The satellite industry has been concerned over the past year or two by the threat of over-supply of capacity. The African continent is one case in point where satellite bandwidth prices are sluggish indicating a surplus of competition not only from an assortment of satellite providers but by the growing links provided by fibre.  A fast-growing shift from analogue to digital compressed MPEG2 and now MPEG4 has freed up further broadcasting capacity in some cases.

However, a report from investment bankers Berenberg suggests that these anxieties are over-stated. Senior analyst at the bank Sarah Simon, in a report on ‘Why SES is a Top Pick’, states: “We [argue] that to simply look at the burgeoning number of satellites globally and conclude that there is an overcapacity problem would be to misunderstand the industry. Satellites have fixed geographic footprints, which means that a satellite overcapacity problem in the US, for example, would have no impact on demand in India. Likewise, satellites are designed for particular products, and the fact that a large number of satellites being launched to serve the US and Australian consumer broadband industry may create an overcapacity problem in that specific market is irrelevant for the purposes of analysing potential sale of capacity destined for the television industry.”

She continues, saying: “The very high fill rates on recently launched capacity is evidence that, in the areas that SES is targeting for future growth, there is actually a shortage of supply. With new satellites dedicated almost entirely to video in emerging markets, we consider SES’s growth expectations to be well underpinned. Other operators without orbital slots in high-growth markets may see slower expansion but we are confident that SES’s global footprint will drive outperformance.”

Simon also addresses the question of digital compression, saying: “Increased efficiency is good news for the industry: it permits operators to launch more channels, and drives capacity requirements, which have consistently increased despite improved compression. We see no reason why this trend should not continue. We note also that any theoretical savings on bandwidth would be far outweighed by the associated capex. With HD representing 60 per cent of total channels in the US, but less than 25 per cent in Europe, we expect continued HD growth.”

Other posts by Chris Forrester:

1. Thuraya-3 suffers major problem
2. AST SpaceMobile hit by Class Action
3. Optimism under threat at SES
4. Rivada visits Terran Orbital’s manufacturing HQ
5. Avanti wins spectrum debt obligation case
6. SpaceX breaks records for re-use launchers
7. IRIS2 already in trouble?
8. Intelsat contemplates next steps
9. SpaceX: 2.7m customers and $180bn value

Categories: Blogs, DTH/Satellite, Inside Satellite