Helped by government subsidies for rural broadband access, the growing popularity of satellite video and the steady but slow growth of IPTV, the satellite market in the Asia-Pacific region is experiencing a strong resurgence.
However, new entrants, a more aggressive market stance by the established satellite providers and fractured market leadership positions are causing some to predict a consolidation in this vital regional satellite operators' market.
'The video market has been the profit-maker and will continue to be so for some time,' says Christopher Baugh, president of research firm NSR. 'Video has the biggest [revenue] share of the market with at least 70%. It is definitely the sweet spot.'
There are also promising new areas of growth such as IPTV and direct-to-home (DTH), although these are still under development. One particularly strong growing market segment in Southeast Asia is DTH video satellite business, Baugh notes. Mainstream IPTV growth, however, has been slow compared to other regions like North America. 'The IPTV satellite business is really a different model and is being pushed mostly by Shin Satellite. It's something that is really still on the drawing board.'
Baugh says that Asia's satellite market also benefits from government initiatives that subsidize broadband development in rural areas. Satellite broadband is not usually economically competitive with other alternatives, but government involvement by Australia, Thailand and others has helped turn that around. With government subsidies 'the cost comes down, the quality increases and the market players meet the opportunity,' he explains.
In its most recent Broadband Satellite Markets report released in May, NSR singled out Australia's program as one worthy of emulation by other governments. 'The Australian Broadband Connect broadband access subsidy program is an excellent example of a government initiative to bring broadband services to rural areas at a price on par with services in urban parts of the country,' notes Patrick French, a senior analyst with NSR. 'This program merits close examination from other governments around the world as an example of a way to help close the digital divide that exists even in developed nations.'
According to NSR, nine satellite operators in East Asia, and seven in both the South Asian and Southeast Asian markets had measurable market share for leased C-band and leased Ku-band in 2005, the most recent year statistics for the region were available.
In East Asia, JSAT (with a 23% market share), ADT/Loral Skynet (13%), AsiaSat (10%) and Intelsat (10%) were the top players. The Southeast Asian market was dominated by SingTel Optus (21%), IntelSat (17%), PanAm Sat (12%) and Shin Satellite (10%), although the undefined 'other' category dominated by smaller regional players controlled a strong 21% market share. In South Asia, ISRO had a 30% share, with IntelSat at 25%, PanAmSat with 13% and New Skies Satellite at 12%.
The interesting point in all of these markets, according to industry executives, is that there is plenty of competition amid a growing market with no one dominant player. This has set the stage for fierce market-share competition and a possible future consolidation.
Bill Wade, deputy CEO of Asia Satellite, believes the large number of regional players could leave to some consolidation, which wouldn't necessarily be a bad thing for the industry because it could reduce excess capacity.