Satellite Market Shows Classic Signs of Competitor Behavior in Deregulating Industries
Some trends are “evergreen” in the communications business, or have been so since the advent of deregulation, new technology and competition starting in the 1980s globally.
Among the recurring themes is pricing instability--or pricing wars--in virtually every segment of the business, driven by new competitors with disruptive price offers based on use of new technology.
So it is not surprising that U.K.-based satellite services provider Talia warns of pricing wars in many regional satellite markets.
“It is becoming a price war among satellite operators,” Alan Afrasiab, Talia CEO told Via Satellite. “We cannot make decisions to buy additional capacity or even renew capacity because we don’t know when the bottom price will be reached.”
“At the moment it is unstable, and it’s bad for everybody,” he said. “I think big satellite operators now realize the market needs lower prices, especially on Ku-band, simply because of the Ka-band prices and also some of the smaller operators that have been quite aggressive.”
High throughput satellites and Ka-band are two big influencers of price today, he said. Afrasiab said HTS is pushing prices down, and putting pressure on traditional Ku-band pricing. Anybody familiar with .
Shifts in demand towards the terrestrial networks also are happening, leading to a situation where “the satellite industry overall has less demand.”
None of those laments are unusual. One of the hallmarks of any market that formerly was a monopoly and then gradually is deregulated is the emergence of new competition, notably from outside the traditional industry boundaries.
One example might be the shift of capacity demand away from satellite to to terrestrial networks. New technology also often underpins new competition. So we see the growing level of competition from HTS and Ka-band competitors.
Virtually always, some new competitors attack using the “same product, lower price” marketing platform, and that also is a trend Talia notes. In response, Talia is moving to create a hybrid fixed and satellite business, an example of another common trend in deregulating markets, namely the emergence of new product niches and roles in a relatively undifferentiated market for services.