Satellite operators facing “industry oversupply”

The world’s major satellite operators are facing continuing revenue problems because of an oversupply of orbital capacity, says a report from Northern Sky Research (NSR). The researchers add that the decline is far from over and could extend into 2019.

NSR says that capacity leasing prices have fallen, on average, for the third year in a row. “On average, capacity price declines for the period 2016-2018 ranged from 32-57 per cent across various applications & regions, and the road ahead appears unclear as greater supply enters the scene, demand lags in some markets and competition intensifies,” stated NSR.

“Operators are now implementing strategies such as vertical-specific market entry partnerships and framework agreements on discounts, but these endeavors haven’t stopped the impact of the widening gap in supply-demand economics.  This trend is further accentuated by the competitive sales positioning by operators in each region. NSR’s pricing forecast suggests the decline is not over yet, and despite 2019 expecting to see smaller decreases, the industry must wait longer for prices to bottom out.”

“With Video Hotspots facing pressure from both global pricing declines and OTT opportunities for non-streaming content, along with Consumer Broadband over Ka-band HTS consistently in the $150/Mbps/Month range – the chances of recovery remain uncertain. However, with CAPEX/Gbps for new satellites marking new lows, declining lease prices come as a blessing to Service Providers in Data and Mobility, so they can fund expansion of their businesses and create mini telco businesses backed by satellite in the scaling process,” states Gagan Agrawal, NSR Analyst and report author. “The satellite operator segment also increasingly looks to jump on this downstream opportunity where managed services are expected to represent 15 per cent – 25 per cent of the entire business portfolio in the next 3-4 years.”

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