- FCC approves the SES-Intelstat merger
- The deal will help create more competitive, low-cost services while establishing another multi-orbit player in the satellite space
- The satellite market is forecasted to see explosive growth over the next 10 years, according to Goldman Sachs
The Federal Communications Commission (FCC) is on an approval spree. The agency just okayed SES’s proposed acquisition of Intelstat, a $3.1 billion deal that will allow the Luxembourg-based satcom company to build out its “multi-orbit satellite-based capabilities, spectrum portfolio, and global ground network to serve customers.”
The approval came just days after FCC greenlit two major transactions for T-Mobile US, allowing the telecom giant to proceed with its $4.4 billion acquisition of UScellular’s wireless division and acquire 50% stake in fiber provider Metronet.
The former move signals a clear shift towards support for delivery of alternative broadband services to the public.
“By permitting the merger of two major satellite operators, the FCC is cultivating a more vigorous multi-orbit competitor in the satellite communications market, which promises to lower costs and increase investment, directly benefiting consumers and expanding access, especially in underserved rural areas,” said Ron Westfall, analyst at HyperFRAME.
Goldman Sachs estimates the satellite market is set to grow seven-fold in the next 10 years, reaching a whopping $108 billion by 2035, up from its current $15 billion value – and that’s a base-case forecast.
According to its analysts, there is possibility of a growth of over $400 billion in the next 10 years in a best-case scenario.
Given the U.S. government's current enthusiasm around alternative broadband technologies, it seems to check out.
BEAD's satellite overhaul
In May, the US government made changes to the Broadband Equity, Access, and Deployment (BEAD) Program that provides funding for expansion of high-speed internet access across all 50 states. Signed into law in 2022 under Biden Administration, the program allocates $42 billion towards rural broadband coverage. In short, the current administration ditched a previous emphasis on fiber rollouts and mandated greater inclusion of more alternative broadband technologies - like satellite.
“After careful review, NTIA announces reforms that will remove rules favoring particular technologies and eliminate unnecessary regulatory burdens,” NTIA said in a release. It argued removing the fiber focus and leveraging additional options would help connect “more Americans to broadband more quickly”.
In June, at a House Appropriations Subcommittee hearing, Secretary Howard Lutnick said, “If your state is willing to just be technologically agnostic, meaning produce the right access at the lowest price, if it’s a tie I don’t care which one you pick, make that application within 90 days, and then this department will put out the money by the end of the year,” hinting that the program will require states to comply to the changed guidelines.
The revision opened the door for technologies such as satellite, fixed wireless and even free space optics (FSO) to snag a much larger portion of BEAD funds than originally anticipated.
In rural areas especially, where the cost of setting up physical broadband infrastructure like cable and wires often exceed the quality of service, satellite internet has the potential to flourish.
“This move, consistent with the administration's policy shifts in programs like BEAD, now prioritizes a broader range of technologies, including satellite over just fiber, and signifies a significant boon for the satellite industry, positioning it as a key player in the national broadband strategy and encouraging further innovation and expansion in satellite-based internet services,” Westfall said.
Speculation is rife that despite President Trump’s souring relations with Elon Musk the changes will provide significant advantage to Starlink in winning more rural broadband funding.
But the FCC approval and BEAD revisions mean Starlink will be up against more competitors, including the combined SES-Intelstat entity, Viasat, Hughesnet, Amazon's Project Kuiper and Eutelsat OneWeb, said Westfall.
As of publication, SES had not responded to a request for comment.