The Bottlenecks
Despite its growing popularity, the VSAT segment is facing a couple of hurdles as well. The temporary shortage of Ku band space is the biggest challenge presently faced by VSAT operators. This shortage could affect the growth of the industry in the short term. The next biggest challenge is of the slowdown of some of the key VSAT segments like stock broking. While the existing streams of revenue did not get affected much, the expansion of some of these segments got severely impacted.

Also the tight regulations governing the deployment of cellular backhaul have still not eased out much, and have severely impacted this high-growth sector. Cellular service providers are going increasingly rural and are looking for fleet-footed quick deployable services, whereas the current regulatory framework is very detrimental to this deployment.

Some of the other challenges that the industry is facing are -capex for VSAT networks, high maintenance and operating costs, poor infrastructure, providing better SLA, visibility in terms of up-time, and overall value for money. Fluctuating dollar price is also likely to put major pressure on price and imports for industry players

Way to Go
The total market size per annum, as of now, is about 25,000-30,000 VSATs. India can see a penetration of over 5 mn VSATs in the next ten to fifteen years across enterprises, government, SMEs, and consumer segments.

Some of the key requirements of the market include, penetration of satellite based services to serve remote and inaccessible areas, distance learning, geographically extensive and flexible mobile service, and more broadband based services. VSAT could also play a major role in providing last mile connectivity, disaster management, e-governance up to Panchayat level, village kiosks or information centers, SWANs, cellular backhaul, connectivity for offshore in oil exploration, meteorological monitoring.

The key industry segments that are expected to contribute strongly in FY 2008-09 are banking, e-governance, stock and commodity trading, defense, distance education, and retail.

There is a higher acceptance of VSATs as a broadband access medium by a much larger addressable market of SMEs, which will provide additional growth compared to the traditional enterprise and government segments.

Akhilesh Shukla
akhileshs@cybermedia.co.in