Speedcast sees a dearth of satellite capacity ahead

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COLORADO SPRINGS — Demand for satellite communications has outstripped supply in markets recovering from the pandemic, according to satcoms provider Speedcast CEO Joe Spytek.

Spytek told SpaceNews the company is “about nine full satellites short” for meeting demand it sees next year across cruise, energy and other markets that were hit hard by COVID-19.

“There hasn’t been a lot of GEO satellites being launched, plus we have some C-band capacity that’s going away,” he said, referring to the spectrum satellite operators were required to sell to terrestrial 5G operators. 

While a significant chunk of new capacity is due to come online from low Earth orbit broadband megaconstellations, those networks planning to sell services through wholesale models have suffered delays.

SpaceX’s fast-growing Starlink broadband megaconstellation, which currently provides broadband services in about 30 nations and is primarily focused on the consumer market, has built its business around selling to customers directly. 

“We can integrate Starlink terminals into our unified global platform, but we can’t go buy bulk capacity from Starlink and provide it to our customers,” Spytek said.

With a lack of available capacity in the market, he expects prices will “start to creep up a little bit,” but then come back down once OneWeb and other wholesale-focused LEO operators come fully online.

“We’re just in this kind of weird point in time where there’s a dearth of capacity for our customers,” he said.

Returning optimism

“It’s a little bit odd to me that we find ourselves in this position,” Spytek said, “but that is where the industry is right now.”

Speedcast emerged from restructuring in March 2021 after pandemic-related travel restrictions that drastically reduced demand in its core markets helped push it into bankruptcy.

However, he said COVID-19 has also catalyzed “true change and user behavior” that is increasing demand for bandwidth in multiple sectors.

The energy industry has talked about “the digitalization of the oilfield” for decades, Spytek added, but it took oil prices to plummet last year for the sector to shift to digital processes to improve efficiency.

“They are trusting the comms, and they’re demanding remote assets, they’re driving efficiencies — it really is real this time,” he said.

“We see rigs going from 3, 4, 5 megabits [of capacity] to 30, 50, 100 megabits … it’s an order of magnitude change. Even with the high-value customers that have been very cautious about that change.”

In the cruise market, Spytek said one of its main customers went from ordering 8.5 gigabits of capacity to “north of 24 gigabits of capacity, just so far, with more to come.”

After seeing growth in expedition cruise itineraries and polar vessel traffic, maritime connectivity specialist Marlink recently said it is buying more bandwidth capacity from Intelsat to meet demand.

“Ultimately, that’s a great thing for the industry,” Spytek said, because “I think everyone was wondering who was going to absorb all this capacity and how it was going to be sold.”

However, the shortfall on the horizon for delivering that planned bandwidth has left Speedcast hunting for bridge capacity.

Spytek said this need for bridge capacity drove Speedcast to recently sign on as a distributor partner for OneWeb’s delayed LEO network.

Customer trials with OneWeb are slated to begin in mid-2022 to bring two-thirds of the deployed LEO network into service for Speedcast’s energy and enterprise customers, followed by maritime mobility in 2023.

For the time being, OneWeb’s services are limited to fixed applications, which would include Speedcast’s customers on oil rigs and cruise ships at ports, and full coverage is only attainable in the upper parts of the northern hemisphere.