October 30, 2014

According to Euroconsult's newly released research report, High Throughput Satellites (HTS) continue to proliferate in 2014 in terms of supply additions (+109 Gbps), system investments (nine new orders) and demand take-up (+40 Gbps). This trend should accelerate considering the 100+ projected new HTS system (payload and satellite) launches over the next decade.

 As a result of the extensive investments made by satellite operators, total HTS capacity supply is projected to nearly triple over the next three years from 600 Gbps in 2014 to 1,720 Gbps in 2017. "The vast majority of today's available HTS capacity supply is in Ka-band, although Ku-band has recently seen increased adoption from operators such as Telesat, SES and Eutelsat, while Intelsat plans to include C-band spot beams on IS-33e and IS-35e," said Nathan de Ruiter, Senior Consultant at Euroconsult. This year's edition of the HTS report specifically assesses and quantifies the demand uptake by frequency band. "Ka-band HTS should remain the dominant frequency band in all vertical markets in terms of capacity usage; nonetheless, Ku-band HTS capacity usage is projected to accelerate from 2017 to reach around 150 Gbps by 2023, largely driven by professional user markets which often have high reliability and availability requirements."

 The influx of HTS capacity and global expansion of coverage footprints should unlock growth opportunities in all major market verticals and geographic regions. Consequently, global capacity usage on HTS systems is expected to grow from 107 Gbps in 2014 to reach just over 1,300 Gbps in 2023, a CAGR of more than 30% over the period.

 The following trends have been found for major market verticals:

• Consumer broadband services in North America will remain the largest user of HTS capacity by 2023, corresponding to 35% of total HTS capacity usage in 2023
• Civil government & enterprise networks and cellular backhaul & trunking are growing at a similar pace of ~34% p.a. through 2023, with demand mainly derived from Latin America, Middle East & Africa, and Asia Pacific
• HTS demand in commercial mobility markets (commercial aviation and maritime) is foreseen to accelerate from 2016 through 2023
• HTS demand for video services is expected to gradually grow over the next decade, while milsatcom usage on commercial HTS systems should remain modest through 2023

As a result, total revenues from HTS capacity usage are forecasted to grow from $1.3 billion in 2014 to reach $6.2 billion in 2023, generating ~$35 billion in aggregate revenue over the period. As additional supply and new services are introduced, regional differences will start to appear. While North America should remain largely dominated by vertically integrated operators posing formidable barriers for new entrants, all other regions are expected to be hotly contested with no current market leader. In order to capture market share and mitigate market risk, satellite operators are increasingly pre-selling large volumes of HTS capacity or payloads at significant price discounts in return for guaranteed annual revenues.