Speaker interview with Carlos Placido, Owner, Placido Consulting and Telecommunications Consultant
Backhaul is a huge revenue opportunity for the satellite industry. As data produced by mobile devices grows exponentially, satellite operators and service providers have an opportunity to capitalize on this growth.
Ahead of the VSAT Latin America show taking place on the 21-22nd of June in Sao Paulo, we caught up with our chair Carlos Placido, Owner of Placido Consulting and Telecommunication, to examine satellite backhaul in Latin America and they key innovations that are improving the backhaul service.
“Latin America currently makes use of satellite backhaul in a similar way as in other emerging markets.” He said “The vast majority of satellite backhaul sites in the region rely on “traditional” uses of (FSS) widebeam C and Ku satellite capacity to connect remote 2G/3G cell towers to the core mobile network. Satellite solutions are chosen wherever (and whenever) there are no terrestrial alternatives to reach those remote locations.
“Sometimes it is a time-to-market value proposition, meaning that players leverage satellite’s distance indifference to quickly setup links while they wait for the completion of fiber or microwave projects. Satellite links are also used for 3G backhaul in the region – and to a lesser degree LTE as well – but the majority of the deployed satellite sites remain with 2G technology. It is evident that it will be HTS platforms -in time for the adaption of 3G/LTE-capable smartphones outside urban cores – that will foster a more widespread use of satellite backhaul for 3G and LTE.
“An interesting point to make here is that, as of today, even when operators deploy 3G satellite backhaul, when you dig deep into the specific uses you tend to find that those 3G links carry a lot of voice traffic. This is understandable from the point of view of the high OpEx of FSS satellite capacity, which results in high overbooking rates for data. Having said this, there is no question that data traffic is growing at a much faster pace than voice , and not just in urban areas anymore. This is becoming a key bottleneck for operators because data is associated with lower revenue than voice/SMS on a per-bit basis; so there are challenges to close the (end-to-end) business case with costly satellite backhaul bandwidth.
“In several countries including Brazil and Peru, regulators have been the key driving force behind the expansion of 2G mobile coverage using satellite links. However, possibly in recognition of the economic challenges that 3G /LTE backhaul face with traditional satellites, regulators have shown a more “relaxed” attitude towards the use of satellites for the expansion of 3G and LTE. I think it is important for the satellite industry to educate regulators on the benefits brought by the new generations of HTS satellites and ground system technologies, so that new policies encouraging or driving 3G/LTE expansion go in synch with these evolutions in a sustainable way for all players in the value chain (satellite operators, service providers, equipment vendors and mobile carriers).
“As the network evolves the divergence between traffic growth and revenue growth is here to stay (revenue growing at a lower pace than traffic volume); there will be an increasing preponderance of data over voice on 3G and LTE backhaul links. This poses challenges for satellite backhaul as mobile players make fewer dollars per Mbps of data traffic -versus voice. With multimedia and video traffic becoming so prevalent this trend has no sign of reversing itself, and will indeed accelerate so mobile operators will have to continuously carry higher data rates over backhaul pipes with decreasing mobile revenues on per Mbps basis. This is where I believe that HTS and new technologies will come into place.
“I think its obvious that, because of the traffic-revenue divergence trend, it becomes an absolute must for mobile network operators (or specialized satellite service providers providing links to them) to simultaneously leverage improved economics brought by HTS platforms while also staying on top of technology trends. I am optimistic that with sophisticated backhaul optimization technology already developed for HTS, the emergence of several HTS systems in the region will fuel a wave of 3G and LTE backhaul expansion for satellites.
“The new HTS platforms in the region, using Ku and Ka band spot beams – and later C band spot/zone beams too – will provide a quantum leap of efficiency that will be well received by mobile carriers and satellite service providers to achieve better economic points for data-hungry 3G and LTE backhaul.
“A potential scenario of oversupply in the short term could further encourage use of HTS capacity for 3G and LTE backhaul. So lower costs on a per Mbps basis can be painful for satellite operators but also are seen as a positive sign for 3G and LTE satellite backhaul. However, this could be one of those “supply-side economics” cases, where supply drives demand and the cycle eventually reverts itself so players should not count on a continuous drop in satellite pricing for ever. I would encourage players to think beyond these “one-time” leaps of efficiency to stay relevant in a more sustainable way; and I think this is where ground system technology becomes so important.
“When combined with HTS, today’s satellite backhaul optimization technologies can achieve great OpEx savings by combining bandwidth-saving optimization techniques that function at both the link and protocol layers. Examples include use of Flexible LDPC coding, DVB-S2X with higher-order modulation, carrier cancelling (CinC /SmartCarrier / PCMA, etc.) in combination with sophisticated techniques for protocol-layer optimization and acceleration. The use of edge caching for data content distribution will further improve savings and help satellite backhaul reinvigorate itself as mobile revenues per bit continue to drop.
“But here is where I am seeing a very different attitude from two key players in the value chain: Mobile carriers and satellite service providers (SP).
“Mobile carriers are such large organizations that tend to view satellite backhaul as a marginal element to their business. Thus, they do not pay close attention to technology evolution and often “leave money on the table” as they do not conduct the technology upgrades in time. Satellite service providers, on the other hand, have a vested interest in making the best use of the expensive satellite bandwidth resources (their main OpEx element) so are early adopters of ground system technologies that squeeze more bits of every megahertz of satellite spectrum leased. This, coupled with the trend towards an all-IP backhaul environment, makes satellite backhaul far more “virtual-izable” than in the past. I have seen cases where, due to this time gap in how SPs and mobile carriers adopt new technologies, satellite service providers are able to offer (profitable) outsourced backhaul services to mobile carriers at a lower cost than what they have in house.
“I believe that the disruptive combination of HTS and new ground system technology will not just encourage more use of 3G and LTE backhaul in remote or rural locations but also expand satellites’ addressable markets towards suburban areas. The hybrid “offload” model, an example, looks promising.
“As I described in an article time ago, I think that we as an industry need to remember that satellites are not necessarily confined to “gap filler” roles; there are times when market disruptions coupled with creative technology foster new uses with wider appeal that can have an impact on the larger telecom / entertainment space. We, as an industry, need to be more ambitious and tackle these new opportunities in a more coordinated fashion.
“Looking into the future, satellite backhaul will also need to find its place in the context of mobile content delivery networks (mCDN). I think there will be interesting opportunities that satellite players could leverage (not just in developing markets) due to the combination of key trends, including:
- Moore’s Law: While all transport technologies (HTS included) provide lower bandwidth costs, price points for storage have historically presented a more pronounced reduction curve. In other words, bandwidth comes down in price but storage price drops faster, presenting a “pressure-building” scenario, fertile for content delivery platforms.
- IoT and Mobile Edge Computing: Future 4G and 5G networks will require certain processing functions to take place at the cell tower location itself. This will present opportunities for mobile carriers to step out of their historically unavoidable role as “dumb pipe” bandwidth providers. Smarter edge resources mean more efficient use of backhaul links.
- Satellites’ broadcast economics and IP multicasting: Despite the success stories involving satellites for 2G, 3G and LTE backhaul, the satellite ecosystem is not yet leveraging satellites’ IP multicast distribution capabilities. It will be interesting for the industry to leverage such advantage for mCDN and, as an example, maybe in coordination with LTE’s broadcast features in the last mile.
“To summarize, I think knowing your way around established technology is not going to be enough anymore. Mobile operators and backhaul service providers will have to look beyond today’s solutions and be ready for what lies ahead. For satellite players, I think it will be key to leverage not just new HTS systems but also future-proof, extensible and software-definable ground system platforms that can upgrade themselves with enhancing features and services in the future.
Carlos will moderate the panel discussion “Is an Oversupply Scenario Coming to Latin America?” and “Connecting the Globe: The role of satellite connectivity in remote areas”
“I have participated as attendee, speaker and moderator at previous iterations of VSAT Latin America and have always found professional value. I think the show provides a good environment for the exchange of ideas among colleagues and professionals in the region. For the satellite backhaul market in particular, it is a great opportunity to network simultaneously with all value chain players: telecom/mobile operators, satellite service providers, satellite operators and ground system vendors.”
If you’re interested in joining Carlos at VSAT Latin America you can register to attend now or register for a free end-user pass on our website: https://latinamerica.vsatevent.com/