Satellite Backhaul Continues to Benefit From Blistering Wireless Subscriber Growth

NSR's annual review of the wireless backhaul via satellite market shows the industry made tremendous gains from the blistering pace of wireless subscriber growth in 2009 and the first half of 2010. Despite a challenging economic environment, the wireless industry was one of the global economic bright spots, which led to sustained demand for satellite backhaul services for use primarily in rural markets.
 
Global wireless subscriptions breached the 4 billion mark in 2009, which represents an additional one billion subscribers in just one year. This pace is the fastest thus far, and it likewise signals the penetration of wireless usage in areas previously untapped. Satellite technology was used to serve new and emerging market opportunities as CAPEX and OPEX began to make sense in key market niches with the advantages of ubiquity and reach that satellite backhaul presents.
 
However, cost remains the single most important issue in the market. Although the satellite industry benefited overall, company-specific performance was mixed as economic issues led to some postponements of shipments and installations to some wireless telcos. Nevertheless, cost due to efficiencies and other technological developments should continue to decline, which should help justify ROI to address relatively low population density areas. As such, the market should remain healthy and improve satellite technology's value proposition over the next 5-10 years.
 
Of particular interest are High Throughput Satellites (HTS) and the upcoming O3b program, which dramatically cut bandwidth costs in targeted service areas. Since ARPU in rural markets in the developing world are limited due to disposable income, wireless operators can now package services for basic voice and data that are affordable with the reduction in backhaul costs. And as the remaining unserved and underserved markets become the final arena of wireless operators, competition will require continued cost-reduction solutions for subscriber acquisition and retention as well as the long term addition of more advanced services such as high-speed data.
 
In total, NSR projects that satellite backhaul equipment and services will grow from an estimated $316.6 million in revenues in 2009 to $583.4 million by 2019, yielding total revenues of close to $4.8 billion over an 11-year period. Satellite bandwidth procurement should dominate revenue streams, accounting for 94% of cumulative revenues. Equipment sales will likewise experience healthy growth as a mix of solutions including SCPC, IP VSATs and HTS solutions begin to impact the marketplace.