Globalstar Inc (GSAT)

[E E Euthanasia]

Unofficial Satellite 2017 Notes from Summit Ridge Group (48 pages):

Executive Summary

Satellite 2017 made clear the industry is in the midst of massive change. Vertical integration, massively falling prices, reusable launch vehicles, digital satellite payloads, cheaper customer equipment, IoT, and 5G dominated discussions. While some of these had been discussed previously, it’s clear they have now descended upon the industry. Recent new events are likely drove the increased attention on data security issues.

There should be no more question about whether satellite pricing was stabilizing. Discussions abounded about how to lower pricing was needed in consumer markets to grow demand. There was widespread acknowledgement that satellite bandwidth price is falling more generally. Almost as if to drive in the point, Hughes ended any doubts by unveiling its new Jupiter service that halved pricing per unit of capacity.

In satellite manufacturing cost per unit of throughput is falling – new benchmark metric for new systems is $1 million per Gbps of throughput. Manufactures are scrambling meet increase customer expectations with software defined payloads, streamlined manufacturing processes etc. Debate about optimal HTS satellite life in the face of rapid evolution came to the forefront. Concerns that others in the value chain, including launch providers and ground equipment manufacturers, are not matching this level of cost/performance improvement.

Pressure to lower prices across the value chain may lead to increased vertical integration as the investments one area, particularly user terminals, disproportionally benefit service providers. Indeed, the two leaders in consumer broadband, ViaSat and Hughes are both vertically integrated. Other announcements including the Hughes/Panasonic Aviation/SES joint venture in aviation and the Intelsat investment in Kymeta were additional examples of vertical integration. This is marked change from the Euroconsult conference this fall. At that time, the notion of investment in customer applications and hardware as being necessary to stimulate demand to fill HTS capacity was only barely breached. Now it has spilled into the open.

Speaking of Intelsat, no one seems to understand how OneWeb benefits from the Intelsat match except that it helps SoftBank that has significant direct and indirect control over OneWeb. Support on the regulatory front does not make sense. But the Intelsat/OneWeb merger was not an isolated deal. Telesat is also moving towards launching a LEO constellation and SES has already deployed its O3B system. In general, the synergies between GEO and LEO operators are not clear. Should FSS operators become more vertically integrated with their distribution partners, this could change. Perhaps it’s only a matter of time?
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http://summitridgegroup.com/unofficial-satellite-2017-notes-summit-ridge-group/