Something very big is happening in the Internet access business, beyond the much-publicized move to gigabit networks by a growing range of providers in the U.S. market. In fact, the full impact of the shift to gigabit access speeds has repercussions beyond the actual number of consumers that elect to buy it.
As CenturyLink executives have noted many times, gigabit marketing drives adoption of 20-Mbps, 40-Mbps and 80-Mbps access services. In other words, gigabit Internet access drives most consumers to consider upgrading to faster speeds, even when they opt not to buy a full gigabit service.
In the global satellite business, something similar is happening. Over the last few years, new high throughput satellites operating in the Ka bands have been launched, and continue to be launched, offering aggregate throughput much higher than for Ku-band satellites. The actual amount of additional bandwidth varies, but can range as high as two orders of magnitude over the present generation of satellites.
But there is more afoot. Up to this point, most consumer satellite service platforms have used the geosynchronous orbit. That has clear advantages in terms of ability to support low-cost consumer terminals.
The drawbacks include high latency.
But many new proposed satellite constellations are operating, or are in preparation, including OneWeb, LeoSat and SpaceX, to name a few. Those new ventures plan to use low earth orbit.
The two clear advantages for such an approach are much lower latency and much higher bandwidth.
O3b already is in operation, using a fleet of 12 medium earth orbit satellites in medium earth orbit, again providing latency and bandwidth advantages over a geostationary approach.
But even geostationary platforms now benefit from use of the Ka band frequencies and ower earth station costs.
Satellite entrepreneurs such as Kacific now are aiming to disrupt the traditional value-price relationship for satellite communications, using new technology as much as two orders of magnitude better than prior platforms.
In the past, price points of older satellite bandwidth caused decision makers in island countries of the Pacific and Southeast Asia to rule out satellite as an economically viable way to enable connectivity in their country, focusing on cable to power fixed and mobile internet networks, notes Cyril Annarella, Kacific executive director.
But new high-throughput satellites are changing the economics of the access business because they “allow data connections at a much lower cost per bit than older generations satellites,” says Cyril Annarella, Kacific executive director.
High throughput satellites provide as much as two orders of magnitude more throughput than earlier generation satellites, significantly reducing cost per bit profiles.
ViaSat-1 and EchoStar XVII (Jupiter-1) provide more than 100 Gbps of capacity, which is more than 100 times the capacity offered by a conventional Ku-band satellite, for example.
When it was launched in October 2011 ViaSat-1 had more capacity (140 Gbps) than all other commercial communications satellites over North America combined, to illustrate the capacity advances.
Kacific is building on several technology advances, in additon to availability of HTS. The Ka-band spectrum inherently “carries more information,” says Annarella, much as millimeter wave frequencies or even 2.5 GHz frequencies can carry more information than signals of equivalent bandwidth at 800 MHz.
Also, the success of HTS-based services in the United States, such as Viasat and Hughes networks Jupiter, has driven the cost of user terminals well below US$500, enabling an interesting mass market value proposition that older generations of satellite services were never able to achieve, Annarella says.
In many markets, including Indonesia, the Philippines, Papua New Guinea and the Island nations of the Pacific, satellite might be the only affordable way to bridge the digital divide, Annarella argues.
Kacific believes there is a mass market for Internet broadband if the price to bring internet at the point-of-consumption can be brought sufficiently low. In most of its target markets, the existing choice is mobile access at speeds no faster than 2 Mbps.
Kacific plans to provide more than that, especially using anchor sites at government buildings or schools as community access points.
In its target countries, Kacific is “currently the only possible proposition that completely addresses the requirements of universal access plans defined by the regulators,” says Annarella.
Kacific was founded mid-2013 by a group of experienced entrepreneurs with space, finance and IT background, he says.
The first phase of the project logically involved convincing potential customers of service viability and affordability, defining technical specifications and raising capital.
“This phase is now closing, and the second step of the project, finishing late 2017, will see the construction and launch of Kacific first satellite K1a, for a commercial service opening in the first quarter of 2018.
But it would not be unreasonable to argue that it is the new LEO constellations which will play a role similar to gigabit fixed network access in stimulating demand for Internet access at higher speeds.
Space Exploration Technologies (Space X), for example, has asked the Federal Communications Commission for permission to create and launch a new low earth orbit satellite constellation of thousands of satellites that would be able to provide Internet access at unprecedented speeds anywhere on the globe.
The LEO constellations now proposed would provide a key challenge to fixed or mobile facilities in the Internet service provider business, at least in terms of coverage. In principle, every inch of the earth’s surface would be covered.
The unknown issue is the business model. It isn’t clear what the retail pricing would be, or how much market share any LEO constellation might be able to obtain.
Orbiting the earth at just an altitude of around 750 miles, the new constellation would orbit at lower than conventional communications satellites at 22,000 miles.
That has huge implications for bandwidth and latency, potentially enabling bandwidth between 50 Mbps and gigabits for any specific end user, a huge and qualitative advance over what has been possible in the past.
If everything goes right, LeoSat could begin launching its new satellite constellation in December 2018, offering bandwidth to any single user site at speeds from 50 Mbps on the low end to a high of 1.2 Gbps.
LeoSat, which plans to launch a new constellation of 80 or more low earth orbit satellites to provide high-throughput Internet access covering every square inch of the earth, thinks its wholesale business model and high bandwidth makes it a potential partner for virtually every other satellite capacity supplier or retailer, aside from the core markets it has identified.
For starters, LeoSat is focusing exclusively on wholesale capacity for business customers, not the consumer business and not business segment retail.
“We wouldn’t compete with anybody in the current milieu,” says Fotheringham. “Our lowest service tier begins where traditional satellite ends.”
The lowest tier of service offers 50 Mbps to 100 Mbps of Internet connectivity. The middle range offers 100 Mbps to 500 Mbps while the top tier supports 500 Mbps up to 1.2 Gbps.
“We do what they cannot,” Fotheringham says of the comparison with legacy satellite services. So he believes LeoSat will have “many chances to align with incumbents who are delivery partners.”
Strictly focused on business-to-business customers, LeoSat’s primary focus will be delivering “ industrial-grade communications to major organizations,” both commercial and government, says Fotheringham.
At the same time, by using a mesh network, LeoSat will avoid a key stranded assets problem that has plagued most prior constellations using the low earth orbit.
The point is that something very new, and potentially very big, is happening in the satellite Internet access business, and it parallels what is happening in the fixed network business, namely disruptive increases in delivered bandwidth.