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Next-generation satellite systems propel shift in capacity pricing and industry dynamics
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Next-generation satellite systems propel shift in capacity pricing and industry dynamics
by Erica Marchand
Paris, France (SPX) Feb 13, 2024

The satellite capacity pricing landscape is undergoing significant transformations, driven by the advent of next-generation satellite systems, according to the latest FSS Capacity Pricing Trends report by Euroconsult. This comprehensive analysis reveals how these technological advancements are reshaping industry economics and operational strategies, highlighting the pivotal role of high-throughput satellite (HTS) systems in both geostationary (GEO) and non-geostationary orbits (NGSO), with a particular focus on the impact of Starlink.

The report underscores a notable trend: the rapid decline in satellite capacity pricing across global markets. Over the past five years, the average capacity pricing in video and data markets has decreased by approximately 16% and 77%, respectively.

This pronounced decline is attributed mainly to the surge in supply from NGSO systems, notably Starlink, and HTS technologies, which have introduced a commoditization effect on connectivity services. As a result, the industry is witnessing a significant shift towards managed service offerings, characterized by more appealing $/GB economics.

A key insight from the report is the differentiation in pricing trends between video and data markets. While data markets have experienced a steep decline in prices due to the abundant supply and competitive pressures from NGSO systems like Starlink, video markets have seen a more moderate decrease. This discrepancy highlights the different market dynamics and supply conditions affecting these sectors.

Euroconsult's analysis points to a structural evolution within the satellite industry, moving away from traditional wholesale capacity leasing models towards a managed service paradigm. This shift is largely influenced by the competitive pricing and service availability offered by Starlink, prompting a strategic realignment among satellite operators and service providers. The emphasis is now on offering pre-packaged managed services, which not only streamline capacity management but also enable the integration of value-added services such as cybersecurity, cloud connectivity, and IoT solutions.

Grace Khanuja, a Senior Consultant at Euroconsult, elaborates on this transformation, noting that "Starlink's pocket-friendly pricing and higher availability of service plans have triggered a structural shift in the industry." This shift is steering industry players towards direct engagement with end customers through managed service plans, thereby exerting greater control over capacity pricing and emphasizing the delivery of additional services.

The report also highlights a convergence trend in the price per GB across key geographies, facilitated by the increased capacity supply from Starlink and new service offerings from incumbent satellite operators. This trend is markedly different from the pre-2021 period, where limited capacity from legacy systems resulted in higher median prices. The expansion of available capacity and competitive service plans has led to a significant reduction in prices, making satellite connectivity more accessible and affordable.

The FSS Capacity Pricing Trends 6th edition is now available on Euroconsult's digital platform in Standard and Premium versions, offering Euroconsult's pioneering and unfettered data access and readability. A free extract can be downloaded.

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