Connecting the unconnected
Yahsat CCO, David Murphy talks to Teletimes in an exclusive interview about the market entrance in Brazil and innovation in the satellite sector
Many of our readers would like to hear about your entrance in Brazil. Please tell us about the business-case of this market, your developments in this regard and your expected timeline for the launch.
We have been working on Brazil for almost 4 years – it took some time to create an effective strategic plan and get to market entry. Once we had worked on the planning from our side, we applied for the license and won it last year.
Basically, our strategy is to focus on areas where the telecom infrastructure is not very strong – we have been doing that for the past few years and it has proved to be quite successful. We focus on underserved areas where the coverage is not good through terrestrial networks. Once we identify a market and set up our satellite for providing service to the area, we are able to create a country-wide or continent-wide network over-night. This strategy has worked very well for us in Middle East, Asia and Africa.
We focus on underserved areas where the coverage is not good through terrestrial networks.
Then we looked around the world and we saw that Brazil is a winning market from our perspective. When we started to research into Brazil, we saw that although Brazil has definitely improved over time in terms of the terrestrial networks, a large part of Brazil (which is big enough to be a continent in itself) is actually not covered by good networks. Satellites seem to be the best solution in the area where the government could work with us to provide Internet to a population that would be unconnected otherwise.
Brazil is a winning market from our perspective.
We bid for the license last year, we won the license and in March it was officially announced that we have the license and are moving forward in this regard.
With reference to the timeline: developing a satellite requires time and commitment – we go through a lot of testing to ensure that the right satellite is deployed as once it’s up there, it is really difficult to make any changes. We have UAE nationals as most of our engineers who are working on this satellite which should be ready by the end of this year and we plan to launch it in the beginning of next year.
The satellite will go up the Atlantic Ocean and cover 95% of the Brazilian population and additional 17 markets in Africa.
Over the past years, Leo-satellites have come up in the market to compete with the benefit of lower latency. How do you see these companies as competition?
First of all, the majority of the markets we are operating in are quite huge that creates room for multiple technologies and multiple service providers. Moving on, one of the problems with lower orbit satellites is that the equipment on ground is actually quite expensive. The cost goes up to hundreds of thousands of dollars for the ground terminals as you need two terminals and a third for redundancy. In comparison, we sell our terminals for 350 dollars and they are sold directly in the market for probably 500 dollars. So in terms of the cost of the ground terminals, it is much more reasonable. Cost plays a major role in almost every service that is bought especially Satellite Communications. The customer has to do a cost-benefit analysis, and they have to see what their actual requirement is. The majority of the customers are less dependent on the little difference between latency but need more connectivity, more coverage in terms of area and reliability. If it is a critical mission where you can’t afford any latency at all, the customer would go for fiber and only choose satellite if the fiber is not available. In almost every other scenario, the customer chooses to pay 500 dollars as opposed to hundreds of thousands of dollars because the benefit of the extra expenditure is really not a critical requirement.
Do you see these companies as a threat to market share in the future?
Absolutely not. In fact, more and more customers are coming to us over the past year. There has been a major effect especially in the oil sector due to the recent oil prices. Many customers from the Oil section that would normally take the C-Band capacity or the Ku-Band capacity are now going for our Ka-Band capacity because it’s significantly cheaper. With reduced margins, the Oil companies are looking at every aspect to reduce the costs, and because of that we are looking at a huge increase in demand from this section that did not exist before.
Many customers from the Oil section that would normally take the C-Band capacity or the Ku-Band capacity are now going for our Ka-Band capacity because it’s significantly cheaper.
Heading the commercial operations for one of the largest satellite companies, you must have a keen eye on innovations and new market trends. Do you see any new technologies that could revolutionize how the industry is operating today?
If I have to give out my personal opinion, I am actually very interested in the Cubesat technology – the small satellites. We are actually a key part of the UAE space effort, we are one of the few companies that are at the cutting-edge of the UAE Space Agency and are continuously working with them. We have invested in a master’s program in the Masdar Institute where we are training UAE nationals to work on the cubesat technology. We are very interested to see how the cubesat will go. Theoretically, it seems very good and we are keen to see how this can develop. A number of companies are already developing cubesats but we plan to create a UAE home grown operation for cubesats.
From a conceptual stand-point, the technology has the potential to completely change the industry for certain services such as Imaging or Weather Forecasting etc. but ofcourse they will not have an impact on the major telecom services side. I don’t think they can ever stand in competition with the geo-satellites but I do believe there will be a lot of innovation coming out of this that can be applied to geo-satellites. I think this segment will see the fastest level of innovation in the coming future, and we look forward to how things develop and how we can play a part in it.