Global Satellite Capacity is About to Go Non-Linear in 2017: What Will That Mean?

Global satellite capacity will go nonlinear in 2017, hitting an inflection point and growing sharply, according to Jose Del Rosario Northern Sky Research research director.

You know what will happen. Whenever supply increases, prices drop. When prices drop, people buy more of products they desire.

But other things are certain to happen. If most of the new entrants in the low earth orbit satellite business actually launch, available capacity will not increase incrementally, but possibly exponentially, at least for a time.

Sudden abundance will have the effect you would think: prices will fall. Just how much, just how fast, and what that will mean for suppliers of Internet access in South Asia and Southeast Asia--as well as consumers--are key issues.

Asked about the challenges of supplying Internet access across South Asia and Southeast Asia, where hundreds of millions cannot afford to pay 41 cents a month for Internet access,

Dave Bettinger, OneWeb CTO quipped off stage, we’re talking about “15 cents a month” as an “ability to pay” hurdle to be overcome.

That is an issue incumbent satellite service providers will have to confront, assuming there are at least some winners in the emerging LEO segment of the business.

No geosynchronous satellite Internet service provider can afford to sell retail access at such prices.

To be sure, geosynchronous providers will be working on getting their own cost structures down. The issue is how much more performance they can wring out of their operations.

Much depends on the business models. To the extent that LEO constellations offer consumer Internet access on a retail basis, mobile service providers and other Internet service providers will find themselves facing market share losses and profit margin contraction.

To the extent the business models are wholesale, and allow mobile service providers and other ISPs to extend Internet access by mobile phone to new areas, at lower prices, revenue and customers could grow.

It also is possible that some portion of the global undersea market might be challenged, at the margin, by LEO providers who aim to bypass all undersea cables.

The point is that we seem to be approaching one of those potentially disruptive periods when change in an industry segment is about to go nonlinear, with unpredictable results.

There can be no assurances at this point. The last time we saw a potential LEO attack, the efforts collapsed.

It is not clear that all of the current contenders can survive and thrive. But maybe some will. If that happens, the satellite Internet access business, as well as the backhaul business, might be disrupted.