Satellite Communications Market Overview

1
Satellite Communications
Market Overview
Canada West Telecom Group
Vancouver / 10 March 2003
Jeremy Rose
Senior Consultant
Communication Systems Limited
42 Holywell Hill, St Albans, Hertfordshire, AL1 1BX, England
Telephone: +44-1727-832288
Fax: +44-1727-810194
e-mail: [email protected]
www.comsys.co.uk
©comsys 2003
2
Our Major Thesis
p
Sea change in the global telecommunications
market over the next five years
p Growth in overall demand for
telecommunications driven by Internet
p Fibre capacity will rise and costs will fall by
several orders of magnitude
p Can operators survive?
p Continuation of last mile problems for fibre
p Satellite capacity expands through
technological advances but much slower
growth rate than fibre
©comsys 2003
3
Our Conclusion
p
Satellites may lose out in specific regional /
application markets but will gain significantly in
overall global revenues
p
Satellites will continue to offer instant
infrastructure solutions - especially for
broadcast applications and interactive services
in regions with developing telecommunications
infrastructure
p
Need to box clever - not to box hard
p Work with other solutions - not against them
©comsys 2003
4
TV Broadcasting
p
Growing demand for integration of TV and web
content
p Greater bandwidth leads to higher quality
p
Will all content be delivered by IP in five
years?
p
Increasing demand from developing world
p Intelsat DTH service to Polynesia
p Eutelsat DTH service to Réunion
p Multichoice DTH in Africa
©comsys 2003
5
Internet Access
p
Three types:
p ISP access
p One-way DTU (Direct to User) with dial-up
return channel
p Interactive DTU (satellite on both outbound
and return links)
p
Most ISPs outside Europe and North America
have satellite access to the Internet backbone
and will continue to do so
©comsys 2003
6
Internet Access (2)
p
Many ISPs which get fibre access will
continue to use satellite as backup
p EMIX has 155 Mbit/second fibre into UK/US
but also 2 x 8 Mbit/second satellite links
(partial backup for fibre)
p ISPs in Turkey and Israel move from 8
Mbit/second to 135 Mbit/second in 12
months
p Intelsat links from India to UK at 200
Mbit/second
©comsys 2003
7
Internet Access (3)
p
Satellite cache applications will be more
prevalent
p Despite quasi-broadcast applications on fibre
p
Lower cost and higher capacity storage will
reduce overall demand for bandwidth but
unlikely to keep pace
p
Need to watch subscriber acquisition and
maintenance costs
p
Also number of users per transponder
p 20,000 or 7,000?
©comsys 2003
8
VSAT Trends
p
Higher data rates
p
Application specific in developing world
p Remote / thin route telephony
p
©comsys 2003
Consolidation of service providers
9
Developing Regions
p
More than 3 billion people without basic
telephone service
p
ITU estimates that 240 million households
could afford service if it was available
p
Waiting lists still average 13 months
p
Rural Telephony:
p Problems with revenue collection / fraud
p Service and maintenance issues
©comsys 2003
10
New Applications / Markets
©comsys 2003
p
ISP connections to Internet backbone
p
Broadband VSAT
p
DTH with integrated TV / web content
11
Investment Requirements
Total Network
Spend
Population
Passed
Cost per
Person / HH
Passed
Sprint PCS
$16.6 billion
270 million
$62
Globalstar
$3.5 billion
5.5 billion
$0.63
Time Warner
Cable
$5.0 billion
17 million (HH)
$294
EchoStar
$1.5 billion
100 million (HH)
$15
Source: ING Barings (March 2000) HH = Households
©comsys 2003
12
Competitive Pressure
p
Higher capacity of fibre
p Submarine and terrestrial
p Increases by a factor of 1000+
p
Wireless Access
p G3 for mobility
p
Higher capacity local loop
p xDSL (but limited penetration)
p Cable modems (very limited penetration and
problems with grade of service)
p Doesn’t really address regions with developing
telecommunications infrastructure
©comsys 2003
13
The Telecommunications Market
p
Expanding by orders of magnitude
p Driven by demand for Internet service
p
Fibre wins over satellite in major trans-oceanic
market
p So what? There are plenty of other growth
areas
p
Cost drivers:
p Increased capacity
p Deregulation and competition
p
©comsys 2003
Move to mobility / interoperability
14
Global Internet Traffic Growth
Growth in Average Network Traffic (Tbit/second per month)
30,000
28,200
Tbit/second/month
25,000
20,000
17,625
15,000
9,620
10,000
4,860
5,000
375
500
1,125
1995
1996
1997
2,250
0
E
Source: Bear, Stearns & Co. estimates (E = estimate)
©comsys 2003
1998
1999
E
2000
E
2001
E
2002
15
Deregulatory Trends
Licensed International Operators, 1995-1998
1,042
1,200
1,000
800
586
600
400
367
470
200
0
1995
Rest of World
1996
Asia-Pacific
1997
Europe
Source: Telegeography 1999; data as of July in each stated year
©comsys 2003
1998
Americas
16
The Market “Spectrum” (1)
SATELLITE SERVICES
Satellite Television
U.S. DTH
1
DIRECTV
1
EchoStar
1
Pegasus
Superstar (C-band)
Fixed Satellite Services (FSS)
Global Providers
1
SES Global
Intelsat
1
PanAmSat
1
Loral Global Alliance
New Skies Satellites
Inmarsat
International DTH
Sky Global Networks (Multi Region)
Canal+ (France, Spain, Italy, Poland) Regional Providers
Sky Digital "BSKyB" (UK)
Europe
SkyPerfecTV (Japan)
Eutelsat
DirecTV Latin America
SES Astra
Sky Latin America
Hispasat
TPS (France)
Europe*Star
Premiere World (Germany)
Nordic Satellite AB
Stream (Italy)
Telenor
ExpressVu (Canada)
Russian Satellite Comm.
Via Digital (Spain)
Multichoice South Africa
Asia
1
AsiaSat
StarChoice (Canada)
Astro (Malaysia)
JSAT
Austar (Australia)
Space Comm. Corp. (SCC)
Viasat Gold (Scandinavia)
Shin Satellite
CBTV (China)
APT
NTV+ (Russia)
Sinosat
Indosat
Latin America
Star One
Satmex
Nahuelsat
Fixed Satellite Services (FSS)
Regional Providers
North America
SES Americom
Telesat Canada
Middle East
Arabsat
Satellite Radio (DARS)
U.S. DARS
1
XM Satellite Radio
1
Sirius Satellite Radio
International DARS
WorldSpace
2
Global Radio S.A.
Australia
Cable & Wireless Optus
Satellite ISPs / Data Svcs
Loral CyberStar
Verestar
NetSat Express
Cidera
BT Broadcast Services
SpeedCast
GlobeCast
Tachyon
Aramiska
Mobile Telephony (MSS)
Big LEOs
Globalstar
Iridium
2
ICO Global
Regional GEOs
PSN's ACeS
Thuraya
Global GEOs
Inmarsat
Inmarsat Distributors
Xantic
Stratos Global
DeTeSat
France Telecom
Comsat
Broadband
Ku-Band
1
Hughes' DirecPC
Gilat's StarBand
2
SkyBridge
Telstra's BigPond Broadband
Ka-Band
Processed Payloads:
2
Astrolink
1, 2
Hughes' Spaceway
Bent Pipe:
2
WildBlue
ASTRA-Net/BBI
2
Pacific Century's PC Matrix
2
Shin's iPSTAR
2
Teledesic
VSAT Services
1
HNS & HOT
1
Gilat's Spacenet
1
Loral CyberStar
Xantic
1
ViaSat
MCI Worldcom
Stratos Global
Imeon (ViaSat/Loral)
BT Satellite Services
Messaging
Qualcomm's OmniTRACS
Euteltracs
ORBCOMM
2
Final Analysis
2
DBS Industries
Mobile (3G)
2
Inmarsat's B-GAN
In-flight Services
2
Connexion by Boeing
Tenzing
2
AirTV
Imagery (Remote Sensing)
Space Imaging
ORBIMAGE
DigitalGlobe
ImageSat International
Spot Image
ISRO
Footnotes
1
Under Research Coverage by William Kidd
2
Source: Lehman Brothers
©comsys 2003
Service Not Yet Started
17
The Market “Spectrum” (2)
SATELLITE INFRASTRUCTURE
Satellite Manufacturing
GEOs, MEOs & LEOs
Boeing Satellite Systems
Space Systems/Loral (SS/L)
Lockheed Martin
Astrium
Alcatel
1
Orbital Sciences
Israel Aircraft Industries
1
Satellite Launch Providers
Arianespace
Krunichev & ILS (Proton)
Boeing's Sea Launch & Delta
KB Yuzhnoye (Zenit & Sea Launch)
Starsem (Soyuz)
Eurockot
1
Orbital Sciences
Earth Stations
Tripoint
1
ViaSat
Globecomm Systems
Datron Systems
IDB Systems
NEC Satellite
MDA
Raytheon
Small/Micro Satellites
1
Orbital Sciences
Spectrum Astro
Ball Aerospace
Surrey
Major Subcontractors
Raytheon
TRW
Northrop Grumman
Alenia Spazio
Mitsubishi Electric
VSATs
Hughes Network Systems (HNS)
1
Gilat
1
ViaSat
Newtec
EMS Technologies
Norsat
STM Wireless
NEC Satellite
Nera
Tachyon
Terrestrial
Terrestrial
Sat. Messaging
Maritime/Aeronautical Maritime/Aeronautical Terrestrial Cellular & GSM
DARS, MSS
VLF/LF
HF
UHF
S
3 kHz - 300 kHz
3 MHz - 30 MHz
300 MHz - 1000 MHz
2000 MHz - 4000 MHz
300 kHz - 3 MHz
MF
Terrestrial AM
Radio
30 MHz - 300 MHz
VHF
Terrestrial
TV & FM Radio
1000 MHz - 2000 MHz
L
MSS, DAB Int'l DARS
& Terrestrial Digital GSM
1
Ground Equipment
Shiron Satellite
Radyne
Titan
Integral Systems
SSE Telecom
Comtech EF Data
Mitsubishi Electric
EMS Technologies
Norsat
Raytheon
1
ViaSat
Military
Satellite Imagery
X
8 GHz - 12 GHz
4000 MHz - 8000 MHz
C
FSS, DTH C-Band
VSAT
Teleport Services
Verestar
Williams Communications
British Telecom
Teleglobe
Cable & Wireless HKT
ST Teleport
Globecomm Systems
Tokyo Teleport Center
Chunghwa Telecom
Deutsche Telekom
FSS, Broadband &
Intersat Links
Ka
18 GHz - 40 GHz
12 GHz - 18 GHz
Ku
FSS, DBS &
VSAT
40 GHz - 75 GHz
V
No current commercial
application
Footnotes
1
Under Research Coverage by William Kidd
2
©comsys 2003
Service Not Yet Started
18
FSS Industry Evolution
1994-2001
Stable historical
growth
CAGR:
2002
Tough macro
economy preprivatization buying
10%
2003-2008
Modest recovery
5%
-3%
million
s
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
$0
1994
1996
1998
Source: Lehman Brothers - September 2002
©comsys 2003
2000
2002
2004
2006
2008
19
Regional Broadband Demand
Broadband Market 2010 / Addressable SME and Households
250
SME
Households
Millions of Customers
200
150
100
50
Source: The Broadband Report, Comsys. (April 2000) / SME and Household models
©comsys 2003
135W
150W
165W
180E
165E
150E
135E
120E
105E
90E
75E
60E
45E
30E
15E
0
15W
30W
45W
60W
75W
90W
105W
120W
135W
150W
0
20
Caveats
p
MSS telephony sector unlikely to grow
significantly
p …if at all….
©comsys 2003
21
Myths to Explode
©comsys 2003
p
Ubiquity of Fibre
p
Smaller Antennas at Ka-band
p
DTU broadband is the Killer App
22
Myths / Fibre is Ubiquitous
p
What fibre provides:
p Very high data rates
p Very low cost - and continuing to fall
p
What fibre doesn’t provide
p Local loop / last mile access in most of the
world
p
Virtually no fibre in Africa / not much in Latin
America
p Fibre will continue to roll out on a global basis
but more slowly in “thin-route” markets
©comsys 2003
23
FLAG “global” network
©comsys 2003
24
FLAG European Network
©comsys 2003
25
Global Crossing Network
Source: Asia Global Crossing (includes planned Africa One coverage)
©comsys 2003
26
Asia Global Crossing Network
PCPC-1
Ajigaura, Japan
KoreaShima, Japan
Chin
a
Hong Kong, SAR
PCPC-1
Taiwa
n
PCPC-1
Philippin
es
EAC
Legend
Malaysia
Singapor
e
©comsys 2003
Landing Points
Connecting Systems
Phase 1A (RFS 12/31/00 or
sooner)
Phase 1B (RFS 6/15/01 or
sooner)
Phase 2
27
Other Fibre Networks
p
Many other point-to-point and trans-regional
networks planned
p
….but essentially all of them terminate at single
national POP (point of presence)
p Remember that satellites have an essentially
infinite number of POPs within their coverage
area
©comsys 2003
28
Myths / DTU broadband
p
May be the killer app for SME markets
p
Need to consider subscriber acquisition and
maintenance cost for residential users
p Can be a real killer on profit margins
©comsys 2003
29
Global Penetration
p
Trans-oceanic fibre networks will need to
interconnect with regional and national
networks to achieve true global access
p
How?
p Interoperability with regional terrestrial /
wireless networks and satellite
©comsys 2003
30
Myths / Ka-band satcomms
p
Smaller antennas only work in clear skies /
regions with low rainfall
p Possibly larger antennas than Ku-band for
Asia coverage
p
Not suitable for mission critical applications
p
Need to “box clever - not box hard” to get
higher capacity at Ku-band
p On-board processing / smaller spot beams
p
Need to accept that the move to Ka-band (and
upwards) will happen at some time
©comsys 2003
31
Satellite Technology Drivers
p
More spacecraft power means more
transponders in more beams
p
Bigger spacecraft antennas means smaller
spot beams and more capacity
p More capacity translates to less cost per bit
p
Longer spacecraft lifetimes unlikely to be a
big issue
p 15 years may be a practical limit
p …but spacecraft near EOL will have more
IOO capability
©comsys 2003
32
Satellite Technology Drivers (2)
p
More flexible switching matrices
p Reconfigurable coverage
p
Higher order modulation schemes
p Practical limit already reached with 16-QAM?
p Impact of Turbo codes
©comsys 2003
33
Regulatory Issues
p
Global Trends
p Deregulation
p More independent carriers
p
Satellite
p Direct Access / Intelsat privatisation
p
©comsys 2003
Fibre / Terrestrial
34
Global Fibre Trends
p
Increased capacity
p Now talking in Terabits - and in Petabits per
second by 2005
p Possibly Zottabits and Yettabits (1018) as well?
p That means a DS3 for everyone on the planet!
p
Increased interoperability and interconnection
p
Quasi-broadcast option
p Results from increased network capacity
©comsys 2003
p
They need to extend reach to local loop
p
Optical routing and switching
35
Global Satellite Trends
p
More landmass coverage needed to serve
markets not well covered by fibre
p
Needs more flexibility for in-orbit coverage to
adapt to expanding and changing requirements
p
Has consolidation run its course:
p Eutelsat off the plot?
p
Inmarsat betting the shop on BGAN?
p
Significant government / military business in
short term
©comsys 2003
36
Issues for Satellite Operators
p
Reconfigurable coverage
p
ITU filings / paper satellites
p
More efficient use of existing spectrum
p
GSO / NGSO sharing
p
More flexible spacecraft designs for core
applications
p
Smaller spacecraft for specialised
applications?
©comsys 2003
37
Issues for Satellite Manufacturers
©comsys 2003
p
Reliability
p
Reliability
p
Reliability
38
Spacecraft Manufacturing
p
Low margin business
p
Focus back to legacy technology
p
Appalling sales record in 2002
p ~20 orders in 2001 / ~3-5 in 2002
p
Military business is sustaining some
manufacturers
©comsys 2003
39
Conclusions
p
Fibre will continue to dominate the high-density
trans-oceanic / intercontinental point-to-point
market
p Interconnection and interoperability will be a
major issue
p
Satellite will continue to offer instant
infrastructure to underserved areas
p
Demand for satellite services will increase driven by demand for IP access and higher data
rates
©comsys 2003
40
The Future?
©comsys 2003
41
Future Issues
©comsys 2003
p
Demand
p
Technology
p
Competition
p
Regulation
p
Financial markets
p
Customer interfaces
p
Content
42
Future / Demand
p
Overall demand for telecom services will
increase
p Increased geographical coverage
p Higher data rates / content rich
p
Concentration on mobile applications
p Mostly terrestrial
p
Assume IP is dominant protocol
p
Offshore data processing and customer
services
©comsys 2003
43
Future / Technology
p
Higher order modulation schemes
p
Higher power satellites
p
More smallsats for specific applications
p
More complex digital beam forming networks
p … at reasonable cost
p
Low cost, electrically steerable, phased arrays
p
More efficient fuel and propellant
p
Lower cost earth stations
p Needs volume production
©comsys 2003
44
Future / Technology (2)
p
Greater use of multiple spot beams
p Ka-band and recent Ku-band DBS in USA
(EchoStar and DirecTV).
p
On-Board Processing (Astrolink).
p
Use of higher frequency bands
p Ka-band - moving to V-Band in the future.
p
Reconfigurable payloads
p Will take account of future/unknown business
and co-ordination requirements).
©comsys 2003
45
Future / Competition
p
Terrestrial / fibre will continue to erode satellite
market for point to point applications
p Capacity will continue to increase
p DWDM and follow-on technologies
p
Satellite will continue to exhibit USPs:
p Maritime and Aero mobile applications
p Remote and rural areas
p Unique technology solution
©comsys 2003
46
Future / Regulation
p
WTO continues to break down barriers
p No more telecoms monopolies by 2010?
p
FSS / BSS definitions merged
p No longer relevant
p
ITU / RB restructuring
p Streamlined notification and co-ordination
procedures
©comsys 2003
47
Future / Financial
p
Unproven concepts will continue to be difficult
to fund in short to medium term
p
End of “long distance” charges?
p Single rate for anywhere on the planet?
p How will carriers make margin?
©comsys 2003
48
Future / Customer Interfaces
p
Integrated and portable numbering / addressing
p
Global enterprise solutions and one-stop
shopping
p
Complex data mining and customer profiling
p
Growth industry for offshore customer
services?
©comsys 2003
49
The End?
p
For more information about any of the issues
described in this presentation, please feel free
to contact us.
p
©comsys 2003
www.comsys.co.uk