London — There are so many different technologies bringing connectivity from the sky or space and all are promising to provide cheaper connectivity. With the implantation of fibre networks in Africa, prices have already fallen and new technologies mean they will continue to fall. Russell Southwood looks at how this will happen and what it will mean for operators' ability to deliver services more widely.
In pricing terms, fibre has always been more transparent than satellite. Even closed operator consortia needed to be transparent with their members about the relationship between the cost of building and prices charged to members. Over time the models and metrics for building fibre became well known to industry analysts.
But it was never the same with satellite operators. When you asked them for details about margins on their services in the mid 2000s, they would just look at their feet and avoid the question.
This began to change with Greg Wyler's 03B MEO project. His starting point was that he would provide satellite bandwidth for the same price as fibre and this was probably one reason why he was able to raise investment from Google.
Later the sheer scale of financing meant 03B was sold to SES and its disruptive price model was replaced with a "fibre plus" pricing. Also the high cost of its earth terminal made it a 'wholesale' product aimed at operators and not something that could easily deal with 'retail' rural demand. This may well change with the arrival of 03B's mPower product, more of which later.
Before going on to potential future satellite projects, it's worth looking at the "here-and-now" impact of High-Throughput-Satellite (HTS) technology. One satellite operator we spoke to late last year said prices would remain the same but customers would get 2-3 times as much bandwidth. Antenna typically cost less as the size is smaller and this has led some resellers to focus on SMEs and high-end domestic customers.
As one reseller told me at the end of last year:"Prices are coming down." Although the expected Global IP capacity has not come online as envisaged. Despite that, this industry reseller saw it being possible that they could offer entry level plans with 18 mbps download and 5 mbps upload for US$35 a month:"For some countries, there's lots of farmers: for example in Namibia. Also there are NGOs and middle income households."
Beyond HTS are the many different projects that - if they come to fruition - will potentially bring connectivity from the sky at a significantly cheaper price. Many of these require huge amounts of capital to build but several of those who are behind them can access the level of capital required. The list below is not comprehensive but is meant to give a sense of the players and their price pitch:
* Loon's balloons: Alphabet's subsidiary Loon announced in July this year that it was testing its product with Telkom Kenya. Reuters in June this year quoted the company as saying that it "will let mountain villagers buy 4G service at market-rate prices for an undefined period". Loon's pricing strategy will be based on levying a fixed subscription charge based on the size of the coverage area, plus fees linked to data usage.
It is unclear what impact the merger of Airtel and Telkom Kenya will have on the test and no pricing structure for the connectivity has been supplied. Over the last three years, Loon has successfully let mobile companies in Peru and Puerto Rico use balloons for free to supplant cell phone towers downed by natural disasters.
But the jury is still out. The same Reuters report said:"... executives at five other wireless carriers courted by Loon across four continents told Reuters that Loon is not a fit currently, and may never be. Those companies, including Telkom Indonesia, Vodafone New Zealand and French giant Orange SA, say Loon must demonstrate its technology is reliable, safe and profitable for carriers". The word 'profitable' may be the key one here as there was also operator resistance to its metronet pricing strategy in Uganda and Ghana that has now subsided.
Alastair Westgarth, Chief Executive of the Alphabet subsidiary officially formed last July, expressed confidence in its strategy. "Multiple" additional entities are close to signing contracts with Loon, he said." Although it has signed a control software contract with Telesat, no mobile operators have yet signed up.
* OneWeb: The irrepressible Greg Wyler has taken another run at creating the disruptive satellite model, raising US$500 million and launching its first six satellites into Low Earth Orbit (LEO). In March it announced it had US$1.25 billion in additional financing: investors included Bharti Airtel, an operator with significant presence on the continent. Total estimated capital requirements vary between US$4-6 billion. Merger talks with partner Intelsat collapsed.
According to Satellite News, OneWeb's individual spacecraft, while dramatically cheaper than traditional satellites, are still at least twice as expensive as the sub-$500,000 price point OneWeb envisioned when the program began. One commentator cautioned that less obvious costs, like gateway ground stations, real estate and regulatory licensing can further inflate costs beyond early estimates. Some of those who followed 03B from the start will be familiar with this level of over-optimism.
Mobile network operators using OneWeb's satellites to backhaul communications traffic for cellular towers will account for a lot of the company's early customers, as well as aviation, maritime and government customers. Wyler has also said:"There are many different methods or financial models to connect the schools in many different countries with different abilities to pay." Those who know past efforts to deliver connectivity to African schools might applaud this sentiment but question how it might work in practice.
* Elon Musk's Starlink: It put up 60 satellites in June of this year. The plan for Starlink, as the project is called, is to put a network of nearly 12,000 internet satellites in orbit (by 2027), which it claims could move internet data about 50% faster than existing fiber-optic cables. Its potential customer base is very familiar and includes remote areas, airplanes, ships, and cars.
Musk told reporters on a press call (reported in Business Insider): "There is a lot of new technology here. So it's possible that some of these satellites may not work," he said. In fact, Musk added that there's a "small possibility that all of the satellites will not work." Musk said it will take about 400 satellites to establish "minor" internet coverage and 800 satellites for "moderate" or "significant operational" coverage. The immediate major goal is to deploy nearly 1,600 satellites about 273 miles (440 kilometers) high.
In the future, Musk says, users will connect to Starlink with terminals that cost about $200 and can steer an antenna beam without moving parts. "It basically looks like a sort of a small- to medium-size pizza," Musk said. SpaceX has asked the FCC to build 1 million of the small ground stations. No connectivity pricing approach has been announced.
* Jeff Bezos and Amazon: It has plans to establish a constellation of 3,236 satellites in low Earth orbit to patch up areas with poor or no internet connectivity. Amazon's planned push into satellite-delivered broadband is taking shape under Project Kuiper, details of which appear in three documents filed with the International Telecommunication Union (ITU) last month. The documents were filed by Kuiper Systems LLC. First spotted by Geekwire, the documents reveal Amazon plans to put 3,236 satellites at three different altitudes. There would be 784 satellites orbiting at an altitude of 367 miles (590km); 1,296 satellites at 379 miles (610km); and 1,156 satellites at 391 miles (630km).
An Amazon spokesperson confirmed the existence of Amazon's satellite broadband ambitions, noting that it was a "long-term project that envisions serving tens of millions of people who lack basic access to broadband internet". The company is also planning to partner with other companies to bring the project to reality.
* LeoSat: It plans to launch 78 operational satellites and six in-orbit spares to create a high-speed, secure data network linking sites of multinational corporations and government agencies. Skyperfect Jsat and Hispasat are two key strategic investors who have been bought on board to optimize the design. The overall cost of the project is US$3.5 billion.
Chief Commercial Officer Ronald van der Breggen told me at AfricaCom last year:"The issue for us was how to design a satellite to compete with fibre. That's what we're trying to do. We're going from the ground up, turning an MPLS router into as satellite at 1,400 kms. It's MPLS in space... an optical fibre backbone in space and we'll beat fibre at its own game. We have to have 70 satellites (to be viable) but we will have 90 in polar orbits covering the entire globe. The speed will be 50% faster than fibre.
"We're targeting businesses with real problems who have real money, the B2B type audience. We'll be following the pricing model of terrestrial guys with a premium on top of that." It claims US$1 billion in signed MOUs and predicts the per mbps price will be in the hundreds of dollars.
Sky and Space Global: It is a British public company planning a constellation of 200 nanosatellites in equatorial Low Earth orbit for narrowband communications that it expects will cost $160 million or less to complete in total. Its satellite weighs 3 kilograms and is 30 cms across.
It wants to deliver narrowband communications like IoT and M2M devices and rural connectivity at 2.5G for messaging and voice. In tests last year with available technology, it was delivering up to a 3 mbps download service. For rural areas, it envisages being able to supply a traditional voice call, a WhatsApp call or a financial transaction for something like an mMoney service.
According to Meir Moalem, its CEO and Founder:"The antenna is the limiting form factor. It's only 8 cms across and works on a battery and so can be off-grid. It can be a local hot-spot that a family and community can use. Existing satellite bandwidth can cost US$7-800 per mbps and we will do much better than that."
"If you look at somewhere like Nigeria, out of its 200 or so million population, 40 million are not subscribers to any services. There's no infrastructure so it's an untapped market of millions of people."
03B's mPower: It is expected to launch this service by 2021 and says it will deliver hundreds of megabits to 10 gigabits anywhere in the world. Each satellite has a total; capacity of 330 gbps and it claims it will have the capacity to target individual customers. To quote the PR spiel it will deliver "cloud-scale connectivity through a 'virtal fibre' network for application-aware services on a global scale.
From the size of the incomplete projects above, it's quite clear that several people would be willing to spend potentially billions of dollars to reach (among other customers) remote areas, which is a plus for Africa. What is less clear is how the customers left over after fibre got through produce a global business case: niche, yes but mass market... just maybe.
But in a way that's irrelevant. If there are two or three low-cost satellite players out there, there will be plentiful bandwidth and prices will drop. However, if we assume that they can deliver bandwidth at the low prices at both wholesale and retail levels, there's still a final barrier. For a genuine mass market product in rural areas you will need a low-cost antenna. The subject of how cheap an antenna could be built for was the subject of a panel at the Satellite Innovation conference in Mountain View, California in October last year.
Satellite operators have complained that slow progress in antenna technology is holding back their growth. Many antenna companies are investing in flat panel antennas as the next big breakthrough, but not all are convinced it's worth the effort.
One of the panelists was quoted as saying:"I think we are a long ways away from seeing a consumer flat panel antenna in the couple-of-hundred-dollars price point, which is where it needs to be to compete with consumer terminals that we have today for [high-throughput] satellites," said Andre Jones, Communications & Power Industries (CPI) vice president of business development. This is the same price quoted by Elon Musk above.
Another panelist said: "I've heard some crazy things like $50 and $100 for a dual-beam, solar-powered, auto-acquired phased array," Dave Helfgott, CEO of flat-panel antenna startup Phasor: "I don't think the cost of materials at any volume gets you that price."
$200 might sound like an insuperable sum for rural residents but interestingly it's about the same amount that mKopa is selling a 32" TV for on repayment plan over 420 days. The question then is how much do people want internet in rural areas in Africa to pay that amount?
Regulation in Sub-Saharan Africa has hit a brick wall, write RUSSELL SOUTHWOOD and STEVE SONG. What changes are needed for a data-centric future? (free to view)