Hughes Exec Says Latin America has “Big Need” for Satellite Broadband
[Via Satellite 10-08-13] Hughes Network System (HNS) recently announced it had teamed up with Media Networks Latin America (MNLA) to bring broadband services based on Ka-band to Latin America. While Hughes has experience operating in the North American broadband market, this deal was significant given it represented a breakthrough for the operator in Latin America.
In terms of how the deal came about, Ramesh Ramaswamy, vice president of sales, international division, Hughes Network System, told Via Satellite, “Telefonica has been looking at Ka-band services in Latin America for a few years. They launched a very rigorous procurement process for acquiring Ka-band ground segment for this service, almost three years ago. Hughes was selected after several rounds of a very thorough technical and commercial evaluation. So, this is a significant win for Hughes.”
While satellite broadband has become well established in the United States over the last few years, it remains to be seen what impact it will have in Latin America. Ramaswamy believes the region has a “bigger need” for these services. “There are more under-served and not served pockets of the population [in Latin America]. There are six to seven countries where we believe the demand will be high. So, the $64 million question is: what is the ability of the population to pay for this service and can you approach the ARPUs seen in North America for similar services?” he said. “However, initially, there should be significant low-hanging fruit in Latin America. As more and more capacity comes online and the cost per bit drops further, you are going to see increased take up. Different from the U.S. market, in Latin America you will see more of wireless backhaul solution using Ka-band. So, as 3G and 4G services are being built out in rural areas, the need for a satellite backhaul solution becomes greater. Ka-band services will play a significant role here.”
Others are also believers in satellite broadband in Latin America. Count Ignacio Sanchis, CCO, Hispasat, as one of them. “Our research showed that in Brazil and Mexico there is a potential demand of millions of households for residential satellite broadband services,” he told Via Satellite recently. “When you combine the expected pace of deployment of other terrestrial broadband networks with the expected increase of many population groups that today cannot afford these services but will in the coming years, the result is that millions of households are potentially customers. We see a strong demand over the next decade.”
One of the reasons for optimism is the potential for High Throughput Satellites (HTS) in Latin America. Ramaswamy expects them to “transform” the satellite industry in Latin America. “There is always an inflection point in any business where a business grows and starts to taper-off, and then you have to come up with the next big innovation to continue on the growth path. Today, I believe the satellite broadband industry is at an inflection point because of HTS,” he said. “Essentially, what you are doing with an HTS is bringing more capacity for the same cost of a conventional satellite. While reducing the cost of equipment and operations are important, reducing cost per bit has the most impact in the growth of broadband. So yes, I believe this will have an impact in Latin America.”
There is always the possibility we might see dedicated HTS’s in Latin America. Telesat recently ordered a powerful, multi-mission HTS satellite from Astrium that will replace the Telstar 12 satellite at 15 degrees west while significantly expanding coverage of growing markets in South America, the Atlantic and Europe, the Middle East and Africa. The Telstar 12 Vantage HTS aims to provide new, high capacity coverage of Brazil and East Africa. This could be a sign of things to come.
In terms of what trends we might see in satellite orders, Ramaswamy added, “National and regional operators started to launch satellites dedicated to their own country or region. So you might start seeing a similar trend in the delivery of HTS capacity, or very focused HTS capacity to address a geographically small area. Large regional wide HTS satellites could still happen, but it is also more likely that country by country you have capacity dedicated specifically for that market via hosted or purpose-built payloads. It is lower cost, lower risk and you are attacking a specific market.”
While countries like Mexico and Brazil will likely gain a lot of attention, there are other markets where satellite broadband could make an impact, “Just based on population and economic growth, you have to look at Mexico as a potential strong market for Ka-band services. If you look at countries like Peru and Colombia, they have growing middle classes, so countries like that will certainly drive the growth. Each of those countries, including Chile and Argentina, have populations of around 40-50 million people. If you can just get a piece of the market in all of these countries, this suddenly becomes a big market,” said Ramaswamy.