Ericsson Report Means HTS Poised to Benefit

In the latest Ericsson Mobility Report, key statistics and future forecasts were presented, which should provide satellite technology, specifically High Throughput Satellites (HTS), with highly promising short term opportunities.

As of Q2 2013, 105 million mobile subscribers were added to the global total, which stands at 6.5 billion mobile subscribers, representing a penetration level of 91%. By the end of 2018, Ericsson expects mobile subscriptions to reach 9.1 billion and for 60% of the world's population to be covered by Long Term Evolution (LTE) technology.

The additional subscription base of 2.6 billion in four short years as well as the deployment of LTE translates to requirements for higher bandwidth where all solutions (including satellite-based platforms) should begin to support 3G and eventually 4G.  Ericsson further forecasts that mobile data traffic will grow by 12 times between 2012 and 2018.

Global Mobile Traffic: Voice and Data, 2010-2018

Source: Ericsson

In examining which satellite platform works best to support the upcoming surge in traffic where a stable trend of data growth means mobile data subscriptions will grow strongly, capacity cost will undoubtedly be a key metric in the solution mix.  In NSR’s view, HTS platforms should emerge as the preferred satellite solution as they will not only serve as a “better costing platform,” but also help drive subscriptions as they address the continuous increase in the average data volume per subscriber.  Data traffic is highly asymmetrical compared to voice where efficiencies can be gained in terms of converting hertz to bits.  With the expected continued explosion of data traffic, satellite capacity that runs on 3G and even 4G platforms can be supported with a reasonable ROI using HTS.

Indeed, recent deals have begun to reflect this. In August 2013, Intelsat and Japan-based SoftBank Mobile announced the successful trial of a cost-effective, rural 3G mobile phone service in Kenya. Intelsat supported the demonstration through capacity on Intelsat 10; however, the demonstration is aimed at delivering a managed VSAT-based 3G solution through the allocation of capacity via the operator’s upcoming EpicNG HTS platform for the upgrade of networks from 2G to 3G, and eventually to 4G via satellite. In June 2013, HTS operator O3b signed a deal with Maju Nusa to provide ultra-high speed 3G Backhaul services across rural Malaysia. Worth noting is that the deal helps reduce CAPEX costs with the aggregation of 111 sites over Peninsular Malaysia into 20 customer terminal locations.

This does not mean, however, that traditional FSS capacity no longer has a play in wireless backhaul. Even if data is expected to outpace voice traffic by leaps and bounds, voice will continue to be essential in provisioning cellular and/or wireless service.  VoIP is certainly available; however, quality of service issues may lead to HTS being restrained in terms of growth prospects.  A solution may be to co-locate HTS for data traffic and Traditional FSS to serve voice in a single terminal site.

Bottom Line

HTS solutions that have the ability to support high levels of data with lower cost structures stand to benefit tremendously from the trends outlined by the Ericsson report.  In NSR’s view, short-to-long term projections of data usage can only be achieved with the participation of satellite systems, given the high levels of additional subscribers being forecasted within a four-year period and high levels of data subscribers will demand.  Terrestrial networks cannot wholly handle this upsurge in both subscribers and data traffic given wireless spectrum is already at the breaking point in many countries.

Ericsson noted as well that video traffic in mobile networks is expected to grow by around 60% annually through 2018.  In NSR’s view, an emerging backhaul application may be to “offload” mobile video in order to help decongest terrestrial networks.  An emerging “video offload” application could be a substantial game changer for the industry given that wireless backhaul via satellite that has been relegated in rural and underserved areas may now be a compelling proposition in potentially decongesting urban mobile networks.