By Christopher Baugh

Broadband access has been a primary target of satellite companies for many years. Unfortunately, the satellite market has not fared well in its efforts to supply low cost, two- way broadband Internet access services via satellite. Technology, scalability and cost limitations translate into only a few hundred thousand Internet via satellite consumer access subscribers worldwide. In addition, the satellite-based Internet backbone market is a relatively small element of growth in many developing countries, with services to the developed world becoming all but extinct. While new trends such as Ka-band, cost reductions through economies of scale, and standards-based solutions (DVB-RCS and DOCSIS) promise to generate growth, wide-scale deployment of broadband satellite access seems to be slipping further into the future. In addition, the deployment may be only incremental.

With this backdrop, one recommendation is clear: the satellite market must develop new models for broadband access delivery to prosper and integrate with the rest of the broadband infrastructure. Satellites are unquestionably the most efficient means for reaching rural and remote areas of the world with a high-speed, ubiquitous link. Luckily, widespread WiFi wireless access technology is one prime candidate to support the bandwidth and low cost requirements of a broadband access service not currently offered by satellite broadband access alone.

Converged satellite-WiFi deployments now promise to carve out several niches of the broadband access market that cannot be served terrestrially. In a converged satellite-WiFi deployment, a satellite link is used as a backbone link to the Internet. The link is used to feed a WiFi access point, which then ultimately serves end users that possess a WiFi access card. This model pairs two strong distribution and delivery technologies. The model enables high-speed telecommunications everywhere, is a solid option for bridging the digital divide, and has tremendous social and economic implications. The model also opens new vertical and horizontal markets that have been ill served by terrestrial access options.

What is the Market Opportunity?

In the satellite-WiFi market, a few large segments (rural/remote) and several smaller niche segments (trains, maritime, oil/gas) create a respectable aggregate opportunity. However, the diversity of applications and service strategies required to serve all addressable markets likely will require a great deal of flexibility from satellite-WiFi service providers. For example, a service strategy for passenger trains will be dramatically different from service to a remote ISP in China. The applications and markets listed in the matrix include a solid mix of enterprise and consumer-driven models. Thus, both enterprises and consumers represent realistic opportunities for success.

Based on our analysis, the current market for satellite-WiFi solutions is estimated to be 1,015 satellite-linked hotspots globally. Europe dominates the market with more than 44 percent of the total. Satellite-WiFi services appear to be quite popular in Europe, which would seem to negate the argument that satellite backhaul services are not required in large scale on the continent. This trend is especially interesting given that most deployments are concentrated in fiber-rich nations, such as France, Ireland, Italy, Spain and the U.K. Also interesting to note is that most deployments (76 percent) in Europe were for remote or rural ISP sites. This strong focus on rural and remote communities likely will continue in Europe as governments and regional development authorities race to equip all communities with broadband access service.

In terms of applications, the remote/rural segment represents 62 percent of current deployments. This total mirrors the expectation of most vendors that remote/rural satellite- WiFi deployments will be the largest future opportunity.

What Hurdles to Growth Exist?

The satellite-WiFi market certainly faces a number of significant hurdles, including:

• WiFi Coverage Limitations — The limited coverage of WiFi (average of 300 feet radius) is considered to be the largest barrier to satellite-WiFi growth. Despite current cost advantages, WiFi is severely limited in coverage, and the 2.4 GHz spectrum is rapidly filling to problematic levels.
• Competing Wireless Standards – Related to the last point, competing standards such as UWB, 3G and WiMAX likely will be a significant long-term barrier to growth for satellite-WiFi services. The satellite industry aims to identify the most efficient wireless standard that will allow service providers to reach the broadest number of users with a single satellite uplink/downlink, and WiFi may not satisfy that long-term requirement.
• Regulatory Barriers for Satellite and WiFi – Regulatory problems have long been a thorn in the side of the satellite industry. This issue is now magnified in the satellite- WiFi sector since many countries have not implemented free, open 2.4 GHz spectrum policies similar to most of North America and Western Europe. In remote areas where terrestrial infrastructure is lacking, proper licenses for two-way satellite equipment and service are required before the network can even be implemented.
• Developing Workable Business Models – Multiple satellite companies say it is difficult to generate positive return on investment through satellite-WiFi services. This issue is especially critical since the primary target market for such services is the rural or remote community. Judging user density and service take-up in any deployment must be done carefully so that the cost of equipment and (more importantly) satellite bandwidth can be efficiently provisioned.

The Bottom Line

Based on current deployments and expectations of future growth, it is safe to assume near-term revenue generation from converged satellite-WiFi services. The cost implications and new service models are quite compelling for many applications; however, technology issues, competing standards and industry skepticism may curtail the long-term prospects for satellite-WiFi. The next two to three years will truly determine if satellite-WiFi services are legitimate offerings or are merely a fill-in until new wireless standards can meet the cost and coverage requirements for satellite-supported deployments. Many keys to growth must be noted including: deployment in areas of adequate user density; development of compelling services; flexibility to implement new wireless standards; technical fixes to WiFi; and the bundling of VoIP over WiFi/WLAN networks.

A chart accompanying this article shows a somewhat healthy near-term market for satellite-WiFi deployments with over 90,000 hotspots expected by 2007. However, based on our extensive forecast methodology, this market likely will be a small component of a larger broadband satellite market. Primarily due to coverage limitations, WiFi is not the end-all solution for satellite-based wireless growth. It is acknowledged that applications such as Internet to trains and in-flight broadband may be well served since the coverage areas fit within the range of a WiFi access point. However, these applications only represent a small portion of the overall projected market opportunity. In terms of broader market opportunity, Northern Sky Research contends that satellite-WiFi may be more of an interim solution until a competing wireless standard can offer expanded coverage and easy plug- and-play implementation at similar low costs.

We believe that most satellite-wireless growth over the next two years will be in the WiFi business, but alternative wireless standards, such as WiMAX and 3G, should start to gather steam in the satellite market in 2005 and beyond. New technologies are coming, and they promise to make WiFi obsolete for many deployments where broad coverage is a requirement. WiMAX, in particular, is generating a large amount of interest in the satellite space since its expected coverage (up to 30 miles) could create advantages for satellite players. The movement to the WiFi family of standards will therefore be challenged once new standards such as WiMAX, free space optics, 3G and UWB are either introduced or expanded in deployment.

Christopher Baugh researches, analyzes and writes occasional analytical reports for SATELLITE NEWS. He heads Northern Sky Research, a market-forecasting firm in Orlando, Fla. He can be reached by e-mail at or by telephone at 407/352-5295. This article draws from an NSR report entitled “Satellite-WiFi Convergence: A Developing Model for Broadband Access” available at http://www.northernskyresearch.com .