02 May 2019

Forget the notion that satellite is old and irrelevant, it’s changing perceptions and breaking new ground, writes Dr. NICOLA DAVIES

Antenna installed at a mining site

The term “satellite” may conjure a traditional image of a large satellite dish mounted on the ground and pointed toward the sky, requiring a clear, uninterrupted view to enable a connection with a device floating high up in space. In many remote areas, this is still one of the most effective ways to connect farflung communities to the rest of the world.

The satellite advantage

Satellite technology has one primary advantage over other technologies: “The sole benefit is that communications can be achieved in areas so remote that conventional land-based fibre or copper cannot be deployed.” This is according to Phil Thomas, operations manager at New Era Systems - a company that sells satellite equipment to markets in Africa, North America, and South America. This capability to provide connectivity in hard-to-reach locations makes satellite technology a viable choice for companies in industries such as energy and banking that are aiming to increase coverage for customers situated in underdeveloped locations, miles away from the urban centres in northern and southern Africa. With further innovations in the field, satellite may have an opportunity to become the chosen method of connection, particularly for industries aiming to serve the needs of untapped communities.

Demand for connectivity in Africa

Global consultancy firm McKinsey describes the African region as the world’s next big growth market. A continent of 54 countries, with an estimated population of 1.2 billion, Africa is bigger than the combined land mass of the continental United States, China, India, and Europe.

The median age in Africa is 20 years, offering a region of young people keen to adopt (and innovate with) digital solutions. Indeed, active users of mobile financial services amount to 122 million and Smartphone connections are expected to grow from 315 million to 636 million from 2015 to 2022.

In McKinsey’s 2018 book Africa’s Business Revolution: How to Succeed in the World’s Next Big Growth Market, the consultancy group outlines five trends:
• A rapidly-growing and urbanizing population, with corresponding increase in spending power.
• An opportunity to industrialize the region to address domestic demand and gain a foothold in export markets.
• A determination for governments and private companies to close gaps in electricity, transport, and water infrastructure.
• Abundance of natural resources including agriculture, mining, oil, and gas. This offers the potential to innovate within the fields of food production and energy, helping create wealth for the region.
• Swift adoption of mobile and digital technologies, helping Africa overtake numerous obstacles to economic growth.

Demand for digital solutions to essential services, such as electricity and banking, is growing rapidly. Thomas says, “Our clients are the hub operators in Europe or the Middle East who sell service to Africa and other regions.

There is a strong demand for service in the interior of Africa, places that terrain and remoteness make it difficult for any other form of connection. Africa is large and the population increasing; they have the wish to get access to global communication networks.”

While some may see it as a hindrance to doing business, the lack of existing infrastructure in many areas and industries could in fact be an opportunity for smart companies to offer services in innovative ways. Digital-only methods may be some of the most cost-effective ways for energy companies and financial institutions eager to expand their markets, and satellite technology can help these companies overcome the lack of infrastructure. “Satellite connection only requires power and a direct view of the sky where a suitable satellite is located,” says Thomas. “Land-based systems need either a wireless tower or copper cable connections between the provider and the consumer. The cost of deploying cable internet connections to low density rural areas, possibly over difficult terrain, makes the task unprofitable. The downside is that satellite bandwidth costs are dramatically higher than terrestrial costs. Urban areas can benefit from hard-wire or Wi-Fi connections and are adverse to paying the higher cost of satellite bandwidth.”

Rural electrification

The household electrification rate in the Sub-Saharan African region remains the lowest globally, according to a 2018 report by the World Bank. 2 In 2016, 42 per cent of households had access to electricity, the majority of which are located in urban areas. Of rural households, the electrification rate is estimated to be 22 per cent. Thus, extending access to electricity is one of the most important development issues in the region. Electrification is one of the factors that will help increase productivity in many untapped areas of the continent.

According to McKinsey, the continent continues to experience large gaps in energy. The lack of power in rural areas is still described as one of the major challenges for Africa. While people living in urban centres may now have little or no problem getting connected, the needs of communities in far-flung areas lacking infrastructure remain unmet. Electricity and an Internet connection go hand-in-hand, and satellite companies may be able to help connect rural communities with energy providers in the region. This is why opportunities still abound for satellite technology within the energy industry.

One example of how satellite is helping energy companies reach remote areas is the hybrid wind farm/power station in Amdjarass, Republic of Chad. The plant is operated by Vergnet Group, a French company delivering renewable energy solutions. The facility has allowed Amdjarass to become the first city in Chad to run on 100 per cent renewables. Its operations control centre is located in France, but a premium VSAT (“very small aperture terminal”) service by Marlink, a global provider of satellite communication services, enables the centre to remotely monitor and maintain the plant. The connection is secure and “always-on,” ensuring the plant is constantly delivering energy to the community. In a media release, an executive from Marlink says that terrestrial networks are either unavailable or unable to provide the bandwidth or reliability necessary for the delivery of sustainable energy production in remote regions. The connection has a guaranteed redundant link for Machine- 2-Machine (M2M) data transmission, as well as Internet access and email. This reliability is why satellite communication technologies are essential in energy production and delivery.

Reaching the under-banked

In a February 2018 report, McKinsey described the African overall banking market as the second-fastest-growing, as well as second-most profitable, in the world. Challenges particular to retail banking include low banking penetration, minimal credit coverage, frequent use of cash in transacting, and the presence of only a few branches and ATMs. There are 54 separate markets comprising the rapidly growing African banking sector. In 2012, 170 million had access to banking services. As of 2017, this number grew to 300 million. In 2022, the estimated number of Africans with access to banking will be 450 million, almost half of the continent’s population. From 2012 to 2017, banks in the continent grew revenues at twice the global average. Additionally, they were more than twice as profitable (on average) as banks in developed markets. Since there are still many unserved or underserved individuals, enterprises, and communities, there are also many opportunities within the banking and financial services sector for satellite technology. The technology’s ability to reach areas not served by terrestrial networks makes it a dependable tool for banks and other institutions who intend to take advantage of the rapid economic growth and the need to address financial inclusion.

One example of a financial institution using satellite communications is in the East African region, where Liquid Telecom works with Kenya Commercial Bank (KCB) to expand its network with satellite services. Specifically, the KCB uses VSAT technology to connect 24 branches in South Sudan. Lacking an effective Information and Communications Technology infrastructure, companies in countries such as South Sudan can take advantage of satellite services that can provide reliable links for branch-to-branch or other internal connections. They can also take advantage of dependable networks for essential services such as ATMs or the use of point-ofsale terminals.5

Another example in the financial sector is the partnership between iDirect, a global provider of satellite communications, and Q-KON, a telecommunications system integrator with 30 years’ experience operating in various parts of Africa. Q-KON specializes in the development and operation of “off-grid” connectivity for businesses throughout the region, with expertise in the financial services industry. The telco group focuses on locations and services that are not provided by national telecom networks or cannot be met by existing infrastructure.

While mobile networks provide 3G, the finance sector requires higher reliability and guaranteed Service Level Agreement (SLA) services for operational concerns, such as ATM connection, point-of-sale services, and branch back-up. Q-KON and iDirect have created unique satellite solutions which combine the advantages of satellite (constantly on, access from anywhere, and high dependability) with the efficiency, optimized costs, and SLA support of network services.

A Swazilandbased bank has approached Q-KON to build primary and backup communication networks for ATMs and branches not just within the country but also to its headquarters based in South Africa. Pan-African banks are facing increasing pressure to develop both regional and national markets. Local monetary regulations require that processing must be done in-country, and companies must find an efficient and cost-effective way to decentralize infrastructure and build local networks and country-specific processing hubs. IDirect helped create what they call a regional node mesh solution to address this need. The service uses one main network core to provide connection to Pan-Africa, with the option to install a regional node, using a mesh receiver, in each country to provide full local connectivity. This way, the company does not need to invest too much on infrastructure in each new location, but still complies with local regulations.

Advantages of satellite technology

Today, satellite communications technology is developed enough to be able to deliver a quality connection, whether this is for voice, video, or data. Networks are reliable, enabling consistent connectivity in areas where terrestrial solutions fail or are unavailable or too expensive. In addition, the technology is modular. It is easy and quick to deploy, making it a convenient option for companies that need to continuously add a new location to its existing network. Even in disaster scenarios, companies would be able to use satellite as a back up connection to immediately restore communications in affected areas.

Innovations push satellite forward

While satellite has traditionally been known for its “last mile” proposition, innovations in space satellite technology may help push the industry forward. The development of low earth orbit (LEO) mega-constellations is one such development. LEO satellites are those that orbit the earth at an altitude of 160 km up to 2,000 km. Since this type of satellite is close to the ground, it requires less power and less time to transmit data, compared to satellites in higher orbits.

The new LEO satellites are lighter, smaller, and less expensive to develop than traditional satellites meant to go in higher orbit. With competition increasing, the cost of LEOs may continue to drop. Satellites can be built with lower-cost massproduced parts. In case one of these parts malfunctions, it can simply be replaced instead of fixed. In the same way, if one satellite within a mega-constellation fails, an operator may simply send up a new one instead of spending time and other resources repairing the broken satellite.

A constellation or group of satellites are designed to communicate with each other in such a way that data is not returned to the ground. Instead, the information is bounced along the sky. Operators on the ground have a terminal that automatically picks out which particular satellite within the constellation has the best signal at that moment in time, and then makes a connection to this satellite. The terminal will need to switch satellites frequently because LEOs move relative to the planet. However, since there will be a large number of these small satellites, on-the-ground terminals will always have one available to them. The terminals themselves will also be smaller and easier to install compared to traditional satellite dishes. Information will travel along Ka (26.5GHz to 40GHz) and Ku (12GHz to 18GH) frequency bands.

LEOs move and are distributed around the Earth, so some satellites may temporarily go to a different part of the sky, over a region where there could be little to no usage of the satellite. There is an opportunity, then, for satellite companies to offer connection services to these areas for a lower price than other markets, because any additional business from these previously untapped regions would increase overall revenue.

Beyond energy and banking

These developments in satellite technology are an opportunity for further digital innovation. Local African businesses and foreign companies may find it worth taking the high risk (and potentially high returns) of investing in the region. One company helping enterprises and consumers in the region is YahSat, a satellite communication company from the United Arab Emirates (UAE). Optimistic about Africa, the Abu Dhabi-based group invested more than $200 million on its Al Yah 3 satellite, which started operations in early 2018. The new satellite has enabled YahSat to launch its broadband service, branded as YahClick, in eight new markets, which include Cameroon, the Democratic Republic of the Congo, Ghana, Ivory Coast, and Zimbabwe. Rural areas in these countries can now have access to the internet.

YahClick has been available to customers in Kenya, Nigeria, and South Africa for some time. Satellite broadband services can help improve the quality of life of remote communities, ensuring businesses are constantly connected. Affordable, easy-to-install, uninterrupted internet services help entrepreneurs, government agencies, schools, and healthcare providers become efficient in their daily operations. This, in turn, enables them to effectively serve the people within the community.

Combining solutions

Satellite technology is a one of the most effective ways to help remote locations get connected to the Internet. It is now as fast as terrestrial solutions, with the added benefits of easy installation, low cost, and “alwayson” dependability. However, as the needs of individuals, households, and communities grow, it may be necessary for companies to come up with combined terrestrial and satellite-based solutions. Thomas says, “Increasing populations in rural areas will see an expansion of satellite connectivity. At some stage when the population reaches a certain level there will be a tipping point and somehow the terrestrial connections will be brought into that area and will replace satellite. We have been focusing on two-way satellite connections, but as we have seen in the US, platforms transmitting television and other streaming content will hold their own and have a much longer life even when cable reaches a particular area.”

Increasingly complex data requirements may also need a network that seamlessly utilizes a mix of Low Earth Orbit (LEO), Medium Earth Orbit (MEO), and Geostationary Orbit (GEO) satellite constellations, as well as land-based technologies. This could be the case with the low latency and gigabit connectivity needs of native 5G networks.

As Africa continues its journey of vast economic growth, it is essential that every community can access essential services, including power, banking, education, healthcare, and small-business support. The importance of the internet in promoting inclusion, efficiency, and innovation cannot be understated. Satellite technologies have a massive potential to help many remote African communities not only catch up, but flourish with the rest of the region.