Very Small Aperture Terminal (VSAT) communications systems are cost-saving additions to most enterprise businesses. Throughout recent years, communication systems via satellite have come down in price. But size of network build out, future expansion and applications that will be transmitted all play a role in the final price, return and network structure chosen.
Years ago, proponents of commercial space-based communications did not support dedicated, point-to-multipoint, corporate satellite networks as a preferred alternative to terrestrial systems with similar configurations and throughput. Rarely was the case made that satellite was a more cost-effective medium. Back then, when executives were creating their cost analysis for network communications, satellite entered the planning stages only when setting up a large network — 500 sites or more — where regional offices are separated by 500 miles or more.
Since then, the costs of VSAT equipment began to plummet. Prices for transmission services and transponder capacity also began to stabilize. Hardware and software add-ons increased dramatically the reach, reliability and quality of enterprise satellite networks. Today, many smaller enterprises — those operating 100 sites or more — are implementing basic VSAT systems and garnering sizable return on such investments.
Users of small-to-medium networks, however, need to keep in mind that just like any business initiative, implementation of a VSAT system is built on cost-benefit and strengths, weaknesses, opportunities and threats (SWOT) analyses. If an initiative is not a winner, it does not get implemented.
Understanding the cost benefit at the start is key in budgeting and planning for such a network. Even though small and large companies already may have a terrestrial information network infrastructure in place, supporting that base with a satellite communication system can improve flexibility, security and efficiency for overall business growth. The satellite solution also might be an attractive and cost-effective addition because of a need to move large amounts of information from a central origin to multiple destination points — a satellite system’s greatest strength.
Even more importantly, having a satellite network incorporated into an established communications infrastructure alongside a terrestrial system can, in certain situations, become a company’s only means of disseminating information. Many businesses and government organizations already have discovered that during natural disasters and times of crisis, satellite technology becomes the only functioning form of communications and data delivery portal.

Why Satellite Technology?

But before making any investment in VSAT equipment and services, network managers must evaluate the expanded role such a platform will play within the overall business structure. For some, the fact that a satellite-enabled network system can improve flexibility, security and efficiency for content dissemination in a cost-effective manner is enough to migrate a proposal from an upper management pitch to implementation.
In recent years, natural and man-made disasters have crippled many business communications systems. For example, as Hurricane Katrina approached the U.S. Gulf Coast in 2005, businesses that were equipped with satellite technology were able to maintain connectivity. Similar scenarios played out in India and Central and Southeast Asia following the devastating tsunami, floods and earthquakes that hit these regions. Likewise, most of the terrestrial communication systems in lower Manhattan in New York City gridlocked in the aftermath of the terrorists attacks Sept. 11, 2001, similar to traffic jams that tie up the city’s avenues during rush hour. A few enterprises, however, like Federal Express, already had a satellite network in place and were able to continue operations. Throughout that day, the company’s executive management initiated a ground delivery strategy to overcome the closing of the U.S. airspace and relayed the new plan to all its employees.
Aside from helping overcome unforeseen disasters that can cripple an enterprise communication network, there are everyday cost benefits that can be derived from implementing a satellite network. By far, one of the most cost-effective reasons for operating enterprise-wide satellite networks resides in the dissemination of training and company information. For example, the cost of what a researcher might term “a traditional hotel meeting” is pegged at roughly $90,000 for travel, rooms, audio-visual equipment and associated expenses. Hosting the same meeting via satellite, with the same number of terminating (travel from) locations, all broadcast time, the studio rental and crew costs, for example, would come in at about $40,000. Another case uses the model of a videotape distribution network. Satellite proves to be cost effective in terms of monthly delivery when compared to terrestrial systems by a significant factor once the number of delivery sites exceeds about 150. Even delivery via the U.S. Postal Service is a winner over land lines in this scenario: If an enterprise client delivers 40 half-hour training session to 2,000 locations, the charges would break out as follows:
â–  By U.S. mail — For delivery of 10 videotapes a week (two VHS tapes per package) four times a month, the total cost would run roughly $144,000 per month with each tape costing $5 and each package costing $8.
â–  By terrestrial network — For transmission at speeds of 3 megabits per second (using 27 gigabytes per month on a 128K line at $200 per month, per location, the total cost would run roughly $400,000 per month with 70 percent utilization and no multicasting.
â–  If a satellite network delivery channel were in place, the same amount of content could be delivered for roughly $50,000 per month based on using an always-on 3 Mbps channel with 5 percent usage and capability to multicast.
These are just a few real-life scenarios illustrating how satellite technology can solve problems and ease business transactions. But adding a satellite component to an established network may not only be profitable; it also can become a strategic business move that helps overall communication needs. For example, according to satellite executives, a network manager looking for a new way to deliver high-speed data to his company’s 700 remote sites recently priced out a terrestrial upgrade solution and one involving a satellite solution. Once he completed his cost analysis, he found that the proposed satellite network would reduce the projected cost from more than $16 million per year to $400,000.
But even with such savings, there are cost impediments that have to be considered when selecting a VSAT system, particularly in Africa. Economies of scale do come into play, but one does not have to have hundreds of sites to benefit. For example, Nairobi, Kenya-based Afsat Communications Ltd. is trying to market to small entities across the continent. According to company executives, Afsat has crossed about 2,500 sites and quite a bit of its service are provided to small entities, either individuals or small enterprise companies of around 100 sites. Accelon, a similar company, is up around 1,000 networks that are concentrated mainly in Nigeria, with a lot of individuals or small business operators picking up on that service. Accelon picks up small contracts — one and two sites at a time, and on average they are setting up 100 to 150 sites per month. By targeting individuals or single proprietors that need Internet access and good communications, Accelon’s business is starting to pick up steam.

Set Up Options, Cost Models

One of the first steps to undertake when conducting a cost analysis of introducing a VSAT system for your enterprise is deciding on the size of the system and whether to contract out the installation process or remain independent. A traditional barrier to entry with satellite networking has been that the initial bandwidth is more expensive than standard terrestrial networking. This issue, however, may become less important within a cost analysis when organizations need to deliver information to multiple locations or to a location where terrestrial networking is not available. Adding additional locations to a satellite network does not drive up the cost of the satellite channel, as the network simply takes advantage of existing purchases, reducing the cost per site with each additional location.
The steps in establishing a satellite communications system begin by identifying the different aspects of the system, choosing the parameters that fit your individual business needs, and deciding how the system should be implemented. Highlighted below are cost scenarios of either building the system with a satellite provider or independently implementing the communications network.

Partnering With A Provider

The most important cost consideration that must be done early on is determining whether your company should lease capacity through a satellite vendor or teleport facility or design and build its own central hub. The most economical solution out of the two, in many cases, is partnering with a satellite services provider. Often, a company can be up and running quickly without encountering any design or regulatory hurdles by using available satellite services. In other words, the satellite services company handles the most significant aspects of establishing the system. You, however, can determine and specify the communication needs on your own or take advantage of complete turnkey support to establish the system. For example, an enterprise executive can contact a representative directly at one of the many satellite providers or obtain the assistance of a teleport operator.
The cost of leasing a satellite transponder depends on the total bandwidth requirements of your enterprise. Lease rates also depend on the length of the contract with the satellite vendor and whether the satellite hardware is guaranteed, non-preemptible, or preemptible. The rate for a non-preemptible, 27-megahertz transponder at Ku-band might be on the order of $150,000 per month, for example. However, only a small fraction of this cost would be required to support a modest data rate. With a T1-carrier (1.544 Mbps) only about 7 percent of the full transponder bandwidth would be needed, depending on the modulation and coding.
Most satellites are non-processing repeaters. The function of the satellite transponder is to receive the signal, amplify it, translate the frequency from the uplink to the downlink, and retransmit the signal. Therefore, the transponder is completely transparent to the signal characteristics. Two frequencies are used for each channel, one for the uplink and one for the downlink. At C-band, the frequencies are 6 gigahertz for the uplink and 4 GHz for the downlink. At Ku-band, the frequencies are 14 GHz and 12 GHz, respectively. The higher frequency is used on the uplink because it simplifies the receive antenna on the satellite. Ku-band is a commonly used frequency band because it permits the use of small ground terminal antennas with small beamwidths. It is susceptible to rain degradation, however, and requires adequate compensating link margin, which may increase cost of the system over time.

Building It Yourself

On the other hand, setting up a new central hub independently is naturally the most involved option, but it will give you complete autonomy. This option, however, can be the most expensive, depending on the overall final size of the VSAT system. One needs to design the system using in-house engineering personnel or outside consultants, obtain licensing through the regulatory process, purchase the equipment, build the system, and hire people to operate it. The cost of the hub terminal would be a major factor if you choose this option. A large hub antenna and transmitter could cost several million dollars. It might be possible, however, to reduce initial cost, operating expense and risk by sharing an existing hub facility.
The satellite system can be either one-way or two-way. In a one-way system, the data are transmitted from a central hub to a network of remote terminals. A license is not required for the terminals because they operate only as receivers, reducing possible upfront cost associated with obtaining the license. In a two-way system, the terminals both transmit and receive. In most cases, a blanket license can be obtained for the operation of the entire network, however, if an enterprise network spans country boarders, executives might need additional licenses from the various countries. Once these logistics are in place, various service organizations are available to install the equipment at the remote sites.
The cost of setting up a receive-only system might be about $1,500 per terminal. The principal components include the antenna and the receiver. In a transmit-and-receive system, the major component is the power amplifier. The output power is typically between 0.5 watts and 2 watts, while hardware cost is about $3,000 to $5,000 per terminal.

Right Planning For Improved Business

A satellite communication system is an efficient method for the distribution of data from a central office to a large number of field offices. As in the purchase of a computer, when choosing a start-up satellite system, it is essential to research the requirements and options before making a commitment to a particular solution. The satellite option, however, can be a cost-effective method for improving the performance and reliability of the information network. The best philosophy is the one that uses the simplest and most robust technology.
Bottom line: Customers do not care what traffic goes on cable, what goes undersea and what goes through the sky. What they do care about is reliability, availability, network security and seamless back up. So the primary goal of the network provider today and in the future must be to create the very best of satellite and terrestrial options to provide an optimum solution for each requirement.
As CTOs, CIOs, and network executives strive to reduce network costs while enhancing service continuity and reliability, satellite increasingly enters the big picture. If climbing utilization statistics and new, satellite-based network starts are any indication of the future of enterprise communications via satellite, then this mature, secure, flexible and highly configurable technology should be at the top of every responsible executive’s “explore” list.
Key enterprise growth markets well suited for satellite include the financial services arena, education and e-learning, hospitals, pharmacies and health care, retail, hospitality, energy, entertainment, and media distribution, among others. Significant inroads into each of these areas, sufficient to offer corporate network and IT executives with real-life, real-time examples, already have been made.