HTS in Energy Markets: A Zero-Sum Game?

As more High Throughput Satellites (HTS) launch, arrive in orbit and become operational in the next 12 to 18 months, many in the industry are asking, “How will HTS affect [insert market here]?”  For consumer markets in North America, and Europe to a lesser extent, HTS can and does have a role to play in consumer broadband access.  For “Enterprise” applications, there is definitely a role for HTS.  And, for Mobility.  And, for…But will this mean it’s a zero-sum game between FSS and HTS players? 

In  Energy markets – Oil & Gas, Mining, and Electrical Utilities – HTS will not in-itself be a ‘revolution,’  but rather a continuation of what fixed satellite service (FSS) providers know and are already providing: CIR-based offerings with strong SLAs.  HTS will be add fuel on the capacity fire but that fire was already started before due to real-time video monitoring reaching everywhere and anywhere, business operations becoming more sophisticated, and crew services a key service. Combined, all these applications were already driving demand in this market..  

As NSR found in its Energy Markets via Satellite, 4^th Edition, HTS-based services will not be a ‘year-zero’ adoption, but rather a steadily growing opportunity as end-users become more familiar with the technology.  End-users continue to care more about making their network work than adopting the latest and greatest technology… or even price for some sub-markets within the energy vertical.

FSS users in C- and Ku-bands will continue to require more Gbps to end-users through 2019, the year of the inflection point between GEO-HTS and FSS C-band…but not the death knell for FSS C-band.  Instead, it is where end-users and service providers will see the uptake of GEO-HTS services surpass a flattening demand for FSS C-band.  2022 will be another key point in the curve, where GEO-HTS uptake in terms of Gbps of demand from end-users will surpass FSS Ku-band.  Put another way – by 2023 more than 50% of total capacity demand in Gbps from Energy End-users on VSAT networks will be delivered by HTS-based services (both in GEO and MEO orbits.)

For MEO-HTS, the story is fairly simple – lower latency and higher throughputs are an appealing value proposition, but it all comes down to three things as in real estate: location, location, and location.  End-users located in the sweet-spot of announced coverage for MEO-HTS offerings (+/- 45 Degrees) AND with enough real estate for a couple of 1.2M+ VSATs AND with significant capacity demands will find MEO-HTS offerings an appealing service.  Those more mobile or those with less space or those with lower capacity demand will face a less attractive cost-benefit analysis.  One thing is clear though for MEO-HTS offerings, ignoring all other aspects: lower latency definitely has a place.

GEO-HTS is another story.  With different frequencies, technologies, “Open vs. Closed” ecosystems, etc. it is harder to pick specific ‘winners and losers.’  However, at a macro-level HTS will be a key enabler for delivering and powering the on-going digitization of and connected-devices in the Energy markets.  Each GEO-HTS offering will have a role to play within the energy market – enabling ‘office’ connectivity at remote locations, or global mobility, or backwards capability.  One thing is clear amongst all of the GEO-HTS offerings, a focus on CIR-based services with high SLAs will be key to getting energy end-users to adopt the technology.  And, only time will allow the ‘proof’ that most sub-markets within the energy industry require to be made. 

So, with the promise of lower cost per bit, and/or lower latency from HTS-centric offerings… what does FSS continue to bring to the table?  Within the emerging ‘middle bandwidth’ markets for SCADA + video monitoring sites (such as pipeline compressor stations, or utility sub-stations) the advantage of lower prices is relatively moot.  As equipment and services comprises a larger share of the pie relative to straight capacity expenditures, and a lengthy process to get technology certified to operate either with grid operators or in hazardous conditions there remains plenty of life left for FSS in these volume-based markets.

In higher bandwidth markets such as Offshore E&P, reliability and availability is paramount.  Meaning, end-users will continue to leverage FSS C-band offerings in areas with higher incidents of rain-fade… rather than risk downtime.  For these end-users, it will not be an either or solution, but rather a hybrid approach to maximize throughput AND availability, while managing costs at the same time.

Bottom Line

With over three-quarters of capacity demand coming from the Oil & Gas Exploration and Production over the next ten years in the Energy markets, the satellite industry will need to keep looking at advances in real-time drilling, sub-sea technologies, and crew welfare trends to continue to match the right technology to the right problem.  GEO-HTS or MEO-HTS is not the “everything, everywhere, everyone” solution for Energy markets.  FSS C-band and FSS Ku-band will continue to have their place in the “HTS era,” but it is not a zero-sum game.