Northern Sky Research

HTS Paradigm Shift

Aug 28th, 2012

Sometimes it seems like change in the commercial satellite industry only occur at a snail’s pace. Yet, since NSR first began promoting its concept of High Throughput Satellites (HTS) as the most effective way (from a market development point of view) to categorize the emerging class of multi-spot beam, high frequency reuse satellites and payloads, the pace of change in how the industry views HTS has changed quite quickly by the standards of our modern, Internet-driven world.

When NSR first introduced the concept of HTS five years ago, 95% of the industry would automatically equate an HTS to a Ka-band, multi-spot beam satellite along the lines of 100 Gbps of total throughput to be used almost solely for satellite broadband access services like HughesNet, Exede, or Tooway. This was never NSR’s definition of an HTS. For NSR, an HTS could use any frequency (e.g. Ku-band for example as in the case of Thaicom-4), could have relatively small to relatively large total throughputs that were a function of the amount of allocated frequency on orbit and reuse of that frequency, and could technically serve any commercial satellite application or service that is today addressed by classic FSS C-band and Ku-band capacity.

And, in fact, NSR’s definition of a High Throughput Satellite has held up remarkable well over the last years as the bulk of the industry has begun to truly realize that HTS are not just for satellite broadband access services. This paradigm shift in thinking in the satellite sector has occurred as more and more people accept the position that HTS capacity could have incredible potential in changing the fundamental cost equation for nearly every application in the industry.

This shift started with Inmarsat’s announcement of its Global Xpress mobility service, and this was replicated, on a smaller scale, by Telenor with its Thor-7 satellite. In parallel, Thaicom’s bulk leasing deals of Thaicom-4 capacity to Japan’s SoftBank and MEASAT mainly for backhaul and rural connectivity opened the industry’s eyes to new market opportunities for HTS capacity. Numerous other events continued to reinforce this change in perception and, finally, the shift truly crystallized in June 2012 with Intelsat’s announcement of its new EPIC product based initially on two new satellites that will have a combination of classic widebeam and HTS payloads.

Bottom Line

The paradigm shift in the industry mindset over the last year has brought into clear focus the potential the satellite sector has to fundamentally challenge the classic dynamic of satellite being seen solely as the “high cost” and “last resort” solution for most data services. These recent trends for HTS capacity show that satellite is ever more competitive with, and on occasion superior to, terrestrial data services and has the potential to not only grow many existing satellite markets, but to also create new services, some of which today we probably can’t even imagine what they will be.

In reinforcing NSR’s view on HTS, the key bottom line takeaways regarding these changes are:

  • Depending on the core market targeted by a satellite operator for a new HTS, the cheapest possible cost per bit is not always the main driver for designing an HTS payload. For some applications, clients are willing to pay more per bit if they can obtain some other advantages like backwards compatibility with existing equipment in order to make the most of sunk investments.
  • The HTS payload needs to be sized appropriately to the target market and expected demand. Smaller HTS payloads can see a better ROI than a larger HTS payload that only manages a small amount of its capacity truly leased, even if the larger technically provides cheaper capacity.
  • The industry will likely see a bifurcation of HTS into two main categories. First will be those with integrated space/ground segments, and the second will be open space segments meant mainly for wholesale capacity leasing. The choice between these two options will depend on the core markets targeted by the HTS operator.