Tuesday, September 28, 2021

LEO Will Remain a Niche, But Will Take Share from Other Platforms

Low earth orbit satellite constellations such as Spacelink will allow satellite broadband provides to serve 3.5 million subscribers in 2021, growing at an eight-percent compound annual growth rate to reach 5.2 million users in 2026, according to ABI Research.


To keep that in perspective, in 2021 there are about 4.93 billion regular internet users, using 1.2 billion fixed connections and upwards of seven billion mobile internet subscriptions, supporting mobile phone users, PCs and internet of things devices.


The point is that, as important as LEO constellations might be, they will remain a niche supplier of internet access services. By 2026, says ABI Research, LEO service revenue might reach US$4.1 billion. 


On the other hand, LEO constellations stand to take market share from existing satellite services and low-speed fixed network service. Starlink appears often to be a better value than geosynchronous satellite service can provide.


LEO services might also limit uptake of fixed wireless in some areas, mostly rural. On the other hand, some rural fixed wireless services (incumbent wireless internet service provider or new mobile alternatives) likewise could limit LEO service uptake.


LEO services generally will not compete with high-capacity fiber to home or cable modem services.


It may turn out that LEO constellations are most often directly competitive with existing satellite services and fixed wireless.


In 2020 fixed network internet access in the United States alone generated more than $100 billion in annual revenue in 2013, by some accounts. By other accounts consumer access spending amounted to that much in 2013, without including business purchases. 


Business access contributes at least $115 billion annually.  


For that reason, other estimates suggest internet access sold to businesses and consumers generates $200 billion annually in service revenues. 


The point is that LEO constellations are probably going to be the driver of satellite internet access revenues in the future. But it will still be a niche within the internet access business.


Low earth orbit satellite constellations such as Starlink promise higher bandwidth, lower latency internet access that eventually might cover every part of the earth’s surface. With Starlink’s early commercial launch, how does the service stack up against other alternatives--fixed and wireless--in terms of value?


Starlink users in the United States and Canada have seen 50.5 Mbps download speed, 14 Mbps upload speed, and 52.5 ms latency, reports Speedcheck. Latency performance is better by an order of magnitude, according to Speedcheck. 


Compared to existing geosynchronous satellite offers, Starlink beats HughesNet for maximum downlink speed and trails Viasat. But value is a combination of performance and price. 


The Starlink price is arguably lower than HughesNet at 25 Mbps and Viasat at its top speed as well. But Starlink does not cap usage, as do Viasat and HughesNet. 


Company-

Starlink

Viasat

HughesNet

Price

Dish $499 + S&H,

$99 per month

$299.99

(life time lease),

$30-$150

(for the first 3 months)

$499.99,

$59.99-149.99

(requires 24 months agreement)

Data Cap

No data cap- Unlimited

Yes, (12-300 GB/month)

Yes, (10-50 GB/month)

Speed

15 - 107 Mbps DL (Measured),

*22.99 Mbps UL

12 - 100 Mbps DL (Advertised)

Up to 25 Mbps DL (Measured),

3 Mbps

Latency

* 33 ms, (Measured)

600-800 ms,

(Advertised)

600-800 ms,

(Advertised)

Accessibility

Limited-Only some cities of US

and 11 other countries

All 50 states

Mostly Southern Sky.

US, Brazil, Columbia, Peru,

Ecuador, Alaska, India, parts of Europe

source: Speedcheck


Starlink also might be considered a reasonable value choice when compared to 4G fixed wireless access supplied by Verizon, but a bit less reasonable where Starlink competes against 5G fixed wireless. 


Both fixed wireless versions cost less than Starlink and do not require a satellite dish. But both fixed wireless options by Verizon also supply less bandwidth. 


All the services offer unlimited usage. But Starlink offers more downlink and uplink bandwidth. Latency performance is comparable to 4G but less than 5G. At the moment, Starlink and 5G fixed wireless do not overlap much in terms of coverage, while Starlink’s footprint covers southern Canada and the northern United States. 


Verizon 5G fixed wireless is only available in large urban areas of the U.S. Northeast. 


Company

Starlink

4G (Verizon)

5G (Verizon)

Price

Dish $499+S&H, and $99 per month

$80/month

$80/month

Data

Unlimited

Unlimited

Unlimited

Speed

50 Mbps DL, 13 Mbps UL

17 Mbps DL, 3.84 Mbps UL

40 Mbps DL, 9.74 Mbps UL

Latency

57 ms

58 ms

39 ms

Accessibility

Limited to parts of North America

Nationwide coverage

Only in big cities

source: Speedcheck


As is typically the case, Starlink will not compete well with fiber to home or cable modem services running at speeds up to a gigabit per second. 


Satellite remains a niche. “Because of the higher relative cost of bandwidth transmitted via satellite versus terrestrial technologies, satellite is currently primarily used in situations where fiber optic cables and other high-capacity technologies are not financially viable due to low population densities and large distances between high-capacity networks and last-mile networks,” the Asian Development Bank rightly notes. 


source: Asian Development Bank 


Low earth orbit satellite constellations such as Spacelink will allow satellite broadband provides to serve 3.5 million subscribers in 2021, growing at an eight-percent compound annual growth rate to reach 5.2 million users in 2026, according to ABI Research.


To keep that in perspective, in 2021 there are about 4.93 billion regular internet users, using 1.2 billion fixed connections and upwards of seven billion mobile internet subscriptions, supporting mobile phone users, PCs and internet of things devices.


The point is that, as important as LEO constellations might be, they will remain a niche supplier of internet access services. By 2026, says ABI Research, LEO service revenue might reach US$4.1 billion. 


In 2020 fixed network internet access in the United States alone generated more than $100 billion in annual revenue in 2013, by some accounts.

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