VSAT Players Concerned by Lack of Capacity

By | September 25, 2008 | Broadcasting, Feature, Telecom

[Satellite News 09-25-08] With demands for broadband services increasing in many regions around the globe, VSAT players see opportunities in markets such as Pakistan, Brazil and Africa, according to attendees at the Comsys VSAT 2008 show in London Sept. 24.
    Heinrich Nothnagel, general manager, MWEB/Afsat, Africa, a communications solutions provider, said while other technologies such as wireless and fiber are becoming more widely available, the business case for Internet services powered by satellite is still strong in Africa. “Wireless networks only become cost-effective when there is a high density of subscribers,” he said. “They are limited to customers in urban areas. From a regulatory standpoint, wireless has had issues in the past. It is important to point out that there is also a lack of maintenance culture for wireless networks when things go wrong. There are also many fiber cables being planned for Africa. We foresee a couple of problems with fiber. Fiber also requires maintenance. Again, there is not a maintenance culture.”
    Nothnagel believes issues with these technologies could open the door for VSAT players such as Afsat, which provides services in 26 countries in sub-Saharan Africa and has 40 distributors. “New technologies will create new opportunities for VSAT,” he said. “There will be significant growth in wireless networks. But, we think there will be a lot of unhappy people in the future. We think we will see a significant number of people migrate to VSAT networks in the future.”
    Talia, a satellite Internet services provider that offers services in the Middle East, is launching services in sub-Saharan Africa within a few weeks. Travis Mooney, COO of  Talia, said customer demands for VSAT services were changing. “In the 2003 – 2004 timeframe, customers were not very well versed in VSAT. The main customers were in the military, government, telecoms sectors, etc. Price sensitivity was very low at that time. What we are finding now is that customers are better educated. Price sensitivity is increasing. Many mid-tier customers opt for less expensive hub options. They is also now no loyalty to network operators. Market churn is high. Despite the increasing availability of fiber, we still think we are going to see a large proportion of VSATs in [Middle East North Africa] markets,” he said.
    The main problem facing VSAT players, according to Nothnagel and others, is a shortage of capacity. “We need to find suitable capacity. If it was not for the PanAmSat-10 satellite, there would be not an AfSat,” he said. “We can’t find enough capacity to sustain our growth. We are strangled for capacity.”
    Rafael Meinking Guimarães, marketing director for Hughes do Brasil, also highlighted lack of capacity as a major issue for its operations in Brazil. “There is lack of space segment, both in Ku- and C-band. There are rising prices for capacity. We are told by the satellite operators that we are competing with Africa for satellite capacity,” he said.
    Despite these capacity issues, Brazil is an exciting market for satellite projects, particularly in areas such as distance learning, said Guimaraes. “There has been a lot of good news in terms of the economy in Brazil,” he said. “Unemployment is decreasing. 50 percent of the population is now middle class. The VSAT business is also thriving. Demand is being driven in a number of areas such as corporate networks, distance learning, digital inclusion programs, telecoms operator obligations etc.”
    Imran Malik, CEO of SuperNet, a data network operator and ISP in Pakistan, said explosive economic growth in Pakistan between 2004 and 2007 was fuelling strong growth for satellite services. With a population of just under 170 million, the competition between the five cellular operators is fierce. Consequently, the cellular backhaul market is proving a lucrative one for satellite players. “The telecoms sector has been one of the fastest growing industries in Pakistan,” he said. “GSM backhaul has fuelled the rapid demand for VSATs over the last two years. All GSM operators are using GSM backhaul via satellite. There is an overall customer base of over 63 million, and there is now intense competition among all the operators. This has forced them to start services in unserved areas in the search for more subscribers. The current satellite transponder utilization for GSM backhaul is greater than 500 megahertz.”
    Malik believes the combination of a favorable regulatory environment as well as strong economic growth has been the key in terms of the demand for VSAT services. However, Malik also highlighted the needs for more capacity to serve the needs of businesses and consumers. Pakistan’s national communications satellite, ‘Paksat-1 is now full. The market is there for a replacement satellite. In around the 2010-2011 timeframe, the lifetime of Paksat-1 will expire. While most VSAT operators are using other satellites as well, there is still a shortage of capacity,” he said.

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