The death of traditional telecoms: Is it imminent?

Don't panic! Telecoms are not going anywhere! But technology will certainly be hugely disrupted with the advent of high bandwidth and low-latency satellite internet.  

Elon Musk has pioneered the disruption by launching Starlink, which puts traditional telecom companies under an imminent threat. Tower and fibre companies would, therefore, need to have their own survival strategy.

Recently, one of the potential competitors of Starlink studied the Bangladesh market to figure out if it is feasible for them to provide low-cost high bandwidth and low-latency internet access from 2025. The same company has a plan to launch more than 12,000 low orbit satellites in the next few years. And they found it feasible to provide back-haul support to mobile network operators (MNOs).

Let's understand the traditional telecom versus satellite infrastructure.

The traditional infrastructure transmits and receives signals using land-based towers. Again, the towers are connected through fibre. Each tower covers its own boundary. The reason for problems like weak signals, call drops, low data speed etc, is the absence of towers in close proximity.

On the other hand, satellite infrastructure is not dependent on terrestrial systems but utilises satellites orbiting the earth. This allows satellite signals to cover a much wider area.

Imagine a future where an effective satellite will be deployed at a substantially lower cost than what it is today, and a 25GB 5G data plan being sold at $10 per month. The price may look to be a stretch but given the continued trend of rapid innovation and economic rationale, the capex (capital expenditure) cost per user per GB will be lower for satellite infrastructure as against the traditional telecom infrastructure.

It must be borne in mind that a satellite can reach way more people than a tower, breaking various natural barriers.

Is the traditional telecom infrastructure cheaper or less capex-hungry?

If one considers the costs involved in building, updating and maintaining towers and fibres, active equipment investment, investment for rapid change in technology and high taxation, it makes it prohibitively expensive from both capex and opex (operating expense) perspective.

However, there are debates over the number of satellites that can fit in LEO. Musk argues that tens of billions of satellites can coexist in LEO as against the current number of 4,500.

Some 37 per cent of the world's population is not connected to internet. According to Iridum, a satellite communication company, only 15 per cent of the world's surface is covered by a traditional cellular network.

In the case of Bangladesh, more than 60 per cent of the population is not connected to internet.

For those living in rural or remote areas, advancement in satellite technology can complement existing terrestrial infrastructure in order to bring these individuals online and remove the digital divide.

The government of Bangladesh and the private sector should explore the possibility of using LEO satellites to address the current accessibility issue of the rural and poor population as the best option available instead of relying on MNOs.

The author is a telecom and management expert.


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