Commercial Geostationary Satellite Transponder Market in North America - Growth Opportunities in a Mature Market

North American satellite service providers are facing declining revenues as the vast build-up of transponder capacity - an outcome of highly optimistic market forecasts - remains unused in many primary markets. The migration of broadcasting from analog to digital signals has increased satellite efficiency in terms of content broadcast per transponder, which is reducing the demand for new capacity. Besides, intense competition is likely from the terrestrial networks in point-to-point applications such as corporate networking that holds huge growth potential. These developments are compelling satellite operators to seek effective ways to compete with terrestrial networks. They are adopting a 'wait-and-watch' approach and are extremely careful in adding further capacity to different frequencies - particularly to C-band - that already have high fill rates.

This research presents a comprehensive study of the North American commercial, geostationary satellite transponder market. It gauges both supply and demand for transponder capacity (C, Ku, and Ka frequency bands) that are leased by third parties for use in several applications such as video broadcast, telephony, Internet trunking, and networking. This is supported by an in-depth analysis of competition and market share as well as qualitative discussions on the regulatory environment and operating strategies.

Satellites - the Best Bet for Providing Seamless Point-to-Multipoint Applications

Video broadcast drives the North American satellites market, occupying more than 60 percent of the total transponders in the region. "Video, one of the key point-to-multipoint applications, is the backbone for transponder demand in this region, and satellites are unbeatable in this aspect," says the analyst. Unlike the terrestrial technologies, satellites do not incur additional costs for addressing each new user once the point-to-multipoint applications system is operational. This innate strength is providing a distinct competitive advantage to satellite systems, which simply cannot be replicated by terrestrial means. Market participants are working toward developing hybrid systems to leverage the strengths of both these technologies and thereby, increase market penetration.

Demand from the Government and Military Sectors Drive Market Growth

Consumer demand for commercial communications satellite capacity has dwindled in recent times. However, demand from the government and military sectors has increased dramatically, accounting for nearly 10 percent of the revenues of major satellite service providers. This is only expected to increase further and market participants have created new divisions to target these verticals and offer specific products and services.

"Satellite operators have enjoyed success so far since the military had chosen to use commercial capacity," says the analyst. "Future market success depends on the military's willingness to continue its reliance on commercial satellites rather than dedicated (military-owned) ones." Another critical factor will be the strategies of the Pentagon pertaining to global dispersion of troops and resource consolidation. Dispersion of troops is likely to boost commercial leasing whereas resource consolidation - Pentagon's strategy since World War II - is likely to choke growth. Besides these, military's choice between using several frequency bands and consolidating on one (or few) frequency bands for satellite transmission is likely to play a key role in the selection of satellite service providers.