Conference Examines Opportunities & Risks for Broadband Satellite Services

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In the shadow of millions of @Home users losing their home pages and high-speed cable connections, a group of experts met in San Diego from December 5-7, for their annual Satellite Internet Services and Applications conference organized by ACT Conferences. Excite@Home's interruptions and the difficulties of data CLEC's over the past year, underscore both the opportunities and the risks for satellite providers looking to make headway in the residential and SOHO Internet access markets.

During the panel discussion on two-way services, experts discussed these opportunities and from three perspectives: regulatory, technology and business issues.

Several key trends and market directions emerged:

• Two-way high speed Internet via satellites is establishing itself as a viable alternative in the U.S. The North American high speed Internet market is expected to rise to 23 million households in 2007. While cable access economics is hard to beat, this is still a sizeable opportunity for satellite-based providers.

• A large number of U.S. Ka-band licensees face critical start-of-construction or launch milestones in 2002 and other applications for Ka-band non-geostationary and V-band satellites may be approved by the FCC in 2002.

• Although satellite Internet is often considered a natural extension of DBS, the system factors are quite different. While DBS satellite cost is independent of audience size, the Internet services satellite cost (and complexity) is directly tied to the subscriber count or capacity of the bird. In addition, the economics of providing two-way services economics improves rapidly as system capacity increases.

• Complex trade-offs exist between FSS Ku, bent-pipe Ka and switched Ka-band systems. Full-mesh connectivity on-board processing satellites appear necessary only for large multi-site enterprises. Hybrid Ku/Ka and Ka/Ka band bent pipe architectures can provide the needed capacity and flexibility smaller enterprises and consumers.

• Newer techniques are providing greater efficiencies that will offset initial CPE expense by reducing recurring space segment costs. Customer Premise Equipment (CPE) cost is a major factor in determining market penetration for two-way Internet services via satellites. CPE cost is very sensitive to manufacturing volume, and adoption of uniform standards for high capacity satellites can bring down the costs to levels approaching that for DSL and cable.

A market segment ripe for exploitation by Internet satellites is the SOHOs and the SMEs both at the national and international levels. As this segment grows, it will also benefit the consumer market through lower CPE costs. A key to penetrating this market is establishing effective distribution channels to reach the underserved segments of those markets.

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