Northern Sky Research

What HTS, From Where, to Whom for Energy Markets?

Apr 23rd, 2015 by Brad Grady   More from this Analyst | Profile

The Constellation Question is on the mind of the entire satcom industry – Will these new systems cannibalize existing and planned HTS offerings?  And, how will key markets like the Oil & Gas/Mining/Electrical Utility sectors respond?

There is no doubt of the potential for disruption, if even one of these new systems come online in the next ten years there will be a significant amount of new capacity to enter the market.  According to NSR’s latest tally, announced HTS supply from GEO, MEO, and LEO could range from 2,500 Gbps to 25,000 Gbps by 2023 – all at a time when the energy sector continues to demand more and more data in more and more places.  But –does the new capacity translate into a death-sentence for the current and planned offerings which are already in the pipeline within the Energy Sector?

Short answer, No.  Long answer is it will highly depend on the type of offerings from the Non-GEO HTS players to truly gauge the full impact of these offerings.  There will be cannibalization - that is unavoidable.  For higher-end GEO-HTS sites such deep water drilling operations or larger mining locations who are already purchasing a significant amounts of per-site capacity, it would not be a large stretch to move into a model whereby they have to ‘purchase the beam’ (or at least a significant portion of one.) 

The amount of cannibalization vs. market expansion for the energy markets specifically will be highly sub-sector dependent, and even down to individual end-users and their unique operating conditions.  For example, it is unlikely that the distribution Oil & Gas segment will take advantage of Non-GEO HTS capacity (and be a minimal user of HTS capacity in general).  Same can be said for the Electrical Utility segment.  Short of UltraHD-based video monitoring, there is simply not enough concentrated bandwidth demand to justify leasing a significant amount of capacity at these locations.

On the other hand, Offshore Support Vessels will range the spectrum of throughput and pricing requirements.  Everything from narrowband MSS applications for a smaller workboat to Non-GEO HTS capacity on an advanced seismic vessel are possible within the segment.  Add-in regional differences of available capacity, unique operating locations or transit paths, and some combination of services will be required to meet communications demand.  There will not be a ‘one size fits all’ package within the OSV market.  GEO-HTS might come close to a ‘one-size fits most’ through a flexible combination of coverage, and price.  For Non-GEO HTS, it will be a careful balance of wants vs. needs vs. costs.

Although one could paint a picture of the declining importance of FSS or even MSS, the real answer to “From where” is “everywhere”, and “What HTS” is “it depends.”  It depends on the importance of overall throughput – It is going to be difficult for GEO-HTS offerings to practically match the potential throughputs available on some of these proposed Non-GEO HTS offerings.  It depends on how much ‘automation’ is really occurring at the remote site, and how quickly information needs to be processed, and actionable to on-shore locations.  It depends on advancements in antenna terminals to reduce the complex ground infrastructure to connect to Non-GEO systems.  Overall, to expand beyond the high-end locations it could depend on a lot of factors.

Bottom Line

The ball is in the court of Non-GEO HTS capacity operators and service providers to capitalize on lower latency and higher throughput requirements found in the higher end segments of the energy market.  But, to move beyond those end-users, they’ll likely need to either match existing pricing levels (on a total monthly basis, not per-mbps) or sell capacity in chunks that these end-users can afford.  That crucial dynamic will continue to enable FSS and GEO-HTS capacity to survive a potential tidal wave of capacity.