Is Telecom Universe Big Enough For Both Satellite And Fiber Capacity?
This article first appeared in PBI Media’s Satellite News
By Evan Bass
The frenzy of fiber deployment over the last few years has contributed to a perception in some circles that optical technology is on its way to muscling satellites out of the telecom universe.
Has the satellite industry stepped up to the plate in competing with fiber, or is fiber undercutting the satellite communications market for international bandwidth services? That depends on who you ask, but there's no dispute that both fiber and satellite will be slugging it out for some time to come.
Christopher Baugh, analyst and founder of Cambridge, Mass.-based Northern Sky Research, observed that as fiber cable builds out, it decreases satellite's total addressable market because there are less unserved users.
"But our school of thought is basically that the growth of satellite technology - and the growth of the telecom market in particular - is predicated on fiber buildout," Baugh said. "Satellite players are using fiber more and more for backhauling routes and point-to-point trunking routes, and using satellites for distributing content, whether its access to an end user or pushing out IP to multiple locations."
Baugh said the question of fiber vs. satellite is not an either/or proposition, it's actually sort of a cooperation that's occurring now. Telcos and carriers that use fiber and satellites together have found that each technology does certain applications better than the other.
"The fiber buildout may be taking some toll on the satellite business, but there are still plenty of reasons satellite services will prosper," said Jose del Rosario, analyst with Frost & Sullivan.
Some of the point-to-point applications that are being targeted by submarine cable extensively are hurting the satellite industry, but del Rosario said that satellites provide a more cost-effective solution in the point-to-multipoint market, especially when the number of users increase.
"It's also a simpler solution," del Rosario said. "If you're in the Asia Pacific, for instance, it would take you perhaps 2-3 hops to go to the U.S. backbone [via satellite]. But if you were...using fiber, you could take 15-20 hops. Fiber is a very robust solution, the capacity is just enormous. But you could have certain links in one of the hops that are weak. Even if your fiber deployment is good, it could get stuck in a part of the network where the fiber deployment is not good."
It might seem strangely techno-phobic in a technology-driven industry, but satellite technology runs into some resistance from companies that haven't used it before. Baugh said those companies not familiar with satellite technology are wary of the hacking that takes place sometimes with direct broadcast satellite (DBS) service, as well as the seemingly tenuous proposition of sending signals through space.
"But actually it's extremely reliable - much more reliable than terrestrial multicasts, based on tests," Baugh said. "With satellites, you hear constantly [about] the DBS players being hacked and swapped and so forth. Granted, the DBS sector does have a problem with hacking and security, but when you're considering the broader IP via satellite sector, which is broadband and Internet access and IP distribution, there are multiple, multiple security schemes that make it as secure as you want it. You can encrypt multiple layers; it's pretty intense."
Del Rosario admitted there is overcapacity for both fiber and satellite. "It seems like they're competing for certain markets, but there's a complement there some place," he added.
Fiber is reaching the coastal areas, and for those markets, satellites are probably losing out. But del Rosario said fiber hasn't gotten to the interior of large countries like India, Brazil, China, and it probably won't for the next five to ten years. He said satellites could control those markets and could be a viable complement for fiber in other markets.
"For the ISP market, for instance, if you're in a remote location, it's hard to dig terrestrially," del Rosario said. "So the ISP would have a local loop deployment using DSL or cable modems. But in order to trunk that, it's sometimes cheaper to use satellites, and sometimes there's no fiber going to the interior, so there's no alternative. So sometimes it can be a complement."
Baugh said even considering the best case scenario that fiber, cable and DSL will build out to their maximum extent, there are still millions of users in the United States, and hundreds of millions of users worldwide, that won't have access.
"Granted there are economic issues there, you can't say that every user in Africa is primed for an access solution," Baugh said. "There are core pockets of users in places where it's prohibitively expensive to have access. We just did a study on the cost of a T1 in Africa and the Middle East in places where there are businesses and business activity, and it's a minimum of $10,000-$12,000 per month for a T1. A satellite solution is maybe half to one-third of that." |
