satellite broadband services rep

8/2/2019 Satellite Broadband Services Rep

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Satellite Broadband Services

Report to the UK Space Leadership Council

by the Satellite Broadband Steering Group

June 2011

Summary

Satellite broadband services are likely to be part of the infrastructure mix delivering

functional and higher speed broadband to homes and businesses in the UK given theaim is to provide universal coverage. It is in the interests of industry and

Government to help ensure satellite services are as cost effective as possible and

meet consumers reasonable needs on service provision and support. The decision

maker is the individual consumer and their interests will be met if satellite is allowed

to compete with other infrastructure technologies on a level playing field. This

includes providing the consumer with information on all of the infrastructure options

likely to available to them and neutrality on the provision of public sector support

where this is necessary.

The overseas markets for satellite broadband services will be far higher in value than

the UK market and the opportunity for UK operators to supply services in thesemarkets provides the opportunity for economic growth. Further, as demand for

higher data rate services and capacity increases this is likely to drive operator

investment in new satellites that can meet next generation needs. Investment of

between 1 billion and 1.5 billion in new satellites and satellite technology will be

needed to deliver fast broadband services1

in Europe and has the potential at least

to be rolled out faster and more economically than fibre in large parts of the

continent that cannot access broadband2. This will also provide a further growth

opportunity for the UK if these satellite payloads are manufactured in the UK.

1

Fast broadband services are defined here as headline speeds exceeding 20 Mbps.2 Britains Superfast Broadband Future sets out that less than 60% of EU or OECD homes currently

access broadband.


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Satellite Broadband

Satellite broadband has been in use in the UK since it was pioneered in the early

1990s when most consumers were using 56kbps dial up Internet access. Early

consumer products were one-way (using the fixed line for the return path) but two-

way satellite Internet products soon followed. Such systems use Ku-band satellitesand the service offered is often perceived as slow and expensive. However, a new

generation of satellites utilising Ka-band spectrum and geographic spot beams that

can deliver broadband between 20 and 30 times more efficiently than legacy Ku-

band satellites have recently entered service.3

These new broadband satellites using

the Ka-band radio spectrum can offer higher data rate services for lower cost

compared to those possible from existing Ku-band satellite services. This provides

the first of several technology advances needed to better address the broadband

marketplace.

UK and overseas satellite operators are showing confidence in the Ka-bandtechnology. The launch of Avanti Communications Hylas-1 satellite on the 26

November 2010, Europes first Ka-band satellite, manufactured by UK industry, is

one of two ordered by the company that is now providing broadband services in the

UK (as well as overseas). Eutelsat launched their KaSat satellite on the 26 December

which is offering capacity in the UK market. This follows developments in the US

where ViaSat has secured around 500,000 Ka-band users and has also ordered new

satellite capacity.

Affordable satellite broadband for the general public is therefore a new and

developing market. The success or otherwise of satellite broadband in the UK willbe determined by the acceptance of this new technology in the market and the take

up of satellite broadband capacity.

A feature of this market is the value chain which comprises satellite operators selling

wholesale capacity to intermediary satellite internet service providers, who set user

charges and service levels (in effect, contention rates). The ISPs in turn sell to

consumers through specialist satellite service providers (in essence dealers and

installers that have local knowledge) who are responsible for installing the service

and customer support. The UK therefore benefits from competition in the market

for satellite broadband services provided by at least two competitors at thewholesale and consumer market levels. It is for this satellite sector value chain to

provide a competitive offering in terms of installation costs, monthly service charges,

speed and fair usage policies.

The satellite broadband offer

The user experience of satellite broadband will not be identical to that delivered

over the fixed fibre network because satellites have a fixed transmission capacity

and higher latency.

3 Satellite Broadband Steering Groups analysis.


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However, there is a case for both technologies depending on the complexity and

affordability of connecting homes and businesses at the edges of the fixed network.

The characteristics of satellite broadband services have to be balanced against their

ubiquity and consistency of service regardless of geographic location, and the

simplicity and speed of deployment which requires only user terminal equipment.

In addition to homes and businesses where satellite is likely to be the only economic

technology for broadband, satellite is able to deploy broadband services much

earlier to users not able to get broadband until the advance of fibre networks into

their communities, which in some instances could take several years. Satellite is,

therefore, a potential tactical option to deliver some level of service early and this is

an additional market to the enduring need to connect remote homes and businesses

that cannot otherwise be reached economically. If fixed networks are subsequently

made available, satellite bandwidth can be allocated to other consumers and only

the costs of the home installation will be written off.

The SBSG estimates that satellite operators will have the capacity to deliver up to150,000 functional

4broadband connections in the UK by mid-2011 using satellites

that have been recently launched, increasing to 225,000 connections by 2012 and

300,000 connections by the end of 2014 as further satellites on order are added to

the network. These satellites are expected to offer headline broadband speeds of up

to 10Mbit/s with service level agreements ('SLAs'). The SLAs will set out service

performance, reliability and servicing standards. The management of satellite

capacity is complex but consumers will have an entry-level fair usage cap of around 4

Gbytes per month. Installation costs are expected to be between 400 and 600

before operator subsidy and monthly costs are expected to be between 20 and

25. Higher capacities will be available at higher cost, with a doubling of the fairusage capacity for a user approximately doubling the monthly cost. Longer term

consumer contracts with operators may reduce installation or monthly cost.

Satellite broadband performance is an area where there are differing views within

the SBSG regarding the available bandwidth per customer and the impact of latency

on higher data rate and delay sensitive applications such as VoIP, Skype, voice and

high-intensity interactive gaming. There is evidence that supports both the views

that these are drawbacks for satellite services or are not material problems for most

real world user applications. For example, voice communications, which are highly

context sensitive, may be suitable for social and emergency uses. More demanding

applications such as multi-participant business telephone or video links need to beproved. Around 20% of all satellite traffic globally is used for cellular voice and data

backhaul to mobile network masts5, which suggests that latency in these applications

does not deter a major use of satellite for these purposes.

Input from US satellite broadband provider Wildblue (owned by ViaSat Inc) suggests

that satellite broadband services of 1.5Mbit/s provisioned at a contention ratio of

50:1 provide an acceptable consumer experience, and the forthcoming generation of

4

Functional means the ability to deliver headline speeds up to 10Mbit/s downstream, but limited interms of sustained throughput rate.5 Source: EADS Astrium.


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the Wildblue service (following the launch of ViaSat-1 this year) is likely to increase

headline consumer bandwidths to 8Mbit/s and as high as 12Mbit/s.

The satellite industry is up for the challenge to further prove the acceptability of

satellite performance to consumers in the marketplace. Any systematic evaluation

of satellite broadband services will need to be based on the new satellite broadbandinfrastructure now just entering service in Europe.

Demand for Ka-band capacity in the UK

Avanti customers on existing satellite broadband schemes will be the first to benefit

from improvements in service quality offered by these new satellites at no additional

costs to themselves. Eutelsat and other satellite operators are expected to adopt

similar service improvement policies.

There are still some 2 million homes and businesses in the UK that cannot access a

good level of broadband6. In order to meet the Coalition Governments objective of

providing virtually all homes and businesses in the UK with functional broadband,

BDUK estimate that between 100,000 and 200,000 of these homes and businesses

will be served by satellite as there is no sensible economic alternative7. Beyond this,

satellite will compete with other technologies in areas where it is uneconomic to

deploy a high-speed fixed network infrastructure, as set out by BDUK in its recent

document Broadband Delivery UK Theoretical Exercise Conclusions and Lessons

Learned.

Fast Internet Broadband from Satellite

Higher speed connections and greater throughput to a much larger number of UK

customers are readily possible beyond 2015 if the satellite industry invests in new

satellite capacity. The industrys ability to make these investments will require

sustained revenue streams from the assets to be launched by 2012.

In anticipation of increases in required broadband speeds, the space industry is

developing innovative mechanisms to increase the throughput of satellites. The

most important aspect of this is likely to be delivering video content for

entertainment.

The emerging technology that has greatest potential is to deliver broadcast video

and broadband content separately using a mix of local caching and smart EPG

technology, but delivered seamlessly to consumers through one dish and modem.Avanti is already planning to demonstrate the basic technology using support from

the Technology Strategy Board. In parallel, some consumer electronics

manufacturers and broadcasters in Europe have created and standardised Hybrid

Broadcast and Broadband TV (HBB TV). HbbTV supports a browser-based TV user

interface that provides seamless access to broadcast and web-based content and

6 Britains Superfast Broadband Future, December 2010.7

Based on the BDUK estimate that between 0.5% and 1% of the 27 million homes and businesses inthe UK will be served by satellite. Numbers in the paper account for the fact that the likely take-up rate

is expected to be around 70% and are rounded.


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services. HbbTV services may be deployed in some European countries in 2011.

Satellite could play a significant role in delivering HbbTV services8.

Substantial new investment of the order of between 1 billion and 1.5 billion will be

required by operators and manufacturers to deliver a staged build of satellites that

can deliver fast, high capacity, services with headline downstream speeds between20 Mbps and 24 Mbps

9. Satellite operators are already planning this deployment

and this could result in some elements of fast broadband being delivered to remote

regions faster than the fixed infrastructure and potentially at lower cost. The picture

on the necessary investment and satellite orders to do this will become clear over

the next 12 months.

Such a satellite network will not be developed for the UK alone and the majority of

capacity will be directed at export markets. Substantive technology improvements

envisaged are a ten-fold increase in bandwidth through greater numbers of smaller

spot beams that enable greater frequency re-use, but at no further cost to

consumers. However, such technology could deliver capacity to provide some of thecapabilities of fast broadband to up to 6 million customers that could enable satellite

to compete for higher market share in the UK and overseas markets.10

Export Markets

Overseas markets might be an important generator of revenues and profits for UK

operators given the export market for satellite broadband is far larger than the

domestic market. Many fast-growing regions have less well developed existing fixed

networks than the UK or Europe. A competitive offering and UK market acceptance

of satellite broadband will provide an important springboard into overseas markets

but success in the volume of overseas sales is likely to be independent of the exactnumber of UK connections sold. The global market for satellite broadband services

is estimated to be worth between 1.5 billion and 15 billion by 203011

.

There are regulatory and access to capital issues that are potentially raised by

satellite broadband services to UK and export markets. The highly international

nature of satellite operations makes the fairness and smooth running of

international agreements on allocating geostationary orbital slots and contiguous

radio spectrum particularly important. UK satellite operators are producing plans of

8

HbbTV is different to delivering broadband and broadcast services through one dish. The latter wouldrequire each signal to be transmitted by the same satellite or by satellites that are close together in orbit.

This is already the case with the Eutelsat KaSat which is located next to the Eutelsat Hotbird TV

broadcast service. Avantis HYLAS satellite has both a Ka-broadband and Ku-band broadcast

capability.9 Satellite Broadband Steering Groups analysis.10 Satellitte Broadband Steering Groups analysis & Analysys Mason data.11

This is a scale estimate only. Based on the assumption that around 25% of the Worlds households

and businesses in 2030 will be able to access internet services, creating a demand for around 1 billion

connections. If 10-100 million connections (1-10%) require satellite services at 150 per annum then

this market could be worth at highest scale 15 billion per annum. No account is taken of poorer

existing geographical coverage of broadband infrastructure in many markets which could lead to higher

satellite penetration rates, ability to pay, nor developments in mobile broadband connections. Political

commitments in developed countries such as the USA and Australia for universal broadband accesssuggests this may be sensible for a first estimate, and will be updated as further market studies become

available from ESA and other sources.


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future slot and spectrum needs that will set out the economic benefits to the UK of

such allocations. These are being taken forward by other work streams that are part

of the Innovation and Growth Strategy Implementation.

Recommendations

There are clear needs to improve market awareness of satellite broadband services;

improve the perception of existing users that new generation services are an

improvement on existing, Ku-Band, services; and set a significant pace to market

take-up.

The SBSG therefore recommends that the satellite industry should:

energetically market satellite broadband services in target markets in the UKwith competitive offerings for service performance, costs, fair usage caps and

customer support;

continue with current plans to move existing satellite customers from olderto new satellite services as a priority as new capacity becomes available;

manage the complex issues around capacity sharing and through the deliveryvalue chain to avoid over-subscribing services as happened with the rapid

take up of services in the US;

work closely with Broadband Delivery UK and local communities to promoteearly and cost-effective introduction of satellite services through clearly

articulating the satellite broadband offer and engage fully in BDUKs local

procurement exercises; and

define further high-capacity satellite solutions with manufacturers andcontinue to develop innovative technologies, including the provision of

seamless broadband and broadcast systems.

We welcome Government and Broadband Delivery UKs announced commitments

to:

o deliver a minimum of 2 Mbit/s broadband to virtually every home andbusiness in the UK by 2015; and

o be technology neutral in the way that it procures broadband infrastructure inthe UK.

We therefore request the following support in relation to the upcoming broadband

procurements:

o assist in communicating to stakeholders (including local authorities,consumers and local procurement decision makers) the capabilities and

benefits of satellite broadband and how it fits in the mix of potential

technical solutions for the most challenging locations;

o ensure that service level agreements (SLAs) for services for users in themost challenging locations do not set operating performance at a level thatexcludes satellites services;


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o leave open the option for satellite broadband services as broadly as possible.There are prospects for satellite in both the subsidised delivery to not

spots and to early adopters in the open market that will want early access

to better broadband speeds;

oconsider a central procurement of satellite and other long-reach broadbandservices (e.g. BET) for those remote UK homes and businesses that can be

identified as almost certainly requiring a such a connection to get broadband.

This will enable operators to access economies of scale in customer

equipment and installation that might be lost if procurement is fragmented12

.

This will also provide the opportunity for procuring bodies to deliver

connections early to known problem areas.

The recent launch of next generation satellite broadband services provides local

decision makers with an option to deliver broadband early to the most remote

homes and businesses that are unlikely to be connected to terrestrial networks. This

is based on the fact that satellite broadband is ubiquitous and available now.

Satellite operators believe that early adoption of satellite broadband will incentivise

investment in further capacity.

Further Work

In addition to the points and recommendations made above, the SBSG suggests that

further work which is required to fully meet the original Terms of Reference set for

the group:

scope the potential for carbon emissions savings from having broadcast andbroadband services delivered from space infrastructure and set out how this

helps the ICT sector deliver growth and reduced emissions given strong

growth in data use and transmission;

set out specific overseas target markets for broadband together with thepotential for growth and revenues in region; and

conclude existing studies on (i) the US experience of delivering satellitebroadband and users perception of service and (ii) analysis of the likely

applications (other than video) that will drive high-speed symmetric services.

12 We envisage that such long reach services could be procured as a call down contract in blocks of

several thousand at a time.

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