Satellite operators can mitigate capacity price declines by targeting specialist verticals

Many incumbent satellite operators’ profit margins are shrinking due to Starlink’s competitive pricing strategy across consumer- and business-facing segments. Indeed, wholesale capacity prices are falling across the satellite industry. However, this decline is slower for segments in which capacity accounts for less of the total cost of ownership (TCO) of a satellite solution, and in which operators compete using means other than prices. As such, satellite operators can mitigate the impact of falling capacity prices by targeting segments such as backhaul and aero mobility where customers spend more on services, equipment and installation. They should develop segment-specific expertise to deliver end-to-end services that present a larger barrier to new market entrants.

Analysys Mason’s Satellite capacity pricing index, 10th edition shows that wholesale prices for geostationary orbit, high-throughput satellite (GEO-HTS) capacity for consumer broadband declined by 6.2% year-on-year on average in 2023. Conversely, the wholesale price for GEO-HTS capacity for aeronautical connectivity (which demands a greater level of service than consumer broadband, as well as expensive equipment installation) fell by just 3.0% year-on-year. In this article, we provide an assessment of some of the notable trends from our report.