by Andrea Maléter
Asia is perhaps the most diverse of all regions of the globe from a range of perspectives – social, political, economic, and business. Telecommunications, cutting across all of these areas, reflects this diversity — and satellite services are no exception. Despite this variety, there are some key generalizations that can be made regarding satellite markets in Asia (including the Pacific Rim).
Video is the key growth driver for overall demand in Asia/Asia Pacific, with HD pushing this trend. The capacity required for video services will more than triple over the next 10 years, a fact that has pushed last year’s growth, resulting in increasing the number of new operators and satellites that will serve the region.
Data services can expect to have steady growth, driven by emerging VSAT applications with government broadband subsidies, as well as expanding government networks, to help support this growth.
The global proliferation of voice over IP (VoIP) usage continues to drive down overall demand for circuit-switched voice services via satellite. Asia, like all regions, sees a continued steep decline in demand for satellite capacity for telephony services.
Observing in more detail, it is possible to see more specific, niche drivers, and trends of satellite services throughout the region.
Video Overview
Improved economic growth is increasing standards of living. The Chinese and Indian markets push this growth for a number of reasons, including:
- Highest populations
- Regulatory changes allowing foreign operators to enter the market
- Economic growth leading to higher income and discretionary funds
- Desire to adhere to the standards of living elsewhere including to match standards of service already found within the region, such as in Japan and Korea
- 2008 Beijing Olympic Games leading to increased pay-TV subscribers in China, as well as acceptance of HDTV, drives new equipment purchases and interest in expanded content
Within the video market, the most frequently discussed factor driving new satellite demand is the growth of HDTV. This is, unquestionably the most important stimulus of new capacity requirements, and as noted above, the “all HD” Beijing Olympics will be a major focus of this growth. There are, however, other new technologies and applications that are important to the potential direction and size of the satellite video market globally, and in Asia. Since these are not as commonly explored, an overview is provided below.
Internet Protocol Television (IPTV)
IPTV, which enables digital television services to be delivered over a network infrastructure that may include bundling with other Internet services, requires a much more complex infrastructure than cable TV. Additionally, its higher cost requires an educated consumer market to accept this as part of a bundle.
Nevertheless, IPTV enables the evolution of a new type of personalized TV for a fresh audience in the more developed markets of Asia. In addition, Internet-based viewing may penetrate where the DTH market faces regulatory constraints, which is the case in many parts of Asia. The key role for satellites in the IPTV business is providing “head-ends in the sky” enabling IPTV delivery.
IPTV is a key part of triple-play/bundled services offered by telcos seeking to increase revenue opportunities, and to compete in most rapidly expanding markets, including Asia. Some markets such as Japan, Malaysia and, especially India, have already seen the deployment of IPTV, and overall Asian demand will likely double over the next five years.
Satellite Mobile TV
While mobile TV today is a rapidly expanding service worldwide, it is primarily a business for terrestrial wireless operators. Asia provided the first satellite entry into this business, with other regions only now starting service, primarily through vehicle-based terminals. However, even the Korean/Japanese MBSAT-1 has found service take-up to be slower than projected. There are now fewer than two million subscribers, mostly in Korea, well below original projections.
The relatively stronger market in Korea can be credited to the fact that service there has been provided in cooperation with the mobile phone operator, whereas the Japanese model required a separate handheld device.
A range of hurdles face this service including:
- Regulatory disagreements over spectrum allocation and competing standards as well as licensing requirements (China, for example, has at least two different standards – CMMB and TDBM)
- Infrastructure costs, including satellite and terrestrial network build-out plus new user devices
- Content development, as repurposing standard television content for the very small screen has not proven as attractive as specialized programming
The broad acceptance of these standards can be expected to produce new terminals with lower price points, driving more consumer acceptance. Unfortunately, the plans to roll out service in China in time for the Beijing Olympics on the CMB Satellites are now somewhat uncertain, and missing this opportunity may seriously slow interest, and delay take up.
Data Services Overview
VSAT services are well established in Asia, although regulatory restrictions have limited growth in many markets. Key areas of growth in VSAT services in Asia are as broad as in other regions, reflecting the diversity of economies in this area.
Enterprise Networks
Retail, financial, utility and extraction industries continue to grow and expand in new markets despite changing some key characteristics. Broader use of credit cards and ATM machines in key Asian markets drives growth in the retail and financial markets, with expanding energy demand pushing the extraction market. The increasing growth of terrestrial infrastructure, and demand for back-up/continuity networks, increase the need for hybrid systems, This may mean fewer satellite sites per system, but greater interconnection required as part of larger networks.
Government networks
While much attention has been paid to the dramatic growth in military use of satellite networks (use that has still not peaked in Asia, outside of the southwest areas such as Afghanistan and Pakistan) satellite networks have been critical for civil government programs throughout Asia. Education and healthcare networks continue to grow, often subsidized by programs such as universal service funds. Other civil government programs, which have long been strong in Asia, such as taxes, customs, and general administrative networks, are growing in importance with e-government initiatives and the demand for electronic access to government services. The market drivers for these networks are similar in many ways to those for education and healthcare, but these are often better funded, making cost less of an issue.
Wireless backhaul
Asia is already a major market for backhaul services for cellular networks. With the growth in broadband wireless networks for both data and media services, there is increasing demand for satellite VSAT capacity to bring those services and networks to remote areas, and across the wide unwired expanses of many Asian countries. As with the enterprise networks for business continuity, this market requires satellite to interoperate with terrestrial wireless, In these hybrid networks terrestrial standards and requirements will be the drivers, with satellite needing to adapt.
Consumer Broadband
IPStar has shown this is a business with potential, but one that requires extensive local relationships to overcome distribution, as well as regulatory complications. In Asia the varying levels of use of home computers, and the evolving deployment of community tele-centers also will be driving factors in local market take-up.
Regulatory Factors Affecting Satellite Services Growth
Satellite services, like all telecommunications, can only grow when market demand, technology and regulation are aligned, like the three legs of a stool. Most of the preceding discussion has been on market and technology developments. The following summary provides an overview of the regulatory leg.
China
Satellite regulation is still very restrictive and lacks transparency.
Nevertheless, a number of changes have been planned, driven in large part by the upcoming Olympics. The State Administration of Radio, Film, and Television (SARFT) plans a widespread opening of satellite services for the 2008 Beijing Olympics. Additionally, the 11th Five-year Plan released in March 2007, by China’s Ministry of Information Industry (MII), included initiatives such as; promoting satellite communications as an important national security communications back-up infrastructure; and accelerating the number of digital satellite television networks as part of the completion of digital TV transition in major cities. Future growth will depend on how well these changes are received, and whether they are allowed to remain after the Olympics.
India
Since the liberalization of telecommunications’ regulations, the country is experiencing a DTH market boom, and now has six licensed providers. The surge in DTH demand led to a scarcity of Ku-band capacity. This resulted in the Indian government permitting the use of foreign satellite capacity, and agreeing to increase the cap on foreign investment in domestic DTH companies from 49 to 74 percent, bringing DTH into alignment with cable companies. Efforts are still ongoing towards adopting an Open Sky policy to allow VSAT operators to work directly with any international satellite.
Other Asian Countries
In addition to these major markets, it is important to keep in mind that there are wide-ranging levels of regulatory transparency and support in Asia, which will impact satellite growth, especially DTH:
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<li>Australia remains an open market and grants open-term DTH licenses
- Hong Kong retains a supportive regulatory framework that drives competition and investment in its pay-TV and broadband industries. As long as the Chinese authorities allow this to remain an open market, growth in satellite usage will continue
- Japan continues to have one of the clearest regulatory frameworks in the region, supportive of both investment and competition in its DTH market
- New Zealand’s DTH market is highly competitive, and has been deregulated for years
- South Korea’s goals for digitization and partial regulation of investment norms has increased competition from DTH and forced cable consolidation
- Taiwan’s DTH market remains dependent on deregulation since existing government regulation, and market structures have limited the prospects for digitization and competition
- A number of Southeast Asian governments support growing pay-TV penetration. The launch of DTH service in Indonesia will grow the market for pay-TV in the future but terrestrial TV is likely to remain dominant
- Digital pay-TV remains robust in Singapore, but the market is inherently small Malaysia continues to be a growing market for multi-channel pay-TV
- The Vietnamese government’s efforts to adhere to international standards for the protection of Intellectual Property Rights (IPR), and to achieve a transparent licensing regime, make it one of the most promising pay-TV markets in Asia. And Vietnam has increased the interest of foreign investors, while, simultaneously, it has launched its own domestic satellite
About the author
Andrea Maléter, the Technical Director, Space and Communications Division, at Futron Corporation, a leading consultant firm to the aerospace and telecommunications industries.
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