Northern Sky Research

Fear Not for C-band

Oct 23rd, 2012

NSR’s latest assessment for global C-band transponder demand trends, from its Global Assessment of Satellite Supply & Demand, 9th Edition study, predicts that total, worldwide C-band demand will drop by approximately 190 TPEs (36 MHz transponder equivalents) between 2011 and 2021. As the chart below shows, global C-band transponder demand is predicted to remain relatively stable/increase slightly between 2011 and 2016, and then demand will begin to drop off from 2017 onwards.

The immediate industry reaction to such a forecast is typically a mix of consternation, denial and concern. But a closer examination of the individual C-band application trends illustrates that this forecast is no more or less a compilation of well known industry trends.

First, no one in the industry will deny that legacy services such as point-to-point telephony & carrier demand have long been ceding to expanding fiber and undersea cable. The same applies to IP trunking as the arrival of new undersea cables to Africa began impacting IP trunking in that region in 2010 just as has occurred in other regions like Asia and Latin America in years past. Further, new technologies like Adaptive Coding and Modulation (ACM) are becoming more and more accepted even in many regions where rain fade is important. This trend is leading to a migration of former C-band VSAT networking services to Ku-band and even Ka-band in some instances. A similar trend is also underway in the gov/mil market as well as SNG services as heritage C-band provisioning moves to newer Ku and Ka-band services. In all of these examples, the entire industry realizes that this is not the death of C-band, just a gradual transition to Ku-band, widebeam Ka-band and HTS.

In NSR’s view, the same realization will soon occur for the C-band backhaul market. Through 2016, NSR predicts steady C-band transponder demand gains for backhaul services as cellular networks continue to expand and other factors, such as government obligations on telcos, push mobile phone services into lower and lower density markets. C-band remains the global standard for cellular backhaul, but primarily for 2G, voice dominated services. Once one attempts to apply classic SCPC C-band to more advanced mobile phone networks such as 3G and eventually 4G services, the value proposition for C-band begins to break down. It is NSR’s strong belief that as of 2015 there will be a significant migration in the industry to new satellite backhaul services primarily based on lower cost HTS capacity as well as new alternatives like O3b. And just like with legacy telephony & carrier, IP trunking and VSAT, a slow steady migration away from C-band will begin to occur.

Yet, all of the above trends are related mainly to fixed data and voice-type applications. The single biggest market for C-band is video distribution. Growth in channels of all flavors, be they SD, HD, Ultra HD or 3D, will continue in all markets around the world, and this will drive future C-band transponder demand gains. In particular, the well established C-band video hotspots serving each regional market will tend to grow ever more in value. Further, the C-band commercial maritime market, while relatively small in demand terms, will also see further demand gains as large global and regional C-band beams bring real value to this mobility segment.

Bottom Line

Change in any market is inevitable. Just as the industry came to accept that legacy telephony & carrier, the dominant application in the 70s and 80s, ceded to fiber and undersea cable, so will the same realization that C-band backhaul will too eventually cede to more cost effective solutions. The key is that overall the industry continues to be inventive and finding ways to maintain the backhaul revenues even if new types of capacity like HTS or O3b come to the fore. But fear not, the one unassailable C-band application remains video. The large coverage areas and high quality transmission characteristics of C-band continue to make satellite one of the single best and most cost effective transmission technologies for video. And as channel bandwidth gets larger as the broadcast industry moves to HD and eventually Ultra HD (plus whatever comes after), satellite’s place in the market is even more secure because, outside dense urban cores, there will be no more cost effective way to transmit this content.

Information for this article was extracted from NSR's report Global Assessment of Satellite Supply & Demand, 9th Edition