Adding Satcom Value by Leveraging 5G

Astranis is revolutionizing the Satcom value chain with a third service provider acquiring its own satellite capacity (PDI, Anuvu and most recently Andesat). This will certainly not be the last instance in which a Communications Service Provider acquires its own Space segment. In fact, in the time of cheap and easy access to Space, satellites become commoditized, and Satellite Operators need to rethink what value they bring to the ecosystem. Can 5G be the new source of value creation and differentiation? 



The impact of 5G in Satcom goes well beyond Cellular Backhaul. 5G will trigger a profound transformation in the entire ecosystem: from unleashing the potential of direct satellite-to-device communications to developing a standardized service orchestration ecosystem where satellite seamlessly integrates with the mainstream Telco ecosystem. 5G has the potential to unlock numerous new use cases and extraordinary growth, catapulting 2020-30 cumulative VSAT capacity revenues to $30.7 Billion according to NSR’s 5G via Satellite, 2^nd Edition report.

Deep Commoditization of Capacity

Various factors are accelerating the commoditization of raw satellite capacity. In a market where Video declines its contribution in total revenues, the ‘Real Estate’ value of orbital positions goes down as Data use cases do not have the same ‘Hotspot’ and multicasting requirements. In parallel, there will be abundant HTS supply from various architectures (VHTS, Software-defined Satellites, SmallGEOs, NGSOs) coming to the industry, putting even more pressure on pricing.

Additionally, CAPEX used to be an unsurmountable barrier for owning a satellite, but this is going down tremendously with SmallGEOs (Astranis’ Andesat-1 deal is valued at $90 Million), and this capacity is actually surprisingly competitive in pricing terms compared with alternatives (Andesat-1 estimated to be in the range of ~100 USD/Mbps/month while recent OneWeb deal Saudi Arabia’s Neom Tech & Digital Holding Co. is in the ~200 USD/Mbps/month range and commercial capacity deals for GEOs today are typically closed somewhere in between those two points). Overall, outside NGSOs where CAPEX continues to be a big barrier, mid- and large-sized communication service providers can get access to proprietary satellite capacity relatively easy today, which pushes satellite operators to add value in other areas.

Value Creation Leveraging 5G

The question is then how satellite operators stay relevant in this framework. The focus should climb to the network and ensuring that satellite becomes plug-and-play for mainstream CSPs. 5G, with the ambition to become a transversal core network from which to manage all access technologies (not just 5G NR but also Wi-Fi, 4G/3G/3G, fiber, FWA, and even Satellite and NTNs), is the perfect fit for this task.



Mainstream Telcos often avoid satellite due to complex integration of OSS/BSS systems, challenges managing SLAs and the specific know-how requirements. Building a 5G-driven satellite network should solve those issues. Mainstream Telcos would be able to manage satellite from a familiar orchestration engine with no specific know-how favoring adoption. This would open myriad blended satellite-terrestrial services such as private networks, cloud, hybrid content distribution, network resiliency or participation of Telcos in applications like Aero and Maritime.

Do Not Forget the Fundamentals

Data verticals are generally very elastic (Backhaul, Consumer Broadband, even Mobility). If a Mobile Operator can profitably expand its network, the incentive to adopt satellite will obviously be bigger (beyond government mandates). There is little doubt that more competitive prices will lead to higher adoption of 5G over Satellite services.



Consequently, satellite price points need to continue improving in competitiveness. But 5G also brings advantages here as Satcom can leverage technologies developed for 5G to improve network orchestration and resource optimization (flexible satellites, constellations, etc.) boosting asset utilization and allowing more competitive prices.

From Operating Satellites to Technology Ecosystems

Satellite Operators are reacting to these trends evolving their business models towards ‘Infrastructure as a Service’ offerings. However, some of the required elements for this evolution are still not ready (virtualization of Ground Segment, standardization, etc.), pushing operators to take a more active and leading role in developing the technologies and ecosystems:

• SES: developing the ARC resource management system (Kythera partnership) and ONAP-based network orchestration (Amdocs and Amartus partnership) hosted on Microsoft Azure. ST Engineering iDirect and Gilat Ground Segment partners


• Telesat: joins MEF and partners with Netcracker to develop Cloud-native BSS/OSS system, CloudOps for cloud infrastructure and Satixfy to develop modem technologies


• Inmarsat: unveils ORCHESTRA as a layered approach (IoT, GX, terrestrial 5G and LEO) orchestrated by a ‘dynamic mesh network’


• Intelsat: ambition to ‘build the world’s first global 5G satellite-enabled, software-defined network of networks’

Satellite assets alone are no longer enough to stay relevant, and it is key to think about the whole technology ecosystem (Ground Segment, orchestration engine, resource optimization, etc.).

Bottom Line

Abundant upcoming satellite supply, lower barriers to entry and other factors  are driving raw satellite capacity towards deep commoditization with very little margin and differentiation among competitors.

Success will come from how well the different network layers and elements (including terrestrial) are orchestrated and integrated. In this sense, 5G is crucial with its ambition to become the standardized service orchestration engine for all access technologies (including satellites and NTNs).

However, the industry must also be aware that, with 5G, some segments that were traditionally exclusively served by Satcom (Private Networks, Government, Aero, etc.) will now be targeted by mainstream Telcos as well.