I recently participated at VSAT Latin America 2015 where High Throughput Satellites (HTS) was, naturally, the core discussion topic. During one of the interactive panels Mauro Wajnberg, General Manager at Telesat Brazil, raised a good point concerning the expectations that the industry may be building around the delivery of bandwidth-hungry OTT video (i.e. Netflix) over HTS and why the industry deserves an honest debate on the subject.
Mauro´s concern was not expressed from a technical standpoint but from a commercial standpoint: While HTS can technically deliver OTT video -possibly at even higher speeds than several terrestrial alternatives- the key concern behind Mauro´s remark is if “all-you-can-eat” HTS service plans for the residential market are possible and sustainable economically, in the context of an increasingly video-dominated Internet traffic environment.
The DTH and ISP Models
Not long ago my NSR colleague Prashant Butani wrote a good article about OTT via satellite, which together with the recent announcement of CDN player Akamai acquiring grid-streaming technology developer Octoshape prompted me to write a series of articles, hoping to somewhat contribute to this timely discussion.
Before reading this article in full, I recommend reading Prashant´s: OTT via satellite – Threats & Opportunities
I believe Prashant´s analytical framework is a good start to look at both ends of the spectrum in terms of how (and if) satellites could play a part in the OTT space by essentially transporting OTT content agnostically, just as any other fixed broadband access technology.
Prashant´s analysis can be summarized as follows: Widebeam satellites are very efficient for distributing “linear” content to many and geographically distributed subscribers simultaneously (the classic “broadcast” DTH model) but in the context of an increasing and inevitable shift towards “non-linear” (on-demand) video viewership, the question that arises is if HTS, with better transport economics for unicast traffic, could truly be leveraged to carry OTT video (the “ISP” model in Prashant´s article) cost-effectively and competitively.
So… is HTS compatible with OTT?
No one can deny that HTS economics have been improving considerably and look even more encouraging when anticipating the impact of future LEO broadband constellations. However, one must note that even with HTS architectures, the satellite industry still has serious challenges to take the transport cost (bandwidth OpEx + amortization of CPE) down to the levels that fixed-line terrestrial competitors can. HTS solutions – either in the form of direct-to-home residential broadband or indirectly via backhaul/IP trunking – aim at bridging the coverage gaps (and there are many) but generally do not intend to compete on similar economic footing versus terrestrial broadband alternatives like aDSL, cable and FTTH. There could be instances or spots where the HTS efficiency leap results in a favorable cost-benefit equation for HTS versus terrestrial (e.g. low bandwidth in suburban locations where the aDSL modem is far from the DSLAM), but it is not likely that such advantage could hold itself massively in the long term. To put it simply, HTS can certainly transport OTT video (even 4K Ultra-HD) without technical problems but it would be difficult to imagine a scenario of heavy OTT use via HTS that can sustain itself economically at a competitive subscription fee for consumers.
A practical (US) example would be comparing HughesNet (satellite) traffic caps versus those of Xfinity (cable). Even in the world´s most advanced satellite broadband market, a $50 subscription with HughesNet has a traffic allowance of 5 GBytes per month. Unless users take advantage of the “bonus bytes” (from 2 am to 8 am), 5GB is roughly consumed in two or three hours of HD video. This contrasts sharply with cable. Traffic caps on the Xfinity cable broadband packages are not expressly disclosed but, at a similar subscription fee, Comcast is known for limiting residential customers to 300GB of usage per month. Even the premium “Liberty 30” package from Exede satellite broadband (HughesNet competitor) has a traffic cap of 30GB and costs $150 per month; so HTS satellite broadband measured in traffic allowances is at least an order of magnitude more expensive than cable broadband.
Therefore, looking forward, the two key challenges for satellite television affecting wide-beam and spot-beam architectures are:
- DTH: As consumers accelerate trend toward “non-linear” or on-demand TV viewing, how will this impact the traditional business of broadcast satellite TV?
- OTT: As consumers rely more on the Internet to download and stream TV and video content on demand, how will this affect the business case of residential HTS platforms?
These questions do not imply (by any means) a doomsday scenario for either DTH or HTS, which are the key driving forces for the satcom industry. But maybe it is time to start thinking outside the (set top) box and prepare not just to deal with the mentioned trends but –more importantly – to view these as opportunities for future reward maximization.
What if DTH and HTS interplayed with CDN?
A few answers might be found if taking a different perspective, looking at satellites in new ways more intertwined with the Internet space, and not just as unicast or broadcast “pipes”. Future opportunities for satellite TV/video networks will likely be found by re-exploring satellites´ inherent advantages in multicast content distribution; interworking with the changes taking place in the media, telecom, computing and Internet spaces.
It seems indeed a good time to undust old concepts (even past failures) and re-explore the role that satellites could realistically play in content delivery networks (CDN) by leveraging wide beam and spot beam satellite resources smartly.
I would argue that HTS and DTH players have an opportunity to play a part in this increasingly non-linear video environment, with DTH set top boxes potentially acting as Federated CDN edge nodes. – My next article will explore this concept in more depth.
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