Satellite prices under long-term downward pressure as capacity grows

Satellite capacity pricing is under long-term downward pressure, but the picture is mixed in different regions, with some seeing much sharper drops than others, according to a report by Northern Sky Research.

Citing a report that airline connectivity provider Gogo had obvserved satellite capacity price falls of 60% over the past two years, Northern Sky Research said that its research showed that while some regions had seen price declines of 5% a year for the past five years, others were holding up. The group said that in some rare instances capacity prices had risen.

According to Northern Sky Research, prices for enterprise data applications have fallen sharpest, thanks in part to growing FSS capacity and the emergence of high-throughput satellites.

The group said that the video market generally and the overall market regions including western and Eastern Europe had held up well, with a small-to-negligible impact of increased capacity on prices.

However, it said, other markets including the Middle East and Africa had seen growing capacity and new entrants “wreak havoc on the current pricing paradigm” with competition from new GEO/HTS entrants such as Avanti and YahSat bringing down prices to as little as US$2,0000 per MHz per month for Ku-band capacity and US$2,500 for C-band capacity.

According to Northern Sky Research, operators with capacity in the markets affected by downward pricing are still some way from breaking point. However, it said, there is likely to be ongoing downward pressure on prices as bandwidth becomes commoditised.