SCPC Replacement Opportunities

January 15, 2013 | By More

Decades of development in ground system technologies have taken SCPC (Single-Channel-Per-Carrier) modems to near-perfect spectral efficiency. New networks requiring SCPC links incorporate advanced satellite modems with performance closely approaching the theoretical limits.

Yet, what some players fail to see are the saving opportunities latent within their installed base. Indeed, there are thousands of legacy SCPC links in operation worldwide, which if replaced, could save millions of dollars in recurring satellite expenses.

This raises two questions:

1-    How can telecom operators and service providers size SCPC replacement opportunities in a simple way?

2-    When in the presence of a clear positive business case, what factors could prevent players from conducting successful replacement projects?

Replacement opportunities vary but for networks using legacy SCPC modems the math is, indeed, fairly straightforward:

  • Replacing links that use legacy Viterbi modems by new modems with advanced coding -such as LDPC- saves between 30% and 40% in satellite spectrum costs without increasing spectral power (equal C/N, real savings).
  • Such OPEX savings typically justify replacement CAPEX. The payback period (cost of new modems divided by link monthly savings) varies but is usually in the “months” range.

scpc_roi

ROI from such CAPEX-for-OPEX value proposition is shaped by the following variables:

  • Satellite Modem cost (CAPEX)- The higher the cost of new modems, the longer it will take for savings to outpace capital expenditure.
  • Satellite Spectrum Cost (OPEX)- The higher the recurring monthly cost, the faster that savings justify the investment.
  • Efficiency Leap – This is crucial, mainly depends on current vs future coding and modulation performance (Viterbi vs LDPC, Turbo vs. LDPC, etc.).
  • Data Rates: Modem price (hardware + software licenses) does not linearly follow link data rates. Thus, high data rates favor replacements better than low data rates.
  • Installation Costs – Sending a satcom technician to remote sites can be costly, reason why some service providers piggyback on maintenance visits to replace remote modems.

Nevertheless, when in the presence of clear savings, some players postpone or ignore the advantages of conducting replacement projects – Reasons may include:

  • Coordination: Even when savings in OPEX justify CAPEX, coordination through specific internal processes needs to take place to approve project.
  • Timing: Evaluating replacement alternatives have the implicit assumption that savings in capacity can be realized immediately. However, capacity is usually leased via multi-year contracts with satellite operators, so vacated capacity may not be immediately returned to the operator. Sometimes, the pressure to save bandwidth comes from running out of capacity for new services.
  • Operations: The satellite industry at large is known for its conservatism and the operation of earth stations is no exception. There is an understandable degree of resistance to adopt new technology as this involves a new learning curve for operators, integration with existing M&C systems, etc.
  • Technology Obsolescence: Concern around the possibility that new modems´ performance could be outpaced by future developments. While this is a valid concern, note that physical layer performance closely matching the theoretical limits (Shannon limit) makes new advanced modems quite future-proof.

Conclusion: Satcom players express concern over tight satellite bandwidth supply and high costs; yet in many cases they can free up bandwidth and reduce costs substantially by conducting simple SCPC replacement projects. Challenges when dealing with internal approval processes, particularly at large telecom operators must, however, not be underestimated.

This post includes a (downloadable) simple SCPC payback calculator with a 3D chart visual to determine the economic feasibility of SCPC replacements (payback period) and trends.

Download (XLS, 79KB)

Questions:

  • What other criteria does your company use to evaluate technology upgrades?
  • What other reasons prevent /deter your company from conducting money-saving SCPC replacement projects?

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Category: ANALYSIS, TOOLS

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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