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Can satellite connectivity bridge the digital divide or is it a bridge too far?

By Loewe Tan

The satellite industry is poised to grow and supply more than 200 terabytes (TB) of bandwidth capacity to the global telecom grid, according to a report released in December 2022 by Euroconsult, a space and satellite intelligence company. 

To bridge the existing digital divide between rich and poor countries, urban and rural populations, Deloitte Global has also predicted that more than 5,000 LEO (Low Earth Orbit) broadband satellites will be in needed by the end of 2023, making up more working constellations to offer high-speed Internet to nearly a million subscribers around the globe, no matter how remote they are located.

Dimitri Buchs, Managing Consultant at Euroconsult, told APB+, “Satellite provides service to some geographies that remain unserved by terrestrial networks, including suburban, rural and isolated areas.”

As satellite technology continues to evolve, can we expect the constellations of LEO satellites to bridge the digital divide in underserved regions by offering easy accessibility at affordable price points?

Connecting underserved communities in Asia-Pacific 

Conventionally, broadband networks require the laying of underground cables, which could be deployed in urbanised communities. However, underground cabling in remote areas lacking infrastructure is not as straightforward, leading to lower connectivity.

Orina Zhao, Senior Analyst at Ampere Analysis, observed that the overall fixed line broadband penetration remains low in many South-east Asian and South Asian markets. 

Ampere Analysis data found that just about half of all households across the region have a fixed line broadband connection but when excluding Taiwan and Singapore, that average access rate drops to 36%.

To bridge the digital divide, a robust digital infrastructure supported by satellite networks can be the cornerstone of connectivity. Orbiting 2,000km above earth’s surface, LEO satellites are closer to the earth’s surface than geostationary satellites, which are approximately 36,000km above earth’s surface. 

With multiple satellites working on a revolving network, satellite connections enable networks to be delivered to many places, including aircraft in mid-air and ships in the middle of an ocean. And satellite-based networks, such as LEOs, can provide greater accessibility to remote areas of the earth.

Zhao illustrated, “A large number of households still rely on mobile broadband to connect to the Internet, especially in remote or rural areas where fixed line infrastructure is difficult to construct, such as in the Indonesian archipelago, which saw mobile broadband data usage rising from 0.68 gigabytes per sim card in 2017 to 29.7GB per sim card in 2022, the largest consecutive growth across the APAC region.

“In such a context, the introduction and commercial deployment of LEO satellite dishes, including Starlink, OneWeb and many others planned, will significantly improve broadband connectivity.” 

Zhao emphasised that the key benefit of LEO satellites is enabling broadband access to over 500 million households across the Asia-Pacific region, including the vast Pacific islands and areas prone to natural disasters or with fewer habitants.

Making satellite connectivity affordable for all?

It must be noted that the satellite broadband market is very price sensitive. Eurpconsult’s Buchs explained, “Affordability continues to be a critical issue for the adoption of satellite services too, particularly in emerging countries, as entry-level consumer broadband packages often cost more than US$50 per month.”

He added that maintaining a satellite network is expensive, due to high recurring operational cost incurred from equipment leasing, which represents the vast majority (up to 80%) of total operational costs.

To create downward pressure on pricing, Buchs suggested that the satellite industry has a tendency towards deploying flexible payload architectures that help maximise “usable” supply and the need to secure a large geographically distributed client base.  

He explained: “Manufacturers have generally been able to offer higher volumes of capacity per satellite over time with asymmetrically lower increases in cost to operators, effectively translating into a structural driver of downwards pressure on capacity pricing.”

Integrating of satellite and mobile networks 

To provide a ubiquitous network, satellite operators are not only relying on LEO satellites, but also geosynchronous orbit (GEO) satellites to increase and offer higher bandwidth per satellite. 

For instance, Inmarsat is testing new concepts and system configurations for its proposed Orchestra LEO constellation, which will integrate with GEO and HEO (Highly Elliptical Orbit) satellites, and a terrestrial 5G network, to deliver a powerful global communications solution for mobility and government customers.

Rajeev Suri, CEO of Inmarsat, said, “Orchestra ensures Inmarsat is well positioned to deliver long-term, profitable growth by delivering new services to existing customers, targeting near-adjacent market segments, and maintaining a strong competitive position.” 

He added that while Inmarsat was focused initially on delivering the Orchestra terrestrial network, it has been preparing for more LEO satellites in the sky. “This is a highly cost-effective approach that leverages Inmarsat’s leading GEO satellite networks as part of its Orchestra’s unique multi-layer architecture,” he pointed out.

Zhao affirmed that a competitive satellite broadband service market will help to bring prices down. She said, “Currently, ARPU (Average Revenue per Subscriber) of fixed line broadband in South-east Asia and South Asia is less than $10.

“To ensure competitiveness with existing services, as well as ensure affordability among lower income households, satellite broadband pricing will need to provide broadband priced at this rate or lower.”

If this is so, even by coming together to collaborate and leverage economies of scale, providers of satellite-enabled broadband will still find it difficult to reduce the cost of deploying satellite networks and offer accessibility at affordable prices for the rural poor … so bridging the digital divide will remain a bridge too far. 

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