A Look at the LATAM Satellite Market and What to Expect Next

November 28, 2014 | By More

Latin America was marked by a number of events and trends in 2014, which hint at gradual shifts for the satellite services ecosystem; and offer more visibility as to what to expect in 2015 and beyond.

For starters, 2014 could be considered a pivotal year for satellite broadcasting as a result of the first transmission of a major, globally-relevant live sporting event in Ultra-HD format: The FIFA World Cup matches that took place in Brazil were encoded in multiple video formats but retransmitted live in 4k Ultra-HD to Europe, North America, Latin America and Asia via Eutelsat and SES satellites, among others. While the Ultra-HD 4K market remains small and rather driven by “non-linear” content (TV series or movies viewed “on-demand” by consumers with high-speed broadband and 4K TV screens), it is undeniably important for the satellite industry to coordinately jump on the UltraHD bandwagon so that linear (live) content can fully seize satellites´ distance-agnostic, one-to-many broadcast economics.

Latin America Satellites

Another important event was the acquisition of Brazilian Pay TV player GVT by Telefonica. It is unclear if this could signal a new wave of DTH consolidation in the region but certainly an important milestone that highlights the fact that telcos absolutely need satellites to grow their pay TV user base in Latin America. There is also an interesting announcement by GVT that hints at how satellite DTH can interwork with terrestrial access. GVT just announced it would launch a set top box with integrated WiFi for its Pay TV service. The project – still in beta- shows how satellite TV could co-exist with IPTV (and OTT) via technology bundles that seek distribution efficiencies for different types of content.

While the FIFA World Cup in Brazil naturally commanded much industry attention during 2014, there were other important events that relate to two-way satellite connectivity. Some of these hint at changes beginning to take shape. One could indeed categorize these 2014 events into three groups: National “Pride” Satellite Programs, High Throughput Satellite (HTS) Commitments and Value Chain Shifts. Examples for each are listed below with a summary and conclusions as to what to expect next.

National “Pride” Satellite Programs

Several Latin American countries strengthened commitments in 2014 to nurture and develop domestic satellite communication programs. These government-driven domestic satellite communication programs, often referred to as “pride satellites” tend to have multiple goals including fostering nationwide digital divide programs, technology independence, national security and domestic broadcasting/ communication. Main examples for 2014 include:

  • ARSAT-1: In October, 2014, an Ariane 5 rocket launched Argentina´s first GEO communication satellite. ARSAT-1 is the first of a series of satellites designed, developed and integrated in the country by state-owned INVAP. This marks an important milestone for Argentina´s ambitious program to develop spacecraft development capabilities.
  • TKSAT-1 (Tupac Katari): After commencing operations in April, 2014, the Bolivian Space Agency reported that customers use over 30 percent of the Bolivian satellite capacity and expect that half of the satellite capacity will be in use by end of 2014, essentially achieving a 50% fill rate in just one year.
  • Defense and Strategic Communications Geostationary Satellite (SGDC) System: Brazil´s SGDC program addresses communications needs of the Federal Government, including the National Broadband Program (PNBL) and strategic/defense communications. During the 2014 VSAT Latin America event in Sao Paulo, Visiona Tecnologia Espacial and Telebras shared details about Brazil´s government satellite program. The first satellite (SGDC-1) to be launched in 2016 includes a multi-purpose, extensive Ka-band payload with spot beams across Brazil and also X-band capacity.
  • MexSat: Mexico is planning to launch the Centenario and Morelos 3 satellites, to provide additional satellite connectivity. These satellites will complete the three-satellite Mexsat system, which already counts with the Bicentenario satellite, launched in 2013 to provide Internet access to thousands of public locations via the Mexico Connected program.

High Throughput Satellite (HTS) Commitments

During 2014, several satellite operatorsconfirmed their HTS plans and better articulated strategies around HTS. Some examples:

  • Hispasat: In 2013, Hispasat became the first operator to provide Ka-band spot beam capacity in South America via a hosted payload arrangement with MNLA. It is anticipated that Hispasat will include additional Ka-band beams in future satellite launches.
  • O3b Networks: With the (delayed) launch of a batch of MEO satellites, global satellite operator O3b completed its initial fleet and is now able to offer seamless global connectivity. During 2014 O3b started providing services in the Americas, by provisioning a high-speed, low latency link for a Royal Caribbean cruise ship.
  • StarOne: StarOne-D1, ordered in 2013 and scheduled for launch in 2016 will be the first Star One satellite to be fitted with Ka-band transponders for broadband services.
  • Hughes & Viasat: US-based HTS leaders Hughes and Viasat are planning to launch two HTS satellites (Echostar-19 and Viasat-2) by 2016/17 that would provide each over 150 Gbps. In addition to full coverage of the United States and much of Canada, these satellites will likely cover the Caribbean, Central America and Mexico. Development around these two HTS satellites, particularly over Mexico, is something to watch closely given the potential impact on bandwidth supply and the services food chain.
  • Yahsat: Yahsat announced in 2014 plans to launch its third HTS satellite in 2016, which will include Ka band capacity over Brazil.

Value-Chain Shifts

The HTS paradigm is forcing all players, including service providers to reassess their core competencies. Three iconic events occurred in 2014, which could shed light on the direction that traditional satellite service providers could take to transition to HTS service offerings.

  • Telefonica Media Networks: Media Networks Latin America (MNLA) started offering residential ka-band services in 2014. With a fully integrated ground infrastructure (including Hughes´ Jupiter broadband platform and RF Ka-band gateways) and a hosted payload on the Amazonas 3 with 8/9 beams over the major metropolitan areas, MNLA´s Ka-band offering could be considered a vertically-integrated platform, but offered to end users via commercial distributors (wholesale model).
  • Hughes Brazil: In 2014, Eutelsat do Brasil, the Brazilian affiliate of Eutelsat announced a contract with Hughes for the entire Ka-band capacity covering the Brazilian territory. The Eutelsat 65 West A satellite, scheduled for launch in 2016, will host a Ka-band payload with 24 spot-beams, of which many will cover a significant portion of the Brazilian population. Hughes Brazil has been a successful (traditional) service provider in Brazil focused on enterprise users. The shift to Ka-band using owned capacity could signal that Hughes could transition from a traditional service provider model to a vertically-integrated one (as in the US).
  • Axesat´s Acquisition of Enlaces Integra: In May, 2014, Colombian satellite service provider Axesat completed the acquisition of Mexican SP Enlaces Integra, previously a subsidiary of Mexican satellite operator SatMex. Axesat can be considered a good example of a traditional enterprise-focused satellite service provider seeking growth regionally via geographic expansion and service diversification. Axesat will possibly transition to HTS “traditionally”: This is, by continuing leasing satellite capacity from wholesale FSS/HTS operators.

Looking Forward

New HTS entrants, value-chain shifts and government play define Latin America as a new ball game for two-way satellite services, presenting opportunities and threats.

Since FSS dominance does not guarantee HTS success, satellite operators are driving differentiating strategies, ranging from open HTS architectures (i.e. Intelsat Epic), to vertically-integrated offerings (MNLA, Hughes and ViaSat). But, when looking at the 2015-2017 launch schedule of satellites with HTS payloads, it is evident that several operators are in a “land grabbing” mode, even weighting the risk of an oversupply scenario towards 2017. Oversupply is a sensitive term for the satellite industry but, if such scenario were to take place, it may not be bad news in the longer term; as lowering barriers could signify supply-side economics which, as a result of less expensive bandwidth, could foster further growth for incipient applications like residential broadband, 3G & 4G backhaul and mobile data offload.

A changing competitive scenario presents a fertile ground for agile satellite service providers that design and integrate win-win offerings with high efficiency enabled by HTS and sophisticated compression/ optimization technology. Of particular interest in 2015 will be how Intelsat´s 29e satellite, the first of its Epic series, will impact the business of B2B satellite connectivity including mobility, enterprise VSAT and cellular backhaul. Mobility will be a key focus for the Caribbean region, but South America could leverage Epic for enterprise VSAT and backhaul.

Increasingly, Mobile Network Operators (MNOs) are viewed as the ISP by default so the digital divide can be bridged via smart hybrid satellite-cellular interworking. Note that, despite the economic challenges for (data-dominated) 3G and 4G satellite backhaul, a small yet promising number of such services were provisioned during 2014 across Latin America using traditional FSS capacity, so Ku-band Epic could indeed catapult this particular market segment.

The satellite play of country governments will be stronger looking forward in several Latin American countries so satellite operators, telecom players and service providers need to adjust plans and seek ways that maximize the socio-economic impact of private-public initiatives around broadband access, 3G/4G backhaul and data offload in remote, suburban or underserved areas.

This article was written for the December “Year In Review” issue of SatMagazine

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Category: ANALYSIS

About the Author ()

Carlos Placido is an independent consultant with twenty years of progressive experience in the areas of telecom consulting, business development, engineering and R&D. With focus on emerging satellite markets and technology, he has conducted numerous strategic consulting projects as well as research and management activities, including global market research studies for Northern Sky Research (NSR), business development support for technology vendors and project management at Telefonica. Until 2004, Carlos led a development team at INTELSAT, where he was responsible for identifying and validating future satcom uses of emerging video and IP data technologies. Carlos is also contributor and administrator for Satcom Post, an online professional knowledge-sharing platform. He holds an engineering degree from the University of Buenos Aires and an MBA from the University of Maryland, Smith School of Business.

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