Connecting the Digital World by Re-Connecting in the Physical World
Pre-2020, the world was incredibly connected. Peak international travel may have arrived in the 2010s when we started to see direct flights from Denver to Beijing, from Auckland to Doha, and from Jeddah to Los Angeles. Several years later, the physical world is an increasingly fragmented place, with supply chains and commercial air traffic routes having been thrown into chaos. And yet, the growth in interconnectedness in the digital world marches on. The pandemic has made internet access even more crucial, and while we as a global community have done well to bring masses of people online, the migration of many essential services onto the internet has made the gap between the digital haves and have-nots even more jarring.
With that being the case, the role of satellite communications (satcom) has seen something of a renaissance during these turbulent times. Propelled by the incredibly inspirational (and impressively rapid cash-burning) activities of Starlink, the world has started to take notice of space and satellites again, and combined with the aforementioned digital divide, this has led to an upsurge in universal service obligation (USO) projects aiming to connect the unconnected, usually in developing countries and often with a significant satellite component.
Addressable market for satellite connectivity in Asia-Pacific (2021)
The center for such activities is Asia, home to more than half of the world’s population, $38 trillion in nominal GDP, and a huge number of unconnected people. In June this year, the satcom industry will descend on Asia’s Lion City, Singapore, for the Asia Tech X Singapore conference and the Euroconsult Asia Satellite Business Week. A variety of topics are on the agenda, but one of the most pressing will be the idea of universal connectivity, and what we as an industry can do to bring more of the world’s population online. Fortunately, with its economic and demographic heft, Asia is well on its way to transforming and digitizing their economies and societies, in part by using satellite.
Satcom in Asia: Recent History Setting a Precedent
The past handful of years in Asia have seen tremendous growth in usage of satellite to connect the unconnected. Satellite demand for universal broadband services was multiplied by five between 2016 and 2021 when it reached 160 Gbps across Asia-Pacific. This has been broad-based across many countries, but unquestionably there is one country that has led the charge, and as has been the case for satcom in APAC since at least the 1970s, that one country is the world’s most populous archipelago: Indonesia.
Since starting the BAKTI program, Indonesia has pledged more than US$1 billion to connect its population using satellite. This has included the procurement and launch of multiple very large satellites coming from both the government and private sector players, chiefly Pasifik Satellite Nusantara (PSN) but also Telkomsat with their HTS 113BT satellite, announced in October 2021. At the same time, service providers in Indonesia have soaked up most of the commercial capacity available over the country, including Teleglobal (1.3 GHz of capacity on SES-12 signed to a 5-year deal in 2019), and iForte (multiple contracts likely totaling several Gbps on Telstar-18 Vantage/Apstar-5C signed in 2019).
The change in tack is evident from the very top of the Indonesian satcom hierarchy, with the President/Director of BAKTI, Anang Latif, stating in mid-2021 that “right now, the satellite is like rising from the grave, yes, even though it’s not the era anymore. However, this is still needed. Many people don’t have internet access, and that’s why we need satellites”. And need them they do. BAKTI’s long-term plan involves connecting more than 100,000 remote Indonesian villages to the internet, and in the process, the country is pushing the satcom industry to new limits in terms of price/value of offering. In a striking example of how much the industry has changed due to BAKTI, a 2021 webinar saw the CEO of PSN, Adi Adiwoso, unapologetically state that the Indonesian authorities have set a price ceiling of US$100/Mbps/month for capacity on Satria-1, the massive government satellite being launched over Indonesia in 2023 if all goes according to schedule. This would represent a major step-change in satellite capacity pricing dynamics, as outlined by Euroconsult in our pricing report.
Satellite capacity lease rates by sub-region in Asia Pacific (in $/Mbps/month)
During the upcoming Asia Satellite Business Week conference, we look forward to hearing from the leadership of various satellite operators about their Nextgen Satellite Business plans. In addition to pure-play HTS operators like Kacific and their CEO Christian Patouraux, we will hear from hybrid GEO/MEO players like SES and their Global Sales VP Imran Malik, a trifecta of regional players with Measat’s CEO Yah Chyong Lim, AsiaSat’s VP of BD & Strategy Raymond Chow, and KTSat’s MD & Head of Global Business, Daniel Kim. Rounding out the connectivity session will be global satellite stalwart Intelsat and their regional VP of Asia-Pacific, Terry Bleakley. In bringing together a diverse group of operators, we hope to spark conversation about best practices in using satellite capacity to bring more Mbps to more people at a lower price, with this arguably the industry’s most important dynamic today.
Such dynamics will push our industry to adapt and will lead to disruption for those who are unable to move quickly enough. Fortunately, Indonesia is far from the only country in the region with significant USO ambitions, with other countries following the archipelago’s lead and incorporating more satellite in their universal connectivity plans.
Connecting the Rest of Asia
Indonesia is undeniably a huge market, but with ~275 million of Asia’s 4.5+ billion people, 19 of 20 Asians do not live in Indonesia. Connecting the rest of the region has represented big opportunities over the past few years, and moving forward, this looks primed to continue.
For starters, 2020 and 2021 saw a massive USO program rolled out in Sabah and Sarawak, Malaysia. With several thousand sites connected using C-, Ku-, and Ka-band, discussions between Euroconsult and regional satellite operators in recent months have indicated a serious lack of capacity due to such rapid demand ramp-up. This continued into late 2021, with the Malaysian telco regulator MCMC announcing that an additional 839 sites had been “identified to ensure that stable broadband coverage can be provided for remote areas which are difficult to access with fibre optics and mobile technology”.
At the same time, the Philippines has seen increasing support for satellite connectivity. Mid-2021 saw Philippines Senator Sherwin Gatchalian call for the Philippines telco regulator DICT to ensure universal connectivity, partly through enabling easier use of satellite. The Philippines Senate Bill (SB) 2250, introduced in June 2021 and still under deliberation, would mandate DICT to identify underserved areas where satellite would be most useful, and would make it easier for service providers and other end users to use satellite. This follows the Pipol Konek program, a Philippines USO effort that has been underway for several years and has experienced multiple starts and stops. Moving forward, it is not clear if the political will, logistical coordination, and funding can all align to create a BAKTI-esque program in the Philippines, but recent months have certainly shown some important green shoots.
Not to be forgotten, the western reaches of the Asian continent have also seen promising and impressive developments over the past years. Notably, Pakistan’s SuperNet announced in April 2022 a Rs. 475M (~US$2.5M) fundraising that was 1.4x oversubscribed, indicating significant interest among Pakistani institutional investors. The fact that the announcement came just weeks after SuperNet announced the installation of its 1,000th YahSat terminal in Pakistan should come as an indication that the satcom sector in Pakistan is, at a minimum, in a state of growth rather than decline.
In the Persian Gulf, February saw YahSat awarded an AED24M (~US$6.5M) contract by Abu Dhabi Ship Building (ADSB) to deliver advanced connectivity solutions to ships being built by ADSB. While the relatively small and geographically well-connected Emirate of Abu Dhabi represents a very small opportunity for universal connectivity, YahSat’s leadership in deploying low-cost consumer and enterprise-grade HTS solutions across the Arab World and much of Africa will prove useful as the region continues to digitize.
What to Expect This Summer
The Asia-Pacific region is one of the world’s most dynamic, and while Covid-19 has to some extent split us into blocks of North America, Europe/Middle East, and APAC, the partial opening that we are witnessing in 2022 is indicative of the opportunities to come in linking up the digital world. A late 2021 estimate from the United Nations indicated that 37% of the world’s population—two point nine billion people—have not used the internet.
Since 2019, the number of connected people has increased by 850M, to 4.9 billion, meaning that on average, since 2019 we have seen ~1 million people per day access the internet for the first time. This is a remarkable achievement, but also an indication of the scale of work left to be done. In Singapore in June, we hope to make progress on solving these challenges.
Taking us back to the beginning and BAKTI, one of the highlights of the conference is sure to be a discussion on Universal Access with BAKTI, leading satellite service providers Speedcast and Gilat, and leading satellite operator ABS, one of the pioneers of using large gobs of C-band capacity for satellite backhauling. Gilat has found much success in providing universal connectivity to Latin America (particularly Peru), and may bring insights on these experiences to a different part of the world.
Not to be forgotten, the rapidly-evolving ground segment will also be an important enabler of more connectivity. Whether gateways, user terminals, or network management software, the Revolution in the Satellite Ground Segment will be a barnburner, with guests including Kratos, Comtech, Hughes Network Systems, and more. With exponentially more bandwidth will come exponentially more ways to creatively utilize that bandwidth on the ground, and the company that controls the terminal technology has a lot of influence over the development of the network.
In addition to a whole host of panels bringing multiple perspectives, we at Euroconsult are especially looking forward to Fireside Chats with several leading figures in industry and government. This will include SES CEO Steve Collar, APAC satcom industry veteran and Arianespace APAC Managing Director Vivien Quenet, and Executive Director of Singapore’s Office for Space Technology & Industry Mr. David Tan.
The physical world has become increasingly fragmented over the past 2 years, at a time when the digital world has continued to expand faster than the speed of light. This June in Singapore, these two trends will clash in what may be Asia’s first major in-person satellite event since Covid-19. With many friends and colleagues from as far away as North America and Europe having already committed to making the trip, we look forward to welcoming our global community of satcom industry friends to the Asia World Satellite Business Week 2022. See you in Singapore, and safe travels!
For more information: asiatechxsg.com/satelliteasia/