Africa is a double-edged sword for satellite players. The continent has a population of more than one billion people, a majority of which are still not connected to high-speed services. However, the rapid onset of fiber could impact the opportunities for satellite. With the cellular market seeing increasing demand for backhaul services, the question remains whether or not satellite can step into the breach.
The whole world is going mobile, and not just in developed markets but also in emerging markets where more development is being focused on mobile devices. The demand for bandwidth is increasing exponentially, and cellular operators are searching for new ways to meet the demand for video and data services.
The good news for satellite is that despite the onset of fiber in Africa, the backhaul market is definitely still there. “Our research shows that around 54 percent of the African population is never going to get connected to fiber. So there is always going to be a demand for satellite, but what is inevitable is that it’s going to be used for more rural and more inland connectivity. We predict that there will be demand for technologies that can support rural low ARPU solutions,” says Phil Braden, COO, Gateway Communications, part of the Vodacom Group in South Africa.
Braden remains optimistic that the satellite opportunity is there and believes that the platform’s role will evolve with markets on the cusp of change. “There will also be a number of cellular backhaul sites, which will never be serviced by fiber or microwave. Satellite will continue to serve those. We see satellite products changing. You are not going to be doing large trunks anymore, but satellite restoration products are something that we have noticed that our customers are crying out for, because even though these cables come in, when their capacity gets to an end customer inland, availability has gone right down. There is need to find restoration products, either by meshing with other cables or via satellite.”
Impact of Fiber
While other technologies will take a piece of the market share from satellite, there are still plenty of niches for satellite players to provide services. “I would say satellite providers will see increased usage of their services for backhaul,” says Vitalis Ozianyi, industry analyst, South Africa, ICT, Frost & Sullivan. “Though, the proportion of use of satellite for backhaul capacity will decrease as compared to microwave and the emerging fiber backhaul. Growth in use of satellite backhaul will emanate from need to connect remote locations with a large number of potential mobile users.”
It may seem cliché, but satellite can make the largest impact on underserved rural locations where demand is on the increase. “Wireless penetration is increasing globally, and we are currently at more than five billion and rising. Yet, there is a big market in remote and underserved areas for more than a billion people. And with that, in targeting end-users in remote, unserved and underserved locations, the most effective way to respond to backhaul requirements is still satellite. In some instances, it is the only possible way. We definitely see more deals on the horizon,” says Jose del Rosario, a satellite analyst at NSR.
While the amount of fiber coming into the African market is on the increase, it is being matched by the demand for data services, a trend which Braden believes is a huge opportunity for satellite. Braden believes it is now Africa’s time for an explosion of new data and video service usage via wireless devices in this market. He says, “Overall, growth is huge from a data perspective. When we set our strategy 12 months ago, we were of the view that this is Africa’s time. The amount of capacity coming in has been crazy. What we have seen year-on-year is that demand predictions have been quite wrong. If you are in the business of providing capacity, it is not a bad business to be in. You have seen a lot of capacity come in. When the West Africa Cable System (WACS) switches on at the beginning of next year, the amount of capacity available in sub-Saharan Africa will double at the flick of a switch. So, there is an awful lot capacity at the landing stations.”