Satellite operators are under threat from the ground in their core Fixed Service Satellite (FSS) markets, including in the areas of broadcast TV as well as high-bit-rate video transmission for production and contribution. IPTV services will line up alongside cable TV in more densely populated areas offering greater interactivity and easier integration with connected home networks. At the same time, expanding IP base fiber-optic infrastructures will provide cheap bandwidth for production and contribution with which satellite will be unable to compete directly. Fiber is already replacing satellite uplinks for video contribution from a number of fixed OB venues such as sports stadiums, and that trend is likely to continue.
Yet despite likely erosion in their core markets of video contribution and distribution, which together account for 70 percent of their global business according to French media analysis firm IDATE, the short and midterm future for satellite operators is bright. The reason is simple: Satellites will continue to provide services to locations beyond the reach of any terrestrial technology, including cellular networks and DTT as well as fixed fiber or copper infrastructures. This includes large areas in emerging markets such as Latin America and Eastern Europe, as well as maritime and commercial aviation and outside newsgathering.
In the case of video distribution, satellites have been gaining ground in Latin America and will overtake cable TV to account for more than 50 percent of subscriptions by 2014, according to a report and forecast of Latin American pay TV recently published by Rethink Research Associates. The ability of satellite to cover large geographical areas poorly served by terrestrial infrastructure combined with common programming in a region connected by the Spanish language, apart from Brazil, are major factors there. And as Rethink pointed out, the relatively high ARPU makes Latin America as a whole highly lucrative. Total ARPU for Latin American pay-TV services is set to increase by $1 billion a month by 2014, compared with the end of 2010 according to the Rethink report, which is the same as India and China combined despite having about four times the population between them. It is the major satellite pay-TV operators, particularly DirecTV, that have the highest ARPU; although, increasing completion is likely to erode that to some extent.
Satellite services also enjoy high ARPU in the maritime sector where they have a totally captive market. In this market, ARPU is likely to grow as services expand to match the capabilities of their terrestrial equivalents, with HDTV becoming standard in cabins; interactive and multiscreen services as well as broadband Internet access for passengers; and, in some cases, services linked to passengers’ subscription pay TV. Maritime TV is also being driven in the merchant sector by crew, where access to premium TV and broadband Internet services is becoming an important factor for morale and recruitment. The maritime sector may not be big in global subscription numbers, but it punches so well above its weight in ARPU that it is becoming one of a number of important niches that will keep satellite operators profitable over the next decade. Aviation is another, because airlines, much like ships, find they have to provide onboard access to broadband services and OTT content to stay competitive.
On the contribution front, satellite communications will also hold up despite losing out for some fixed-event coverage. Newsgathering, as opposed to sports and other outside event coverage, remains by its nature a mobile activity requiring rapid setup. This means that unless the area concerned happens to be close to a fiber network, a satellite uplink is often the only available option to provide fast, on-the-spot coverage.
But to serve these markets, satellite technology needs to evolve, even if it can’t hope keep up with fiber on the ground for bandwidth. Progress is being made on this front in three areas. First, new frequency bands are opening up to increase capacity, particularly for uplinks. Second, multibeam technologies are enabling satellites to boost capacity further by reusing frequency bands within their footprint and also deliver local or regional programming within smaller target zones on the ground. Third, satellites will start to carry onboard routers to provide more efficient transport of all IP data, including video. Intelsat could be one of the first to equip satellites for commercial services, after evaluating Cisco’s IRIS on its Intelsat 4 satellite for military applications. A key benefit is that by extracting IP packet routing information onboard the satellite, the need for an extra hop to the ground and back is avoided, cutting up to half a second from the total end-to-end transmission delay.
Meanwhile, satellite companies will continue to gain aggregate capacity by engaging the higher microwave frequencies, as well as by dividing their footprint into larger numbers of beam areas. Higher frequencies increase data transmission rate, with another advantage in the case of satellite being smaller beam size, reducing the antenna dimensions. But again, like wired transmission, high-frequency transmission requires more sophisticated electronics at either end. In the case of satellite, signals at higher frequencies need more accurate antennas to cope with the smaller spot size and additional signal processing to cope with greater susceptibility to signal fading in heavy rain.
But the challenges are being solved, and Ka-band in the range of 26.5GHz to 40GHz is being investigated for both local video distribution and wider contribution. In the future, even higher bands will be used, such as Q-band in the range of 30GHz to 50GHz and even V-band at 50GHz to 75GHz. Indeed, the Alphasat I-XL satellite to be operated by Inmarsat and due for launch in 2012 will experiment with transmission in the Q- and V-bands.
These new bands will enable satellites to expand their services in emerging markets, particularly the maritime areas around Europe, where the density of both merchant and passenger shipping is greater than elsewhere. Here, for example, Telenor Satellite Broadcasting has recently decided to launch a new satellite to serve the busy shipping lanes of the North Sea, the Baltic area and the Mediterranean with services in the Ka-band.
The future, then, for satellite is bringing a declining proportion of broadband and video communications in more densely populated areas, but increasingly serving areas where wires cannot reach, including for newsgathering and maritime services as well as fast-growing markets outside the video sphere, such as in machine-to-machine communications.