Analysis of the global satellite backhaul market april 2015
1. Analysis of the Global Satellite Backhaul Market
Economic Growth in China and India Drives New Demand for
Satellite Services
April 2015
9ABF-66
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Contents
Section Slide Number
Executive Summary 3
Definitions 8
Satellite Backhaul Analysis 10
Regional Analysis 14
The Last Word 25
The Frost & Sullivan Story 28
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• 2G and 3G cellular services continue to drive global cellular expansion due to the high
quality of services for voice capabilities (2G) and high-bandwidth data capabilities (3G).
However, many remote or difficult to cover locations around the world remain unconnected.
This is due to the expense associated with expanding traditional backhaul technologies
(fiber and microwave) over vast distances and adverse geological conditions.
• Mountainous regions, vast landscapes without infrastructure, water bodies, and densely
forested barriers contribute to the difficulty of expanding fiber technology or achieving line
of sight (LOS) with minimal hops for microwave technology. As a result, satellite technology
(primarily Ku- and Ka-band) is currently favored by cellular operators as the technology of
choice for quickly and efficiently connecting remote locations.
• Other vertical markets and use-cases also have a significant impact on the growing need
for satellite backhaul to enable cellular connectivity. The growing mobile workforce and the
need to always remain connected are directly influencing the need to expand cellular
networks to previously unconnected locations.
• Oil and gas drilling and exploration, as well as other in-the-field jobs continue to have a
similar effect on the industry. These solutions often include mobile cellular towers that can
be transported from one site to another to quickly enable connectivity in any location
around the world.
Source: Frost & Sullivan
Executive Summary (continued)
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Executive Summary (continued)
Source: Frost & Sullivan
• Emergency and backup communications are a growing application for satellite backhaul
services; particularly in locations which already have significant cellular connectivity. These
solutions are typically owned and operated by the cellular operators themselves, coupling
mobile cell-towers with a satellite backhaul solution, which can typically be transported via
a van or a large truck.
• These mobile solutions will continue to grow in importance as natural and man-made
disasters often disrupt or disable cellular connectivity, leaving people in the dark and
without any communication.
• Portable solutions such as these are not only used for emergency situations but planned
events as well, aiding the existing, traditional cellular technologies by offloading some of
the traffic. When events are planned, and if the location has a significant population
density, mobile satellite solutions can be brought in to prevent degradation of service, loss
of service, and slow performance or decreased end-user experience.
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Executive Summary (continued)
Source: Frost & Sullivan
• With a low CAGR of 0.7%, North America has the lowest demand for satellite backhaul due
to its industry leading land-line and cellular networks.
• Latin America is significantly larger than North America, and is expected at a strong CAGR
of 4.5% during the forecast period.
• Due to the diversity in governments, economic performance, and existing infrastructure,
the EMEA region is expected to grow a modest $7 million over the next 7 years.
• APAC currently leads the satellite backhaul market with a CAGR of 6% due to the growing
economies and the need to connect more people than any other region.
• The ROW region includes many locations that would benefit from satellite technology.
However, cost and current economic performance of these locations have limited adoption
to a CAGR of 3.9% during the forecast period.
• Hughes, Gilat, and Intelsat continue to drive the satellite backhaul market globally due to
their vast global footprints, high-performance technology, and the ability to fulfill large-scale
communications projects at the country level.
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Frequency Band Potential for Mobile Satellite ApplicationsBandwidth
Cost for Service
Ku
Ka
C
X
S&L Ideal bandwidth and price.
However, antenna size limits
its usefulness for mobile
applications.
It has potential, mostly in the
government market (for
which X band is typically
used).
Main drawback is price, and
the speed is unnecessary for
most mobile applications.
Ku is versatile and may be used
where more bandwidth is needed
(although Ku congestion could
limit the push for high-volume Ku
M2M).
Low cost and low bandwidth
make both S & L bands ideal
for M2M applications.
Due to the high-quality of service/high bandwidth, Ka- and Ku-band satellite
technologies are most commonly used for backhaul applications. Source: Frost & Sullivan
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Definitions
• VSAT or very small aperture terminal refers to any fixed, two-way satellite communications technology
that utilizes C-band, Ku-band, or Ka-band frequencies. Thus, VSAT ranges drastically in dish size,
power needs, bandwidth, and interference from weather.
• Frequency ranges for these technologies increased from C-band to Ku-band and Ka-band. Therefore,
Ka-band has the most bandwidth, but it also suffers from the most rain attenuation; while C-Band is at
the opposite end of the spectrum (and Ku-Band is in between).
• Cellular network technologies such as HSPA+, EVDO Rev A, and LTE are used to connect modern
mobile devices with voice, SMS, and data services. These technologies are backhauled by different
technologies, which may include satellite, depending on the conditions of the cell-tower deployment.
• Satellite backhaul in this research refers to satellite services which are used to enable cellular
communications. Satellite services for this application are typically Ku- or Ka-band VSAT satellite
technology. Cellular technologies backhauled by Ku- and Ka-band satellite technology typically consist
of 2G and 3G technologies (for both voice and data), and sometimes 4G. Additionally, satellite
backhaul can either be used as a permanent means for connecting cell towers in some areas or as a
temporary measure to expand networks—to supplement existing networks, to enable communications
in remote locations as needed, or to enable communications in emergency situations.
• This research covers VSAT technology which is used as backhaul for cellular 2G, 3G, and 4G
technologies.
Source: Frost & Sullivan
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Revenue Forecast
0.00
100.00
200.00
300.00
400.00
500.00
600.00
2013 2014 2015 2016 2017 2018 2019 2020
Revenue 319.03 328.73 339.84 352.72 367.33 383.38 401.14 420.56
Revenue($Million)
Year
• The satellite backhaul market is anticipated to grow by $101.53 million from 2013 to 2020.
• Forecasts in this research were calculated from primary and secondary sources for the VSAT market,
coupled with regional trends, economics, and existing communication technology penetration.
Total Satellite Backhaul Market: Revenue Forecast, Global, 2013–2020
CAGR (2014–2020): 4.2%
Note: All figures are rounded. The base year is 2014. Source: Frost & Sullivan
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Global Satellite Backhaul Discussion
The satellite backhaul market is growing steadily with a global CAGR of 4.2%. Much of this
growth comes from China, India, Russia, Latin America, and the Middle East.
Unlike most other satellite related markets, North America does not have a large presence in
this market due to a lack of significant need for alternative backhaul technologies. This is due
to the robust existing infrastructure of the region and lack of remote/difficult to connect
locations.
Hughes, Gilat, and IntelSat continue to dominate this market due to their global reach,
high-bandwidth/high-quality of service, competitive pricing, and industry reputation.
Ensuring a global footprint, physical presence, and expertise within adopting and potential
adopting countries are becoming increasingly important for new revenue growth for
satellite-enabled cellular backhaul.
Source: Frost & Sullivan
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North America—Revenue Forecast
Due to a lack of necessity from robust existing landline and cellular networks, North America
will experience only a slight growth during the forecast period.
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
2013 2014 2015 2016 2017 2018 2019 2020
Revenue 3.19 3.22 3.24 3.27 3.29 3.31 3.33 3.35
Revenue($Million)
Year
Note: All figures are rounded. The base year is 2014. Source: Frost & Sullivan
Satellite Backhaul Market: Revenue Forecast, North America, 2013–2020
CAGR (2014–2020): 0.7%
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North America—Revenue Forecast Discussion
• North America, particularly the US, has the most
robust existing landline and cellular network
infrastructure globally. Thus, the demand for
satellite backhaul for cellular services is extremely
limited in this region, resulting in the lowest
overall revenue potential and CAGR.
• Despite the limited demand, satellite is used to
backhaul cellular services in some remote
locations in Alaska and Canada.
• Additionally, satellite is often used for emergency
backhaul scenarios for cellular operators in this
region.
• The vast majority of satellite backhaul
applications used for cellular network expansion
are in Canada and Alaska. There are a few
examples of this use case in the United States.
Source: Frost & Sullivan
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Latin America—Revenue Forecast
0.00
20.00
40.00
60.00
80.00
100.00
2013 2014 2015 2016 2017 2018 2019 2020
Revenue 52.80 54.20 55.89 58.12 60.68 63.62 66.93 70.61
Revenue($Million)
Year
Although cost and return on investment (ROI) can be a barrier in this region, satellite
backhaul is expected to increase by almost 18 million from 2013 to 2020.
Note: All figures are rounded. The base year is 2014. Source: Frost & Sullivan
Satellite Backhaul Market: Revenue Forecast, Latin America, 2013–2020
CAGR (2014–2020): 4.5%
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Latin America—Revenue Forecast Discussion
• Latin America includes many locations that are
underserved by existing network technologies.
Thus, unlike North America, there is a significant
need for satellite technology to enable cellular
communications in some towns and cities.
• More importantly, many of these towns and cities
are experiencing economic growth, either from
manufacturing or from oil and gas drilling and
exploration. Therefore, the need to connect more of
Latin America is growing in multiple ways, and cost
is becoming less of a barrier.
• In addition to the oil and gas market throughout
Latin America, Mexico is experiencing significant
economic growth from manufacturing for a variety
of markets. This increase in revenue and lack of
substantial existing networks make satellite an ideal
choice for increasing connectivity.
• Political unrest in this region currently could
potentially slow down the adoption of satellite
backhaul due to a shift in regional focus/priorities. Source: Frost & Sullivan
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Europe—Revenue Forecast
0.00
20.00
40.00
60.00
80.00
100.00
2013 2014 2015 2016 2017 2018 2019 2020
Revenue 84.19 85.20 86.25 87.35 88.49 89.65 90.87 92.10
Revenue($Million)
Year
Similar to North America, the European region has excellent existing landline and cellular
communications networks which limit the potential for satellite.
Note: All figures are rounded. The base year is 2014. Source: Frost & Sullivan
Satellite Backhaul Market: Revenue Forecast, Europe, 2013–2020
CAGR (2014–2020): 1.3%
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Europe—Revenue Forecast Discussion
• Although Europe has robust existing landline
and cellular networks, the diversity of
government/local economics and geographical
characteristics has created a need for satellite
technology.
• Similar to North America, satellite is most often
used as a backup technology for carriers or as a
means for supplementing existing cellular
networks which might be overburdened due to
events in locations that create vastly more
network traffic than normal.
• Additionally, Russia is quickly becoming a prime
candidate for many satellite services, including
satellite backhaul. Due to the expansiveness of
this country and the need to increase
connectivity, it is expected to be the primary
driver for new satellite backhaul growth.
Source: Frost & Sullivan
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APAC—Revenue Forecast
0.00
50.00
100.00
150.00
200.00
2013 2014 2015 2016 2017 2018 2019 2020
Revenue 122.54 127.93 134.26 141.53 149.99 159.29 169.72 181.26
Revenue($Million)
Year
With a CAGR of 6%, APAC continues to drive growth in the satellite backhaul market.
Note: All figures are rounded. The base year is 2014. Source: Frost & Sullivan
Satellite Backhaul Market: Revenue Forecast, APAC, 2013–2020
CAGR (2014–2020): 6.0%
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APAC—Revenue Forecast Discussion
• The Asia-Pacific region includes the quickest
growing economies in the world. In addition, the
existing landline and cellular infrastructure is
inferior to most of North America and EMEA.
Therefore, satellite backhaul has significant
potential in this region.
• Economic growth will be the largest driving factor
in this region, with China and India comprising
the majority of new growth for satellite services.
• Additionally, as many locations with
communications deficit are densely populated,
satellite backhaul projects in this region are often
far larger in bandwidth and subsequent revenue
than any other region.
• Australia is another quick growing region for
satellite backhaul adoption. Although Australia is
not experiencing the same economic boom as
China and India, the remoteness of many towns
and populated areas is driving demand.
Source: Frost & Sullivan
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ROW—Revenue Forecast
0.00
20.00
40.00
60.00
80.00
100.00
2013 2014 2015 2016 2017 2018 2019 2020
Revenue 56.31 58.18 60.19 62.46 64.88 67.51 70.29 73.23
Revenue($Million)
Year
The rest of world (ROW) region is experiencing strong growth for satellite backhaul due to the
remoteness of many populated areas.
Note: All figures are rounded. The base year is 2014. Source: Frost & Sullivan
Satellite Backhaul Market: Revenue Forecast, ROW, 2013–2020
CAGR (2014–2020): 3.9%
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ROW—Revenue Forecast Discussion
• The rest of world (ROW) region includes countries
with the least amount of adequate existing network
infrastructure. These countries vary considerably in
economic growth and performance, and therefore
they have inconsistent levels of satellite need and
adoption capabilities.
• In this region, shear necessity for enabling
communications to remote towns and cities will
drive adoption. There is not yet a market for
emergency cellular backup or supplemental
coverage as POP coverage is currently so low that
expansion is the driving factor.
• Africa is notable in the ROW region due to the
extremely low level of existing landline and cellular
communications coupled with vast distances
between populated areas.
Source: Frost & Sullivan
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The Last Word—3 Big Predictions
2
Improving economic conditions in locations where existing landline and
cellular infrastructure is lacking continue to be the largest driver for satellite
backhaul.
3
Disaster preparedness and temporary supplemental coverage prevent
satellite backhaul from declining in locations nearing 100% POP coverage
for their cellular networks.
1
Ku- and Ka-band satellite frequencies continue to evolve and expand the
capabilities for satellite, making VSAT a growing technology for backhaul
services.
Source: Frost & Sullivan
