Satellite sector shaken by outside innovation

17 Jun 2014

Rural connectivity projects being proposed by internet companies like Google and Facebook are a dire warning to the satellite sector – start innovating, or become irrelevant.

A hot topic among satellite executives is the general slow pace of innovation in the business, to include business models, and the danger of being left behind as outside companies start going after promising growth segments such as connecting underserved areas.

“The projects we’ve seen from Google and Facebook targeting rural connectivity demonstrates that we as an industry haven’t been able to solve that problem,” said Thomas Choi, founder and CEO of ABS.

“We have to react to that. If we don’t, they’ll eat our lunch. Whether its UAVs or LEOsats, they’ll solve that problem and take away that niche market that we’ve been after. The future of traditional bent-pipe satellite will disappear. We have to figure this out before they do.”

However, some executives see a bright side to outsiders challenging the industry status quo.

“I think it’s encouraging that they see satellite as an enabling technology,” said Steve Collar, CEO of O3b Networks. “It’ll have a positive impact on all of our businesses. It does present challenges, but I think it’s really what the industry needs.”

Bill Wade, president and CEO of AsiaSat, points out that upstart launch provider SpaceX is having a catalyzing effect on the launch industry. “They’ve influenced other launch providers to look at what they’re doing. That’s not a bad thing. It helps us to take a second look at what we’re doing and how we can do it better.”

And not a moment too soon for some satellite players, which acknowledge that the industry overall is hampered not only by sluggish innovation, but a business model where projects can take years to realize.

Karim Michel Sabbagh, president and CEO of SES, said that the satellite industry needs to “put its foot on the pedal” on innovation on a number of fronts, including space launches, time to market, optimized cost per bit, optimized quality of experience and ground solutions that integrate more smartly into terrestrial infrastructure.

Choi said that while he’s still generally optimistic that the satellite sector will find ways to grow, his worry is that the growth is too slow for investors to care.

“Mobile is a trillion-dollar industry. If you look at the top global satellite players, it’s less than $20 billion. And mobile is growing much faster than we are,” Choi said. “So in that sense we’re no longer relevant as an industry. If we don’t innovate, we’ll be wiped out.”


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