What would we do without satellites?
by Bill Ostrove
The steadily increasing growth in demand for satellites will continue to come from television, broadband and government markets over the next decade - predicts analyst
The world is becoming an increasingly connected place; consumers want to be connected wherever they are. Satellites are playing an important role in providing connectivity to people in remote locations and while on the move. These new roles add to the more traditional roles that satellite communications have played, such as forming parts of data networks and providing video transmissions.
Over the next 10 years, the value of production of commercial satellites is expected to total about $52.7bn, with 419 satellites to be delivered during the decade. Space Systems/Loral, Thales Alenia Space, EADS Astrium, Boeing and Lockheed Martin produce some of the most popular commercial satellite platforms on the market. Boeing and Lockheed Martin focus most of their energies on developing satellites under military and government contracts. However, government spending is currently tighter than it has been in the past and the two companies are therefore broadening their focus on the commercial market.
A number of technological trends are driving demand for satellite services. Broadband Internet is driving the growth in Ka-band satellite transmitters. These transmitters are able to transmit with much higher power than other bands, allowing them to send more information. This capacity increases the revenues generated per transmitter, increasing a satellite's profitability and allowing satellite broadband companies to offer competitive speeds and rates to other broadband providers. New satellites equipped with Ka-band transmitters are being built to meet this new demand.
Satellites are also being used to increase connectivity in the air and at sea. Airlines want to provide in-flight Wi-Fi to their customers as a way to increase revenues. Satellites enable airlines to provide high-speed Internet connections that customers are increasingly willing to pay for. For example, Panasonic recently signed a deal with Telesat, while Gogo Inc recently signed a deal with SES for satellite capacity to provide in-air Wi-Fi to airlines.
Satellites are also used at sea. Shipping lines can use satellite links to centralize ship management and to provide crewmembers with links to their families back home. Cruise lines, such as Royal Caribbean – which selected O3b Networks to provide Internet onboard its Oasis of the Seas – are also adopting satellite networks to provide passengers with Internet access.
Digital television is another market that is driving satellite service growth. Consumers are watching more television, and are increasingly willing to pay for television channels. Satellite TV providers have been major beneficiaries of this trend, especially in regions of the world that are not saturated by terrestrial cable networks, such as Eastern Europe and Latin America.
Governments constitute one of the most important customers of commercial communications satellite services. Militaries particularly are in need of satellite services. Deployed soldiers often lack an established infrastructure. Satellite communications allow them to communicate within the battlefield as well as with headquarters. Governments and militaries will continue to need more communications capabilities than they can provide with their own satellites, requiring them to procure additional service from commercial providers.
The United States military, for example, is estimated to rely on commercial satellite operators for nearly 80 per cent of its bandwidth requirements. This reliance will continue throughout the next 10 years, especially with the recent cancellation of the Transformational Satellite programme. Satellite services will remain in demand over the next decade. Even though delivery totals will fluctuate during that time, increasing in some years and declining in others, they will remain strong. Growth in demand for satellites will come from television, broadband Internet and government markets.
Bill Ostrove is a research analyst at the Forecast International consultancy firm