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Satellite operators need innovative business models, tech

Satellite operators need innovative business models, tech

Satellite operators in Africa need to adopt more innovative business models and technologies if they are to work effectively with mobile operators and bring down the cost of connectivity on the continent.

That is according to Oren Tepper, vice president for sales in Africa at satellite services provider Spacecom, who said satellite firms needed to remodel their business case and come up with new approaches to working with MNOs.

He said there was a perception that satellite connectivity was expensive, and that operators needed to do more to reduce the cost per bit. This is becoming particularly important as younger generations consumer more video content, which uses up a lot more data and means MNOs need to bring prices down.

"There is a very rigid business model these days with satellite operators," Tepper said, adding such companies had a lot of upfront costs and until now had not adopted innovative enough business models to enable them to bootstrap projects and reduce costs.

This is forcing MNOs to take on all of the risk for themselves, making satellite a less attractive option.

"We as satellite operators expect MNOs to invest upfront without knowing what the service uptake will be. We need to find a way of changing that," Tepper said.

Yet it is not as simple as satellite firms taking on this risk themselves.

"There is a bottom in terms of price because the fundamentals of satellite are not changing. We cannot offer lower and lower and lower prices because we will go out of business. It is not that we don't want to," said Tepper, who said things like payload, launch and insurance were expensive. "That will not change in the next three, five or six years," he said.

Some companies are trying to accommodate a business case for MNOs that are trying to bridge the digital divide, said Tepper, by adopting a 'pay as you use' model that reduces the risk of bootstrapping.

"We want to share the pain and gain. By doing it volume-based we allow the bootstrapping of services," he said. "It is a model MNOs are really used to."

By offering unique business models that offer an affordable introduction, satellite operators can help bring new services to new markets, he said. However, innovation in terms of technologies is also necessary. While most operators have focused mainly on the Ka-band, more and more businesses need C-band or Ku-band.

"Satellite operators haven't innovated much over the last few years. They are afraid to," Tepper said, adding that there was also a necessity to make these other bands cheaper by reusing spectrum and ensuring in-country termination.

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