Panasonic Avionics’ David Bruner.

MOUNTAIN VIEW, California — One of the most active and aggressive buyers of geostationary-orbit satellite capacity in recent years has undergone an epiphany and is withholding planned satellite investment in favor of riding the expected wave of non-GEO broadband satellite constellations.

It had become clear in recent months that Panasonic Avionics had sidelined its XTS, or Extremely High-Throughput, satellite payload plans, in which the aero-connectivity provider would design specific satellite payloads to ride on geo satellite operator fleets in specific regions of the world.

But the extent of the turnaround in thinking at Panasonic Avionics’ belief that LEO-orbit mega-constellations was perhaps never stated so clearly as in Oct. 3 remarks by David Bruner, the company’s vice president for global sales and marketing.

It is Bruner who has led a team that has travelled the world in recent years, stitching together a network of satellite coverage from establishes satellite operators including Intelsat, SES, Eutelsat, Telesat and others.

The company now provides in-flight connectivity to nearly 1,800 commercial aircraft, and has an order backlog of another 2,200 aircraft waiting to be installed with Panasonic-compatible hardware.

With Ku-band satellite bandwidth much more plentiful than Ka-band, Panasonic became, by default, a Ku-band promoter. More recently the company has said that it will be making most of its uplinks in Ka-band in the coming years as Ka-band satellites become available over international air corridors.

But Panasonics’ XTS move, which was intended to provide an additional layer of bandwidth over specific geographic areas, is now on hold.

GEO investment moderated on eve of presumed NGSO tsunami

Addressing the Satellite Innovation Symposium here, Bruner explained his thinking.

“I thought we had the market pretty well understood,” he said. “We were anchor tenants on a number of major projects in GEO.

“But the last six months have kind of scared me, dramatically, and forced me to change our direction. It hasn’t changed our opinion on the business model of the NGSO projects. It’s more that these things are going to happen and it’s going to destabilize the marketplace and we have to be ready to take advantage of that instability to grow faster.

“It’s affecting our network planning and purchasing, dramatically. When three or four of our major geo-capacity providers are all major investors in [NGSO] services, it got our attention. One is Ku-, a couple in Ka-, so it’s going to impact our network and where we go with this.”

Bruner likely was referring to Intelsat’s Investment in OneWeb, SES’s additional investment in SES Networks’ O3b, and Telesat’s tentative plans for its own global LEO constellation. Panasonic has made major capacity purchases on all three companies’ geostationary-orbit satellites.

“This is an inflection point,” Bruner said. “Some of our projects that we were investing in, which were major capacity purchases, we are moderating our purchase to be more flexible, with shorter terms, and getting ready for this crazy period we’re about to go through.”

Seeing opportunity in NGSO business failures

By “crazy period,” Bruner made clear he believes many NGSO broadband efforts will fail as businesses, but perhaps not before their networks are built. The opportunity then would be to pick up NGSO capacity at fire-sale prices, perhaps during bankruptcy proceedings.

“I’m old enough to remember the last time this happened, and it was painful. And I actually think that’s going to occur again. But hopefully we will have learned from that and figured out how to make lemonade, because there are going to be some lemons dropped. Maybe the second mouse will get the cheese here as some of these constellations go up. They wont be profitable and they will change ownership.

“We are looking for those situations and how to be ready to move and make sure we have sufficient capital to be ready to grow.”

Bruner said the low-latency connectivity offered by LEO satellites does not matter for 80% of Panasonics Avionics’ customers. But the remaining 20% would find value in a low-latency service.

More concretely, Panasonic Avionics customers would like global connectivity.  Geostationary-orbit satellites cannot provide links at the poles, unlike the NGSO constellations, most of which use high-inclination orbits.

“Passengers don’t understand why the coverage stops in northern area of Russia and doesn’t pick back up until you get down into Alaska,” Bruner said. “They just want it everywhere. So we look for solutions and this could be a very efficient way to service our customers everywhere they are and give them an experience that is a combination of low cost and low latency. Low latency does matter.”

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Peter B. de Selding
Peter B. de Selding
Peter de Selding is a Co-Founder and editor for SpaceIntelReport.com. He started SpaceIntelReport in 2017 after 26 years as the Paris Bureau Chief for SpaceNews where he covered the commercial satellite, launch and the international space businesses. He is widely considered the preeminent reporter in the space industry and is a must read for space executives. Follow Peter @pbdes