NSR Sees Mobile Video as Key Satellite Opportunity
[Via Satellite 09-15-2014] The world is on track to see mobile subscriptions outpace the human population in a short period of time, according Ericsson’s August 2014 interim update of the “Ericsson Mobility Report.” In Q2 2014, there were 80 million new mobile subscriptions, raising the number of global subscriptions to 6.8 billion. As a result, trends in mobility are having a powerful impact on the satellite industry. With phones increasingly becoming a method of broadband access rather than merely voice, the increase in data use makes mobility a lucrative market for satellite.
“The ‘bread-and-butter’ markets for satellite have been video applications — [Direct to Home] DTH, distribution, contribution, occasional use. As video moves to a mobile environment, mobility will highly influence the satellite industry in terms of protecting its market share and maintaining its relevance as a telecommunications platform as well as in tapping emerging opportunities,” Jose Del Rosario, research director at NSR told Via Satellite.
Ericsson expects smart phones sales to exceed regular phones sales by 2016. Furthermore, the company expects mobile data consumption to quadruple, with video comprising more than 50 percent by 2019. In the August 2014 interim report update, the company found that mobile broadband subscriptions exceeded 2.4 billion, growing year over year globally by 35 percent.
This aggressive growth is creating more opportunities for satellite services. For example, In-Flight Connectivity (IFC) is seeing tremendous growth thanks to the number of devices passengers carry with them. But at the same time, much of the growth in the cellular industry is concentrated in densely populated areas where terrestrial connectivity has the upper hand.
“Yes, the market base is high in terms of usage of satellite for backhaul services for countries like Indonesia and there is positive growth indeed in capacity requirements. However, the satellite land-based towers wireless backhaul market overall has not been on pace with the more robust growth in the net additions of wireless subscribers. This indicates that growth in net additions has taken place in urban rather than rural and underserved markets where satellite capacity is being demanded,” explained Rosario.
China, Russia, India and Indonesia experienced the most growth during Q2 2014 in terms of mobility, according to the Ericsson report. While satellite has potential here, low Average Revenue Per User (ARPU) presents a challenge. In some markets this will be more difficult than others, but Rosario expects satellite will find greater play as video rises to an ever more prominent role.
Cellular backhaul services will increase commensurably with the increase in mobile devices,” he said. “More importantly, the bandwidth per user or bandwidth per device requirements will explode with video becoming the key application that needs to be managed by wireless operators on their network platforms. We, at NSR, see that video offload will be a big challenge going forward, but also see a major opportunity for all industry players, including the satellite industry, in terms of providing highly reliable and cost-effective solutions.”
Countries with strong initiatives to close the “digital divide” between urban and rural areas can be promising markets for satellite. In Latin America particularly, digital divide remediation plans are common. But Rosario cautioned that despite the presence of programs in nearly every part of the world, some implementations have not been very effective.
“For instance,” he explained, “there is the Universal Service Fund (USF) that is to be used specifically to bridge the gap. The problem is a large percentage of USF in key countries like India has not been spent. On the other hand, Australia has spent close to, if not, 100 percent of its USF and is also implementing other programs such as NBN to address the digital divide issue. So there has been no lack of initiatives and regulations to address less populated areas but it has been the implementation that has and continues to be the problem.”
Rosario said the satellite industry has been proactive in developing cost-effective solutions to closing the digital divide, since rural areas are often too costly to connect by terrestrial means. Examples include iPSTAR, which Softbank uses in Japan, as well as O3b Networks, which sees cellular backhaul as a top market. Intelsat too plans to meet cellular backhaul needs with the upcoming High Throughput Satellite (HTS) constellation EpicNG. With mobility set to continue rising, satellite players that can tap into this burgeoning video market will be poised for additional revenue.
“Companies that can come up with a relatively seamless offering that easily integrates into the wireless ecosystem will be at the forefront of future wireless developments,” said Rosario.