Latin America is at the early stages of what is poised to become a very dynamic and competitive high throughput satellite (HTS) marketplace.
Key trends shaping HTS uses in Latin America include:
- Residential Broadband: The number onepriority in this segment is achieving the lowest possible operational cost per bit on the satellite. This usually pushesHTS architectures towards some degree of vertical integration; such as when the satellite payload, network infrastructure and service offering are managed by a single player. However, in a region as geographically spread and culturally diverse as Latin America, no single satellite player has the necessary on-the-ground market visibility and retail reach so developing efficient commercial distribution pipelines is as critical as technical efficiencies. Telecom and mobile operators would be ideal HTS distributors if it was not for the fact that, in the grand scheme of things, satellite markets are so small to them nowadays that it could be a challenge for true commercial engagement. On the other hand, smaller, specialized distribution partners can show high engagement levels but have less retail reach and branding power than telecom/mobile operators. As evidenced by the diverse set of partners selected recently by MNLA, the path of least resistance for an efficient regional sales pipeline could rather hinge around cherry-picking partners that provide a good mix between these two extremes.
- National Programs: Broadband access is a critically important driver for economic growth, prompting national governments to foster development or to directly invest in infrastructure to bridge the digital divide. Key is that end-to-end broadband services can be government-subsidized for social inclusion; and one aspect in Latin America is that paths taken by national administrations vary widely depending on considerations like population size /spread, geographic extension, political shifts and state of the terrestrial infrastructure. As an example, Colombia decided a few years ago that they could make better use of the money budgeted for SatCol (Colombian Satellite) by using such funds to extend the reach of long-haul fiber. On the other hand, with the SGDC government program, Brazil will rely on satellites to complement Telebras’s fiber footprint. Focus on the middle mile means need to efficiently interwork with last mile access technologies. Indeed, Brazil is developing 450 Mhz 4G technology which -as a result of the propagation benefits of the 450 Mhz spectrum band- promises to offer a good compromise between coverage and access speed in rural locations. With a rural population of around 30 million people in Brazil -roughly the size of the total population of countries like Peru and Venezuela – Brazil has critical mass to drive economies of scale. Should Brazil’s developments succeed, use of 450 Mhz 4G could then spread into countries like Peru and this could, in turn, change the picture of how satellite HTS can interwork with last-mile wireless access in the region.
- Open B2B Platforms: Open HTS systems to be provisioned for Latin America will focus ontapping into an established and diversified set of specialized satellite service providers and teleport operators that wish to transition to HTS. This service model is consequently expected to receive great acceptance among satellite service players because they will be able to continue benefiting from capacity intermediation – translating Mhz into Mbps and value-add services-. What is not yet entirely clear however is if, by virtue of the HTS push towards higher traffic volumes, lower prices and IP virtualization, regional transition towards HTS could then sparkle a Darwinian consolidation process among established satellite service providers in the region.
Risks for HTS can be high but so are the opportunities. Currently, all eyes are on MNLA, for better estimations about how big and how fast the HTS residential business can become. With HTS giant players like Hughes and ViaSat watching and already making capacity commitments, MNLA might not keep its first-mover-advantage in the long run but has sure become a leading case for the true demand of residential satellite broadband.
It is worth noting that supply and demand are not fully independent variables. In Mexico, Central America and the Caribbean the HTS situation looks to develop quite differently from a supply perspective in comparison to South America, given that these regions above the Equator are expected to experience a dramatic jump of HTS supply in 2016/2017 as both Hughes and ViaSat plan to expand their coverage with their respective launches of the Echostar-19/Jupiter-2 and ViaSat-2 satellites.
Established satellite service providers are anxious to learn how HTS will impact their business, which will largely depend on how local markets evolve towards either closed systems, open systems or hybrid models. A positive aspect of the emergence of HTS is that the satellite sector as a whole will grow by better enabling uses and applications not well served -from an economic perspective- by traditional FSS. So, in a sense, HTS will be creating new markets but, what might concern some players, is that this growth will also come with some shacking and shifts within the service ecosystem, affecting the business of established satellite operators and service providers. Also note that FSS supply dominance may not necessarily be transferable to HTS, as evidenced by the large number of players entering the HTS market in Latin Ameirca.
Clearly, not all HTS platforms are created equal and Latin America is offering a good mix of opportunities for a number of players and service models to co-live in a sort of “coo-petition” environment. Long term, however, business pressures could push the region towards wholesale models seeking increasing levels of technical and commercial distribution efficiencies.
This article first appeared on SatMagazine
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