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Satmex 8 at SSL facilities prior to shipping to launch base. The satellite, launched in March of 2013, will have several applications including providing cellular backhaul in North, South and Central America.
Image credit: SSL
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[Satellite TODAY 07-11-13] The continued growth of cellular backhaul indicates it will remain a vibrant segment for the satellite sector, particularly in the emerging regions, said Deepu Krishnan, senior consultant at Euroconsult during an interview with SatelliteTODAY.COM.
The growth for cellular backhaul remained solid during the second half of the last decade, and capacity revenues from this sector in fast-growing economies could reach close to $1.1 billion by 2023, according to a recently released Euroconsult report.
The report, titled "Prospects for Cellular Backhaul in Fast-Growing Economies," tracks strong cellular backhaul growth in all emerging regions. It identifies Sub-Saharan Africa as the largest historical market for cellular backhaul and notes that accelerated growth has been observed in recent years in a variety of countries such as India, Brazil and Indonesia.
"The number of sites using satellite backhaul more than tripled between 2007 and 2012 to reach close to 16,000 sites for a satellite capacity use of around 15.6 GHz," according to a written statement from Euroconsult.
If, as Euroconsult predicts, capacity revenues from cellular backhaul in fast-growing economies reach $1.1 billion by 2023, that would be a sharp rise from around $500 million in 2012, corresponding to a 7 percent CAGR (compound annual growth rate) over the 10 year period. Experts are encouraged by the dramatic rise in the use of this technology because "the regions assessed present significant differences in terms of structure, dynamics and accessibility for each market player," the statement said.
Krishnan said the growth of the market is also the result of a combination of events, including the explosive growth of mobile connectivity, maturing satellite and ground equipment technologies and Mobile Network Operator’s (MNOs), and the expansion of technologies to remote communities to comply with government-initiated universal service obligations (USO).
"The sustenance of this growth in the future will depend on a number of factors like extension of cellular networks and telecom markets, continued support from governments in the form of USO’s and USF’s [Universal Service Fund], growth in 3G/4G networks and evolution of satellite and ground network technologies to make a business case for the use of backhaul over satellite," he said.
But Krishnan notes that a condition for a continuous growth in the market, which will be increasingly data driven, will be the ability to reduce the transmission cost per Mbps. "This should be achieved through the use of HTS (High Throughput Satellites) capacity and improved spectrum efficiency that could reach in average over 3.5Mbps per MHz by the end of the decade, doubling the current speed of 1.7Mbps/MHz today," he said.
The expectation, Krishnan said, is that the overall market will grow in the next 10 years notwithstanding the regional differences in market dynamics and potential revenue.
Although the report indicates that Brazil and Indonesia saw the most cellular backhaul growth, several other regions saw a decline. "Following robust growth in the past decade, demand will slow down in some countries/regions due to factors like increasing mobile penetration, an extension of terrestrial networks and political instability,” he said. Count Peru, Iraq, Egypt and Kenya on the list of countries that will see negative growth in future in the number of Base Transceiver Station (BTS) sites backhauled over satellite.
But Krishnan noted that overall, growth in the Middle East and North Africa has been limited by large terrestrial coverage of population and the limited size of part of the countries, not just politics.
"A challenge for satellite use remains the reach of large cities by fibre in countries where it was not historically the case. In Indonesia, the arrival of the Palapa fibre ring in the eastern part of the country could result in reduced satellite capacity usage in 2016-2017," Krishnan added.
As far as the impact of HTS on cellular backhaul, lower prices and faster speeds appear to be among the results, according to industry analysts. "HTS systems promise to reduce price per Mbps for mobile operators who are already operating in a competitive environment with decreasing ARPUs. This will help in MNO’s (mobile network operator’s) efforts to reduce their backhaul OPEX (operational expenditure), where the satellite bandwidth cost represents a significant chunk," Krishnan said.
He also notes that lower latency could represent an advantage for MEO systems – such as O3b Networks’ constellation – over GEO systems. "However, HTS adaptation for cellular backhaul will depend to a large extent on how the operators will overcome challenges like service migration to costly ground terminals, coverage limitations smaller spot beams, [and] higher latency for specific HTS network designs," he said.
Earlier this year Israel-based Gilat closed a large cellular backhaul project at a Tier-1 mobile operator in Asia. According to Euroconsult, this deal may have been unique to the industry.
"This trend cannot be generalized as a global one, as there are also other regions where still a large portion of backhaul contracts are typically in fractional transponder capacity lasting one-to-two years typically involving capacity brokers," Krishnan said, noting that large capacity of longer duration between satellite operators/service providers and MNOs have been observed in several of assessed regions such as Latin America and Asia during the past decade.
In areas with reliable or existent terrestrial infrastructure, Krishnan said cellular backhaul satellite service still plays a vital role. "Satellites are still used for providing emergency cellular back-up communications in case of events like fibre cuts and in providing disaster management solutions," he said noting that satellites will maintain a gap filler role for areas that are either difficult to reach or less of a commercial priority to mobile operators, and for emergency preparedness, disaster recovery, and enterprise continuity.
Specifically referring to the June 2012 earthquake in Japan, Krishnan said there has been a notable increase in capacity use to manage mobile backhaul traffic in damaged areas, such as those provided through 10 Ipstar terminals and 60 antennas that connect up to 500 base stations.
"Given the increase in disaster relief efforts, satellite communications providers focused in this area have expanded their business over the past years. For example Ipstar won contracts with Japanese mobile operators SoftBank Mobile Corporation, KDDI Corporation, and NTT Docomo to restore their network coverage by connecting BTS stations to their core network using the new femtocell [small cell] technology," he said.
As previously reported by SatelliteTODAY.COM, the Satmex 8 satellite, designed and built by Space Systems Loral (SSL) for Satélites Mexicanos (Satmex) will provide cellular backhaul in North, South and Central America. When the satellite completes in-orbit testing, it will replace Satmex 5 at 116.8 degrees west longitude.
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