Convergencia Research, Consultoría especializada en Latinoamérica y Caribe
Thursday, December 05, 2019

Satellite Internet: KA band business starts to tilt the scales in its favor

The SME satellite Internet providers in Argentina, as well as the cooperatives that opt for this type of connectivity, observe different scenarios after the devaluation of recent months, according to the link they occupy in the business chain. But there is a point of coincidence: Ka is already beginning to show its convenience for Internet services over Ku, in terms of cost-efficiency.

Even when the availability of Ka beams in Argentina is reduced, and as claimed from the satellite service provider sector, the country "arrived late to Ka".

Orbith poses an ambitious scenario, either as a wholesale provider or as an Internet service provider to end users. In its first role - under a white-label business model - it stepped up in the last year: it went from 15 ISPs to 28 (21 residential and 7 corporate). In its offer to end customers, it has 4,000 subscribers, after a record October in extras (about 500), and plans to end 2019 with 5,000, exceeding its original business plan.

The company uses 900 MHz in Ka band on the Amazonas 3 satellite of Hispasat, over the province of Buenos Aires, south of Santa Fe and south of Entre Ríos. It plans within 12 to 18 months, to be using all the contracted capacity. Pablo Mosiul, General Manager of Orbith, confided that for one year they have been working on a capacity expansion plan, but the economic situation of the country has been delaying its fulfillment.

The availability of HTS satellites with capacity in the Ka band is what allowed greater cost efficiency for satellite Internet models. Translated for the user, it implies plans of US$40 per month, compared to others on Ku band (used for DTH and specific niches such as mining, agribusiness, oil), which can reach US$300.

Among the companies that resell Orbith's capacity, dollar volatility places the corporate segment as the growth path, while the residential sector loses ground. Nahuel Mota Cabanillas, CEO of Advantun (operates in areas of the province of Buenos Aires and in the northern area of ??the suburbs, especially Tigre and San Fernando), makes a clear difference between one and another recipient. Of its 20 customers with satellite technology, corporations usually opt for it as a redundant connection and are used to hiring dollar value. The recent devaluation complicated the scenario for the residential sector, and from the firm they anticipate a 2020 with reduction of clients, specially in areas where there are alternatives of wired networks or fiber.

The Cooperative Cooperativa Eléctrica de Monte provides satellite Internet to rural users - about twenty - and recognizes that the price of the service is a problem in the residential environment. After all, the monthly value resembles that of a full tank of a Toyota Hilux (US$2,300, figure valid as of September 2019), the most sold unit in the field during 2018. Installation costs are also presented to the eyes of potential clients as an entry barrier: around US 50.12, compared to US$ 2.50 of fiber.

The backhaul opportunity

The KA band also has potential for backhaul services, but the limited availability of this type of capacity in Argentina does not allow it to be used. For Mosiul, in certain cases, because of the location of mobile sites, it could be more cost-effective and convenient to connect them over the Ka band than by fiber, if the monthly traffic volume does not exceed a certain threshold, using an Opex model.

Another company that recognizes this shortage is Tesacom, which offers corporate services in the Ka band in Argentina (including Vaca Muerta) and Chile through its infrastructure mounted on the Hispasat gateway in Lima. Its CEO, Viviana Fonseca, told Convergencialatina that what delayed Ka's development in the country were the landing rights: Hispasat delayed the use of its dedicated spot beam for four years, until it reached the “landing rights”. Tesacom has two IoT clients in Vaca Muerta, which provide services to the oil companies, destined to the management of mobile transformers.

Arsat, questioned for its foray into the Mountain Range

Several ISP cooperatives and SMEs consulted by Convergencialatina for this document questioned Arsat's project to bring satellite Internet to 5,000 homes in the Mountain Range (Cordillera) area. The state company received US$4 million to carry it out (at a rate of US$835 per house) and plans to perform between 200 and 240 monthly installations. Industry sources say that Arsat is already providing services in the area, which makes it an unexpected competitor for small and medium-sized suppliers, with a state-subsidized benefit with money from the Universal Service Fund.

Questioning does not end there. The installation and commissioning of the service was awarded directly, without public bidding, to Hughes, which can provide the service thanks to the capacity hosted on the Telesat Telstar-19 Vantage satellite. Arsat sources ensure that the antennas to receive the signal are also provided by Hughes.

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