Satellite Broadband: The proof will be in the pricing

Following a flurry of deals and announcements in the space, the potential of satellite broadband is at the forefront of many industry conversations. As interest spikes, ALCAN Systems CEO Onur Karabey gives his take on why cost will prove to be the deciding factor on the future of the relationship between satellite and telecoms.

 

Satellite potential

Elon Musk is no stranger to making headlines and he is certainly doing so as his Starlink venture gains momentum. From plans for a satellite station that will cover the whole of Britain, to a 30% jump in customer subscriptions in a single month it is undeniable that this approach to broadband is gaining traction, and rightly so.

It is not just Musk making waves in the space as we’ve seen a spike in recent announcements. This includes China joining the satellite race, Amazon’s Project Kuiper and BT which, in partnership with OneWeb, has announced it will look to use LEO satellites to fill the ‘not spots’ that have been a source of countless criticisms in recent years. These developments bode well for both the satellite and telecoms industries. If we look back to the early 2000’s, the view was that the technologies would complement not compete and this step certainly feels like the beginning of the road back to this close relationship.

 

Cost is key

However, as with any relationship, it is not so simple. At the heart of the decision to turn to satellite, is its ability to overcome the two main challenges that fiber faces in rural areas – roll out and cost. Delivering last mile connectivity via LEO satellites offers an alternative to the time and labor-intensive process of fiber installation however, cost could still be the sticking point.

While there recent market activity demonstrates there is an opportunity for satellite broadband, the proof will be in the pricing. The satellite industry must start to think with consumer expectations in mind. The explosion of connectivity which has only been further fuelled in the past 12 months by the pandemic and the rise of home working has had a profound impact on customer demands. Higher capacity at lower costs is no longer a wish list item – it is the basic expectation and emphasises that, for satellite broadband to take off, those demands must be met at a price point that allows operators to see ROI without passing on unreasonably high costs to customers.

 

Setting the standard

Recent developments in the industry present an opportunity to set a precedent for how satellite can work as an ideal complementary technology for delivering broadband. Given only 54% of the world currently has access to broadband there is a huge opportunity to deliver connectivity if there is a proven model for doing so. Therefore, the next big step for the satellite and telecom industries will be to develop and invest in the highest performance equipment possible, at drastically lower costs. This must extend not only to a low upfront cost, but low OPEX costs to make the reconvergence of satellite and telecoms commercially viable.

The two industries are poised to work together to deliver uncompromised connectivity in any environment. However, it is crucial that cost must not be the difference between success and a great idea that falls down on ROI in reality.

 

If you’d like to hear more about the development of low cost satellite solutions to deliver connectivity in any environment get in touch [email protected]