More apart than together, satellite and telecom are beginning to align to open up a world of new possibilities.

Constellations spoke with Robert Bell, Executive Director of the World Teleport Association, Guido Neumann, Chief Development Officer at AXESS Networks, and Stuart Daughtridge, Vice President of Advanced Technology at Kratos about the challenges and opportunities for growth as satellite and teleport operators deepen integration with terrestrial telecommunications providers.

Often viewed by telecom as “the transport of last resort,” Bell said satellite didn’t do anything to, “shall we say, ingratiate ourselves to their business models.”

Between costly capacity, expensive equipment, and the lack of integration with telco standards, “How could they really love it?”

One reason for that, Daughtridge said, was because satellite’s primary business was broadcast. “That’s where the money and the focus was.” But with broadcast now generally a stagnant business, they both agreed that satellite will have to find its growth elsewhere.

Bell said that the future direction for any teleport operator, without question, will increasingly be a focus on IP transport as opposed to broadcast.

“They are under incredible pressure because they’ve got to digitize, they’ve got to virtualize, they’ve got to automate, they’ve got to orchestrate to handle the exploding volume and complexity of the traffic they’re carrying. They’re getting pushed into the world, whether they’re ready or not.”

But there was progress. Neumann of AXESS Networks pointed to evolving technology and the falling cost of capacity and terminals as key factors that were helping drive the industry to better integrate with global telecom.

He cited cellular backhaul as an example, and how satellite was playing an increasingly important role with mobile network operators (MNOs) and telcos, helping them manage traffic across their towers and networks to save them capacity and money.

Bell of WTA said that there was a “sort of a magic number” of $3 per gigabit that MNOs pay for backhaul, and that as satellite continued to get down into that zone it would suddenly be competitive to open up more opportunity.

The Easy Button

On a technical level, for satellite to better integrate with telecom and MNOs, Daughtridge of Kratos said the industry needs to make it easy for the telcos to use satellite so that its “transparent.”

“We need to adopt their standards. We need to adopt the technologies that they use in their ground infrastructure, and by doing that we can actually make it easy for them to use satellite.”

He pointed to the adoption of MEF and 5G, telecom standards that will make it easier to orchestrate services through a satellite network.

Bell agreed that satellite needs to get on that same playing field to do business with the telcos, but that it was being held back by not having digitally transformed or adopted standards at the same pace.

Compared to terrestrial carriers and mobile network operators, who live in a world of standards, he characterized satellite as adapting “very unevenly.”

A Standard Path Ahead

Although the industry wasn’t known for standardization, using proprietary technology as a lever to lock in users, Bell said there was now a change in mindset.

As an example, Daughtridge pointed to the success of the DIFI specification, the standard put forth by the industry consortium to enable digital intermediate frequency interoperability. In less than two years, 60 member organizations from across industry, government and military had joined. That speed, he said, showed the industry’s switch in mindset and recognition that standards are a key to growth.

Bell Called the DIFI standard, “a fundamental building block,” and that he was “very pleasantly surprised,” even “thrilled” by the speed of its uptake.

“It’s such a simple idea that all the devices that are actually hooked together should get their analog content digitized as soon as possible and be able to exchange it.”

“It just tells you that the major users, not necessarily all the people who are doing the service provision, but the major users really want this. And of course, when your customer wants something, that’s when you’ve got to move.”

Daughtridge also pointed to 5G as a “fascinating case,” noting it was the satellite industry’s involvement that drove satellite and its special needs to be incorporated into Release 17 of the 5G standard.

Although satellite and teleport operators were beginning to “crack the nut of integration with telcos,” Bell said but it was not easy. “They’re being challenged to rethink their networks for this new world and how to earn a worthwhile return on investment.”

Another hurdle that Daughtridge pointed to, was the move from existing infrastructure to new, but that it was an adjustment they would need to make in order to turn up new services when they have the opportunity to upgrade.

Growing from 1%

Asked about other factors that could help close the gap between satellite and telecom, Daughtridge pointed to sheer motivation and that it has to happen for both industries.

He pointed to two strong market forces: “The satellite operators need the telcos, and the telcos now need the satellite operators.”

For satellite to grow from 1% of the IP transport market to 2, 3, 4, or 5%, the industry needs to “play better with telecom” because that’s where the growth is, and telecom operators, who were being pushed by regulators to connect the unconnected, can’t do it without satellite.

Neumann of AXESS was even more optimistic, believing double digit growth was possible in the long term. He said that if satellite could become more attractive and close the business case to connect the unconnected all over the world, down to the level of a small village, then, “I’m very optimistic and positive. A two-digit figure in the overall market could be possible.”

“I love his double digits,” Bell, said of Neumann’s outlook. “Think of it this way, we’re 1%. If we go to 2%, we’ve doubled the size of our industry and just added $20 billion. Can we at least make that the ambition? And from there on the sky’s the limit.”

Asked about the timeline of such growth, Daughtridge said he believed it would be more likely closer to three years than five because the need is great.

“The faster you do it, the greater your growth potential,” Daughtridge said, noting the possibilities of replacing diminishing broadcast revenues with growth in the IP transport market.

“I think the industry now recognizes that they have to do this. So, I think it’s not a matter of if but when, and once the industry puts their mind to it, I think it will happen relatively quickly.”

To hear more about the challenges of integration between satellite and terrestrial telecom and the growth opportunities ahead, click here.