Euroconsult has significantly revised down its high throughput capacity lease revenue forecasts for the next decade. In October 2014 the consultancy estimated HTS capacity revenues would reach US$6.2bn in 2023, but its analysts now anticipate annual HTS lease revenues will only hit the US$4.9bn mark in 2024.
Euroconsult has significantly revised down its high throughput capacity lease revenue forecasts for the next decade.
In October 2014 the consultancy estimated HTS capacity revenues would reach US$6.2bn in 2023, but its analysts now anticipate annual HTS lease revenues will only hit the US$4.9bn mark in 2024.
Explaining the revision, the group said in a report released in March 2016 that this reflected a confluence of factors including growing supply, bulk contracts, and an increasingly commoditised market for telecom network services.
Nathan de Ruiter, principal adviser at Euroconsult and the report’s editor, said: “The impact of long term bulk leases and aggressive pricing strategies of new entrants has caused the average HTS capacity price to drop by more than 50% between 2012 and 2015. “The marked improvement in CAPEX efficiency (US$ per Gbps) for OneWeb’s (LEO) and ViaSat’s (GEO) constellations as compared to current HTS systems is also likely to enable further downward pressure on effective capacity pricing in the longer-term.”
Euroconsult’s 2014 report forecasted HTS revenues would generate around US$35bn in aggregate revenue between 2014 and 2023. This year’s analysis suggested a figure of US$26bn between 2015 and 2024. Despite the revenue forecasts, other aspects of the report are more promising for HTS operators, not least demand.
Euroconsult said that despite the lag in anticipated supply, primarily due to delayed launch schedules, demand for HTS capacity has accelerated more sharply than anticipated. Two factors have boosted demand, namely the deepening market shift towards bulk capacity leasing, and rapidly increasing data usage per end-user.
The low capacity costs and higher data rates offered by HTS will foster more growth in demand in areas such as consumer broadband, where subscriptions are predicted to grow from 2.5 million in 2015 to 7.1 million by 2024. Rapid adoption of HTS broadband solutions in the mobility market will also drive demand.
The report said the number of commercial airliners offering HTS broadband would increase from 480 in 2015 to 11,700 by 2024 and that the number of private jets with inflight broadband would rise from zero in 2015 to 6270 over the next decade.
The demand increase in maritime will be even more pronounced, according to Euroconsult, which expects 25,000 commercial ships to be connected to HTS broadband in 2024 compared to the 120 in 2015.
Euroconsult suggested a 22% compound annual growth rate for the total leased HTS capacity over the 2015 to 2024 period. This in turn reflects the surge in investment that will see 123 HTS systems lofted between 2016 and 2024, according to Euroconsult’s forecasts – well over double the 48 HTS systems placed into orbit between 2004 and 2015.
“Given this level of investment activity, global HTS capacity supply is set to more than quadruple from 680 Gbps in 2015 to nearly 3 Tbps by 2020,” de Ruiter said.
Consumer broadband use in the US will continue to be the largest single use of HTS capacity, but that share of HTS traffic is set to drop from 72% to 42%. The dominance of ViaSat and Hughes in that market, however, is not expected to change.
Other markets will be markedly more competitive. Euroconsult highlighted Latin America and in particular Brazil, where seven new entrants are expected within the next three years, as an area to watch.
Elsewhere, Euroconsult said that the Middle East and Africa will be notably fragmented as the region will be served by at least 12 HTS operators by 2019.