Two consulting companies have concluded that the mobile satellite services sector will witness regular but not spectacular growth in the coming years.
In separate market forecasts, Cambridge, Mass.-based NSR and Euroconsult of Paris measure different aspects of the industry in studies that are not easily comparable. But both say growth will not be much affected if one of the two mobile-satellite constellations now in operation eventually shuts down.
NSR and Euroconsult say that demand among the hard core of government, military and corporate customers for today’s mobile satellite gear will simply transfer to the remaining suppliers if either the Globalstar or Iridium constellations are not renewed.
“We assume that at least one of the two will remain in operation
,” said PacomeRevillon, executive vice president of Euroconsult, whose study forecasts trends to 2016. “We do not get into the issue of which will survive because our models suggest this will not have an effect on the overall market.”
In a July 2 interview, Revillon said some of the current service providers are expanding their networks and product lines and that one or more of these would absorb the business if Globalstar or Iridium were unable to complete the transition to a second-generation constellation.
Christopher Baugh, president of NSR, agreed.
“What we see now is Inmarsat moving to a hand-held telephone offering, while Thuraya is planning to expand its coverage throughout Asia,” Baugh said in a July 2 interview. “Any business lost by one of the other players could be picked up by the survivors, and the net effect on the size of the market would be minimal.”
Milpitas, Calif.-based Globalstar Inc.
already has signed a contract for the construction of 48 second-generation low-orbiting satellites for mobile communications. The company, which has not yet contracted for the launch of these satellites, is under pressure to launch them as quickly as possible to mitigate the performance decline of its current in-orbit fleet.
Bethesda, Md.-based Iridium Satellite LLC forecasts that its current 66-satellite fleet will continue to operate through
2013 or 2014. The company plans to secure debt and equity financing and to contract for its
second generation satellites by 2009.
of London and Thuraya Satellite Communications of Abu Dhabi, United Arab Emirates, both operate large satellites in geostationary orbit. Inmarsat, through a partial merger with Asia Cellular Satellite of Indonesia, is offering a hand-held satellite telephone starting this year. Thuraya, whose next satellite is scheduled for launch in October, is expanding beyond its Middle East/Central Asia core market into East Asia with its new in-orbit capacity.
NSR’s study, “Mobile Satellite Services, 3rd Edition,” covers the entire range of mobile communications using satellites, including C- and Ku-band terminals, and forecasts market trends to 2012.
“World Mobile Satellite Communications Markets Survey: Prospects to 2016,” projects further out into the future and concentrates on L-band services offered by the service providers mentioned, with passing references to Orbcomm Inc. of Ft. Lee, N.J., which operates an asset-tracking system using low-orbiting satellites; and to Mobile Satellite Ventures of Reston, Va., which operates two satellites in geostationary orbit.
For NSR, the current global population of narrowband mobile communications terminals is 1.85 million, with revenues in 2006 totaling $2.4 billion. This market will increase to 4.6 million terminals and $4.9 billion in annual revenue by 2012, according to NSR.
, using a more-restrictive definition of relevant companies and services, found 1.1 million terminals in service at the end of 2006 – the figure excludes Orbcomm – and total revenues that year of around $1.4 billion. By 2016, total terminals should reach 2.8 million units, with revenues totaling $2.4 billion.
Revillon said Euroconsult treats Orbcomm separately because the business model – unmanned sensors on cargo being tracked by its owners – is a different business model, with little monthly revenue per unit and a large number of what Orbcomm calls machine-to-machine subscriber communicators. Orbcomm reported 225,000 units in service at the end of 2006, with reported revenues of $24.5 million.
NSR and Euroconsult are both cautious about the likely market impact of what are known as Ancillary Terrestrial Components (ATC) – networks of ground-based signal amplifiers permitting signals to penetrate areas not reached via satellite link – on the mobile satellite services industry.
“We think ATC will happen,” Baugh said. “Around 10 to
15 percent of our market forecast for 2012 is due to ATC networks. But we consider that it will be more applicable for mobile broadband than for telephony. But we have a lot of problems with the hype that has surrounded the ATC issue, and we think there will have to be consolidation among the companies now planning to use ATC.”
Revillon said Euroconsult’s forecasts do not include any ATC effects – in Europe these terrestrial towers are called Complementary Ground Components – because of continued uncertainty over whether they will be used.
“We’re talking about a multibillion-dollar investment to cover the United States,” Revillon said. “It remains to be seen who will step in to the [mobile satellite services] sector to furnish that amount of cash. We don’t rule it out, but there are too many unknowns to permit us to include it in the forecast.”