New standard for network outsourcing

Robert Syputa, Maravedis
14 Sep 2010
00:00
News
Commentary

The long-term dream of building satellite and hybrid satellite-terrestrial broadband networks is moving closer to reality. Meanwhile, Nokia-Siemens Networks (NSN) is once again active in M&A and its push to win managed network service contracts reflects the company's and ICT industry's shift to consolidated business services suppliers.

Satellite cellphone and broadband networks have failed in the past to appeal to mass markets, due to both the physical requirements of antennas and other aspects of mobile device designs and the practical limits on the capacity that can be hoisted up into orbit and that must share limited bands of spectrum across large terrestrial areas.

This has contributed to an inability to achieve the device cost structure needed to support the short-lived competitive product cycles. Use has been relegated to applications for which high cost, bulky devices and antenna units are tolerable.

My guesstimate for a critical mass of deployments is coverage of over 100 million POPs within a fairly contiguous geographic region. Part of that requirement is that this region be able to attract ARPU in line with the costs of deployment; thus the formula would vary if considering a low ARPU country like India compared to a high ARPU country like the US. The revenue vs cost of deployment, promotion and operation of the network would obviously have to be taken into account.

A hybrid satellite business model might be justified in extremes of cost vs revenue situations; the coverage scenario in India would be over 300 million POPs to build a viable satellite-terrestrial business model as the ARPU of the captured market would be much lower and may take several years to mature an appetite for premium broadband services. The US market, on the other hand, is more driven by the internet-phone application service model where higher ARPUs are the norm.

For developed markets such as the US and Canada and parts of Mexico and Latin America that a satellite network might reach, a major requirement is similar to that for Clearwire or any other terrestrial network: gaining access to the most popular mobile phones and hot devices that have driven market share.

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