positive,” he says.

Considering the projected growth and investment in the “emerging markets” it may not be long before satellite is also the secondary infrastructure in Africa, the Middle East and Asia.