MSS Operators Performing Above Expectations
[Via Satellite 08-29-13] MSS operators have performed above expectations in recent years and maintained a good growth momentum despite the withdrawal of troops and tough VSAT competition. This is one of the biggest surprises from Euroconsult’s latest report “Mobile Satellite Communications Markets Survey: Prospects to 2022,” according to Wei Li, senior consultant at Euroconsult,.The report came out as Globalstar announced that all of its second-generation satellites are now in full commercial service, completing the its satellite communications network.
Li said one of the key highlights of the report was that he MSS market has been growing at 10 percent CAGR in the last five years. “The market is highly dynamic with the launch of innovative products such as Thuraya SatSleeve, maritime BB, BGAN HDR, etc. Secondly, there has been continuous investment in next-generation satellites such as Globalstar 2.0, Alphasat, Global Xpress, Orbcomm 2.0, and Iridium NEXT. Thirdly, there is a high level of concentration at the operator level: Inmarsat, Iridium and Thuraya account for close to 90 percent of the market. Finally, there have been a large number of M&As at all levels of the value chain (e.g. deal between Inmarsat and RigNet, Cobham buys Thrane, Rockwell Collins buys Arinc, etc.),” Li said.
Despite greater talk of more convergence between the MSS and FSS sectors, the MSS sector has held up strong and these operators generated around $1.5 billion in revenues in 2012. Euroconsult forecasts that the MSS market will grow at an annual rate of 12 percent in number of terminals from 2.9 million in 2012 to close to 9.4 million active terminals by 2022. Wholesale service revenues are projected to grow at a 10 year CAGR of 5 percent over 2012 to 2022.
Li believes Asia and North America could be strong growth regions for MSS operators. “Asia has a large population, huge landscape, fast-growing economy and wide areas underserved by terrestrial networks. All these factors present huge potential for the MSS industry,” he said. “For instance, the Civil Aviation Administration of China (CAAC) has recently issued a new regulation which requires all commercial passenger airplanes in China to be equipped with mobile satellite communications by 2017. This represents an opportunity of at least 4,000 aircraft for MSS operators in the next four years.”
North America presents “a different set of growth drivers” according to Li. He indentifies North America as the largest MSS market and absolute leader for business, aviation and M2M. Euroconsult expects the region to remain dominant in market share and innovation. Li said that MSS is likely to become more and more customized in the region, especially in the M2M domain. He talks of North America becoming the first adopter for many innovative MSS products (such as satellite cellular dual mode M2M service, and SPOT consumer level outdoor tracking service), and believes this will drive growth in the future.
Other markets such also offer potential. Li describes Latin Amrica as “among the fastest growing MSS markets.” In terms of Africa, he said the dynamics differ between the north and the south because it is such a large continent. “Military operations and political turmoil has been the main driver for the north part in recent years. In sub-Saharan Africa, the MSS is mainly driven by natural resource exploration activities. Many vertical segments such as aeronautical, M2M and even maritime are still to be developed. Euroconsult does not foresee MSS usage in these vertical segments catching up with other developed regions in the short term,” Li said.
Specific verticals such as maritime will be interesting to watch as they have been a particular stronghold of MSS operators in recent times, but with FSS operators looking to gain market share, competition is heating up. However, Li is still optimistic that MSS operators will be able to grow this market, albeit in slightly different ways. “Maritime has been a historic market for MSS, and FSS is taking away market shares from MSS, especially on the high-end market. MSS operators do feel a lot of pressure, so they introduced fixed monthly fee services, new generation Ka-band services, and even bought several competing FSS companies. Without FSS competition, the MSS maritime market will not evolve that fast,” he said. “Nonetheless, the market is shrinking on one side and expanding in the other. More lower-end markets such as fishing and coastal vessels are not penetrated by MSS operators. So the MSS maritime market is still going to grow, but maybe in a different direction.”