Intelsat Sees African Over-Capacity Situation as Temporary
[Via Satellite 04-21-2014] Intelsat remains confident that Africa will become a powerhouse market for satellite services. The company currently has more than 20 in-orbit satellites focusing on the continent and plans to bring more capacity online through the EpicNG satellite Intelsat 33e in 2016. Africa has been a difficult market in the past due to a rapid surge of capacity from multiple operators. Fiber build out in and around metropolitan areas has further added to available capacity, but Intelsat sees future opportunities that can be leveraged as the market smoothes out.
“What we see is a near-term influx of capacity into Africa, and that’s coming both from satellite operators as well as fiber. This is having an impact on satellite communications, and this can lead to supply and demand coming out of balance from time to time, which is having an effect on pricing,” Grant Marais, Intelsat’s regional VP of Africa sales told Via Satellite. “Even with the growth of other types of connectivity, we still see that satellite plays a pivotal role in connecting the continent over the long term. This influx in capacity and excess supply is probably not expected to extend over the medium to long-term.”
Recently Intelsat signed a deal with MultiChoice for an increase in C-band capacity on its Intelsat 904 satellite. The agreement will power MultiChoice’s Digital Terrestrial Television (DTT) service GOtv in a number of Sub-Saharan countries. It will also contribute to other broadcast applications such as MultiChoice’s unique Digital Video Broadcasting-Handheld (DVB-H) offering, which uses a separate bouquet of channels. Intelsat’s other recent contract is with Vodacom for broadband services on the Intelsat 28 satellite.
“In Africa the terrain and the locations are just so remote and so difficult to get to by terrestrial means, whether that be fiber or microwave, some Push to Talk (PTT) and GSM operators don’t see that it will ever reach every part of Africa,” said Marais. “Satellite, such as our cell back haul capabilities, definitely plays a critical role in bringing connectivity to that ‘last mile’.
Satellite’s strength lies in its ability to connect hard-to-reach locations, but Marais expects satellite in Africa to continue playing a critical role in cities as well. Rather than switching out for fiber, satellite contributes to the needs of service providers by acting as a backup solution as well as providing voice and data connectivity. Marais pointed to the Vodacom deal, which supplies Ku-band capacity to South Africa, as proof. Vodacom has been an Intelsat customer in South Africa since 2009.
“That’s the last place I think anyone would have imagined that you would need to deploy a satellite-based broadband product,” said Marais. “South Africa has the biggest terrestrial build in Africa and has for several years. If we use that as the barometer, I think end-user consumers are going to continue to demand more and more connectivity in more remote and difficult places as well as the fringes of cities at the edge of current networks.”
Media-rich applications and the demand for connectivity will continue to push the need for satellite. Intelsat is keenly watching as private broadcasters begin to gain traction in parts of the continent. Marais said that VSAT connectivity will also continue to grow, and that it has continued to be profitable despite outside expectations to the contrary. EpicNG will bring additional capacity to bear over Africa, and Intelsat believes it will provide a cost-effective offering strong enough to attract customers from all geographies.
“Epic’s strength is really going to be in the amount of efficiency — in terms of capacity — it will bring to market,” said Marais. “Its open architecture platform, which can be layered onto a customer’s existing network, does not require the customer to replace its existing system, reducing the overall operating and capital expenditures. It also introduces a new level of flexibility in setting up customized solutions, and the increased throughput is really going to help Intelsat meet our customer’s long-term business needs. By providing customers with increased throughput and greater flexibility in a much more cost efficient manner, they will be able to expand their networks and increase their subscriber base at a much lower total cost of ownership.”