Armand’s Notes from Euroconsult 2016 Conference

Attached are a full set of my notes from the Euroconsult “World Satellite Business Week” held in Paris from September 12th to 15th.

 

Executive Summary

FSS Sector Facing Headwinds

The realities of massive satellite capacity growth and declining price has sunk in. It’s becoming broadly accepted that satellite video distribution is at best stable, and most likely slowly declining and data pricing is collapsing. It’s a huge move from last year when the declining bandwidth pricing was only beginning to be discussed in the openly by senior execs.

Euroconsult forecasts average global FSS prices declining significantly and reaching $500 to $600/MHz/Month for spotbeam capacity. At these prices, most of today’s satellite are, at best, marginally economical. Considering the $2,000 figure is inflated by premium European video neighborhoods, the average for the rest of the world will likely be lower.

New LEO Projects Appear Stalled

In the current pricing outlook for satellite bandwidth, the prospect of financing LEO broadband projects looks increasingly daunting. Simply put, their promised cost savings appear less compelling as GEO bandwidth prices decline. We have seen no major funding announcements since OneWeb’s $500 million raise in June 2015.

Distribution Increasingly Important

The importance and challenges of the distribution channel are becoming increasingly apparent. With margins compressing, satellite operators are becoming increasingly vertically integrated. Major operators have all dramatically increased their direct marketing to government. They are also dedicating resources to working with distribution partners on various application and/or hardware issues. Resellers are rapidly consolidating to be able to pre-buy large amounts of satellite capacity a discount rates. In-flight connectivity providers are openly discussing acquiring satellite operators to lower bandwidth costs – à la ViaSat. They also realize that as the market matures, the market may not support all of today’s providers.

Satellite Manufacturing & Launch

Today’s rapidly changing market dynamics aren’t lost on the satellite manufacturers. They are focused on extending the economic life of satellites with advances such as digital payloads that allow reconfiguration to meet changing markets on the ground. At the same time, they are also exploring development of less expensive satellites that can be manufactured faster, but at the sacrifice of life-time. Satellite design lives of 15 to 18 years is increasingly seen as wasteful for HTS applications given the rapid advancement of processor technology.

The recent SpaceX Falcon failure highlights the delicate nature of access to space. The launch industry manifest remains tight through 2017, even assuming a quick return of the SpaceX (which may take longer than expected).

Growing Younger?

On an encouraging note, we saw a significant increase in attendees who appeared to be under age 35. This suggests an increased attractiveness of the industry to young people who will hopefully infuse it with some new ideas and perspectives.

 

Executive Summary………………………………………………………………………….. 2

DAY ONE – Monday September 12, 2016…………………………………………… 5

Armand’s takeaways from Day 1………………………………………………………… 5

  1. Opening remarks……………………………………………………………………… 5
  2. Opening speech – State of play & challenges for the satellite sector…5
  3. Outlook for the satellite sector: Insights from investment bankers…5
  4. Morning coffee break hosted by Arabsat…………………………………….. 8
  5. Satellite operators: Next expansion plans…………………………………… 8
  6. Lunch hosted by Airbus Defense & Space………………………………….. 10
  7. MSS operators: Next gen business……………………………………………. 10
  8. Afternoon coffee break hosted by ThalesAlenia Space………………… 12
  9. Strategies & prospects for the satcom business in Latin America…. 12
  10. Evening reception SpaceX……………………………………………………….. 14

DAY TWO – TUESDAY, September 14, 2016…………………………………….. 15

Armand’s Takeaways from Day 2……………………………………………………… 15

  1. Welcome coffee hosted by Spacebelt…………………………………………. 15
  2. New trends in financing satellite systems………………………………….. 15
  3. Newspace actors and satellite constellations……………………………… 16
  4. Morning coffee break hosted by Intelsat……………………………………. 17
  5. Next generation satellite and services……………………………………….. 17
  6. Lunch hosted by Eutelsat………………………………………………………… 18
  7. Global satellite operators: Reinventing the satellite business………. 19
  8. Afternoon coffee break hosted by ABS……………………………………… 20
  9. Towards a renewed commercial access to space………………………… 20
  10. Cocktail reception hosted by Airbus Safran Launchers………………. 22

DAY THREE  – Wednesday September 14th, 2016………………………………. 23

Armand’s Takeaway from Day Three…………………………………………………. 23

  1. Opening coffee……………………………………………………………………….. 23
  2. “Beyond Frontiers”: SES Book Presentation with the Author Chris Forrester.. 23
  3. Keynote speech: “Luxembourg in space”………………………………….. 23
  4. Satellite manufacturing: Evolution or revolution?………………………23
  5. Morning coffee break hosted by Optimal Satcom………………………. 23
  6. Trends and prospects for maritime satellite services………………….. 23
  7. Lunch hosted by Boeing………………………………………………………….. 24
  8. Prospects for the Middle Eastern and African satcom business…… 24
  9. Afternoon coffee break……………………………………………………………. 26
  10. Prospects for in-flight bandwidth & connectivity………………………. 26
  11. Closing drinks……………………………………………………………………….. 28

DAY THREE: “Smart Plane” Track…………………………………………………… 29

Armand’s Takeaway from “Smart Plane” Track…………………………………. 29

  1. Opening remarks…………………………………………………………………………………. 29
  2. Euroconsult market presentation…………………………………………….. 29
  3. Connectivity: Benefits and challenges for the future aircraft………. 29
  4. In discussion with a digital media content provider…………………… 30
  5. Morning coffee break hosted by Optimal SatCom……………………… 30
  6. Airlines’ views on the connected plane……………………………………… 30
  7. Lunch hosted by Boeing………………………………………………………….. 33
  8. Innovation and its impact on flight operations………………………….. 33
  9. Afternoon coffee break……………………………………………………………. 33
  10. Prospects for bandwidth & connectivity……………………………………. 33
  11. Closing remarks……………………………………………………………………… 33

Day 4: Symposium on Market Forecasts (1/2  Day)……………………………. 34

Armand’s Takeaway from “Symposium on Market Forecasts”…………….. 34

  1. Registration & Welcome coffee hosted by Zodiac Aerospace………. 34
  2. Euroconsult’s views on the state of play & prospects for the satcom market 34
  3. Operators strategy executives look at future markets…………………. 35
  4. Morning coffee break hosted by Telespazio……………………………….. 37
  5. What’s next for satellite manufacturing……………………………………. 37
  6. What operators want: View from their CTOs…………………………….. 41
  7. Closing remarks…………………………………………………………………….. 43

  

NOTICE: These notes were taken live at the 2016 Euroconsult Summit for Satellite Financing. They are a good faith representation of our impressions of the events and what was said by participants. However, we cannot guarantee of accuracy of any specific comment. They are not endorsed by Euroconsult in any way. This document is not a recommendation to buy or sell any security. Please consult with appropriate professional advisors before making significant business decisions. Corrections and additions welcome.

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