For some time, the mobile industry has known that the next wave of growth was going to come not just from emerging markets, but the rural areas beyond the reach of any telecom infrastructure or even the electrical grid. It's not just a huge untapped market, it's also a growing one, according to satellite market research firm NSR.
It estimates that while urbanization in many key Asia-Pacific countries is growing, drawing rural denizens to the cities, the rate of population growth in rural areas is offsetting that to the point where the total rural population base in Asia will grow from 2.43 billion in 2007 to 2.68 billion by the end of 2017.
One of the many challenges in deploying cellular services to remote villages has been the backhaul link from the base station to the network. And for many year, satellite has been touted as an ideal solution, primarily because it covers a wide footprint and can connect thousands of base stations in one go. Just about every major satellite player offers cellular backhaul services in one form or another, and equipment vendors such as Gilat, Hughes, iDirect and others sell equipment to enable it on the ground.
NSR has projected that cellular backhaul revenues from equipment and transponder leases will grow from an estimated $227.1 million in 2007 to almost $573 million by 2017.
However, takeup of cellular satellite backhaul has overall been slow. Cellcos in sub-Saharan Africa have been the most enthusiastic, but in Asia, despite hundreds of thousands of unconnected villages and a number of satellite operators willing to provide the backhaul link, cellcos have been approaching satellite-based cellular backhaul with caution.
By most accounts, that's largely to do with the tendencies of cellcos to focus on dense urban markets first before stretching out to the rural areas. The reason for that is that, regardless of backhaul technique, rural cellular has typically been a problem of too much equipment cost for too little return. And that was just for the base station. Satellite equipment and bandwidth, while cheaper than rolling out fiber or microwave, were also expensive.
But that's changing. With many urban markets now sufficiently covered, many cellcos are prepared to focus on rural coverage - especially since mobile equipment vendors have spent the last couple of years designing base stations for rural deployments with a heavy focus on cost-effectiveness and alternate power. That leaves the backhaul - the most expensive opex cost of any mobile network - and satellite players are getting attention again. In the first half of 2009 a number of vendors announced cellular satellite backhaul trials and contract wins in markets like Malaysia, Nepal, Inner Mongolia and Fiji.