Broadband via satellite has long been touted as the best solution for isolated areas that have no terrestrial connection, but it is also a big business for the satellite and telco operators that combine it with their TV and radio services. So, how does satellite broadband impact Europe’s cash-strapped markets?
SES and Eutelsat continue to believe satellite broadband can generate significant revenues in Europe. Though it remains a tough sell and currently limited to regions with few terrestrial alternatives, new developments in technology have put the broadband satellite industry in a position to be more competitive with DSL providers in Europe and North Africa, according to consultancy firm IDATE.
In a report issued late last year, IDATE argues that satellite is still lagging behind its competitors in the ultra-fast broadband market and needs to keep pace in regions where it has the most potential to grow. The IDATE report, “Ultra broadband via Satellite — Fourth Edition,” explores developments in national broadband plans in the United States, Asia and Europe, and examines the positioning of satellite solutions compared to other alternative technologies like 3.5G and LTE. The study notes that bandwidth speeds are often below 2 Mbps in regions that are too far from DSLAM service connectivity and that satellite’s latest connectivity speed enhancements have enabled certain providers to deliver downlink speeds of up to 10 Mbps.
“Most of the major countries of Europe, North America and Asia have adopted national plans for the large-scale rollout of ultra-fast broadband networks,” says Maxime Baudry, project director and co-head of Satellite Practice, IDATE. “In most instances, however, the technological choices are geared towards deploying FTTx, combined with LTE. Only a handful of countries, including France and Australia view satellite as a credible alternative for delivering super-fast services of around 50 Mbps downlink by 2015.”
Baudry notes that the most advanced satellite developments promise 50 Mbps service speeds by 2015, which will end up competing with large-scale rollouts of FTTx and LTE services set for launch between 2011 and 2020 and delivering download speeds of 30 Mbps to 70 Mbps. The future success of a service in Europe will also depend on how it positions itself with respect to competing wireless/cellular technologies, which are enjoying a very healthy momentum today.
SES and Eutelsat
SES has long been looking to tap into this market, and has gradually stepped up its plans in recent years. Peter Schüler, vice president, products and marketing, SES, says, “Consumer satellite broadband has been developed to serve the white spots where other technologies reach their limitations and it will continue to play this important role in the future. We believe that satellite broadband solutions are a necessary component of the technology mix to bridge the digital divide and reach the digital agenda objectives of 100 percent broadband coverage in Europe now and in the future.”
With broadband services already launched all across Europe, the operator has recently extended these to the Middle East and Africa – two other potential hotspots for satellite broadband. “We will further expand our service in other regions and grow our subscriber base in new and existing markets. With the tailored space segment development in Ka-band we are able to increase the cost effectiveness of the service, the quality of service and further increase the broadband speed per end-user. In addition, we will further develop satellite broadband applications, such as M2M, mobile applications or the tailored made broadband connection for whole villages via our SES Broadband for Communities service,” says Schüler.
SES uses a multi-layered approach to build a profitable business in this area. In this case, the service is distributed through a network of resellers that market the service to the end-users in their respective regions and provide a local sales force, knowledge, customer service and experience. In Europe, SES currently has 20 local service providers are selling its service. Its reseller network also covers Africa and the Middle East.
The operator also plans to launch a residential satellite broadband offering with even higher download speeds in Ka-band in its core European markets soon, thus increasing the speeds of its product. “In general, we have been creating profitable growth on existing Ku-band capacity since 2007. We have now decided for a measured expansion and investment into Ka-band to improve the service quality and lower the cost per bit, leveraging on our existing satellite procurement program,” Schüler adds. “The advantage of the solution is that communities do not have to make costly investments in their local infrastructure; and end-users do not have to install their own satellite dish. They can use standard equipment (e.g. standard DSL/cable modem) to benefit from all of the advantages of broadband Internet.”
Eutelsat has also solidified its presence as a major player in the broadband market with the launch of its Ka-band satellite, Ka-Sat. It has a very different strategy to SES in the sense it has been far more aggressive with promoting Ka-band, with the launch of the Ka-Sat satellite representing a signature investment in a high-performance satellite. Laurent Vandebrouck, commercial director at Skylogic, says that Eutelsat can meet a huge pent-up demand for these services. He estimates the consumer market in Europe and the Mediterranean basin could have as many as 13 million households that lack a broadband connection; and up to 17 million households are underserved by terrestrial networks.
TeliaSonera is one of Europe’s largest telecoms operators. Last year, it signed a deal with Eutelsat to use capacity on Ka-Sat to provide satellite broadband services.
Jussi Salminen, head of TeliaSonera’s broadband consumer business in Finland, explains why the company joined forces with Eutelsat. “It is a useful service in sparsely-populated countries and areas, but in city areas for example fiber and 4G will be the main technologies,” he says. “So far, the biggest interest group has been in sparsely-populated areas and summer houses, as well as connections for enterprises.”
Sonera Broadband Satellite, designed for residential customers, includes a 13 GB data package, a download speed of up to 10 Mbps and a transmission speed of up to 2 Mbps. Satellite now has a fit in its overall communications strategy. Salminen says “We are proud and happy that the new kind of satellite technology allows us to bring high-speed broadband access within the reach of all people in Finland immediately. Simultaneously, we shall continue with our long-term efforts to expand our fiber optic network and 3G and 4G networks.”
The European Union’s (EU) digital agenda requires that all member States provide 100 percent of their citizens with Internet access of at least 30 Mbps by 2013 and half of Europe’s households to have connections of 100 Mbps or higher by 2020. Pedro Pintó, head of broadband services at Hispasat says that important investments in infrastructure will be needed in order to meet this ambitious goal of providing users with such high quality broadband access.
“The main deployments that are being carried out are based mainly on fiber optic, cable and 4G services. For satellite, both residential and commercial users can take advantage of it, since what´s important is that they are users who do not have Internet access or have low quality Internet access not considered broadband,” says Pinto.
More simplified pricing policies are also a key to success. Pinto highlights two options concerning this strategy. “In both cases the user pays a start-up fee, which includes antenna installation, modem and the needed materials, and a monthly amount by type of service contracted, which can be only Internet access or a package of data and voice-over-IP, says Pinto.
While Ka-band will be critical going forward, it is by no means Hispasat’s only strategy at play in Europe. “Hispasat estimates that with important engineering efforts, know-how and with powerful Ku satellites, excellent Ku-band optimization can also be achieved,” says Pintó. “Proof of this is the successful deployment of thousands of terminals in Spain using the Ku-band capacity on our Hispasat 1E Satellite, and offering service from 1 Mbps to 8 Mbps at prices similar to ADSL in rural locations.”
Hispasat derives around 10 percent of its overall revenues directly from satellite broadband services. This rises to around 30 percent when added to the broadband services offered by its clients through its fleet of satellites.