Research: satellite driven networks need to be big to make financial sense
August 19, 2008 by Dave Haynes
Northern Sky Research has released a report looking at the cost of using satellite distribution for digital signage installs, which comes to the surprising (at least to me) conclusion that it takes a monster-sized network to make dishes the better way to go.
It’s surprising because, best as I can tell, the market research and consulting firm is all about satellite and wireless work.
The aim of this exercise was to establish the “tipping point” at which a satellite-based deployment (one-way DVB-S/S2 with return path over terrestrial) would prove more cost effective over a traditional wired deployment. At the very outset, the choice for satellite over terrestrial in most cases is governed by qualitative factors such as deployment in remote regions, geographical reach etc. However, NSR through this analysis, sought to establish if there exists a threshold in terms of number of sites over which the choice shifts from terrestrial to satellite based purely on a decrease in the Net Present Value of the total costs associated with the project.
The researchers laid out a series of assumptions about the size of a typical deployment and the associated costs, and came to their conclusions:
The total cost of deploying a Digital Signage network of the scale mentioned above ranges from $150,000 to $11 million per year depending upon the number of screens deployed, and a large portion of that total is the cost of the screens. However averaged over a 10 year-period, the cost per screen rests between $2,300 and $3,200 per screen deployed. This translates to a cost of $7,000 to $10,000 per site if we consider the average number of screens between three and four per site. This figure for the average number of screens per site was established by NSR as a part of the Global Market for Digital Signage report and widely accepted by the industry.
The figure below depicts the variation in the cost per screen when compared across two technologies for connecting Digital Signage sites, namely terrestrial (wired two-way) and satellite one-way (DVB-S/S2 and terrestrial return path). As the figure shows, the “tipping point” is achieved when the cost per screen for deploying this network via a one-way satellite solution falls below that for deploying the same network over a terrestrial equivalent. This benefit continues as economies of scale are achieved, a long-standing advantage of a satellite solution. Based on the inputs above, NSR’s analysis reveals that this tipping point is achieved at a network deployment of close to 4,500 screens.
The report looks at the size of the current deployed market using satellite, and takes a look ahead.
Clearly there exists evidence that satellite will continue to serve a niche within the Digital Signage industry as it does with industries such as basic connectivity, paid television and newsgathering, to name a few. Falling cost of equipment and the forthcoming Ka-band satellites for consumer broaband will usher in larger Digital Signage deployments that decide to skip the terrestrial route for more tangible benefits to the bottom line.
One thing this doesn’t get into — but can have a huge bearing on whether one-way satellite makes sense — is localization. These sorts of satellite networks can work when it is the same content blasted out to thousands of sites with dishes and receivers. It is not impossible, but waaaaay more complicated if there is a need to tailor the content, in any way, to each location, or groups of locations.
And if you want to know what’s going on at each site, you need some sort of a back-channel (some networks even resort to dial-up) to send log files and reports back to the mother ship.
So, as the report notes, there is definitely a role for satellite in this industry, but as the report says, it services a niche.