The financial sense behind satellite

From a business model and pricing structure point of view, a cost comparison between mobile services and satellite technology reveals that satellite works out to be up to ten times more cost effective. 

Dawie de Wet, CEO, Q-KON. (Image: Q-KON)

This is the view of Dawie de Wet, CEO of Q-KON, an established engineering group and provider of managed network services and turn-key solutions to the growing Africa telecommunications market.

According to de Wet the growth of mobile subscribers and prevalence of mobile technology services has impacted on cost structures and made packages acceptably priced in the eyes of consumers – for both private individuals and corporate customers.

“In stark contrast to this is the general perception that satellite service is an expensive alternative that can only be justified in very specific niche market applications and often considered as a last option to provide connectivity services,”

However, when calculating an equivalent per-minute cost for satellite services, it may come as a surprise to many that satellite is about ten times cheaper! This is based on an average market reference of R500 per Giga-byte and usage of 25kbps per voice call, which yields a satellite transmission cost of less than ten cents per minute. In addition the call forwarding rates need to be added using very competitive terrestrial voice termination service providers,” he explains.

Management at Q-KON emphasise that pricing of telecom services has more to do with the commercial business models and pricing policies than with the actual cost of the telecom medium or infrastructure.

Operators have taken into consideration factors such as high-demand for mobility and the convenience this technology does offer, along with the relevance of a pre-pay pricing model, to effectively access lower income markets on a small incremental basis.

De Wet says the pricing and billing models of current satellite services, outside of that which falls within the Q-KON portfolio) have not yet evolved.

“Which means that the solutions are actually offered as part of an expensive pricing package,” says De Wet. “By pricing satellite services in the same way than mobile telephony services (i.e per minute) reveals a completely different perspective.”

The company urges the market to view the cost of satellite services in the context of services offered and business model applied. Services offered could be the Internet, standby services, telephony services and/or broadcast services and corporate data networks.

As an established service provider in this competitive space, Q-KON continues to address the issue of awareness around satellite infrastructure and what it can mean for businesses.

De Wet says Service Providers have a role to play in helping to drive this awareness by demonstrating the cost advantage of using specifically developed billing models for specific applications.

“The market must be educated to appreciate the potential of satellite and broaden their understanding that satellite services can be contracted in very different ways – in the same way than you will get very different call rates for pre-pay or contract mobile service packages,” he adds.

Staff Writer