Mobile Satellite Services

Mobile Satellite Services (MSS) saw a period of strong growth earlier in the decade but are now facing a period of relative uncertainty. Paris-based consultancy Euroconsult released their report, ‘Communications Markets Survey, Prospects to 2018’ in October. Richard Roithner, Senior Analyst at Euroconsult, presents us with the highlights.

The MSS industry is currently at a crucial point with several operators about to replace their aging satellite constellations, an economic crisis that impacts several key vertical target markets and a difficult financing environment. Nevertheless, the industry is expected to grow in the years to come, driven primarily by data applications, increasing use of MSS in maritime and aeronautical markets and rising demand in emerging regions.

According to Euroconsult, MSS operators generated total revenues of $1.23 billion in 2008, a year-over-year industry growth rate of roughly 6 percent. But the industry remains very concentrated and the three leading operators Inmarsat, Iridium and Thuraya account for close to 88 percent of the total industry revenues with Inmarsat alone having a market share of over 51 percent.

From 2002 to 2005 industry wholesale revenues grew from roughly $740 million to nearly $1.2 billion driven heavily by military activities in the Middle East. After that, several MSS operators started to struggle for various reasons. Middle East-based Thuraya’s results have been impacted by technical issues and a high number of pre-paid users who stopped using their phones. US-based Globalstar has also seen a sharp decline in financial performance beginning in 2007 due to technical problems on its satellites affecting the system’s two-way communication capability. In 2008, only two of the six current MSS operators, Inmarsat and Iridium, were profitable with the remaining operators still in the red. The current financial crisis and the economic downturn affecting a number of key vertical does not make things easier for MSS operators, even more so as a number of them are currently about to replace their aging fleets or launch costly new mobile satellite systems.

However, the outlook for the industry may not be as gloomy as it seems. “Despite the adverse economic environment, MSS operators’ core market -- critical mobile communications where terrestrial networks are not available -- has been robust,” said Pacôme Revillon, CEO at Euroconsult. ”Needs for better broadband communications and remote control of assets are key growth drivers for the MSS industry going forward,” he continued. Increasing demand in emerging MSS regions such as Asia will also contribute to growth.

Also the high growth in MSS terminals over the last years is an indicator of the growth potential of this niche industry. The number of active MSS terminals worldwide has increased from less than 500,000 terminals in 2002 to over two million terminals in 2008, largely driven by the strong growth in M2M terminals.

To read the full story, see the next issue of Satellite Evolution EMEA.

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