Residential LTE vs. Satellite broadband
Maxime Baudry
Co-Head of Satellite Practice at IDATE
Perspectives for satellite broadband facing residential LTE offerings
Just as they did with 3G, telcos started to propose residential offers based on LTE, how does it compare with satellite broadband offers?
Residential LTE, a direct competitor to satellite broadband
ust as they did with 3G, telcos started to propose residential offers based on LTE. It’s notably the case of Verizon Wireless in the United States who proposes “Home Fusion” since May 2012, a service that allows households to access broadband via an outdoor LTE antenna installed on one of the walls of the building. The antenna is billed 200 USD but the installation is free. How does it compare with satellite broadband offers? Downloading speeds vary between 5 and 12 Mbps in average with a pricing range going from 60USD for 10GB of data to 120 USD Monthly for 120 GB. With similarities in pricing, downloading speeds and data caps, LTE is positioned as a direct competitor to Satellite broadband.
Residential LTE coming to Europe
In Europe, first LTE offers arrive on the market. The first to propose such services was Netcom, a filial of TeliaSonera, who was first to propose LTE in Norway. It offers 100GB of data for a monthly fee of 68 EUR. According to Netcom, it is very likely that this kind of solution could be considered as a substitute to DSL, especially when the monthly data cap exceeds observed traffic on DSL networks (An average of 30 GB per household). In germany, Vodafone proposes a similar offer since 2012, but this time it is differentiated with quality of service through network speed with prices starting from 25 EUR to 40 EUR monthly to have access to 50 Mbps and 30 GB.
Satellite Broadband: no more competitive?
Considering this kind of offers, satellite broadband is no more competitive, neither on network speed nor on monthly data cap offered. Even though these new offerings materializes the LTE threat for satellite broadband we had foreseen, LTE coverage remains very limited. Anyhow, satellite will have to pursue its downloading speeds increase since 2008 if it wants to maintain a competitive advantage on this market.
Positioning of some satellite broadband offers in France, March 2013
Source: Digiworld by IDATE
Maxime Baudry
Head of the radio technologies & spectrum practice, IDATE
m.baudry@idate.org
Satellite Broadcast: Main trends and impacts for the industry
Maxime Baudry
Co-Head of Satellite Practice at IDATE
Satellite TV broadcast booming in emerging countries
Satellite TV broadcast is put in the forefront with our analysts attending the Satellite 2013 summit in Washington, USA from march 18 to 21 2013
Satellite broadcasting is currently being led by the explosive development in emerging countries. According to IDATE’s findings, there were at year-end 2012, 372 million satellite households with more than a half located in emerging countries. As an example, the Indian satellite pay-TV market registered a growth of 20 million households in only two years, to reach an estimated base of 51 million subscribers at the end of 2012.
World's current satellite TV broadcast market
Between 2008 and 2011, close to 100 million households worldwide switched over to satellite TV, which is almost identical to how many viewers terrestrial TV lost during that time. To compare, cable TV gained 55.5 million households and IPTV 26.4 million during that period.
Breakdown of the globe’s TV households by access technology
Source: IDATE, World TV Markets, August 2012
Satellite TV is booming in emerging countries
Satellite broadcasting is currently being led by the explosive development in emerging countries. According to IDATE’s findings, there were at year-end 2012, 372 million satellite households with more than a half located in emerging countries. As an example, the Indian satellite pay-TV market registered a growth of 20 million households in only two years, to reach an estimated base of 51 million subscribers at the end of 2012.
Impacts of TV broadcasting for the satellite industry
These developments have great impact on satellite capacity, as it is estimated that emerging countries roughly accounted for 90% of the new satellite capacity leased in 2012. According to SES, the weight of emerging countries in the total demand of satellite capacity worldwide will move from 69% in 2012 to 76% in 2019. Whereas the Western Europe and North American markets are expected to register a CAGR of -0.3% and -0.5% respectively, the Latin American market will for instance grow at a CAGR of 6.3% and the Eastern European one at +3.3%.
Maxime Baudry
Co-Head of Satellite Practice at IDATE
m.baudry@idate.org
More information on Satellite Broadcast in our TV observatory
Satellite broadband : main market trends to 2020
Maxime Baudry
Head of the radio technologies & spectrum practice, IDATE
State of the art of satellite broadband
The scope is put on the satellite ultra broadband with our analysts attending the upcoming Satellite 2013 summit in Washington, USA.
Three to five times more expensive than ADSL offers in the early 2000s, broadband satellite services have long required a sizeable investment from rural residential users interested in this type of access, with some even preferring to opt for “unlimited PSTN”. Prices have come down since then and, even though satellite access is still more expensive than ADSL, the gap has shrunk substantially. At year-end 2012, there were 1.2 million subscribers in North America, 200 000 in Asia Pacific (IPStar service), and roughly 150 000 in Europe.
Drop in the price of broadband satellite terminals
Parallel to the decrease in the price of subscriptions, the price of satellite terminals has also dropped, thanks to technical improvements which have helped bring down production costs, and to the economies of scale generated by the tens of thousands of terminals sold by manufacturers. Current prices vary between 250 and 350 EUR and could drop to 200 EUR by 2015.
Evolution of broadband satellite reception terminal prices (EUR)
Source: Digiworld by IDATE
Industry preparing for ultra-fast broadband via satellite
As part of its ARTES programme, the ESA (European Space Agency) has plans to develop a very high-speed satellite called the Terabit/s Satellite. Based on a very broad platform, the Terabit/s spacecraft will make it possible to achieve speeds of around 200 Mbps with dishes measuring 40 cm in diameter, through the use of the Q and V frequency bands.
French space agency CNES also has similar plans. The THDSat project is currently in R&D phase and could supply French households and SMEs with access at 20-100 Mbps starting in 2016. The THDSat initiative would involve satellite constructors EADS Astrium and Thales Alenia Space, and possibly service provider Eutelsat, among others.
Impacts for satellite broadband
Satellite is clearly a viable alternative technology for reducing all t ypes of digital divide. Its development is nevertheless being stunted by the steady progress being made in terrestrial technologies and the need to increase data rates.
Although latest satellites allow access speeds of up to 20 Mbps, they are behind their earthbound rivals as the data rates supplied by FTTx or LTE are closer to 50-100 Mbps. It is only by being able to rival its terrestrial counterparts that satellite can become a credible alternative, which is why projects like the THDSat and the Terabit/s Satellite are now on the table.
Maxime Baudry
Co-Head of Satellite Practice at IDATE
m.baudry@idate.org
Next Gen Access deployment
Roland Montagne
Head of the Telecoms Business Unit at IDATE
Measuring costs for each EU-27 member state to reach the Digital Agenda in Europe
In May 2010, the European Commission adopted its Digital Agenda policy programme. It was one of the first flagship initiatives of the EU 2020 strategy. It sets ambitious targets to provide all European households with ubiquitous coverage of 30 Mbps as a minimum and half of them with a subscription of 100 Mbps by 2020. IDATE has published recently a report providing different possible cost scenarios – with a breakdown by technology and by population density (urban, peri-urban, rural).
Today, some voices are raising concerns that the goals of the Digital Agenda (DA) will not be reached in many Member States as the necessary expenditure is beyond reach, especially in the current European economic situation. This is why this report focuses in particular on the cost of the Digital Agenda in reaching the ambitious goal of coverage of 30 Mbps and 100 Mbps, and further tries to clarify, per country, what it will be. It puts forward a theoretical model with the distinction of various scenarios involving distinct technologies, namely fixed and wireless.
"In several European countries, the rollout of FTTH networks has started and the European Union disposes already of a 40% NGA net coverage amongst all its member states. Indeed, copper local loop will ultimately be replaced by fibre, it being the medium that can guarantee an almost infinite bandwidth capacity for the future. Nevertheless, good quality copper, especially in Western Europe, and the current economic situation, could lead some telcos to consider other alternative scenarios involving VDSL, LTE or even satellite in Ka band", says Roland Montagne, Director of the Telecom Business Unit at IDATE. He adds: "The adoption of a FTTH-oriented scenario by telcos will not only depend on the amount of capex necessary but also on a viable business model. On this, telcos should be innovative not only with the services they propose but also on their pricing approach (tiered pricing) and their strategy regarding smart access."
Deployment costs by scenario
- Four scenarios in different constellations have been modelled, including a full FTTH/B coverage scenario. Depending on the mix of technologies deployed, these scenarios will cost between 51 billion EUR and 229 billion EUR.
- These amounts, whilst certainly substantial, are within the expected range and therefore come as a confirmation of the ambitious nature of the broadband objectives of the DAE.
*50% uptake
NOTE: Scenario names are chosen to reflect main technological characteristics, but do not express a preference for any given
technology to reach the broadband objectives of the Digital Agenda.
90% FTTH/B = 90% FTTH/B only + 10% LTE
Base case = FTTH/B+FTTLA+VDSL2+LTE
Vectoring = FTTH/B+FTTLA+VDSL Vectoring+VDSL2+LTE)
Wireless = LTE+FTTH/B
NGA Costs model
In order to build our theoretical model of the costs of reaching the DA goals, IDATE started by drawing up several assumptions about ‘overlapping’ in each country with the aim of establishing the ‘net’ number of FTTx homes passed, and thus the effective level of NGA coverage. Consolidating this in the EU27 gives a net NGA coverage rate of 41% of European households in late-2011. Among the four fixed NGA architectures considered (FTTH/B, FTTLA+DOCSIS 3.0, FTTN+VDSL and FTTx/LAN), regarding our estimates at that time, FTTH/B accounted for 22%, FTTN+VDSL for 25% and FTTLA+DOCSIS3.0 for 50% of the European NGA coverage.
Using these coverage estimates as a baseline, IDATE modelled the investment required for each of the 27 Member States to reach the broadband objectives of the Commission's DA. We also took into account, nevertheless, for each Member State, the national broadband or ultra-fast broadband plans already launched, with their associated objectives of coverage up to 2020.
We then considered no duplication of infrastructure in our cost model. Indeed, the model's output shows the minimum cost of reaching the DA targets by rolling out one single network per coverage area1.
> For more information about what we do, visit us online at: www.idate.orgwww.idate.org
Satellite Ultra-Broadband
Maxime BAUDRY
Head of Satellite Practice at DigiWorld IDATE
Africa, a new growth opportunity?
IDATE has just published its study “Satellite Ultra-Broadband in Europe & Africa” which explores the latest developments in broadband and ultra-fast broadband markets in Europe and Africa. After a detailed examination of the dynamics of these areas, in both fixed and mobile markets, the report delivers strategic and figure-backed responses to the question of the current and future role of satellite in the race to deploy broadband and ultra-fast broadband. The report comes with its own database including the set of indicators analyzed for all the areas studied.
Maxime Baudry, project manager of this study and co-header of the satellite practice at DigiWorld IDATE, shares his point of view about the actual situation of the Satellite Ultra-Broadband:
“Satellite technology has made enormous progress in recent years, boosting the average downlink speed from 3 Mbps in 2008 to 10-18 Mbps in 2012, and raising traffic caps from 2 GB to 10-20 GB (in some cases even unlimited). It thus seems set to even tackle DSL gray zones, which only a few years ago seemed inaccessible.”
He adds: “On the ultra-fast broadband front, however, satellite is lagging behind: while large-scale rollouts of FTTx and LTE, and even LTE-Advanced between 2012 and 2020 will offer observed download speeds of 30-70 Mbps (and even 200-300 Mbps with LTE-Advanced), the most advanced satellite developments make it possible to supply “only” 50 Mbps, and even then not before 2015 at the earliest. To be able to offer such speeds, satellite technology may well switch to frequency bands even higher than the Ka band.”
Africa, a new growth opportunity?
- Africa’s fixed broadband market is still extremely limited, with an average density of 3.4% of households in the region at end-2011.
- With limited fixed infrastructures, operators are focusing all their efforts on mobile broadband, often only deployed in the most profitable urban areas.
- Over the past three years, however, the region has seen major rollouts of underwater cables, boosting subscriber speeds. Africa’s capacity at end-2011 is estimated at 22 Tbps versus 4 Tbps at end-2009.
- Satellite ultra-broadband remains a tough market in most countries of Sub-Saharan Africa, where barriers to entry remain very high, such as low ARPUs, poor literacy rates (30% to 40% of the population), low electrification (10% of the rural population) and low PC penetration (often below 5% of households)
- Extremely high equipment prices caused by high customs barriers remain a major handicap.
- Against this backdrop, only a few countries seem to present any real short-term potential: South Africa, Kenya, Nigeria and countries in North Africa.
Promising market outlooks
IDATE estimates that between 2012 and 2016 the number of satellite broadband subscribers in Europe will increase by 29% annually.
Africa will post the sharpest growth, a region where the telecoms infrastructure is much more restricted than in Europe. We estimate that the launch of solutions costing 20-30 EUR a month in Africa, such as YahClick and IP Easy, are likely to attract a tier-one clientele with incomes well above the majority of the population, eager to acquire a fixed broadband access solution that is superior to traditional landline connection and often at a cheaper price (excluding the expensive equipment cost which, at around 600 EUR, is inflated by customs barriers). However, areas of uncertainty remain in this market, especially over the future technical and economic performance of fixed infrastructures after the deployment of numerous underwater cable and terrestrial backbone projects funded by the World Bank.
Eastern Europe, the market that seemed to offer most potential at the outset, has failed to take off, with subscriber bases remaining very limited. Several reasons explain this failure: it is a tough market with extremely low ARPUs, making it hard for satellite services operators to make sufficient profits. Also, most countries have invested in mobile infrastructures (LTE already deployed in many countries, including Hungary, Lithuania and Poland), sidelining satellite. Lastly, operator distribution networks revolve around small business operations, while in Western Europe they usually rely on major operators such as Orange, SFR, Swisscom and Deutsche Telekom.
Western Europe has not seen very high growth either. Two countries, France and Germany, continue to make up most of the subscriber base, while operators have managed to boost subscriber numbers quickly via government programs to reduce the digital divide, such as Avanti in Scotland and Eutelsat in Italy. The German market though does now seem to be losing subscribers to other technologies, particularly LTE deployed in rural parts of the country.
Maxime BAUDRY
Project manager
m.baudry@idate.org
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World Television Market
Florence LE BORGNE-BACHSCHMIDT
Head of the TV & Digital content Practice, DigiWorld by IDATE
The penetration of digital television in TV households passes the 50% mark
Publication of the twenty-fifth edition of the “World Television Market” report, is an opportunity for IDATE’s Media team to put into perspective the fundamental changes in the audiovisual industry, in France, in Europe and worldwide. For Florence Le Borgne-Bachschmidt, "It is particularly important to put into context the transformational movements in television, which have never been greater than they are today, in order to measure the revolution taking place”. This report, founded on a very detailed database, provides key information (terrestrial TV, satellite, cable, IPTV, pay-TV etc.), for nearly 40 countries and 5 geographical areas.
TV access modes
According to IDATE, the number of TV households worldwide will reach 1.502 billion in 2016 (+9.4% in 5 years).
- Cable will the remain the chief access channel but will gradually lose ground to satellite and IPTV which will account for 30.0% and 7.3% of TV households, respectively, at the end of 2016.
- Despite the development of hybrid TV solutions, terrestrial TV will continue its decline and drop down to number three spot by 2016, with a roughly 26% share of the global market.
- The development of hybrid solutions that combine live programming on broadcast networks (terrestrial and DTH) and OTT video services over the open Web is a key variable in the future development of the various TV access modes.
Digital inroads
According to IDATE, the penetration of digital TV households worldwide will come to 77.6% of TV households in 2016. Three factors in particular will shape the development of digital TV:
- Governments’ ability to steer the digital switchover of national terrestrial broadcasting networks
- Cable companies’ investments in upgrading their infrastructure
- How popular IPTV and satellite pay-TV services are with TV households.
TV revenue
According to IDATE, the global TV industry’s revenue will come to €340.1 billion in 2012:
- Pay-TV revenue will grow by 12.1% between 2012 and 2016, or by an average 2.9% annually.
- Ad revenue will enjoy even stronger growth of 21.2% between 2012 and 2016.
- Public financing/licensing fees will continue to increase significantly (+7% in 5 years).
Pay-TV providers going international
- Pay-TV is nearing saturation in the world’s more developed TV markets. The emergence of new OTT video services on televisions and other connected devices increases the threat of cord-cutting.
- For a great many pay-TV providers in the West, emerging markets therefore represent vital sources of future growth.
Florence LE BORGNE-BACHSCHMIDT
Head of the TV & Digital content Practice
f.leborgne@idate.org
> Executive seminar "Content in the Cloud" within the frame of the DigiWorld Summit 2012 – 14 November 2012
> More information about this study available on our website
Satellite M2M Market
Maxime BAUDRY
Head of Satellite Practice at DigiWorld IDATE
The global market is forecast to reach 2.3 billion EUR in 2016
IDATE just releases the first edition of its market report providing its readers with an analysis of the M2M market that is currently changing shape, assessing the key technologies to accelerate such a development of this promising market, along with an examination of the positioning of the top players, the key issues to be addressed and market forecasts up to 2015 by geographical area and by type of market.
M2M is a growing segment for the satellite industry, although satellite still has only a small share of the machine-to-machine market which is largely dominated by cellular systems: around 2% in terms of volume and 6% of revenue in 2011.
For most operators, M2M is still very much a niche market, but everything points to real growth potential for these applications.
“While it is sectors like fleet management and maritime security that have driven the sector’s development up to now, new markets have been emerging over the past several years, especially in the area of energy, but also in the homeland security/military arena.” insists Maxime BAUDRY, project manager of this study and IDATE’s head of the satellite practice.
Satellite M2M market growth/disruptive factors
There are several factors driving the growth of satellite M2M applications, starting with:
• Clear assets in terms of coverage: once classic and low-cost wireless solutions (chiefly GSM and 3G) are no longer available, satellite becomes the only possible solution for M2M applications. This is especially true of vast desert areas, and of oceans where demand for M2M solutions is high: for tracking fishing vessels, dangerous cargo, monitoring offshore wind farms, etc.
• Tremendous increase in applications requiring M2M. Examples here include smarts grids in the area of energy, tracking shipments – whether on land, sea or in the air – and for the military which are heavy users of M2M applications for tracking combat assets, in addition to having the means to pay for very high-end and so very expensive products.
• Complementary nature of terrestrial and satellite networks to deliver M2M links end-to-end. Manufacturers have been innovating over the past several years by rolling out hybrid equipment which is being used more and more by operators. Orbcomm was a pioneer in this field, and was then followed by players such as Iridium and Inmarsat.
• Stricter regulation. Recent developments in maritime regulation, notably the adoption of stricter regulations over monitoring commercial vessels, have been beneficial to satellite which is the only possible solution for this type of application outside of coastal areas.
Current satellite M2M market estimates
The satellite M2M market still represents only a small fraction of satellite services revenue. In the satellite M2M market came to 1.5 billion USD while the Satellite Industry Association (SIA) puts the entire satellite services market at an estimated 101 billion USD – giving M2M a 1.5% share of the market. IDATE estimates for 2011 indicate that this share will increase to 1.6%. The number of M2M modules in services stood at 1.3 million units in 2010.
The global satellite M2M market is forecast to reach 2.3 billion EUR in 2016. The highest rate of increase will be in the Asia-Pacific region thanks to developments in countries such as China, Indonesia, Vietnam and India.
Historical growth of satellite M2M market volume
(Millions modules)
Maxime BAUDRY
Project manager
m.baudry@idate.org
Visit our website for more information on this topic
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