Conversations about the African telecommunications landscape today should focus on two major factors: connectivity, and purchasing power. With a rapidly growing population expected to reach 2.5 billion by midcentury, the African continent remains one of the most unconnected places on Earth, with pockets of 4G around relatively well-developed cities floating in a sea of backward backhaul networks and 2G connectivity on good days. The demand — and indeed the genuine need — for connectivity for the 1 billion people living in Africa is undeniable, and, as such, there should be demand raining down from the sky when we see new High Throughput Satellite (HTS) payloads launched over this region. However, purchasing power, the second part of this equation, remains a stumbling block. There may be a real need for connectivity, but can we make a business case out of it?
Taking data from Northern Sky Research’s (NSR) “Global Satellite Capacity Supply & Demand, 12th Edition,” we will discuss the potential for new markets to develop should new HTS systems drive down prices sufficiently, before looking at the potential impact of Low Earth Orbit (LEO) HTS, before taking a brief moment to examine the traditional Fixed Satellite Services (FSS) market of Africa — the C-band and Ku-band birds that carry thousands of channels of Direct-to-Home (DTH) content to the millions of TV households across the region.
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GEO-HTS: A Diversified Market Where More is Less
The market for Geostationary Earth Orbit (GEO) HTS capacity in Africa continues to be one that is characterized by customization, diversified product offerings, and, consequently reasonably high leasing revenues per Gbps due to the presence of turnkey solutions that command higher per bit prices.
Of all regions globally, the HTS market in Sub-Saharan Africa will be one of the least dependent on broadband access, not only from a revenue standpoint, but also from a raw capacity leased standpoint. This is due to a number of factors, but greatest among them is the fact that the African region in general still lacks sufficient Average Revenue per User (ARPU) to justify a concentrated consumer broadband via satellite play. As such, the majority of demand will come from more “enterprise data” type applications such as Very Small Aperture Terminal (VSAT) networking, trunking, backhaul, etc.
Broadband access will only account for around 20 percent of new demand in terms of raw Gbps, significantly less than the majority of regions. For example, globally broadband access is forecast to account for more than 80 percent of new HTS bandwidth demand to 2024. The end result here is that the vast majority of HTS revenues will come from non-broadband applications, with less than 15 percent of GEO HTS revenues by 2024 coming from broadband access services.
LEO-HTS: Not Yet, but Someday?
Turning now to look at the impact of LEO HTS systems, we must note that the African continent presents a particularly interesting case study of the potential impact of these systems. On the one hand, with relatively low ARPU levels, a low cost service would seem ideal for this market. On the other hand, the African continent has challenges in terms of distribution, local content development, and customer service that may limit the addressable market for any new service, including LEO HTS.
It remains to be seen how impactful LEO HTS systems will be in Sub-Saharan Africa. What is clear, however, is that the African continent presents what is arguably the greatest opportunity globally for satellite broadband, with over 600 million people today without access to the internet, a number that will grow as population growth outpaces internet roll-out in certain areas.VS
Blaine Curcio is a senior analyst at Northern Sky Research (NSR) focusing on Asia-Pacific and Africa. Prashant Butani is a senior analyst at NSR focusing on GEO-HTS markets.
