Asia-Pacific Broadcasting (APB) Satellite Special 2018 | Page 14

2018 SPECIAL How satellite service providers respond to disruption will determine their future 90% will do the same in IoT and cloud services. However, 37% expect their investment in DTH to decrease in the next three years, while 17% said the same for distribution to terrestrial broadcast and cable TV systems. BY ROBERT BELL T he satellite ecosystem is made up of satellite operators, ground- based service providers and the customers they both serve, supported by technology providers and other vendors. In the past year, a wave of disruptive technology and market change has begun to challenge all of them. It includes new models of connectivity — high throughput satellite (HTS), middle and low earth orbit spacecraft. It is driven by the rising domination of software over hardware, customer demands for seamless global service, and the accelerating shift in how media consumers want their programming delivered. As the CEO of one teleport operating company summed it up: “Everybody desperately wants to know where things are headed right now — and nobody knows.” At the end of 2017, the World Teleport Association surveyed top executives of satellite service providers on the changes they were seeing in the industry and how they were responding to them. What market opportunities are they targeting and where are they investing their capital? What are their biggest obstacles to growth and the biggest threats to their survival? Their responses paint a picture of an industry sector that is facing disruption and, in many cases, disrupting their own operations by innovating up the value chain to meet new customer needs. What are their biggest obstacles? Teleport operators have succeeded by resisting the temptation to get too far ahead of the market, too close to the bleeding edge of technology or too sure of the road ahead, according to the World Teleport Association. Where will growth come from? The survey data allowed us to focus on the teleport business, whose primary market is the broadcast customer. The top five opportunities that they see in the market include supporting Internet of Things (IoT) applications, over-the-top (OTT) origination and distribution, cloud services, aeronautical service for passenger airlines and enterprise video and data networks. It is a very interesting list — because only two of those opportunities are in the broadcast space. That reflects a dim view of the future of their traditional business. Nearly half of the respondents (44%) of media-focused companies expect declines in direct-to-home (DTH), terrestrial and cable TV origination, as well as distribution services. The growth in OTT distribution needs little explanation. The viewing habits of the young — anywhere, anytime and on any device — are rapidly become the viewing habits of us all, particularly in Asian cities where mobile bandwidth is exploding. We dug deeper into the reference to cloud services, because media-focused operators have a different view of the future from their data-centric peers. As the CEO of one teleport operating company summed it up: “Everybody desperately wants to know where things are headed right now — and nobody knows.” 12 An Supplement Media-focused operators see opportunities in providing their own cloud services, as well as integrating third- party providers, while non-media-focused companies see value only in third-party integration. TV content owners have been far slower to adopt public cloud services such as Amazon Web Services, and service providers are offering their own private clouds as solutions. Asked to name the one obstacle that presented the greatest threat to their businesses, executives saw danger in increasing competition from new companies entering the market, in addition to established competitors. At the same time, they foresee the need to invest a rising amount of cash in technology to meet their customers’ needs. These same factors, however, are likely to translate into greater choice, better pricing and more advanced offerings to broadcast customers. Entrepreneurship lies deep in the DNA of independent commercial teleports. The sector was born when entrepreneurs seized the chance created by the US Open Skies policy to access satellites directly for the first time. From analogue to digital, one TV channel per transponder to hundreds, telex and fax to broadband and IoT — teleport operators have never stopped innovating. In spite of that, innovation has always been about evolution rather than revolution. Teleport operators have succeeded by resisting the temptation to get too far ahead of the market, too close to the bleeding edge of technology or too sure of the road ahead. In 2017, they even faced a faster and deeper rate of technology and market change than ever before. The question that will begin to be answered in 2018 is whether the industry’s tried-and- true approach to innovation will continue to deliver success in the years ahead. Where is investment going? The media-focused service providers are directing today’s investment in OTT distribution, private cloud services for content owners, IoT and the integration of third-party cloud services into their offerings. Despite expected decline in their core business, however, 18% of respondents will continue to invest in terrestrial, cable and DTH distribution. Looking forward three years, every broadcast service provider expects to increase investment in OTT, while nearly Robert Bell is the executive director of the World Teleport Association (www. worldteleport.org), which conducts research into the teleport and satellite industry, and offers a Teleport Certification programme to service providers. This article is based on data from the Teleport Opportunities 2018 study published in January.