“Caesar caesaris, deus dei”
When it comes to broadband services, mobile network operators (MNOs) have an indisputable dominance over the market. When addressing MNOs, the new HTS players seem to exclusively focus on backhaul solutions. It seems that a deeper collaboration with MNOs is avoided, as if it could result in the reassessment by the largest HTS players, of their recent strategy to approach the residential broadband market directly. A war of HTS Ecosystems in on the Horizon, while the penetration of mobile broadband continues its mighty ascension leaving any other access method far behind (32% global penetration rate Vs 4,4% for fixed broadband according to ITU’s report “The world in 2014: ICT Facts and Figures”).
The assumption by the new HTS ecosystem of as complex an endeavor, as it is to serve huge numbers of subscribers with resources that, can hardly match those already set in place by MNOs (both globally and –mainly- locally), might end in all spin and no delivery. Moreover when considering that any attempt to bridge the supply gap without acknowledging the method new subscribers are choosing to access the Internet –mobile!-, could be described as temerarious.
If you cannot beat them, join them!
According to the GSMA study “Mobile Broadband at the Bottom of the Pyramid in Latin America” published last year, there is something more than a supply gap (lack of infrastructure to reach new broadband subscribers): the advance of mobile broadband faces a critical demand gap (with 57% of the population who could purchase mobile broadband but decide not to). If new HTS based broadband services fail to observe the demand gap, their success will be scarce. The main reason for the demand gap to exist, again according to the GSMA study referred above, is limited affordability. Additionally, other factors like the lack of digital literacy and absence of relevant contents or applications are considered. Mobile phones have done more to raise the digital literacy of the people living in the emerging regions in a couple of years, than decades of failed education programs promoted by both local governments and international organizations. Most people shall surf the web on their mobiles without any problem, whether at home or while away from home.
The coming HTS ecosystems can target a massive number of subscribers at the expense of MNOs, or to complement MNOs coverage… but can HTS based broadband services compete against the commodity mobile broadband means to new subscribers in emerging regions? Even if at end it was all about the money subscribers have to pay for the service, and once the supply gap was bridged, not even the best deployed service model (where user experience sits at its core) can guarantee bridging the demand gap.
What can the new HTS ecosystems do for MNOs to boost their network capacity instantly, and with a limited investment dependent on actual revenues? Is it just about backhaul all what the HTS players can come up with?
The Golden Mean
Being the main objective for both MNOs and the new HTS ecosystems to capitalize on the bridging of the digital divide by bridging both the supply gap, and the demand gap (making of broadband services both available and affordable); the possibility of an open debate between both parties where roles were reviewed and strategies aligned, would shine as the middle ground between extremes.
At one extreme we have MNOs which capacity to cope with the increasing demand for broadband is deficient (as it seems to be the ARPU to justify heavy investment on the needed network capacity increase, which for geographical reasons is more than heavy). By the other extreme we see the thriving HTS ecosystems which resources to deal with a vast and complex market (from regulatory to operational facets) are limited.
The Golden Mean is the middle ground between two extremes and is by default aligned with sustainable practices. For the provision of broadband services in emerging markets Hybrid Broadband Services come across as the Golden Mean, through the combination of MNOs market competence with HTS’ extended and ubiquitous capacity.
Hybrid Broadband Services
The task of defining the optimal implementation of a hybrid broadband service escapes to the understanding of single stakeholders, only hybrid teams coming from both the HTS ecosystem and MNOs can assess and propose practical solutions.
There have been several attempts to create and promote alternative solutions which, perhaps without the required muscle, have failed to propose a meaningful dialogue between MNOs and the HTS ecosystem. What is clear, is that both parties shall benefit from mutual understanding and plain collaboration. We can try to do a simple analysis of what use any of the dominant MNOs in LATAM, could make of a new hybrid broadband service offering via collaborating with HTS players:
One example (of many to be thought)
Any MNO with an already functioning DTH service is transmitting data over satellite directly to the subscribers’ households. If statistics showed that a considerable portion of the data consumed by subscribers of mobile broadband services occurs in the proximity of their residence: Would it unload the mobile network, the transmission of data directly to the subscriber and through a technically identical resource as the one used for the DTH service? What would the impact be on the MNO’s network capacity occupation, if the transmission of data to mobile subscribers sitting in their homes was made via satellite (heavy downloads), and only the uploading of data was carried out by the mobile network? Broadband services are still asymmetric in the composition of download / upload traffic: MNOs would see how without major CAPEX concerns, they can allocate more subscribers who mainly target high quality mobile voice services, while they can simultaneously bridge both the supply gap and the demand gap in one only shot! MNOs can actually reach those whom they could not reach before in question of weeks. OPEX would not grow more than revenues, the satellite capacity required to operate the network can only be dependent on the number of new subscribers for broadband services.
Those vendors and satellite operators who are willing to think hybrid, need to sit down and estimate the size of the business that could materialize from the extended collaboration with MNOs: greed not always supported best results, and sustainability can only be achieved when making the best use of existing resources. Creating sustainable broadband services in the emerging markets requires the integration of MNOs into the forthcoming HTS ecosystems.
Disrupting the operation model of MNOs by the smart (and extended) integration of HTS solutions, makes far more sense than disrupting the vendors’ or satellite operators’ business models, by attempting to reach directly subscribers who have already decided to access the Internet through their mobile phones. A big piece of the cake can be eaten by the new HTS ecosystem when subscribers sit down and surf the web in the comfort of their homes, a far bigger piece than the one left when HTS solutions can only gather subscribers who have no other means to access the World Wide Web but satellite.
Anyway, the HTS spot beam technology could be said to have been inspired by the way cellular networks reuse frequency and organize coverage in cells (spot beams?): aren’t HTS and mobile networks a perfect match to support each other in the achievement of their common goals? Both parties should balance the give and take, for the ones who shall win at the end are those they both serve. If customers really drive the business, an extended co-operation between HTS players and MNOs is the best way forward: HTS+3G&4G=Sustainability.
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