Bridging the Digital Divide – Satcom Positioning and Opportunity

Wave-after-Wave in this ongoing pandemic, the one element that has been greatly highlighted, is the need for robust Internet connectivity and bridging the digital divide across the globe. Remote learning, working, healthcare, conducting businesses and other key socio-economic activities have become universal and hence have exposed the still wide digital divide across regions and communities. Ideally, Satellites can offer a quick infrastructure and suitable option to address this need, but there are multiple challenges attributed to its service provisioning such as bandwidth supply and pricing.

NSR noted in its VSAT & Broadband Satellite Markets, 20^th edition report, that in the last two years, Social Inclusion programs supported by governments have been one of the major growth drivers in the Fixed VSAT market. In-phase with this trend, NSR has improved its resolution on social inclusion by segmenting and analyzing Enterprise-type sites such as connecting schools, institutions, among others and Consumer-type sites, covering programs such as RDOF, in this latest edition.

Bridging the Gap

Despite the COVID19 connectivity boost in the last two years, 37% of the World’s Population still have never used the Internet and 96% of this population are from developing countries, according to the latest ITU data. In Africa, with 453.2 million users, Internet penetration represents only 34% of the total population. Although this represents an increase of 10% compared to 2019, there is a big leap yet to be covered. In Latin America and Caribbean region, 67% of households are connected in urban areas, whereas in rural areas, the figure is only 23%. Similarly, in the Asian region, a wide digital gap exists between urban and rural populations. Undoubtedly, the need in terms of size is massive and governments of many countries are responding appropriately to make connectivity affordable, which is offering a clear opportunity for Satcom stakeholders. Key recent developments include:

• The U.S. FCC announced a $14 billion Affordable Connectivity Program to ensure affordable connections for work, school, health care and other programs.


• Telesat to receive $1.44 billion investment from Government of Canada for affordable broadband connections to all Canadians.


• Hughes India won the deal to connect 5,000 remote villages using Jupiter Systems to the Internet BharatNet program.

Programs such as Indonesia's BAKTI is the forerunner in the Asian region today and as countries in the region, specifically in Southeast Asia emulate Indonesia's example, defining the future of Social Inclusion.

Future of Social Inclusion Market

The major challenges for satcom players in bridging the digital divide are service pricing, equipment pricing, regulations, and customer acquisition. Ongoing Satcom service pricing is out of reach for most of the addressable market. Similarly, equipment pricing – especially for non-Geo services, the expectation of the $200-$300 antenna remains 3-5 years away.





Government mandated programs and subsidies lower most of the hurdles in the segment – making the segment a target. According to NSR’s VSAT & Broadband Satellite Markets, 20^th edition report, cumulative social inclusion service revenues contribution in the fixed VSAT market is estimated to grow from 19% or $1.2 Billion in 2020 to 32% or $7.5 Billion in 2030. Massive growth to $5.7 Billion service revenue by 2030, is forecasted for the Social Inclusion-CB (Consumer Broadband) segment as programs such as RDOF and Telesat + Canadian Government start service provisioning during the forecasted timeline.

Clear demand is observed in the social inclusion segments, in regions such as Asia, Africa and Latin America. However, supply is posing a growth constraint due to a global chip/semiconductor shortage and delays in the VHTS programs such as Viasat-3 and Jupiter-3. NSR estimates these challenges to spread to 2023. This will result in restricted growth in the near term for overall revenues. However, in the long-term, the social inclusion segment’s fundamentals remain strong and hence a projected growth acceleration starting in 2023. Social Inclusion – EV (Enterprise VSAT) is forecasted to ramp-up faster compared to the other traditional Enterprise VSAT segments.

Currently, the industry is witnessing more demand from emerging countries such as Peru, Indonesia, Ethiopia, Columbia and Brazil. NSR predicts this trend in the segment to continue throughout the forecast period, aggregating to $5.3 Billion in capacity revenues at CAGR 6.9%. On the Consumer-class broadband side, Social Inclusion – CB (Consumer Broadband) will be a key growth segment that is projected to take off in the 2025 timeframe. The segment’s capacity revenues are projected to witness $2.3 Billion net growth at an astounding CAGR 29.8%, during 2020-2030.

Bottom Line

Massive opportunities exist for the satcom players in bridging the digital divide as a large global population are still un/under connected and the need for connectivity is at an all-time high with the ongoing COVID19 challenges. An increase in capacity demand per site across Fixed VSAT applications has been a typical trend in the last two years as the workforce work remotely, students attend schools through online classes, businesses transition from offline to online or cloud, leading to a demand ramp-up for data usage and bandwidth. This has resulted in the increased focus on social inclusion programs, which is in-turn boosting demand. However, growth in the segment is not up to its absolute potential because of constraints from the supply side. While demand is ramping up at a rapid pace, supply constraints such as program delays for key players such as Viasat, Hughes, Telesat and the semiconductor/chip shortage are restricting growth. Addressing these supply constraints must be a top strategic imperative for satcom value chain players, in the near term.

The good news for the industry is that demand in this segment is validated with government funding, Greenfield deployments, and bandwidth demand growth in the recent past. Overall, NSR estimates a promising long-term opportunity of $7.5 Billion in service revenues by 2030 and will be or should be one of the main targets of the industry, particularly new programs that are about to enter the marketplace.