Trends in the Satellite Industry from a User’s Perspective
by Krasimir Terziev
Sofia, Bulgaria, March 9, 2020--This month Satellite Executive Briefing welcomes the views of Krasimir Terziev, Head of International Sales for Satellite services at VIVACOM--Bulgaria’s largest telecommunications company. He is also a member of the Board of Directors of Trakia University where is spearheading innovative training and educational initiatives in the telecommunications and satellite field. Follows are his insights:
Some people would say that the satellite business is declining. However, the facts present a very different picture. The satellite industry has achieved sustained growth every year and the approximate increase for 2018-2019 is 6% according to a report from the leading market research company, NSR. The largest segment of the industry is Satellite Services has a minor decrease of 1.7% due to the competitive satellite transponders market. Satellite Manufacturing revenues increased by 26%, Launch Services and the Ground Equipment segment also has a positive upsurge of 26% and 5% respectively. The overall turnover is expected to skyrocket up to US 1$ trillion in 2040.
Talking about the trends and foreseeing the future, we must mention the new revenue stream - the non-satellite space industry which include the Government space projects and the commercial human spaceflights. This should not be underestimated because the potential market presented revenues of US8 2.5$ billion in 2018 according to a report by the Satellite Industry Association (SIA) report. Any growth in this non-satellite segment of the space industry will usually have a multiplier effect on the satellite industry.
Revolutionizing the space industry- I believe that is the right sentence that describes the impact of “New Space” players. The three billionaires, Elon Musk, Jeff Bezos and Richard Branson want to lead humans in space and they are in fierce race who will succeed first. One of the most popular topics in 2019 was the LEO / Low Earth Orbit / satellites which will provide affordable Internet connectivity to everybody across the globe. Space X has announced the plan for the mega constellation of 12 000 satellites. Elon Musk has already proved that he can change the industry, cutting the prices of the satellites launches and providing a reliable service. On May 23, 2019 Space X has successfully launched the first 60 Starlink satellites in orbit. One Web has sent also in February the first 6 satellites and registered the start of the project. Telesat and Kuiper of Amazon are in addition some of the significant names in this market and they will be definitely part of the major players. One thing is sure - the end customer will win from this competition and at the end will receive a service on better priced service.
Consolidation of the Teleport facilities continues as well. Smaller operators became part of larger companies in order to provide a wider portfolio of services and to be more competitive on the market. However the revenue of the services increased from 2016-2018 according a report of WTA. The Teleport providers also faced a lot of challenges - they had to provide more services in existing hardware-fewеr antennas and less capacity and invest in new hardware or in cloud/virtualization services for better operational capabilities and competitiveness . They also tried to dodge the process of migration to terrestrial connectivity which is in some cases the cheaper solution for the customer but still not the best option because of lower reliability of the service.
The most fertile business direction this year remains the VSAT market. The average expected growth for the period 2019-2023 is 10%. In 2018 the Maritime connectivity market reached US$ 1 billion. The VSAT market is growing rapidly because of higher capacity demand of the passengers or the crew. The number of terminals will rise up to 65 000 by 2028.The satellite operators provide also a better pricing squeezed from the hard competitors and in addition the High Throughput Satellites (HTS) deployments ensure better throughput and better efficiency in the link budgets (MHz converted to Mbps). The on-board applications which deliver different optimization of the vessels also require more capacity. There is also a raised interest for additional services on board like Video on Demand services, TV solutions, Voice over IP, 3G/4G services close to the shore, vouchers for the crew and IP network management. This supposed automatically the purchase of additional capacity from the VSAT providers. The total GEO HTS capacity is expected to grow up to 680Gbps by 2023 Finally it should be mentioned that the biggest players in this market Newtec and iDirect have merged aiming to provide more sophisticated service to the customer.
The broadcasting market is getting more and more challenging. In some regions like Europe some customers migrate the services to IP infrastructure because of cost optimizations. The transition to IP is the biggest threat for the satellite providers. According a report from Euroconsult the leased satellite capacity will increase by 2021 but the overall revenue will decline. The company foresees that the total leased capacity will go up to 10Tbps. The viewer also became more sensitive in terms of the quality and additional services. This is why there is an increment of IP TV subscriptions with additional options like catch-up, pause and Video on Demand services. A lot of customers also tend to watch often the content or live events directly on the smart devices. This is why there is an increase of the OTT / Over the Top / subscriptions and this trend will continue in 2020. The biggest players remain Netflix, Amazon Prime Video, Hulu, HBO, Disney+. At the end we cannot miss the merger between FOX and Disney in March 2019.
As a user of satellite services and buyer of satellite products, I am very bullish the satellite industry moving forward in the new of the 20s. The new LEO and MEO constellations and the growing vertical markets such as maritime, oil and gas present a unique opportunity for the satellite industry.
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Krasimir Terziev is Head of International Sales for Satellite services at VIVACOM Bulgaria’s largest telecommunications company. He is also a member of the Board of Directors of Trakia University where is spearheading innovative training and educational initiatives in the telecommunications and satellite field. He can be reached at krasimir.terziev@vivacom.bg
