An analysis of C-band spectrum reallocation from Northern Star Research published today finds a limited sale of mid C-band spectrum is the best way for Intelsat and SES to pay down or even eliminate debt and begin investing in video and data distribution based upon hybrid satellite architectures, constellations and consumer broadband.

The analysis, “C-Band Spectrum Reallocation: Too Lucrative To Ignore?” by NSR analyst Gagan Agrawal, examines the economic ramifications of the sale of 500MHz of spectrum between 3.7 and 4.2GHz in the United States to wireless companies for deployment of their 5G network.

[Read: FCC Grants Yet Another C-Band Filing Extension]

According to the author, several factors over the next few years will contribute to a decline in C-band-derived revenues for Intelsat and SES, which together account for about 90 percent of the C-band spectrum in the United States. Declining revenues from this spectrum mean continued use C-band satellite service will not make “economic sense,” writes Agawal, referencing NSR’s “Global Satellite Capacity Supply & Demand, 15th Edition” report.

Based on the anticipated value of the spectrum in an auction to wireless companies, selling the spectrum appears to be the wisest choice. Taking into account a 50 to 100MHz guard band to protect against interference, the value of 400MHz based on a U.S. population of 330 million people theoretically falls between $60 billion and $75 billion, based on a conservative estimate of $0.5 to $0.6 MHz-pop.

“And with Intelsat and SES approximately possessing 45 percent of the spectrum each, both could (again theoretically) net at least $20 - $25 billion in proceeds after tax,” writes Agawal.

The author, however, lists several caveats that impact the true value of the proceeds--for instance, higher costs than reimbursements to broadcasters and cable providers because Intelsat and SES may need to launch a new satellite, costing them around $200 million to keep their customers. However, Agawal points out that new HEVC compression as part of DVB-S2X could make it possible to fit all video distribution channels into less than 30 percent of capacity.

Regardless of economic and regulatory factors, however, both companies “have a great opportunity to offset their complete debts with the spectrum sales,” he writes, adding “Intelsat and SES each may gain between mid to high single-digit billion dollars (considering Intelsat’s >6B tax losses), wiping [sic] of 70-100 percent of their debt.”

To read the full analysis, visit the NSR website.

CAMBRIDGE, MASS.—In Northern Sky Research’s ninth edition of its Linear TV via Satellite report there is still a global growth market for Linear TV via Satellite as more than 12,200 channels are expected to be added over the next 10 years. Despite this growth leading to a total of more than 53,600 channels by 2026, NSR claims that Direct to Home (DTH) and video distribution growth are coming to an end due to market saturation and increased competition.

SD channels are expected to be the largest source of growth for DTH, per NSR, with more than two-thirds of channels to be in the SD format. There should also be channel growth occurring on the higher bandwidth HD format for satellite operators, indicating that DTH, cable and IPTV markets are reaching an inflection point in their product offerings. NSR says a reason for growth is to keep offering premium content to compete against OTT platforms and the fear that cutting channels may lead more to cut the cord.

The full report is available here.

CAMBRIDGE, MASS.—Currently, about 1 percent of overall channels are UHD, according to NSR’s “UltraHD via Satellite, Third Edition” report, however the report also indicates that 2016 could be a key year in changing that. NSR cites 2016 as the key inflection point for the rollout of UHD via satellite and predicts that by 2025 there will be more than 785 UHD channels; annual leasing revenues for satellite’s to have the required bandwidth capacity to run UHD channels are predicted to be an additional $280 million.

Some of the indicators identified in the report to support his growth include the expected increase of regions carrying UHD channels. East Asia has carried commercial UHD channels for more than a year, per the report, but by next year almost all regions across the world are expected to have UHD channels; developing regions are expected to receive content by the end of the decade. The falling price of 4K TV sets is also increasing the interest in the format, creating a higher demand for content.

“Given the exponential increases we’ve seen on 4K TV shipments, introducing UltraHD channels and packages is a key strategy to retain and grow pay TV subscriber bases in an increasingly competitive environment,” said Alan Crisp, NSR analyst and author of the report. “While in the short term DTH, cable TV and IPTV platforms will offer UHD for ‘free’ with existing premium channel bundles, longer term UHD will achieve higher revenue streams generated by increasing ARPUs and subscriber levels.”

NSR is an international market research and consulting firm with a core focus on the satellite sector and other related industries. Click to see the full “UltraHD via Satellite, Third Edition.”