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Report: Satellite Broadband May Have Turned Corner In 2005

By | February 27, 2006

      After years of false starts and disappointments, 2005 may have been the year that broadband satellite services "turned a corner and began to deliver on a number of long-held promises," according to a study released by Northern Sky Research.

      In the fifth edition of its annual "Broadband Satellite Markets" report, the marketing and research firm cited the advent of Ka-band satellite broadband services in North America, strong performance by Hughes Network Systems‘ Direcway service and the successful launch of Shin Satellite‘s IPStar satellite as the drivers of the resurgence. The study covers industry trends and forecasts for enterprise/VSAT and consumer satellite broadband.

      All told, Northern Sky estimates that the satellite broadband industry generated nearly $2.7 billion in 2005 from an installed base of 1 1 million IP VSAT sites and satellite broadband subscribers.

      As for the future? "A new generation of ground equipment, revamped service plans and some exceptional in-orbit satellite assets has given the satellite industry access to a variety of business opportunities, said Patrick French, senior analyst and author of the report.

      The big picture, according to Northern Sky forecasts, is that satellite broadband Internet access to consumers and small businesses will be the fastest growing segment of the broadband satellite market, with more than 80 percent of global subscribers being located in North America during the next five years.

      "The rest of the world is taking a wait-and-see approach to consumer broadband," French said. "If it sells well in North America, it could succeed in other places as well."

      The only potential roadblock may be stiffer terrestrial competition, French warned. Direct-to-home TV providers DirecTV and Echostar Communications Corp. will jointly launch a terrestrial wireless broadband service. Although French expects this service to complement rather than compete with satellite ,"it will initially serve towns, while satellite broadband will continue to serve areas of lower population density." Such services will still cut into satellite broadband’s prospective client base. "There’s a window of opportunity that exists today, that won’t last forever," he said.

      Not surprisingly, Northern Sky’s bullish assessment is playing well with the satellite broadband industry. "I think it is a very reasonable assessment of the market and its potential, based on what we’re seeing today in terms of pickup," said Ken Carroll, Wildblue president and COO. "We’re seeing excess demand for our product, and based on the surveys we’ve conducted, we’re getting good levels of customer satisfaction."

      Carroll also agreed that there is a near-term "window of opportunity" that the satellite broadband industry needs to exploit before terrestrial wireless broadband gets a foothold. "We believe that we need to get the product out there, and that the customer is ready to purchase it," he said.

      "Spacenet believes that there is strong growth potential in the VSAT services market, especially when it comes to underserved markets and managed enterprise networks," said Spacenet President and CEO Bill Gerety. "The new generation of broadband VSAT platforms has dramatically improved their price/performance equation, placing us on a better footing than ever to compete in the enterprise and government services markets. We believe the strongest growth potential lies not with commodity connectivity in traditional markets, but with service providers who will be able to find new applications and uses for VSAT, as well as those who are able to provide managed applications and hybrid or managed network solutions to end customers."

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