High Throughput Satellites (HTS) are poised to deliver much higher capacity than traditional satellite services at a mere fraction of the cost. Today, HTS can provide more than 100 GBps of capacity this is more than 100 times the capacity offered by conventional Ku-band satellites. HTS is based on spot beam technology which enables frequency re-use across multiple narrowly focused spot beams. This results in a very significant increase in capacity for the same amount of allocated spectrum, allowing satellite operators and providers to lower costs.
What does this mean for the traditional satellite business model? And how will the satellite ecosystem look in a few years when HTS satellites are fully operational? These are some of the questions that leading satellite operators, VSAT operators, and service providers are looking to address. HTS could dramatically alter the satellite industry’s landscape, and below we will tackle the several ways that HTS can impact satellite markets in the next few years:
- Rise in Bandwidth Capacity and Drop in Prices
The increase in satellite capacity will be remarkable – all the HTS satellites that are currently in construction will have a combined throughput of over 800 Gbps, so their addition could more than triple the global bandwidth in space capacity in the next two years. The high capacity of HTS opens up satellite connectivity to new industries and markets, and satellite operators assume that if the prices fall, the demand for capacity from customers will increase. However, many people argue that satellite operators may be reluctant to lower the price of capacity too much, in case the capacity demand doesn’t rise to meet their expectations.
But there is bound to be a very strong downward pressure on satellite bandwidth pricing for many applications and markets where HTS systems will operate. The sheer scale of the increase of capacity means prices are eventually going to drop. For example, the throughput of two HTS satellites launched this year alone (ViaSat-1 and Echostar XVII) more than doubled the North American capacity. This great increase in capacity is most likely to drive prices downward as more customers can avail the service due to excess in supply.
- Technology Disruption
In addition to dramatic increase in bandwidth supply, new technical architectures of HTS could disrupt existing satellite markets. For example, HTS could challenge even the next generation of Geosynchronous-based satellite services in maritime, wireless trunking, and other markets in the developing world. HTS services are unique in that they have fiber-like data rates in the hundreds of Mpbs to the Gbps range, and yet they have low latency, at less than 130 milliseconds round trip. The low latency of HTS provides higher speeds for applications, and it gives Internet users faster download speeds. On the other hand, Geosynchronous-based satellite latency has a negative impact on throughput due to its high latency.Because of its low latency of HTS, it can support satellite backhaul of broadband mobile handset IP traffic for carriers that want to introduce 4G type services to remote locations without fiber infrastructure — applications that are not feasible using Geosynchronous-based backhauls due to the high latency. The advantages of HTS may attract a big share of users away from geosynchronous services in the next several years, but it does not pose a threat to the consumer and SOHO VSAT markets. The price for HTS dual motorized terminals is projected to cost up to $30,000 even at the low end, and the service coverage is focused only to within +/- 45° north and south latitudes of the globe.
- The Threat of Cannibalization
Since the cost per Mbps of bandwidth on an HTS system can be much lower than present prices, there are concerns that steep downward pricing pressures could hurt current C–band and Ku-Band revenues among satellite operators, as some services might migrate to HTS systems. The smaller regional satellite operators may have the most to gain from HTS satellites, since it can help them expand their services. If the small operators gain a lot of new capacity at lower costs than they have today, they are not as affected by cannibalization due to their size. However, larger operators are more sensitive to cannibalization, so they will be looking at business models that will not cannibalize their current business.
Because large operators have a huge portfolio of customers with existing C-band and Ku-band systems, creating a backward-compatible open architecture system will be an important part of their HTS strategy. This means that large operators that will start HTS services will put an emphasis on maintaining their current ecosystem of partners. Large operators can roll out enhancements to take full advantage of the performance and flexibility of HTS, and their current customers will have the freedom to select the terminal they want which will be backwards-compatible with existing services.
- Higher Satellite Payload Cost
HTS satellites can cost around 50% more than conventional satellites, in large part due to the complex multi-beam payloads they are carrying. Spot beam satellites such as HTS use large numbers of receivers, TWTAs, filters, and switches which will drive the price for the satellite and payload up.
The increase in payload will directly benefit the suppliers of these components. For example, the biggest suppliers of space-born TWTAs (Thales Electronic Devices, Ulm Germany, and L3 Communications) have all seen a surge in demand for HTS components.
- Complex Antenna Systems
As mentioned before, HTS payloads require a large numbers of receivers, TWTAs, filters, and switches to operate the multiple spot beams.
This increase in payload requirements and its complexity can change the industry teaming arrangements. For example, the Inmarsat-5 satellites being built by Boeing will use gimbaled antennas provided by Harris Corp under subcontract, while Lockheed Martin is subcontracting to Astrium for Ka-Band beacon equipment to fly on NewSat’s Jabiru-1 satellite for Australia.
- Ground Systems and Terminals
HTS require extensive new RF ground infrastructure, especially for the consumer Ka-band systems, and networks providing consumer/SOHO grade solutions. These can drive very large-scale network infrastructure and terminal contracts, not to mention hundreds of thousands of terminals demanded over time. Leading VSAT players like ViaSat, Hughes, iDirect, and Gilat stand to gain ground as demand for higher capacity broadband terminals comes with next-gen satellite deployments
However, there is a lot of long-term R&D required for these HTS ground systems which is a very big investment. This large R&D investment benefits the large VSAT players since they will have a long term advantage in the market as compared to the smaller VSAT manufacturers, thus resulting to fewer VSAT players.
The next few years will be an exciting and challenging time for the satellite industry, with major new opportunities for High Throughput Satellite services. HTS is bound to serve an ever-increasing demand for broadband IP services from consumers, businesses, and governments around the world. Operators and providers that fail to effectively respond to the changing industry conditions ranging from cost, competition, and changing distribution models could see major strategic opportunities pass them by.
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