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Euroconsult warns on satellite expansion

Euroconsult’s latest report, published in time for its annual ‘Satellite Business Week’ gathering in Paris next week, says the total traffic carried by satellite will reach close to 3.5 Tb/s by 2025, and enjoy a 16 per cent CAGR over the 10-year period. The forecasts are an upgrade on its previous expectations. But the forecasts come with a warning that the increase in demand will be at the expense of lower pricing.

“While regional situations will remain diverse, we estimate that the global average capacity ARPU could be halved when expressed in MHz by 2025. This combination of higher volumes and lower pricing leads us to a capacity market value that would stand at around $14 billion by 2025 compared to $11 billion in 2015,” says Euroconsult.

The study – Satellite Communications & Broadcasting Markets Survey – says that the pressure on pricing will not be helped by heightened competition and falling fill rates on satellites.

“The last year has confirmed the transformational nature of the satellite communication sector’s current development phase, with the confirmed appeal of High Throughput Satellites (HTS) for several user segments through the signing of capacity contracts and the announcement of broadband LEO constellation projects, even if most are still under development. Euroconsult projects total HTS capacity leased to more than triple in the next five years, supported by recently announced contracts for entire HTS payloads or beams.”

“Current business patterns correspond to those of a breakthrough innovation period,” said Pacome Revillon, CEO of Euroconsult and editor of the report. “New and more cost-effective solutions open new opportunities, but also result in oversupply and challenge legacy satellite services. To be sure, we must realise that all announced projects are not likely to come to fruition, as this would likely create a volume higher than what the market will support. However, this period can change the competitive standing of all organisations, and each project shall be considered according to its own merits. Finally, strategies pursued by organisations to adapt their business offering are quite diverse with an increasing trend towards managed services.”

In that context, capacity usage on the FSS communications fleet increased by 6 per cent to around 380 GHz (or traffic by 10 per cent to around 770 Gbps) in 2015. This included 1.7 per cent growth in regular capacity usage and significantly higher growth in HTS capacity leased. A recent market outperformer has been mobility, now a separate segment in our report, which should represent over 10 per cent of total traffic by 2025.

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