Consolidation of Satellite Industry, Particularly VSAT Segment, Seen Necessary

Despite about 10 VSAT services provider deals annually since 2016, it’s still a highly fragmented industry, said Eric Le Proux, Trinity Advisers managing partner.

The C-band could end up funding satellite industry consolidation, with Intelsat, SES and perhaps Telesat ending up with sizable piles of cash they could use for M&A, said Susan Bull, Comsys consultant. Mark Brady, managing partner at small satellite startup Clarke Belt 2.0 Project, said the consortium of satellite operators pursuing clearing 100 MHz of the C-band for terrestrial 5G use shouldn't sell rights to that spectrum without getting an equivalent long-term benefit from the terrestrial industry. He said an example is a route to contiguous frequencies between mobile and satellite, "which would open up the market for all of us."

While 5G is a big business opportunity for satellite, extending the reach of 5G to rural and suburban areas more cheaply than the huge numbers of small cells that would be required, the satellite industry faces a fight to guarantee it has co-primary status in the 28 GHz and 40 GHz bands, said Hughes Senior Vice President-International Ramesh Ramaswamy. Without that, he said, "We can take our toys and go home."

"Cellular coverage sucks," BridgeSat CEO Barry Matsumori said to scattered applause, on a question about how satellite can compete in areas like IoT and connected car and with moves to extend cellular coverage offshore. Matsumori said cellular has limited coverage and "takes the cream of the crop" in terms of markets and customers. He said it will be challenging for the space community to compete with cellular unless the cost base comes down or efficiency increases.

Dynamic Spectrum Alliance President Kalpak Gude said spectrum pricing is driven in large part by spectrum policy, because giving dedicated bands to users creates scarcity even though that dedicated spectrum isn't being used 24/7 in all places. He said the world is moving toward more densification of use, and that changed approach will drive greater spectrum use and cheaper spectrum. "There's never going to be enough spectrum," Matsumori said, adding that millimeter-wave spectrum and optical options -- like what BridgeSat is pursuing -- are "release valves."

Bull said satellite bandwidth costs are dropping due to telco competition and satellite operators going head to head, driving pricing down even in markets without a competitive alternative. Pricing per megahertz has gone from $5,000 in 2011 to a few hundred dollars in 2017, and satellite operator margins are now negative, Bull said. VSAT operator margins are still in the black, but shrinking, Bull said.

Traville Group CEO Michael Pollack predicted “a lot of failures” among planned non-geostationary orbit constellation plans, particularly among startups without operational experience in satellite. He said there's "silly money" being spent by the Silicon Valley venture capital community on some space areas.

Telesat Vice President-Global Sales Tom Eaton said its Ka-band low earth orbit constellation will go up starting in 2022, first with 100 satellites and coming into full operation at 300 satellites. He said Telesat is deliberately trying to keep the constellation as small as possible to keep capital and operational costs down.

There was some back and forth over high-altitude platforms stations' competitive threat. Aurora CEO Chris Hill raised the idea HAPS could end up cherry-picking particular lucrative markets from satellite. Others waved off HAPS applications as primarily limited to areas like government or disaster relief. “I’m not a believer” in HAPS as a long-term growth market, Pollack said.