Soaking in bandwidth. Back to the 90s for RLVs. Brexit jitters for U.K. space. POTUS plugs Mars mission
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1 BUSINESS POLITICS PERSPECTIVE May 8, 2017 Soakig i badwidth Lati America is gettig dreched i satellite capacity. The regio s satcom buyers could t be happier INSIDE Back to the 90s for RLVs Brexit jitters for U.K. space POTUS plugs Mars missio VISIT SPACENEWS.COM FOR THE LATEST IN SPACE NEWS
2 Soakig i badwidth south of the border LATIN AMERICA IS GETTING DRENCHED IN SATELLITE CAPACITY. THE REGION S SATCOM BUYERS ARE HAPPY AS DUCKS IN RAIN. XXXX 8 SPACENEWS
3 IF YOU TOURED A COMMERCIAL SATELLITE FACTORY SOMETIME IN THE LAST THREE YEARS, chaces are good that at least oe of the spacecraft o the floor was beig built for the Lati America market. That s because more of the commercial satellites, measured i traspoders, that various builders had uder costructio as of a few years ago were destied for Lati America tha ay other geographic regio. Some 25 percet of all ew capacity brought ito service betwee 2014 ad 2017 is edig up over Lati America ad its populatio of more tha 600 millio, accordig to research firm Eurocosult. The result was ievitable: Lati America is ow awash i capacity, ad high-throughput satellites (HTS) from several established players icludig Hispasat, Yahsat, Arsat ad SES will cotiue to brig the rai. How this oversupply pas out will show up i the balace sheets of these ad other satellite operators determied ot to lose out o chaces to geerate reveue south of the equator or (eve worse) lose it to competitors. Amog those hopig the deluge cotiues are the etwork operators already beefitig from buyig capacity i a oversupplied market. Better still at least as far as the regio s etwork CALEB HENRY Axesat s Mauricio Segovia operators are cocered lower prices carried i by the HTS dowpour show o sigs of stoppig aytime soo. For the last 13 to 14 years it was a seller s market, said Mauricio Segovia, the CEO of Colombia s largest provider of satellite-based corporate etworks, Axesat. For the ext several years it will be a buyers market, which meas that compaies such as Axesat will have a lot more flexibility whe buyig capacity. Lati America s satellite etwork operators who help coect everythig from gas statios ad grocery stores to ships ad oil rigs have had a tough couple of years thaks to Brazil s ogoig recessio, the oil idustry s protracted dowtur, ad regioal political upheaval. Accordig to Segovia, several differet busiess sectors wet dormat durig the past couple of years, which traslated to weaker demad for satellite coectivity. New product iitiatives ad verticals, plus the reactivatio of traditioal verticals, will make 2017 a better year tha previous two, he said. Axesat geerated roughly $40 millio i reveue last year, ad has a istalled base of more tha 7,000 satellite-coected sites, Segovia said. XXXX SPACENEWS.COM 9
4 Red 52 istalls a microwave lik back to the compay s teleport, eablig a satellite lik for a covetio where lie of sight issues preveted usig a uplik truck. It s bee two tough years for most, with difficulties collectig paymets from customers, delayed paymets, ad lower or o-existig budgets by customers, said Svate Hjorth, chief executive of Arycom, a satellite etwork operator based i São Paulo, Brazil. I kow that some of our competitors have ot come out as good as we have from the recessio, so I d say it s a good result itself that we survived, ad as of Jauary this year, we are startig to see that the ecoomy is improvig agai. For Arycom, Axesat ad others who feel they ve weathered the regioal ecoomic storm, a buyer s market for satellite capacity is the sushie they say they eed to start growig agai. Segovia said Lati America is i oversupply ow ad likely will have excess capacity for several years to come. While that s geerally bad ews for satellite operators servig the regio, it s good ews for Lati America s badwidth-hugry etwork operators. How is that good? It drives prices dow. It started ad will cotiue to happe for quite some time, Segovia said. This should help us be more competitive ad go after opportuities ad segmets where satellite, because of cost, was ot a alterative. The high-throughput wildcard The iflux of HTS capacity comig to Lati America will put additioal pricig pressure o fleet operators servig the regio. Satellite operators largely view HTS as a ecessary step to ulock ew markets thaks to higher data rates ad lower costs. But HTS is also puttig pressure o traditioal wide-beam capacity, forcig some operators to cut prices o slower, o-hts capacity just to stay competitive. How low ca prices go before margis are o loger profitable? That s up to the satellite operators to figure out. For their customers, however, low capacity prices could make it easier to take risks opeig ew markets. I expect that HTS will brig ew opportuities i markets that were ecoomically ufeasible before, said Sergio Murillo, director geeral of Red 52 s Sergio Murillo RED SPACENEWS
5 Red 52 s CEO, Sergio Murillo, said the arrival of high-throughput satellite service over Lati America will help ope ew markets, leadig to a proliferatio of VSAT istallatios like this oe i Mexico. Arycom s Svate Hjorth Red 52, a satellite etwork operator i Mexico with aroud 600 i-service VSATs, or very small aperture termials, ad 30 coected ships ad oil platforms. The rush of cheaper badwidth will help shore up saggig margis, but o the dowside, there is the high cost of groud equipmet. Murillo said Red 52 is o the verge of a major capacity purchase, early 8 gigabits per secod of capacity, for the Mexica market. The creatio of Mexsat, the Mexica govermet s ow satellite program, has t had much of a impact o demad for commercial compaies like Red 52, he said. The bigger cocer is the evolutio of Mexico s relatioship with the Uited States. There is some ucertaity amog corporate decisio makers sice Presidet Trump s electio, with may projects havig bee put o hold as a wait ad see attitude has domiated, said Murillo. The reegotiatio of the NAFTA [trade] agreemets, coupled with the cotiued low oil prices, have curtailed some govermet projects, as well. Havig said that, the recet itroductio of HTS services has created optimism i the sector. What to do with all this capacity? Satellite etwork operators are cofidet there are a log list of applicatios for the dowpour of capacity soakig Lati America. Arycom s Hjorth said the Iteret of Thigs is just begiig to evelop Brazil as cosumers ad busiesses embrace the proliferatio of always-coected devices. Agriculture is aother prime market for satellite, he said, estimatig that roughly three-quarters of Lati America s farms are beyod the reach of cellular coverage. There are umerous applicatios where you collect data from fields, from sesors, machies or vehicles, he said. Collectig that data ad sedig it ito a ceter of operatios, processig it ad actig o it that s somethig people have bee talkig about for may years, but we actually see it beig rolled out as we speak. Axesat s Segovia said may traditioal market segmets for satellite etwork operators eergy, miig, ifrastructure ad retail are all reboudig from slow years. Mobility, too, is comig alog. Ad while residetial satellite broadbad is still ot as competitive i Lati America as Hughes ad ViaSat s offerigs i North America or Eutelsat s KA-SAT service i Europe, cellular backhaul has strog potetial i the regio, he said. I m a big believer i cellular backhaul via satellite for three reasos, Segovia said. Oe, we have travelled the learig curve to serve this segmet well. Two, with capacity prices goig dow, our offerig is more ad more attractive to cellular operators where they are begiig to see satellite ot as somethig they eed to meet regulatory coditios, but also to expad their etworks profitably. Three, there is a clear willigess from operators to outsource their satellite operatios, which before was ot the case. Red 52 s Murillo said the biggest driver of demad i Mexico is coectivity for bridgig the digital divide, a goal he described as elusive ad usustaiable before the advet of HTS, IP-based telephoy ad commuity Wi-Fi. SN RED SPACENEWS
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