Satellite Players Search for New Frontiers in Asia
With huge individual country markets and strong demand for satellite services across the board, Asia has numerous opportunities for satellite players. However, with regulation varying from country to country, where there may be lands of opportunity, it is not necessarily easy to monetize.
April 27, 2015
Asia is a mix of local operators competing against the likes of Intelsat, Eutelsat and SES among others that have also targeted the region for growth. There are a number of big DTH markets in the region such as India, Indonesia and Malaysia. But, outside of DTH, what are the new business opportunities for satellite operators in Asia?
For one, Singtel Satellite is seeing an opportunity in the broadband/data markets. Last year, the operator, backed by one of the region’s biggest telcos, delivered more than 6,000 ATMs for remote banking across Indonesia. The company is also doing some mobile backhaul delivery of more than 120 sites in Malaysia. Lim Kian Soon, head of Singtel Satellite, says the data opportunity is emerging in the region. “We have also reached out to the consumers who wish to have broadband in the rural areas. This is a new area where we think a new need is approaching market. This has not been fulfilled,” he says.
Baozhong Huang, vice president at APT Satellite, agrees that while there is strong growth in its broadcast business, markets such as Indonesia are increasingly offering a strong data opportunity, alongside DTH. He says although the data market is price sensitive, there is really a “huge demand” for data in Asia.
“I believe this will be represented by the increase in demand for capacity in Indonesia. Indonesia is our single largest market for data services. I see that the data opportunity in Asia is far better than the broadcast opportunity. However, a lot of the global growth in the broadcasting market is coming from Asia. But, the data market will grow more,” he says.
One market to look at in Asia is cellular backhaul. According to Tom Cheong, VP Asia Pacific at iDirect, Asia remains the world’s fastest growing market for mobile data communications with six of the 10 largest LTE operators based in the region. By 2017, Cheong says, it is forecasted that Asia alone will generate more than 47 percent of the world’s mobile data traffic. This presents a strong opportunity for satellite technology.
“Spectrum-constrained mobile operators are therefore turning to satellite technology to help with this challenge on account of its numerous advantages over terrestrial options — time to deploy, ease of installing and Communications-on-the-Move (COTM),” he adds.
Cheong says the market for mobile data backhaul equipment is expected to hit some $30 billion in the years leading up to 2017 and, as mobile data traffic jumps to LTE speeds to keep pace with the fast-growing smartphone user base in Asia, the need for more efficient mobile data transmission solutions is palpable. He believes attitudes are changing toward satellite.
“Historically, satellite-based solutions have not been seriously considered when compared to other connectivity options like microwave or fiber,” he says. “However, as satellite bandwidth rates level off, ground segment equipment pricing comes down and satellite communications technology delivers carrier-grade quality. Mobile operators are re-evaluating its use due to numerous benefits like ease of deployment, reliability and end user mobility.”
Kian Soon also believes there is a strong mobile backhaul opportunity saying that satellite is a great and fast way to roll out infrastructure to help mobile networks in the region.
“We have seen this in Indonesia and the Philippines. And this will be the same for many new countries like Myanmar, Laos and Indo-China, where they want to have faster roll-out of their mobile networks. We have also seen more developed countries, when looking to complete Universal Service Obligations (USOs) from their regulators, reaching out to satellite companies,” he says. Huang says cellular backhaul accounts for half of the capacity demand in the emerging market. “The increase in data is coming from the rural areas. This will attract more satellite capacity then they had before,” he says.
New Country Markets
While markets such as China and India, with their more than 1 billion people populations, gain a lot of headlines, there are business opportunities everywhere you look in Asia. Myanmar is seen as an exciting new opportunity for the industry.
“Myanmar is experiencing a period of unprecedented demand for satellite-based communications technology due largely to the government’s expressed desire to provide broadband connectivity to 70 percent of the country within an accelerated timescale of three years — a feat that cannot be met with only terrestrial communications technology,” says Cheong.
Cheong also highlights Indonesia, India, China, the Philippines, Malaysia, Indo-China and the Pacific Islands region as offering strong opportunities for satellite. Huang adds, “Indonesia is still the largest consumer market for satellite market, given the number of islands it has. Satellite is perfect for Indonesia. Fiber is causing more and more problems for the service providers. I believe satellite will have a significant market share in Indonesia. I would also say some other countries like Myanmar, where it can make a difference, given the poor infrastructure there. So, satellite would be the ideal solution for Internet connections, mobile backhaul services, and some other VSAT business.”
Kian Soon says Singtel Satellite sees strong demand for capacity in South East Asia, and that this is not just new markets such as Cambodia, but also established markets like Indonesia and Malaysia. He cites a forecast the company has seen that predicts the amount of Ku-band satellite capacity usage in South East Asia will grow by more than 10 percent in the next three years. He says Singtel Satellite is quite optimistic about the growth it is seeing in the region.
Meanwhile APT Satellite is launching a new satellite this year as it looks to take advantage of growth in the region.
“It will be positioned at 142 degrees east with two C-band beams. The smaller beam will be dedicated to Malaysia and Indonesia, as well as Brunei. The bigger beam is for the whole of South East Asia. The Ku band part has four beams carrying 14 transponders. The key focus is to provide maritime. As we have a powerful spot beam, this can provide DTH services in the South East Asia region. That is our key opportunity for 2015,” says Huang.
Maritime and Aero
Two verticals that are getting a lot of attention in Asia are the maritime and aeronautical sides of the satellite business, particularly as airlines and shipping operators look to get more connected. Singtel Satellite has been serving the maritime market for 30 years and remains a key focus area. When assessing the aeronautical opportunity, Kian Soon says, “The aero is a new requirement. We are watching closely to see what the new technologies are to fulfill these markets.”
APT Satellite considers both of these as “key verticals” for the company. Its new satellite will also be key here. “Our new satellite is most suitable for maritime, and aeronautical as well. Our Ku band on the new satellite is mainly focused on maritime. The satellite has a very flexible design in terms of the four beams. All the four beams are cross-trapped. With the four beams, we cover all of the major shipping and aeronautical routes,” says Huang.
Cheong says both verticals present significant growth opportunities for iDirect in Asia. “Analyst firms like NSR have projected that this vertical will experience 34 percent compounded growth over the next 10 years — resulting in over 80,000 in-service units globally and creating a completely new industry segment for major COTM vendors like iDirect,” he says.
Impact of WRC-2015
While Asia remains a good news story for the industry, there are potential storm clouds on the horizon. A positive outcome at WRC-2015 is crucial as the industry looks to continually develop. “Over the past year, what has been positive is the more efficient use of the limited spectrum available,” Kian Soon says. “International Telecommunication Union (ITU) has put in measures to tighten the filing of orbital slots to remove the “Paper Satellites” filings. This is very positive for our market. There is increasing pressure from the mobile operators for spectrum. We see this is going to be an issue. We believe satellite operators will get together around the world and lobby the regulators to articulate the reasons why satellite should continue to have a prominent role especially in content distribution and mobile backhaul. C band is very important for this.”
New Business Opportunity: DTH in Mongolia
Mongolia is one of the smaller markets in Asia with a population of only 3 million people. The amount of satellite users dramatically increased in the last 5 years, with an average growth rate of 511 percent annually between 2009 and 2013. Estimates show that about 90 percent of households in the capital city have their own television sets, while between 80 percent to 86 percent of the households in the rest of the country have television sets in their homes.
The current pay-TV market size in Mongolia is about 560,000 households. DDish TV’s Pay-TV penetration is highest within the nomadic segment because nomads have no way of receiving television other than from DDish TV, the only DTH service provider in Mongolia. DDish TV is trying to take advantage of the increasing demand for pay-TV in the country, particularly outside of urban centers. Dr. Otgonchimeg, the CEO of DDish TV, hopes the platform can launch further HD channels this year, if the operator can get the satellite capacity it needs.
“In Mongolia, we don’t have enough satellite capacity for this. Mongolia is a very big territory between Russia and China. The Russian and Chinese markets are fully occupied, so the transponders available to us are pretty small. HD channels need more capacity so it is not an easy situation for us,” she admits. “We are talking to satellite operators which are launching new capacity in the region. For a DTH operator like us, we are looking to use around four to eight transponders. Eight transponders will be enough for us. Right now, we are using two transponders,” she says.
Getting hold of extra satellite capacity is not the only issue facing the DDish TV. The platform has a low Average Revenue Per User (ARPU), which means costs need to be kept down. But offering new technologies and services to people comes at a high cost, says Dr. Otgonchimeg. She admits content prices are still very high.
“The challenge is that people in Mongolia are already used to satellite TV and other technologies, so we have to look to provide them a better service. For a DTH operator, the major challenges are content prices, but also the cost of satellite capacity,” she adds.
The TV market in Mongolia is developing at quite a pace in recent times. The Mongolian government recently announced that it was switching off the analog signal, which will naturally lead to an even bigger pay-TV market. However, there will be no big telecoms infrastructure projects in Mongolia, meaning satellite communications will remain very important in Mongolia.
So, can something like OTT make an impact in Mongolia? Dr. Otgonchimeg’s answer: “In Mongolia, even in the towns and cities, there is no OTT service. This is currently a regulation issue. But, if the regulation situation improves, a number of operators would like to launch OTT services. For example, even our customers, even though they are based in the countryside, would like to have access to services when they are traveling around the country." VS
Mark Holmes is the editorial director of Via Satellite and