With the Covid-19 pandemic infiltrating every aspect of life, the role of the telecommunications industry has never been more crucial in staying connected as we are forced apart from each other physically.
Remote connectivity in the world’s most underserved regions has always been a primary focus of our site, and satellite connectivity has long served an incomparable role on delivering reliable service to regions that would otherwise remain isolated. With the advent of 5G, the dream of fast and reliable internet access in these remote areas is becoming a reality.
To gain a better understanding of how the satellite market stands and how it looks set to evolve, we spoke to Avanti’s Kyle Whitehill shortly after he returned from the 2020 Satellite Show in Washington DC – which, for obvious reasons, he noted was “much more sparsely attended than normal…”
Which trends struck you most from the show?
At the 2019 show, if you were talking about GEO rather than LEO, you were a nobody – it was OneWeb and SpaceX etc, whereas now they’ve realised they don’t have the economics for LEO. The GEO market has bounced back – in 2018, there were 25 GEO satellites in orbit globally, and these cost in the region of $400 million. In 2019, this number dropped to five – there was a real sense of doom and gloom around manufacturing, with companies like Airbus, Boeing and Talos impacted by that – taking out 80% of the market has a devastating effect on the whole industry.
This year, there are 18 in orbit – a sudden bounceback helped by the fact that the satellites are bigger and more efficient, as well as more cost effective. Two years ago, satellites were a distress purchase as they were expensive but newer models – particularly K-High Throughput satellites – are going to change the economics of providing consumer broadband and being able to put last mile connectivity into places. There is much more optimism from manufacturers now that GEO is back in the game.
What we really like are small sats, which cost around $100 million and take around two years to make. With the big GEOs back in play, these are probably the next direction for the industry.
Are the upsides solely cost-based, or do they offer an edge in terms of coverage?
If you look at the original principle for all networks – fixed, mobile and satellite – it was a challenge to make them synchronous. Particularly with GEO satellites as they have such wide beam patterns, if you stick another one into an orbital slot close by the original one, you’re going to get a lot of beams providing coverage across each other. With a small sat, you can select a much narrower geographic range – so for example if the DRC is missing from your footprint, you can build a small sat quickly that focuses on that specific geography with a high throughput capability. This allows you to identify opportunities in specific markets and investigate making a play there, as opposed to launching a satellite like HYLAS-4 which covers the whole of Africa. Suddenly you’re providing fixed-beam capacity to every country in Africa, irrespective of what the demand might be.
Operators typically want to wring the most that they can out of investment in previous generations but many firms are scrambling to implement 5G. What are you seeing in terms of attitudes towards 5G in emerging markets?
From a mobile operator’s point of view, a megahertz of spectrum is a good thing – they want to get as much spectrum as they possibly can so that they can optimise their network coverage and costs. The argument there is “do you care how you get your network?” – and of course not, you care about the experience that you receive. If someone tells you that they can provide you with a better home internet speed than you currently receive, you won’t be picky about the technology – you’ll just ask them to explain what they offer and how much it costs.
The demand for 5G spectrum is currently being driven by network optimisation. With 2G, around 20% of customers consumed 80% of network minutes – this sort of split isn’t unusual. With 3G, it was around 10% of customers consuming 90% of data, while with 4G the ratio is more like 1:99. For operators, a shrinking number of users consuming a gigantic amount of bandwidth is an issue – they have to find ways of making spectrum usage and data consumption efficient. Anything that facilitates this is welcome, and that’s certainly what’s happening in South Africa – particularly in Johannesburg where they want to use 5G to soak up some of the high consumption users.
The M2M applications of 5G are one of the most hyped use cases – do you think that’s a reality we’ll see?
I think in Africa right now, people are interested in 5G as a possible replacement technology for 3G & 4G data consumption. In rural Africa, it’s going to be about ubiquitous coverage to enable more industrial applications – the technology won’t just be used for gaming, it will allow companies like Unilever to create a global network that tracks every grocery item that they ship. We’ve never cracked ubiquitous machine-to-machine before, and I think 5G’s the technology to do that.
There’s a lot of life left in 4G, with different types of optimisation technologies – anybody who’s got decent 4G coverage knows that that’s as much as you need. It’s plenty; it’s not a problem around throughput, so I think that’s why the industry is so excited about the M2M applications of 5G.
And how about the satellite backhaul applications - particularly in Africa?
This is exploding across Africa on 4G, with the big operators held accountable by regulators – it’s really effective in remote areas where consumption booms, so that’s likely to proliferate. Secondly, we have to discuss what rural connectivity actually means – you can’t put up a $150,000-$200,000 telecom tower, antenna and BTS equipment in a rural community where the ARPU is less than $1.
The solution is that four or five companies are deploying satellite macro sites where you can effectively build a Wi-Fi solution in a community that radiates around 200 metres. These can definitely deliver 2G and they’re beginning to become data enabled for basic texting. These comprise of the radio, core and macro site and cost less than $10,000 all in – this not only delivers affordability, but provides the opportunity for local entrepreneurs in villages for monetisation via device-sharing. Just because connectivity is available doesn’t mean villagers will have iPhones – there are about 500-600 sites across Africa where entrepreneurs are offering access to devices for a small fee, and mobile operators are encouraging this. The distribution model debuted in India, which saw a vast network of agents turn to selling airtime or access, when previously they might have sold soap or other sundries. Top-ups swiftly became their biggest product, and this model has been replicated in Africa.
The biggest inhibitors are affording a device and airtime – you can maybe get a device for $20 but then you’ll need to spend $1-2 a month for airtime and that’s just not feasible for a lot of people, so I believe this sharing approach will be the most attractive. The key drivers with communications in Africa are not trivial -checking sports scores or looking at Instagram. People care that they can feed their families, about getting access to education and healthcare, and ensuring their family’s security, so the internet as an enabler has to support one of these core objectives.