In the mid-1990s, at the SATELLITE show in Washington DC, one teleport executive turned to another and said, “This Internet thing. Think there’s anything in it?
It turned out that there was. In the satellite industry alone, the rapid adoption of Internet Protocol (IP) created a revolution. It launched a new line of business: Internet backhaul and trunking via satellite. Then the traditional dedicated circuits for video, data and voice began giving way to a single pipe carrying IP packets. Costs fell and capabilities exploded, as did customer applications and demand. Pretty good news for all concerned, despite the travails of the telecom recession that followed the bursting of the first IP bubble.
Next Act in the IP Drama
The next act in the IP drama is unfolding now. By 2014, satellite operators will have put over $5bn of new capacity into orbit operating in the Ka-Band frequencies, representing many times the current bandwidth of the entire orbital arc. How will that new market evolve? The answer could be of vital importance to the teleport operators and other companies that currently provide satellite services. This is the subject of a new white paper from WTA called Ka-Band and the Teleport. It is based on interviews with Ka-Band operators and the top executives of teleport and technology firms. It details the significant threats as well as potential opportunities in the Ka-band revolution, and offers advice for satellite service providers on steps to take today to prepare for tomorrow.
The Ka-Band Business Case
The Ka-Band satellites being lofted into orbit take a completely different approach to network architecture than the satellites there now. While the operators are all focused on the low-hanging fruit of the world’s underserved regions, their real goal is to make satellite broadband competitive with terrestrial broadband. That requires enormous efficiencies, which are only possible with a network that is tightly integrated between ground and sky. As designed, each satellite will be served by a small handful of ground stations, not unlike the Inmarsat Land Earth Stations today. If your company is lucky enough to be one, life could be good. But the overwhelming majority of the world’s nearly 1,000 commercial teleport operators will not be in the club.
You might think that won’t matter much, because Ka-Band will be used just to deliver consumer broadband. But consider this. The current VSAT market is likely to take a hit, according to experts, because Ka-Band may offer a substantially cheaper way to deliver higher levels of service. The Internet trunking business, launched by the success of IP, is likely to disappear if 03B’s plans to target Ka-Band capacity to emerging and underdeveloped markets go forward.
But aren’t most satellite service providers are in other lines of business, where they can escape the impact? Maybe. It depends on how successful the Ka-Band operators’ business plans turn out to be. They are putting so much capacity into orbit so quickly that there is a real risk of a severe surplus. In which case, they would probably go looking for other markets to serve – video contribution, DTH, DTT distribution – which are core businesses of service providers today. And the cost advantages of Ka-band could be truly disruptive in those markets.
How worried should service providers be? Enough to pay attention, get involved in the market’s development, and think through the implications for their businesses. And of course, they can start by taking a look at Ka-Band and the Teleporton WTA’s web site at www.worldteleport.org.
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Robert Bell is Executive Director of the World Teleport Association, which represents the world's most innovative teleport operators, carriers and technology providers in 20 nations. He can be reached at: rbell@worldteleport.org
