Report: Telcos with no satellite strategy will miss revenues
February 12, 2024
By Chris Forrester
A report from Analysys Mason’s NSR division states bluntly that “Telcos that rely exclusively on terrestrial networks will miss revenue opportunities and fall behind their rivals.”
Telcos should use satellites to enter new verticals and enhance services, says NSR. Telcos’ satellite strategies need to fit into their overall action plan; they should prioritise their target verticals and take advantage of their existing capabilities.
The report says: “Mobile operators’ capacity to generate economic and social value is limited by the reach of their network coverage. However, better-performing satellites, lower satellite costs and easier adoption are unlocking tremendous opportunities for telecoms operators (telcos) to integrate satellite services into their portfolios.”
Report author, Lluc Palerm, commented: “Telcos should embrace satellites as a new source of differentiation and growth. Telcos need to find solutions to address the decline in their traditional revenue streams. The satellite market is almost wholly greenfield for telcos and offers a promising growth opportunity. In fact, NSR forecasts that satellite solutions will account for 40 per cent of the growth in telco enterprise connectivity revenue between now and 2027.”
“Telcos may need to change their outdated perception of satellites,” adds the report. “Recent technological developments have transformed the satellite market. Developments such as low-Earth orbit (LEO) constellations (for example, Starlink) and software-defined satellites have improved the bandwidth and performance of satellite services. The economics of satellite communications have also improved significantly over the last few years. For example, the total cost of ownership (TCO) of satellite backhaul is such that connecting rural mobile base stations via satellite can be more cost-effective than alternative solutions. Furthermore, the emergence of common standards in the satellite and telecoms markets, and the development of ‘satellite-as-a-service’ solutions are lowering barriers to adoption and helping mainstream telcos to integrate satellite services.”
Telcos could generate revenue from satellite deployments rapidly because the relevant use cases already exist. Many satellite operators offer, or plan to offer, solutions that comply with the Metro Ethernet Forum’s (MEF’s) standards or are compatible with SD-WAN and eventually 5G core. These developments will facilitate the adoption of satellite solutions by mainstream telcos. The standardisation of 5G non-terrestrial networks will break down the barriers to satellite adoption and enable satellite solutions to be included in unmodified phones. Telcos should prioritise these standards-based solutions to accelerate integration and revenue generation.