Global Consumer Satellite Broadband Internet Market The Beginning of Global Ka-band Coverage and its Growing Impact on the Global Market November 2011
Contents Introduction 7 Executive Summary 17 Market Dynamics 22 Market Forecasts 27 Competitive Structure and Market Share Analysis 35 Summary of Major Findings and Strategic Recommendations 40 About Frost & Sullivan 43 4
List of Figures Global Consumer Satellite Broadband Internet Market: Internet Service Speeds and Prices (North America), 2010 15 Consumer Satellite Broadband Internet Market: Competitive Environment (Global), 2010 18 Consumer Satellite Broadband Internet Market: Impact of Top Three Industry Challenges (Global), 2010 24 Consumer Satellite Broadband Internet Market: Market Drivers Ranked in Order of Impact (Global), 2010 25 Consumer Satellite Broadband Internet Market: Market Restraints Ranked in Order of Impact (Global), 2010 Consumer Satellite Broadband Internet Market: Total Market Forecast by Subscribers, Revenue, and ARPU (Global), 2010-2017 Consumer Satellite Broadband Internet Market: Market Forecast by Subscribers, Revenue, and ARPU (North America), 2010-2017 Consumer Satellite Broadband Internet Market: Market Forecast by Subscribers, Revenue, and ARPU (Europe), 2010-2017 Consumer Satellite Broadband Internet Market: Market Forecast by Subscribers, Revenue, and ARPU (Asia), 2010-2017 26 29 30 31 32 5
List of Charts Consumer Satellite Broadband Internet Market: Frost & Sullivan s Market Research Methodology Diagram (Global), 2010 9 Consumer Satellite Broadband Internet Market: Regional Market Lifecycle Analysis (Global), 2010 19 Consumer Satellite Broadband Internet Market: Market Share by Subscribers (Global), 2010 20 Consumer Satellite Broadband Internet Market: Market Engineering Measurements (Global), 2010 23 Consumer Satellite Broadband Internet Market: Forecast of Service Revenue by Region (Global), 2010-2017 33 Consumer Satellite Broadband Internet Market: Forecast of Users by Region (Global), 2010-2017 34 Consumer Satellite Broadband Internet Market: Company Market Share by Subscribers (North America), 2010 37 Consumer Satellite Broadband Internet Market: Company Market Share by Subscribers (Europe), 2010 38 Consumer Satellite Broadband Internet Market: Company Market Share by Subscribers (Asia), 2010 39 6
History of Satellite Broadband Internet Access Satellites have provided Internet access to remote locations for business and government customers for xx years with services first marketed to household consumers in the United States in 2001. Before 2001, providers treated these households like enterprises, and they would have to pay as much as enterprises for high-speed satellite Internet service. Only very high-income households could afford this rate. The U.S. market is xx.x percent of the global market for consumer satellite Internet access. The U.S. market is already a decade old, and Europe and Asia have services that have been offered in most countries for the past few years. There are not consumer satellite Internet service offerings in Latin America and Rest of World regions. It is unlikely that providers will launch service offerings before the end of 2017 in these markets. Source: Frost & Sullivan analysis. 11
Current Market Trends Satellite broadband Internet subscriber adoption is driven by a lack of alternative Internet access services. Consumers select satellite broadband Internet service when there is no other broadband alternative services due to satellite broadband Internet access historically lower speeds and higher prices relative to terrestrial alternatives. Current consumer satellite high-speed Internet service costs roughly twice that of comparable wireline alternatives but is still relatively affordable for middle- and working-class households in the developed world. Most consumer satellite service plans cost between $xx and $xxx per month and offer download and upload speeds of x to x.x megabits per second (Mbps) and xxx to xxx kilobits per second (Kbps), respectively. A table comparing satellite to competitive access alternatives is presented on the next slide. Source: Frost & Sullivan analysis. 12
Future Market Projections New higher throughput Ka-band satellites have the potential to revolutionize the satellite broadband Internet industry. These satellites are able to serve hundreds of thousands, and even millions, of consumers. Wireline telecommunications lines to remote homes and businesses exist in a majority of the developed world. Countries that began economic development and industrialization over the past several decades or have yet to modernize do not have a similar wireline infrastructure. For example, the United States has 2 wireless lines for every wireline, whereas India has xx wireless lines for every wireline. Even though the number of wireless lines exceeds that of wirelines in emerging markets, satellite broadband Internet access will be more accessible and cost effective than either wireless or large fiber rollouts. Consumers in developing nations generate a lower average revenue per user (ARPU) than in developed nations. Therefore, longer payback periods for wireline and wireless infrastructure investments will spur the growth of satellite broadband Internet in emerging markets. Source: Frost & Sullivan analysis. 13
Future Market Projections (continued) Satellite broadband is going global: Companies in North America that provide satellite broadband Internet access, such as ViaSat's subsidiary, Wild Blue, and the market share leader, Hughes, have grown in the last several years. The market in North America reached the one million subscriber milestone in early 2010. The world market for consumer satellite broadband Internet service is $x.xx billion per year with xx.x percent of the market in North America. Over the next decade, the market will grow rapidly, attracting more subscribers and generating more revenue. Subscription rates and market revenue in Europe will overtake rates and revenue in North America. Hughes and ViaSat are selling their Ka-band satellite broadband Internet technology to Avanti and Eutelsat, respectively, in Europe. They will launch collectively three satellites over the next few years. Currently, the market in Europe has xx to xxx million households that depend on satellite service for Internet access. New Ka-band satellites offer the potential for satellite broadband Internet service providers to compete with the pricing and speed range of DSL Internet services. Source: Frost & Sullivan analysis. 14
Satellite Internet Service Pricing Comparison Consumer Satellite Broadband Internet Market: Internet Service Speeds and Prices (North America), 2010 Service Type Download Speed Upload Speed Price per Month Fiber xx Mbps xx Mbps $xx.xx Cable xx Mbps xxx Kbps $xx.xx DSL x Mbps xxx Kbps $xx.xx Satellite x.x Mbps xxx Kbps $xx.xx Dial-Up xx Kbps xx Kbps $x.xx The chart lists mid-level speed and pricing for each service type. The prices were taken from U.S. Internet service provider websites. For each category several companies were used when possible to get a current industry snapshot as of Q1 2011. The listed prices vary depending on promotional specials and whether the user purchases other communication products, such as wireline or wireless telephony. Pricing can vary greatly from nation to nation for the same satellite service from the same carrier using the same satellite because of tariffs and other business reasons. Most of these prices can be xx.x percent to xx.x percent lower if a subscriber signs a long-term contract. Contracts are typically one to two years. Use of customer premise equipment (CPE) for each type of service may result in an additional charge, but use is often complimentary with a long-term contract; installation pricing follows guidelines similar to CPE pricing. Note: All figures are rounded; the base year is 2010. Source: Frost & Sullivan analysis. 15
Market Technology Changes Ka-band begins to impact the existing market: Ka-bands could potentially offer customers lower prices and higher bandwidth speeds than services that use C- and Ku-bands. These bands also require equipment with smaller antennas. Fixed satellite operators are building and launching Ka-band satellites as well as integrating them into their existing fleets of C-, Ku-, and L-bands. While lower service costs and higher bandwidth speeds make Ka-band service attractive, two major challenges with the service persist. First, Ka-bands are more prone to service disruption because of weather interference. The weather interference of rain fade is primarily a problem in very wet climates, but new technology will overcome this problem. Second, the availability of Ka-band terminals and end-user hardware is limited. Increasing popularity of Ka-band service will result in more terminals and greater production of end-user hardware. Source: Frost & Sullivan analysis. 16