Satellite Communications Market is Bigger--Perhaps Much Bigger--Than it Used to Be

It’s too early to say anything definitive about how much demand might exist for new high throughput satellite services, medium earth orbit and proposed low earth orbit satellite constellations. But the market “is bigger than we originally thought,” said David Burr, O3b Networks VP.

“Our customers are growing faster than they thought they would, or that we thought they would,” says Burr. “Many of our customers have doubled the amount of capacity they buy from us in less than a year (and O3b Networks has only been commercially available for less than a year).”

“There is lots of untapped business,” Burr said.

In large part, one might argue, that is because consumer Internet traffic now drives global capacity demand, in every segment of the transport business. And just about every trend in the global Internet applications business is driving bandwidth demand.

For starters, most applications use more bandwidth than they used to consume, a direct result of the shift to a highly-visual and image and video capable Web. In substantial part, the demand growth results from increased end user consumption of video entertainment of all types, from YouTube to video advertising to other streaming video features and sites.

At the same time, the shift of most apps to cloud delivery means most apps now require wide area network connectivity.

In the mobile business, the shift from 2G to 3G and 4G networks has dramatic implications for end user bandwidth consumption.

Cisco Visual Networking Index

Consider that a typical feature phone might use about 22 megabytes a month, where a 4G phone often consumes 2 gigabytes per month. All that end user data has to be backhauled or trunked to Internet points of presence.

Summary of Per-Device Usage Growth, MB per Month
Device Type	2014	2019
Nonsmartphone	22 MB/month	105 MB/month
M2M Module	70 MB/month	366 MB/month
Wearable Device	141 MB/month	479 MB/month
Smartphone	819 MB/month	3,981 MB/month
4G Smartphone	2,000 MB/month	5,458 MB/month
Tablet	2,076 MB/month	10,767 MB/month
4G Tablet	2,913 MB/month	12,314 MB/month
Laptop	2,641 MB/month	5,589 MB/month

Source: Cisco VNI Mobile, 2015

“That’s a key opportunity,” said Burr.

Beyond that substantial market, as nearly the entire global mobile phone base shifts to use of 3G and 4G networks and devices, there are the other traditional revenue segments for any satellite operator, namely trunking for enterprises and government entities as well as telcos.

The maritime segment, for example, has been a traditional customer segment for satellite services, as are energy industry offshore drilling platforms, said Burr.

At the moment, “trunking” is the main revenue driver for O3b. But in five years time, IP trunking (wide area network connections) should be about an equal contributor, alongside enterprise services, government services and mobile backhaul.

Burr does not think it is part of O3b’s roadmap to add low earth orbit capabilities in the future, but certainly will be exploring ways to add new features, such as satellites that support greater numbers of fully steerable beams, allowing O3b to focus its footprint where paying customers require the connections.

Nobody yet knows how big the MEO and LEO business might eventually be. But the shift of nearly all global traffic to IP, and the eventual ubiquity of mobile Internet access connections, suggests the market potential is quite a bit larger than ever has been the case in the past.