With the advent of High Throughput Satellite (HTS) services within Africa’s connected business environment, the question of what happens with the remainder of the satellite supply value chain is relevant, says Dr Dawie de Wet, CEO, Q-KON.
The development of HTS services is slowly but surely entering the African landscape and means that satellite access servicing to the end-user is nearing the 10Mbps, 15GB at $50/month service points.
At these price and performance points we would expect an upsurge in subscriber growth and Africa to mirror North American levels of +1,000 000 subscriber terminals.
Surely the fast geographical landscapes of Africa, linked to the lack of extensive ADSL networks and the limitations of 3G services, create the perfect opportunity for large-scale satellite deployments?
Satellite services as a technology can certainly meet the future user demands and contribute significantly to close the digital divide.
But what is less certain, and not often debated, is whether the remainder of the value channel will be able to rise to the occasion.
Challenges within the greater value chain and the requirements to ensure large-scale deployments of satellite services warrants further discussion.
The challenges
The first, and probably most significant challenge is that satellite service is, and always will be a niche service.
As elegantly demonstrated by the 2014 Comsys Report, satellite revenue is less than 10% of telco revenues with little to no impact on the bottom line.
Often considered more of a necessary evil than a strategic differentiator, satellite services do not form part of the mainstream focus of leading telcos. This represents both an opportunity and a challenge. The opportunity is for niche and focussed Service Providers to drive the delivery of satellite services and to do so in a way that compliments the services from the major telcos.
However, being niche Service Providers, the capital and investment required to drive large-scale satellite deployments is often not available. What will be needed is the development of medium tier service providers who can drive the next phase of HTS deployments, these will be niche provider who can indeed amass the resources required for HTS service while being small enough to appreciate the returns offered.
In the South Africa and Africa context Service Providers such as Q-KON, iBurst and Godwana could be ideally placed to leverage the moment.
Multimedia Service Bundles
With IP access being the core delivery of HTS services it is logical to expect that subscribers will want an elegant service offering which combines TV, broadband and telephony in simple service bundles.
From a technical product definition point of view this is certainly not a challenge at all. However, from an industry, regulatory and content rights position this leads to far more questions than answers.
With the Africa regulatory landscape still very much split between telecommunication and broadcast services – will this means that ISP’s will now be licensed to be national broadcasters or will broadcasters be licensed to be ISP’s?
This doesn’t even start to address the matter of regional licenses for Netflix and other over-the-top providers.
Since we want to focus on solutions and not problems, I maintain that it will be the new medium tier Operators that will be flexible and dynamic enough to address this issue. It will be these innovative, and by definition niche technology operators, that can create the structures needed to deliver HTS in Africa.
Logistics, Distribution and Field Services
The exceptional successes of the GSM network rollouts and the large scale growth in subscriber terminals might lead many to expect that mobile operators are well positioned to drive deployment of subscriber HTS satellite services.
However, in our experience, exactly the opposite is true. Large-scale satellite service deployments require very different capabilities, which are closer to the DTH industry than the mobile cellular industry.
Given that the subscriber terminal cost is getting lower and nearing the $300 per set mark, the cost of warehousing, logistics, field trucks and field engineering costs are becoming the dominant element in the cost equation.
As such it is no longer enough to get affordable equipment costs if you can’t also distribute, deliver and install the service at affordable rates. It is the DTH industry players who have the capabilities and infrastructure required to meet this challenge and who could potentially partner with niche Service Providers to execute the HTS service promise.
Time to reconsider
We believe the architects, manufacturers and developers of the HTS macro environment should do more than evangelise the brilliance of HTS technology and the exceptional performance and functionality of what it offers.
We believe these industry players should also stimulate debate and initiate discussions within the wider landscape and value chain in order to lay the foundation of what will be needed to really pull through on the HTS promise.
They might need to rethink contract models and engagement structures to enable medium tier Service Providers to execute the implementation of large-scale HTS deployments.
The HTS successes we have witnessed in the Americas by Wildblue, DISHtv and others are sound of what can be done albeit done by single organisations which taken up the responsibilities of the completed end-to-end value chain and has delivered on each element.
Africa might not be fortunate to have such giants with the appetite to accept the end-to-end responsibility in a niche technology domain such as high-throughput satellites. For Africa we will need creative industry models which will collectively develop the value chain.
