Revenue Management for Communication Satellite Operators - Opportunities and Challenges

In this paper we propose a Revenue Management framework for satcom operators and show with a proof-of-concept simulation that predicts a significant gain in revenues. New satellite operators, highly variable demand for data, digital payloads, and new phased array technologies are likely to remake the current satcom landscape. One of the challenges operators old and new will face is how to manage demand and capacity. Airlines faced a similar situation with deregulation in the 1970s - their response with tiered pricing and seat inventory control to allocate capacity (known as Revenue Management), which may offer lessons for the satcom market. The satcom industry shares many characteristics with the airline industry, such as inflexible capacity, low marginal sales cost, perishable inventory, heterogenous customers, and variable and uncertain demand. Generally, those characteristics favor the implementation of a Revenue Management system. However, the details of how Revenue Management can be used by satcom operators still need to be explored, which is the focus of this paper.