Unofficial Notes from Euroconsult’s World Satellite Business Week Conference, September 11-15, 2017 in Paris, France

Executive Summary

Presenters at this year’s conference were more positive than last year. They consistently painted a picture that the worst in terms of declining FSS revenue may be behind us. At the same time, most of the planned HTS capacity ordered in the past few years has not yet entered service. The compelling (sic) logic seems to be that FSS industry revenue declined in each of the last two years due to HTS overcapacity, therefore, greatly increased amounts of HTS capacity coming on line will increase future revenue. (Armand’s comment: this logic escapes me, perhaps because I’m not a Millennial.)

Participants I spoke to privately, however, are not seeing any evidence of market prices stabilizing or demand increasing outside of mobility applications. There is even a growing acceptance that LEOs will eventually play a large part in the communications segment of the industry, even displacing GEO demand.

Not to be outdone by the FSS sector logic, marketing executives from the major satellite manufacturers boldly proclaimed that the number of satellites they sell is no longer an important metric! (Armand’s comment: I can’t make-up this stuff). There is a point to be made that given the wider range of satellites being ordered, the number of satellites ordered is less of an indicator of revenue. But sales usually still matter.

While their market people may have given-up, the operating folks at the manufacturers are busy responding to industry pressure and declining orders with 3-D printing, automated manufacturing, flexible digital payloads, etc. This is reducing both cycle time and costs. Cycle times for standard satellites are down from 36 months to closer to 24 months and can get much lower if long-lead items are ordered in advance. Satellites are increasingly ordered in batches under the same umbrella design to get economies of scale. There is movement towards in-house manufacturing (OneWeb and ViaSat), but it is unclear if that level of vertical integration will become a trend.

In-flight broadband remains a hot spot (pun intended) for growth in the satellite sector. But the business model remains unclear. Airlines face pressure from customers to make it happen and are leaning on suppliers to pay retrofitting costs. This is hard for the fragmented IFS sector, where most players have thin balance sheets. The search for alternative revenue streams from passenger data, etc. to close the gap continues.

Euroconsult’s Earth Observation conference highlighted new advances in analytics, and satellite technology. But the sector seems to be plagued with the same challenges of commoditization of raw satellite data, difficulty growing commercial demand, and dealing with government restrictions. As the value chain moves increasingly towards data analytics, as opposed to satellite infrastructure, the number of new entrants has tapered. Some aspiring entrants are dropping infrastructure plans and refocusing on data analytics.