Global VSAT Review: Satellite Purists–Too Much Of A Good Thing?

By | November 10, 2001 | Via Satellite

by David Hartshorn

Birds of a feather flock together, even in the satellite industry. And to be sure, staying close to professionals who share the same enthusiasm for this extraordinary business has got to be a good thing.

But there’s another saying that applies here: You can have too much of a good thing. There is ample evidence that certain members of the satellite industry have taken their flocking too far.

You’ve probably heard it at conferences. An esteemed member of our industry stands at the podium and, in the heat of rallying the audience to adopt a satellite-based solution, either implies or, indeed, states that fiber is inferior in most, maybe all cases. Satellite one, fiber zero. Us vs. them.

Aren’t we all a bit guilty of having referred deferentially to fiber as “those terrestrial systems,” as if to say that, because satellite systems operate hundreds or thousands of miles above the Earth, our industry exists on a higher plane? Come on, admit it!

This may all sound like frivolous armchair psychology. But the reality is that these tendencies sometimes affect the shape, direction and effectiveness of this industry’s business plans.

If, in a given company, corporate politics hark back to the satellite “purists” camp, then how likely are aspiring business planners to propose diversification of the portfolio into fiber? And how likely is such a company to prevail in an arena where its competitors–either through mergers, acquisitions, strategic alliances or partnerships –increasingly are offering customers head-to-toe connectivity that draws upon the relative strengths of both terrestrial and satellite-based links?

The over-flocking problem is not unique to the satellite industry. Far from it. And sometimes the technology-based bias is evident within the same company. On at least one occasion–and while working in a previous posting–this author knew a major telecoms company where the department responsible for fiber operations competed as much with its own organization’s satellite department as it did against external rivals.

Fortunately, those walls are being broken down, both within companies and between industries. Evidence of this has been increasingly apparent in the past 36 months, with an unprecedented number of satellite companies announcing they are adding fiber to their service menus and, conversely, of fiber companies including satellite in their portfolios.

This is good. Technologies are nothing more than tools. No one could reasonably argue that a screwdriver is as effective in sawing wood as it is turning a screw. The same principle holds true for communications systems: Satellites, while they serve very nicely on un-fibered point-to-point routes, are optimized for point-to-multipoint applications; fiber is hard to beat in providing primary point-to-point links for thick-route traffic.

This case is currently being made in the boardrooms of one of the great bastions of fiber optic communications–Flag Telecom. The case maker is Abu Shafquat, a director of the company, who hails formerly from the VSAT industry and who, indeed, served on the first board of directors of the Global VSAT Forum.

Speaking recently in London at VSAT 2001, a conference organized by Comsys, Shafquat underscored his point with the following cost analysis: If you assume that a satellite costs an average of $275 million, including corresponding ground systems, and that each satellite has 40 transponders with an average of 54 MHz equalling approximately 2 Gbps, then you have the equivalent of 12 STM-1s with an average cost per STM-1 of $23 million.

By contrast, one STM-1 from London to New York can be acquired today for $0.75 million.

But…when you introduce the distances and volumes involved, Shafquat added, the math swings toward satellite links. As our industry well knows, the unit cost for satellite is the same over short or long distances (a.k.a. the “Death of Distance”), but the cost of fiber correlates directly to distance. Thus, satellite is more cost effective than fiber over long distances assuming traffic volumes that are, in fiber terms, thin route.

That’s not all. Shafquat pointed out that the difficulties associated with backhaul interconnectivity often constrain rapid in-country access. In such markets, satellite–in particular, VSAT-based networks–enables fast, scalable access directly to customer sites. Combine the merits of fiber with the virtue of VSATs and you have not only cut the wood to length, but you have screwed it together and finished it off with a nice coat of paint.

Shafquat’s conclusion? “Core network synergies are possible–if the will prevails.”

My conclusion? I’d go one step further: The will has already prevailed in a growing number of this industry’s leading companies. The net result will be increasing availability of satellite/fiber solutions that deliver the world to end users’ doorsteps–and to which telecom customers will flock.

David Hartshorn is the Secretary General of the Global VSAT Forum. For more information, e-mail: david.hartshorn@gvf.org.


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