Facebook & Eutelsat “Like” Africa’s HTS Broadband Promise Oct 5th, 2015 by Prashant Butani, NSR The slide below is from an NSR event in France back in September 2014. Today’s announcement between Eutelsat and Facebook made a small part of this forecast take the form of a signed agreement. But what does this mean for satellite operators like Thaicom who have invested in High Throughput Satellites (HTS) for over a decade? And might the likes of Avanti and Yahsat, who have HTS capacity over Africa today, view this as a lost opportunity or the tip of a new iceberg? Does this mean that internet.org can’t wait for the LEO constellations to get going and is steaming ahead with GEO HTS instead? It Was Coming… Facebook also announced last week its call for universal internet access to be made a global priority. Over the past few weeks, Mark Zuckerberg met with the Indian Prime Minister and supported the Digital India initiative, while Google’s Sundar Pichai announced a 400+ site Wi-Fi rollout in the same country. Indeed, Google, Microsoft and Facebook have not been shy to play harder in telcos’ turf. Yet, despite investments in O3b, SpaceX’s constellation and others, this announcement is the first coming together of an Internet biggie, a Big 4 satellite operator, a planned GEO HTS mission and “affordable, off-the-shelf customer equipment”. The challenge for these announcements has always been a clearly defined timeline for rollout but this one, with mid-2016 comes closer than most. For the GEOs For anyone with GEO HTS capacity over regions like Africa, Latin America and South Asia, this should be a sign that the Internet as the universal common denominator is ripe for consuming satellite bandwidth. However, bandwidth prices of $5000/MHz are no longer indicative of the data market and $500/Mbps or lower is here to stay. Most importantly, customers or partners like internet.org have put their weight behind GEO HTS, perhaps even at today’s price points. But this is not the first time that Facebook has been rumored to be in talks with GEO HTS operators. In speculation, it might have wanted an entire satellite to itself, and Amos 6 happened to be the next in line to launch. However, the GEOs have legacy customers to contend with, and it does not bode well for their investors that assets that were being leased for $X per transponder are now being leased at a tenth of that figure. For the LEOs For the LEO constellations, the challenge now is to co-ordinate, build, launch and deliver bandwidth that is truly global and a further order of magnitude lower in dollar terms. O3b’s recent figures, whether revenue or utilized capacity, indicate that upfront cost of hardware was not a deal breaker for backhaul customers once Total Cost of Ownership (TCO) made sense. And while go-to-market strategies need more market research, “build it and they will stream” may actually come true. Flat panel antennas, spectrum co-ordination and distribution chains remain areas of concern though and are no small feats of engineering at that. For the Hardware And finally, for those that manufacture VSAT and broadband equipment, this could be just what the doctor ordered. Even as the likes of Gilat revised earnings, the challenge that is being thrown back to the manufacturers is to bring down the barrier to entry. With billions to connect, whether directly or through Wi-Fi hotspots, it seems only a matter of time that equipment manufacturers will get the scale they want either directly, or through supported projects from the United Nations, individual countries or Internet philanthropists. The biggest question is whether they can reinvent fast enough and ultimately whether these projects will result in significantly larger shipments. Bottom Line The concept of the Internet as a universal right has been around for a few years, and some may argue why this gets priority over other issues faced by humanity. More people on internet.org would mean more of them on facebook.com and that raises a Net Neutrality debate. But the positive effects of getting people online, no matter the means, cannot be denied. It remains largely unproven whether satellite can be a viable Internet source for regions with low ARPUs. As it stands today, the only substantial satellite broadband in developing countries is a few tens of thousands of subscribers (at most) in wealthy urbanized areas of Latin America and Russia, while the vast swathes of Africa remain an SME/SoHo play. Come 2016 when Amos 6 enters service with Ka-band HTS capacity over Africa, 36 HTS beams will light up 14 African countries with tens of Gigabits delivering Direct-to-User satellite broadband. A small win would be that the forecast above will have become a reality, but the larger impact on tele-education, tele-medicine and poverty alleviation for what has long been called the “Dark Continent” will have become the true winner.