Wireless Backhaul via Satellite Worth $4.3 Billion Through 2017
Published on: 25th Jun 2008
Note -- this news article is more than a year old.
Satellite links will represent a growing portion of rural wireless network deployments around the world over the next 10 years, claims a new report from NSR. The report concludes that, from an estimated $227.1 million in revenues for 2007, revenues for both equipment sales and transponder leases are expected to reach $572.9 million by 2017, yielding total revenues of $4.3 billion over an 11 year period.
Given the increased competitiveness of the top metro markets as well as the regulatory impetus towards the fulfillment of Universal Service Obligations (USO), rural areas are becoming more important for incumbent as well as new service providers that are looking to enter the market. And here, satellite backhaul due to coverage and instant infrastructure advantages become highly valuable in being part of the mobile ecosystem in many of the globe's Greenfield markets.
Indeed, in key markets such as India and China where mobile growth has occurred at a blistering pace in recent years, rural areas have become key markets for many service providers for sustaining historical growth levels. "But addressing rural demand is vastly different from urban demand, particularly in cost structures. For instance, equipment prices in rural markets are very inexpensive, and monthly service costs or ARPU levels are just a fraction of their urban counterparts," stated Jose Del Rosario, Senior Analyst of NSR and author of the report.
As such, service providers have to closely monitor CAPEX and OPEX in addressing rural demand. And backhaul costs are key since these could be as high as 40% in some instances, which pose huge challenges to ROI considerations. For satellite space segment in particular, its relative high cost has been one of the biggest market restraints in adopting satellite backhaul solutions.
Moreover, satellite backhaul is not the only option for rural and remote areas, and terrestrial technologies are constantly improving their reach in order to expand coverage and enlarge market territory. Satellite backhaul solutions will have to address these issues in order to improve its market positioning over the long term.
The good news is satellite technology is likewise improving its technical capability and improving its cost structure. "There is an evolution taking place where satellite backhaul technologies are moving towards IP and data platforms that improve efficiency in space segment usage and thus lower transponder or bandwidth costs for mobile service providers. As technological improvements and the evolution continues, satellite platforms should at the very least maintain its niche and sustain its role in the wireless backhaul market over time," stated Del Rosario.