Over the years, satellite communications (satcom) have emerged as a preferred solution for delivering high-bandwidth internet connectivity in rural and remote areas. While technologies like 3G and 4G have helped in digitally connecting urban and semi-urban areas, satcom can play a pivotal role in bridging India’s digital divide. This is because satcom offers a number of benefits compared to terrestrial technologies. It is not only faster and more economical to deploy in rural areas, but can also provide connectivity at a lower cost per bit and offer wider coverage.
Given these benefits, the government has selected satcom as one of the mediums for connecting gram panchayats under its BharatNet project. The technology is also poised to play a vital role in the government’s Digital India Mission and is ripe for investment. Industry estimates suggest that the Indian satcom sector has an investment potential of $100 billion. However, leveraging this potential calls for a unified policy framework that encourages stakeholder participation and promotes the convergence of terrestrial and satellite networks.
tele.net presents a brief overview of the Indian satcom space and the outlook for the segment….
Current market scenario
The current global satcom market is estimated to be worth $350 billion. Of this, the Indian market accounts for 2 per cent share with a valuation of $7 billion. Over two-thirds valuation of the Indian market comes from direct-to-home (DTH) television, broadband and over-the-top services delivered through the internet. Further, the remote sensing and geographic information system markets today are worth $500 million and offer an enormous growth potential.
In terms of market composition, the Indian satcom market was characterised by five major players as of end 2018. Among the top players in the market were Hughes Communications India Limited (HCIL), Bharti Airtel, Tatanet Services Limited (TNSL), HCL Comnet and Bharat Sanchar Nigam Limited (BSNL). Among these, HCIL accounted for 36 per cent market share in 2018, Airtel 27 per cent, while Tatanet, HCL and BSNL accounted for 21 per cent, 8 per cent and 7 per cent shares respectively.
However, the year 2019 ushered in a move towards market consolidation with the two largest players, HCIL and Airtel announcing their merger in May 2019. This merger will create a strong top player in the market and has been initiated to increase scale, improve operational efficiencies and target new customers in areas such as in-flight connectivity. It is reported that HCIL will own 67 per cent of the new entity, while Airtel will own the rest. According to industry sources, the merged entity will have a combined market share of 63 per cent and the closure of the deal may take nine to 12 months, depending on regulatory clearances. Further, in May 2019, HCL Technologies, the parent company of HCL Comnet, announced that the company would be merged with it. The impact of the merger on HCL Comnet’s operations in the satcom market currently remains unclear as the scheme of amalgamation is subject to necessary statutory and regulatory approvals.
Emergence of new technologies
The satcom space is at the cusp of a huge technology transformation led by new and emerging satellite technologies such as low-earth-orbit (LEO) and medium-earth-orbit (MEO). While these technologies are expected to be launched in India during 2021-22, the government has started examining how these systems can be utilised for improving connectivity in all areas. To this end, the Department of Telecommunications (DoT) has announced its plans for setting up a network of LEO and MEO satellites for telecom services and is reportedly in discussion with the Department of Space for the same. The proposed satellite network will be funded and owned by DoT. The capacity of these satellites would be available for use by telecom operators for offering telecom services in rural as well as remote areas and IFMC services.
Convergence with wireless mediums
Satcom technology can also be used in convergence with wireless mediums to improve connectivity across the country. According to industry experts, the country has about 10 Gbps unused satellite capacity. This unused satellite bandwidth can serve as backup during fibre downtime and can be used as backhaul to power wireless networks. For instance, satcom can play a crucial role in the roll-out of 5G networks. In fact, industry experts are of the view that an efficient 5G ecosystem would involve close integration of 5G core infrastructure, ground infrastructure and satellite infrastructure.
Satellites can provide 5G backhaul for cellular towers, enterprises, commercial and business aviation, maritime and high speed trains. The upcoming LEO constellations can be leveraged to deliver low latency and extreme throughput 5G mobile backhauling. Moreover, satellite connectivity can support high speed video streaming and enable internet of things connectivity for remote sensors/actuators, utility meters, autonomous vehicles and smart grids. In addition, satellite networks for 5G have a lower capex and opex as they enable spectrum, hardware and software optimisation, allow dynamic network planning and improve spectral efficiency.
Since satcom technology offers numerous advantages, it has emerged as a favourable medium for accelerating progress under key government programmes like Digital India and BharatNet. Over the past few years, the Indian Space Research Organisation (ISRO) has released a series of satellites to accelerate the development under the Digital India initiative. These include GSAT-19, GSAT-11, GSAT-29 and GSAT-20, which aimed at achieving an ambitious target of providing 100 Gbps data connectivity under Digital India. Recently in February 2019, ISRO launched India’s 40th communication satellite, GSAT-31. GSAT-31 would be used for supporting very small aperture terminal (VSAT) networks, television uplinks, digital satellite news gathering, DTH television services and cellular backhaul connectivity, among others.
Further, Phase II of the BharatNet project envisages using an optimal mix of media including satcom for connecting gram panchayats. The satellite mode is being adopted for connecting gram panchayats in areas such as north-eastern states, Jammu & Kashmir, Himachal Pradesh, Uttarakhand, Rajasthan, Madhya Pradesh, Uttar Pradesh, Odisha, Jharkhand, Chhatisgarh, Lakshadweep and Andaman & Nicobar islands. The satellite medium is being used to provide connectivity to 6,228 gram panchayats, of which 4,821 are to be connected by Bharat Broadband Network Limited and 1,407 by BSNL. Of these, 828 gram panchayats have been made service-ready, completing only 13 per cent of the work. Therefore, a huge untapped opportunity still exists for satcom players under the BharatNet project.
Satcom players have also started exploring opportunities in new areas like in-flight and maritime connectivity (IFMC) services. In fact, HCIL, Nelco and Airtel have secured licences for providing IFMC services using satellite systems. The market potential for these two services is estimated to be more than Rs 10 billion per annum in the coming years, which presents a lucrative opportunity for these players.
The enterprise space is another area that offers numerous opportunities for satcom players. In the oil and gas sector, oil marketing companies like Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited, Bharat Petroleum, Reliance, Nayara and Shell have chosen VSAT as their medium to automate around 60,000 petrol pumps. This retail automation project would witness the deployment of over 40,000 VSAT systems.
Satcom offers myriad opportunities to players in this space as it has been driving significant growth in the industry. At present, the growth rate of the Indian satcom industry stands at 8 per cent per annum. This growth is poised to increase substantially in the coming years, owing to new business avenues like IFMC. However, powering the growth calls for improving the ease of doing business by formulating progressive policies that encourage private sector investment and help reduce the price of satellite bandwidth. Further, the country needs to focus on a new partnership-based model that promotes collaboration among ISRO, incumbent private satcom players and new-age entrepreneurs to exploit the full potential in the satcom space.