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Global satellite capacity prices fall in wake of Starlink

TAMPA, Fla. — The price of satellite bandwidth for data services fell 77% in five years after SpaceX’s Starlink constellation flooded the market with capacity, according to a Euroconsult analysis released Feb. 12.

Grace Khanuja, principal consultant at Euroconsult, said satellite operators would get an average revenue per user (ARPU) of $260 per month for each megabit per second of capacity in 2023.

The consultancy’s data definition covers fixed and mobile services in commercial and government markets, including for cellular backhaul and military customers.

The ARPU analysis is derived from Euroconsult’s proprietary internal databases, Khanuja said, from confidential interviews with industry participants.

The study showed that the price of satellite capacity for video services declined 16% over a five-year period, reaching an ARPU of $2,760 per month for each megahertz of bandwidth.

Video prices have fallen more slowly than data prices as capacity supply to broadcasters has largely stagnated due to a shift to internet-based streaming services, as well as the prevalence of long-term contracts.

SpaceX has more than 5,400 Starlink broadband satellites in low Earth orbit after launching an aggressive launch campaign in 2019. The company recently told regulators it has 2.2 million Starlink customers worldwide, including 59 % in the USA.

Khanuja estimates that Starlink will add between 25 and 26 terabits per second of satellite capacity to the data market in 2023.

High-throughput satellites (HTS) from geostationary operators such as the American Hughes Network Systems and the French company Eutelsat also contribute to the supply glut, but to a lesser extent.

In response to falling capacity prices, the satellite industry is moving away from traditional wholesale leasing operations to more managed solutions to make more money from its bandwidth. This trend is also pushing operators to purchase service providers and pursue other vertical integration strategies to get closer to their customers.

According to Euroconsult, service providers are increasingly opting for predefined service offerings offered by satellite operators to offload the complexity of capacity management, allowing them to focus on providing services to added value such as cybersecurity, telematics and cloud computing.

The costs of providing capacity have also fallen in recent years thanks to advances in satellite manufacturing – and greater launch availability thanks mainly to SpaceX.

The average cost of providing HTS capacity in North America has fallen from around $40 per month per megabit per second in 2019 to around $12 in 2023, according to Euroconsult.

However, Euroconsult expects costs to stabilize over the next two to three years in America and Europe, which could slow the decline in capacity prices.

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