Although much has been said about High Throughput Satellites (HTS), the big question mark for many satellite service providers is how they can play along in the “HTS" game.
When I posted the following question on LinkedIn "HTS - IS THERE ANY FUTURE FOR VSAT SERVICE PROVIDERS?", the response was massive. Many people who commented said HTS is adding new possibilities to the market, while others said this progress is good, and disruptive but also painful.
When I look to the evolution of the market in the previous years, I see quite spectacular change, mainly in North America. Viasat and HNS, previously seen as equipment manufacturers, are now becoming satellite operators and satellite service providers at the same time, competing with what were previously their own customers. You see the same thing happening in other parts of the world.
I also saw people being confused about HTS, and linking HTS with Ka-band or VSAT. A lot of education still has to happen as it seems, let alone for service providers to understand their new role in the value chain.
This blog post tries to demystify HTS as a technology, but also shine some light on possible strategies for you to start monetizing the opportunities that HTS have to offer.
What are High Throughput Satellites?
High Throughput Satellites offer many times the throughput of the classic FSS satellites for the same amount of allocated orbital spectrum. The increase in capacity HTS offer is a result of high-level frequency re-use and spot beam technology enabling multiple narrowly focused beams. By contrast traditional satellite technology utilizes a broad single beam or a few beams.
The big advantage of High Throughput Satellites is the cost. While Ku band FSS bandwidth can cost well over $100 million per gigabit per second in space, HTS like ViaSat-1 can supply a gigabit of throughput in space for less than $3 million.
Network designs of HTS
As a consequence of the high number of spot beams High Throughput Satellites have geographically spread gateways, which mean local providers can not longer use their teleport infrastructure.
There are 2 typical configuration types:
- An HTS may be configured for dedicated gateway beams, which then are connected to multiple spot-beams. The main advantage of the dedicated gateway beams is that the gateway location can be carefully selected, for reliable & cost-effective backbone connectivity and also in a favourable location for rain-fade. Often these gateway beams land at the Satellite Operator Teleports, where they also offer HUB hosting services. A draw-back of this configuration is that it becomes challenging to have ‘in-country gateways’, which is still mandatory in many countries across the world.
- An alternative configuration is that the gateways share the spot beams. This is comparable to traditional satellite payloads. Still multiple spots can be connected from one gateway, e.g. by having the gateway the beam overlap points. The main advantage is that it enables ‘in-country’ network requirements and also it enables teleport flexibility end re-use of existing teleports.
Supposing you would have access to these satellite networks, you still have a couple of technical challenges:
- to cover one country, you’ll need multiple spot beams, which means you need hub infrastructure serving each of the spots
- to be able to access those spot beams, you will need to be able to access the different gateways through terrestrial means, which means you need terrestrial (fibre) links between each of these hubs.
- you need a central network operating centre (NOC).
Unless you as a service provider have a lot of CAPEX, these challenges are not easy to overcome. In practice only satellite operators take on the role of HTS operator, with the exception of Viasat who first was an equipment vendor turning into a satellite operator.
HTS doesn’t mean Ka-band automatically
Sometimes the link between HTS and Ka-band gets mixed up. This drawing shows you different types of beams that you can have in typical C-band, Ku-band or Ka-band configurations. The message I want to bring here is that when we talk about HTS, and more specifically the future of HTS, we do not only talk about Ka-band, but also about other frequency bands like Ku (like in the case of Intelsat’s Epic), but then spots are also smaller compared to traditional FSS.
Of course, the selection of the frequency band has an important impact on the geographical area you can cover with your service. For example, as depicted in the drawing below, if you want to cover the United Kingdom with your service, in Ka-band that would require at least 3 spot-beams, while with Ku or C-band, only 1 spot beam would suffice.
High throughput satellites represent the next chapter in the satellite industry’s story.
Since the first dedicated Ka-band (HTS is not Ka-band, IP-star its first HTS (Ku-band) satellite was launched in 2006) a precedent appears to have been set and satellite operators all over the world are building HTS into their business strategies.
There are many satellites in the pipeline that fit the HTS description and most in Ka-band such as Inmarsat’s Global Xpress, O3B Networks and other satellites such as Jabiru-1 and Hylas-3. However, Intelsat’s EPIC platform, whilst still a HTS, will comprise different frequency bands.
Closed and Open Platforms
We at Newtec see the market as being split up in 2 types of HTS systems: open systems and closed systems.
- Closed systems are systems like from HughesNet, Viasat Exede in North America, Tooway in Europe or YahClick in the Middle East. In these type of systems, you as a service provider can only resell the services as defined by the satellite operators, and you have no access to setting the service level agreements yourself.
- Open systems on the other hand, like Avanti in Europe, SES, IPstar in Asia, Intelsat EPIC, O3B and Eutelsat (in Latin America), allow you to buy MHz or Mbit capacity, and package that as your own service. You can define your own service level definitions and your own choice of equipment, and sell that to your own customers.
Diversify in platform choices - 3 options for Satellite Service Providers
Now that we know the difference between open and closed systems, what are your options to generate revenue on each of these systems?
The way we see it, you basically have 3 options:
- Just resell service of an existing HTS closed platforms: this type of business model makes sense when you are starting in a region and you are trying to understand the potential of the market without taking the risk of having to invest in. The problem with this business model is that other players will come on your territory, reselling the same type of services. This puts you in a difficult situation,where in the end you can only compete on price, which is never a good idea. An example of a service provider using this model in Europe is Quantis, reselling different services from Hispasat, Intelsat, Tooway, Avanti and SES.
- You get to buy Mbits on a HTS closed platform: this is where you have more freedom. You still use the infrastructure of the HTS operator, but here you get the possiblity to buy wholesale Mbits. Instead of selling individual profiles, you now get the possibility to manage the speeds and overbooking, and you can add other service on top of that. In this way you can differentiate yourself from other service providers on that same HTS operator in that same region. A good example of a service provider using this model is SatADSL, providing services mainly over Africa on SES capacity using a Newtec hub. Another example is Afrique Telecom, who is also using a Newtec hub on Eutelsat, and is buying Mbits. On top of these Mbits they are offering new services like pre-paid cards or additional volumes.
- Fully control of the services you offer: this is the best known model, where you select the capacity you want, the hub technology you want, and fully package your own service. Operators that support this model are operators like Avanti, Eutelsat (on 3B) and IntelsatEPIC.
Having all these options doesn’t mean you need to choose only one option. You can play with all 3 of these options, like Bentley Walker has does done. Not only does Bentley Walker offer its own services on multiple satellites (Amos, Eutelsat, Avanti, Telesat), it is also reselling managed services from Avanti, YahClick and Tooway.
Diversify in choice of vertical markets - playing your strengths
So on the one end you can differentiate yourself by deciding on what type of platforms you will be building your service, and how you will mix and match the different options you have while you go to market.
Reselling services or building your own service much depends on what type application your customers are using. During the recent HTS roundtables, organized by the Global VSAT Forum (GVF) in May 2013 in Washington, a strategic grid was presented by Hughes to plot the level of service demand and the degree of customization. Key vertical markets are indicated, where PoS is point of sale retail and M2M is machine-to-machine communications.
This map provides an interesting way of presenting the playing field for providers of HTS satellite services. Other applications like maritime, aero applications, SCADA or other can be given a spot on this map.
Closed systems tend to be stronger when standard service plans and best effort are required. Once higher level of SLA is required, open systems are better suited. You could say the big vertical satellite platforms are a one trick pony, and less suited for professional applications like for example professional sports contribution.
When assessing your new role in the value chain as a service provider, you have to play your strength. Your real assets are your market know-how, the ability you have to offer tailored services to your local customers, your access to a local customers base, you understand the local regulations, you speak the same language and you understand the local culture. Playing these strengths can differentiate you from the larger HTS networks which are on the market, or will go to market soon.
Newtec’s position in the value chain
What is important to remember is that Newtec is a technology vendor. We have no strategy whatsoever to launch a “Newtec 1”-satellite in the future. Our position in the value chain is very clear. We are a technology vendor, and we want our customers to be successful in this industry, preferably with our technology and products. As such, we won’t become a competitor of service providers as was the case with Viasat or HNS in the past.
Typically, what we provide are components like:
- Broadband hub technology,
- Different types of modems for different types of markets (consumers, professional, a mix of both)
- Accessories for antenna pointing like Point&Play
The Future of High Throughput Satellites for Service Providers - the EPIC case
The key to VSAT Service providers taking full advantage of the future of HTS satellite capabilities, is to differentiate services, taking VSAT service providers back to the option of buying megahertz from HTS operators.
This is beginning to happen more and more, with Intelsat’s EPIC satellite leading the way. The high performance, next generation satellite platform made up of a series of satellites delivers global high-throughput technology without sacrificing user control of service elements and hardware. It is based on open architecture and engineered for backwards compatibility, allowing broadband, media, mobility and government organizations to realize the cost-efficiency of using existing hardware.
In this video recorded during IBC2013, Nick Dowsett, Director IntelsatONE Network Solutions, gives an update on EpicNG, Intelsat's high performance, next generation satellite platform.
Topics tackled in the video are:
- general update on EpicNG
- the EpicNG ecosystem,
- focus markets and applications,
- EpicNG's role in the maritime sector.
Just click on the video to play or access the Intelsat EPIC update video directly.
At the same time, increased control means these organizations can build on their success by offering their end-users customized, differentiated solutions — even defining such service characteristics as speed, hardware and network topology. Customers can also utilise their existing equipment, meaning they need to make no new investment for EPIC and they do not need to delay the investments or purchases they are making today.
Intelsat has also been working with hardware manufacturers, in particular Newtec, to ensure that come the launch of the satellite space band equipment is available to enable customers to take full advantage of EPIC’s performance.
That’s it for this post. Hopefully it is clearer now for you how you can grasp the opportunities that HTS has to offer. One thing is clear: HTS is there to stay, and is providing massive opportunities for those willing to take them.
If you have any questions, or comments just pop them in the comment field.
Tom De Baere
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