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Ground Rules for Capturing the HTS Opportunity

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  • 1. 1 Ground Rules for Capturing the HTS Opportunity October 2012
  • 2. 1 With the advent of High Throughput Satellite (HTS) technology, the satellite industry is poised to enter a new era of innovation and possibility – one in which the challenges of quality, reliability and cost have been overcome, and satellite is poised for exponential growth and mass adoption. However, while HTS brings considerable opportunity, it comes with its own set of challenges. New satellite architectures. One of the primary issues the industry must face is the introduction of new, complex satellite architectures. Satellite operators are choosing different architectures to get the most out of the markets and geographic areas they want to serve. The first architecture model to emerge is the Ka-band spot beam satellite. To gain throughput improvements, these spot beams continuously re-cycle frequency on the remote side, while connecting through a feeder link to a hub infrastructure. Other models that have recently debuted are combined spot/wide beam Ku-band satellite and MEO fleets. The reality today is that HTS satellites encompass a wide range of different bands, beam sizes and earth orbits – each with distinct strengths and unique physics. And the industry must adapt to these new complexities. New business models. HTS satellite architectures will impact the value chain – namely, who owns and manages infrastructure and who owns and manages customer relationships. That means new business models will emerge for bringing HTS capacity to market – from managed services developed by satellite operators and delivered through service providers to new levels of infrastructure sharing and collaboration. And these will co-exist with traditional business models. Success will require flexibility to adapt to any business model present or future. Higher end user expectations. The HTS era will usher in a new wave of end user expectations. They’ll demand connectivity that can flawlessly handle high bandwidth applications. They’ll expect better price points on service and equipment. They’ll need a network that can seamlessly, quickly and affordably scale across any geography and support any application. Satellite technology must also be easy-to-use and deploy and designed precisely for their business and operating environments. And everything must combine to deliver a reliable, high-quality experience and deliver carrier-class reliability.
  • 3. 2 The role of next-generation ground infrastructure As satellite operators and service providers chase the HTS opportunity, they need ways to grow affordably and respond quickly to new market opportunities. This means finding ways to leverage their current infrastructure to enter the HTS market while building out new infrastructure in line with demand. It can’t be a rip and replace solution. More than ever, they’ll need to manage an integrated portfolio. All this gives new importance to the capabilities of ground infrastructure. Ground infrastructure must enable the entire value chain – satellite operator, service provider and end user – to capitalize on these opportunities in the most profitable ways with maximum choices, flexibility and value. As networks become more complex, ground infrastructure must be able to deal with it. This paper will detail how this can be achieved. And in particular, it will examine how the iDirect Platform – from its original design to its next-generation capabilities – presents the best opportunity for satellite operators and service providers to capture the HTS opportunity while managing their existing deployments. How we got here – advances on the ground For many years, satellite was considered an expensive, inflexible, and inefficient technology that wasn’t sophisticated enough to handle complex applications. Ground infrastructure developers responded to this challenge by making significant technological strides in the past decade, bringing satellite to more users than ever before. The key development was the shift toward IP-based satellite systems. iDirect introduced this significant change, and positioned satellite as a solution for high-quality and reliable connectivity supporting sophisticated applications – not just basic data access. From this foundation, iDirect developed an IP-based communications platform comprising a satellite hub and line card system, operating and management software, and remote routers. Through the iDirect Platform, network operators and service providers could offer carrier-class quality. And they had a full suite of tools to optimize their networks, grow their revenue and lower their business costs. This shift fundamentally redefined the capabilities of satellite, leading to a significant increase in demand. Satellite suddenly had newfound relevance as a form of reliable, immediate connectivity that could extend high-speed, secure connectivity to any geography, environment or communications application. Yet there remained a serious challenge. Ironically, as end users embraced satellite communications, it placed a strain on already limited capacity. This undersupply of capacity – coupled with the additional costs of purchasing, installing and managing hardware – kept the price for satellite service high and hindered much broader adoption. “Ground infrastructure must enable the entire value chain – satellite operator, service provider and end user – to capitalize on these opportunities in the most profitable ways with maximum choices, flexibility and value.”
  • 4. 3 the launch of HTS coupled with significant advances in small cell technology makes satellite a much more affordable option for mobile operators to cost-effectively fill coverage holes in more developed markets. Estimates suggest that HTS operators will be able to offer bandwidth at one third of the price, making it economically feasible for mobile operators to expand 3G coverage to all areas that have demand. Furthermore, the influx of new HTS capacity will bring down the price of traditional Ku- and C-band satellite capacity, making traditional satellite backhaul more affordable. The U.S. Department of Defense has also expressed great interest in HTS for military and defense applications. With shrinking DoD budgets and greater satellite bandwidth demands generated by Intelligence Surveillance and Reconnaissance (ISR) video missions, the DoD is looking toward commercial HTS to augment its existing Wideband Global SATCOM (WGS) fleet. The worldwide coverage and powerful and consistent EIRP contours of HTS make the solution ideal for airborne ISR missions. In addition, HTS will allow the DoD to leverage the commonality of the commercial portion of Ka band with the WGS constellation. Furthermore, the high capacity steerable beams available on HTS offer the DoD a highly flexible “bent pipe” capability, which is compatible with any existing MIL-STD 188-165 FDMA modem. HTS Capacity Launches (Gbps) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 180.0 160.0 140.0 120.0 100.0 80.0 60.0 40.0 20.0 0.0 Gbps 11.0 44.0 10.0 10.5 5.4 0.0 72.3 150.0 156.7 170.0 26.7 40.5 Source: NSR Where we’re going - advances in the sky Today, operators are solving the challenges of bandwidth availability and price by launching next-generation high throughput satellites (HTS). These satellites will deliver significantly higher data speeds at lower costs. According to NSR, HTS satellites are going to supply at least 1.6Tbps of capacity by 2020. COMSYS projects that Ka- and Ku-band HTS will account for 90% of all available bandwidth by 2015. HTS, coupled with rising demand for satellite, will change our business on an order of magnitude never seen before. End users will gain greater access to satellite communications at lower price points. Markets that have been developing will hit new levels of growth. And markets that have been somewhat out of reach will now be open to what satellite can deliver. For example, in the maritime industry, companies that have been holding off on the technology over cost concerns will reconsider its strategic value. HTS will open up an untapped segment of the maritime market that includes small to mid-sized shipping companies, fishing vessels, yachts, and other specialized vessels. Meanwhile, for current users, HTS offers the ability to quickly increase the flexibility of their existing investment in satellite or expand their network to more of their fleet at a lower cost. While mobile operators have increasingly turned to satellite for use as a cellular backhaul solution in remote and rural markets,
  • 5. 4 Figure 1: Universal IP Hub The new imperative: aligning ground and sky infrastructure to deliver HTS capabilities The demand for innovation now shifts back to ground infrastructure providers. How will these providers advance their platforms to enable satellite operators and service providers to best capture the HTS opportunity while managing their existing deployments? At iDirect, our goal is to ensure that the entire satellite value chain can take advantage of the HTS opportunity in the most profitable way, gaining the highest value across multiple markets, with maximum flexibility and minimum risk. So what does an HTS platform look like? There are five foundational requirements: • Universal IP hub that can support all frequencies and all satellite architectures • Infrastructure that can scale with demand and flexibly support diverse business models • Carrier-class service reliability • Easy to use, easy to deploy terminals engineered to meet distinct end user needs • Single management system to make large-scale deployments manageable and that automates, optimizes and integrates NOC applications Each of these requirements validates the core design of the iDirect Platform while driving our next chapter of innovation. Universal IP hub With HTS, satellite operators and service providers will need to manage an increasingly diverse and integrated network portfolio that spans traditional, HTS, MEO and GEO satellites; integrates bandwidth across multiple bands and beams around the world; supports legacy deployments and new growth; and meets the needs of any network size, application and bandwidth requirement. iDirect has worked to support this reality for years through its universal hub and line card system, which can connect to any satellite architecture, support any frequency and integrate into a terrestrial IP-based network that is backed by carrier-class redundancy – at both the earth station and hub component level. With the iDirect hub, it is possible to support any business model, as explained in greater detail in the next section.
  • 6. 5 Ability to expand cost-effectively and leverage multiple business models The iDirect platform consists of a hub chassis which is designed to be populated with network line cards in a pay-as-you-grow manner. With HTS bringing much more capacity and performance into the mix, iDirect is enhancing its platform to support significantly greater scale. Line cards will be able to handle exponentially more bandwidth and symbols, reaching data rates in the tens of Gbs. With these improvements in scale, satellite operators and service providers can leverage a consistent hub infrastructure to reliably deploy high-bandwidth networks exceeding hundreds of megabits per remote site and/or large-scale networks including hundreds of thousands of terminals. With iDirect’s hub and line card system, satellite operators and service providers can leverage their existing infrastructure to launch and scale HTS networks. Imagine you have a hub in Africa, and it’s supporting Ku- and C-band capacity. A new Ku-band high performance satellite becomes available, which uses a spot beam overlay to expand coverage. To tap into this capacity, you can simply add new line cards – ones that have Figure 2 VNO Figure 3 been engineered for high throughput bandwidth – to your existing hub infrastructure. You can then continue to add line cards and hubs as demand increases. See figure 2 Imagine now that you want to add capacity in the Middle East through a Ka-band high throughput satellite. This satellite has a common feeder link that is only accessible from the satellite operator’s teleport. To launch a network, a service provider can co-locate a hub within a satellite operator’s teleport – and then add line cards to light up spot beams. See figure 3 Another option is a VNO model, in which a service provider simply buys a line card and leases hub space from a satellite operator. A service provider can also distribute a managed service from a satellite operator – avoiding capital costs altogether, simplifying operations, and entering new markets faster. These options represent flexible business models and go-to-market approaches. And it’s critical that a ground infrastructure platform supports them all.
  • 7. 6 How HTS will impact the way capacity is delivered and impact satellite operator and service provider business models HTS business models comprise six key elements: a satellite operator, teleport facility, hub infrastructure, network operations, service provider and end users. Managed Service Model. Due to the economics of the ground segment infrastructure needing to be centrally located within the feeder link, the first HTS satellite offerings were marketed as a managed service. The satellite operator owned and operated all infrastructure and network operations, relying on distributors to re-sell its service and manage customer relationships. In this model, satellite operators assume responsibility for infrastructure and network management. Service providers have a narrower operations focus, but also a smaller capital outlay. And they gain speed to market – as they can immediately access and market HTS capacity. Vertically Integrated Model. Several satellite operators are also developing a vertically integrated service. In this model, a satellite operator owns and operates the entire value chain: the satellite, teleport, hub infrastructure, network operations, service provision and customer relationships. Hub Co-Location Model. If a satellite operator wants to lower opex and capex, it can develop a shared infrastructure model. A satellite operator can also invite a service provider to co-locate a hub in its teleport. The service provider has greater control and higher margins, while the satellite operator is able to establish an accelerated path to market by gaining access to service providers that are ready to purchase significant amounts of HTS bandwidth. Virtual Network Operator (VNO) Model. Other satellite operators have chosen to offer a VNO model through which they lease hub space to a service provider. The service provider only needs to purchase a line card to establish an HTS service and has full control of its own network and end users. This is an attractive model for service providers that want to lower their investments while getting quick access to the HTS market and expand in response to demand. Advantages Disadvantages Advantages Disadvantages Vertically Integrated • Highest margins • Highest total investment • N/A • N/A Business Model Satellite Operator Service Provider • Lower capital investment • Accelerated path to market – service providers ready to take bandwidth • Lower capital investment • Accelerated path to market – service providers ready to take bandwidth • Lower margins • Lower margins • Branded service • Dictates service levels • Maintain full control of network • Moderate capital expenses • Higher margins • Branded service • Dictate service levels • Maintain considerable control and differentiation • Low startup expenses • Scale with demand • Restricted to satellite operators’ teleport locations • Hub is local to feeder link • Restricted to satellite operators’ teleport locations • Hub is local to feeder link • Lower opex • Distributors provide sales and marketing support • High capital investment • Scale service rapidly • Global coverage • Low capex • Less management control at NOC • Less margin Managed Service Hub Co-Location VNO
  • 8. 7 Carrier-class service reliability As operators and service providers position HTS satellite as a mainstream technology, it is critical that they deliver carrier-class service reliability. In part, this means that a network should also provide sophisticated Quality of Service (QoS) features so that satellite operators and service providers can easily prioritize traffic for customers in a shared network environment. Carrier-class service reliability also means that ground infrastructure must ensure maximum availability. A network must automatically optimize inbound and outbound traffic for high performance under any condition – adjusting to weather, beam location and terminal size. And it requires hub diversity to overcome rain fade and hub redundancy to ensure network failover. Range of easy to use, high-performance terminals engineered to meet distinct end user needs Whether it’s an enterprise user that needs access to high-speed Internet, a military unit that needs streaming reconnaissance video, or an offshore oilrig that needs to connect with land-based headquarters to improve operations, a reliable link to advanced broadband IP data is a must. Fortunately, all these scenarios will be possible with the launch of high-performance satellites, and, more specifically, the development of diverse remote terminals that are designed with end users in mind. iDirect is committed to enhancing its already diverse remote portfolio and plans to introduce major processing gains – Figure 4: Hub Diversity/Redundancy Figure 5: Wide Range of High-Performance Terminals offering data rates that span from kilobits per second for SCADA applications, to tens of mega bits per second for enterprise, and even hundreds of mega bits per second for trunking applications. iDirect terminals will be smaller, easier to install and quicker to deploy. They will also become more integrated, as antenna manufacturers begin to build all the infrastructure and functionality into a more contained unit. Collectively, these enhancements to the remote terminals will significantly reduce the capex required to deploy a VSAT network, which will increase the number of first-time VSAT users.
  • 9. 8 Single management system to make large-scale deployments manageable and that automates, optimizes and integrates NOC applications Satellite operators and service providers will need to manage their entire HTS deployments, as well as their non-HTS deployments, through a single Network Management System (NMS). This NMS must be able to scale to any size network and create a seamless interface between network and business operations. The iDirect NMS is a single Web-based system that integrates across all networks and syncs with an operator’s business operations, such as provisioning, OSS and BSS. It automates NOC activities and provides extensive monitoring and analysis features that enable operators to optimize their networks and increase customer satisfaction. Further, critical NMS functionality can be extended to end-users and customized features can be developed based on unique requirements. A future of collaboration and innovation The next generation of satellite communications will introduce landmark changes that build on a decade of innovation and overcome longstanding cost and availability challenges that have limited market expansion. Satellite communications will become easier and more cost-effective to manage, positioning satellite as the logical answer to a much wider variety of users and applications, delivering the kind of constant connectivity that the world has been demanding for years. To succeed in the future, satellite operators and service providers must choose the right mix of HTS business models and be able to integrate them with their existing non-HTS networks. They must become more market-driven to meet increasing end user demands. And they need an easy way to scale and manage their operations and greater flexibility in how they go to market to capture the most opportunity while minimizing risk and investment HTS represents a tremendous strategic opportunity for satellite operators and service providers to achieve unprecedented levels of growth. iDirect has studied the HTS market thoroughly, and we have designed our technology to meet the key requirements most critical for success. As demand for satellite communications accelerates in the HTS era, iDirect will continue to lead the way in developing high-performance, easy-to-use, and cost-effective ground infrastructure technology that pushes the entire satellite industry forward and achieves our vision of advancing a connected world. The iDirect Next-Generation Evolution Platform • Highest performance, service availability and reliability • Broad range of remotes and terminals that are powerful, compact and easy to use • Infrastructure optimized for all frequencies, all networks • Single, Web-based management of all customers no matter what infrastructure Single Network Management System Monitors Networks Manages Service Performance Integrates with Business Systems (OSS/BSS) Automates NOC Operations
  • 10. 9 iDirect 13865 Sunrise Valley Drive Herndon, VA 20171 +1 703.648.8000 +1 866.345.0983 www.idirect.net Advancing a Connected World