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2 Indian landscape courtesy Shutterstock. Asia s satellite industry flexes its muscles Asia is hot hot hot and the satellite industry knows it. With demand coming from all angles, Richard T. Kusiolek looks in more detail at the region in this two-part article, from the applications driving the industry to manufacturing and launching the satellites that serve the region. According to Northern Sky Research 2012 report, the global satellite industry should launch satellites worth collectively over US$250 billion from 2012 to NSR expects over 1,600 satellites to be launched by In addition, the US Satellite Industry Association (SIA) report concluded, World Satellite Revenues were $161 billion in 2009, and since 2004 have showed a steady 11.7 percent growth. A slow economic recovery in the West will impact export markets for Asia but will lead to the development of a high growth in satellite launches, applications and related global economic dominance. The growth in the next three years will be in Asia-Pacific s satellite services domestic and regional markets. Kopin Tan, an analyst with Barron s, stated that emerging Asia is expected to contribute nearly 60 percent of the planet s economic growth which will attract money toward this teeming continent. Realities Research by SIA has revealed that: the US satellite industry was in a slow downturn shedding 12,219 jobs, or 4.6 percent, linked to the global economic downturn. The February 7, 2012 Aerospace Industries Association Report on US commercial satellite manufacturers from 1999 to 2009, indicated that the US share of global commercial satellite sales fell by 50 percent. Dawn Harms, Vice President, Sales & Marketing, Space Systems/Loral stated our company has grown dramatically over the past five years. In 2007 we had about 2,000 full time employees working at the satellite manufacturing facility in Palo Alto, California and now we have about 3,000. According to our records, in 2011 there were 18 commercial satellite contracts awarded industry-wide and six of these went to Space Systems/Loral. Since 2008, the EU and the US have been in a debt driven economic free-fall from which they are not expected to recover until well after However, despite a worldwide economic slowdown, overall Asia-Pacific s satellite industry sectors are expected to see revenues expand considerably. As Chen Zhao of the Hong Kong s BCA Research Office said, in China the macro economic backdrop 34 March/April 2012

3 is fantastic but in India the macro is a disaster... China and the emerging economies are better situated to weather any economic satellite industry market downturn. China has a clear ambition to be a powerhouse in the international satellite communications markets. Japan has made a commitment to launch a new constellation. India s satellite industry players are moving aggressively into the Asia- Pacific satellite sector markets. Also narrowing the gap, are the satellite industries in South Korea, Indonesia, Singapore, Australia, Malaysia, and Vietnam. Demand for satellite-based consumer broadband services, and demand for ethnic programming in the Asia-Pacific region will result in an increase in demand for transponder capacity. This is a key moment in history, not just for Asia-Pacific s satellite industry but the global satellite sector. However, questions still remain. Where are the demand and supply gaps in satellite services, ground equipment, and launch sectors? What market segments will benefit from this growth? What will be the future direction for the Asia-Pacific satellite industry? Will over capacity and the saturation of orbital slots bring economic famine? How can the satellite industry prepare to meet the new growth era in Asia-Pacific? What are the applications that will be winners? This article will attempt to highlight some of the answers. The outlook for selected economies and markets The Asia-Pacific region consists of countries such as Australia, People s Republic of China, Hong Kong, Macau, Indonesia, Japan, South Korea, Malaysia, New Zealand, Singapore, Thailand, Taiwan, Philippines and Vietnam. India and Russia are sometimes included in this region. The population in Asia-Pacific totals over 3.6 billion. China, India and developing countries will continue to drive global economic recovery with strong output growth, with developed economies putting in a weaker performance. These economic realities in Asia-Pacific are driving all market sectors. To begin with, I would like to look at the most powerful economic dragon China. China China, like the current governments of the US and the European Union (EU), adheres to a Keynesian command and control economy. In 2011, China s GDP grew at 9.2 percent, and currently it is at a steady 8.4 percent growth. China s growth target for the next five years was set at seven percent. As a comparison, the US had been projected in 2011 at 2.6 percent and in 2012, 2.8 percent; Japan at 0.7 percent and 2.8 percent; and the EU at 1.6 percent and 1.6 percent respectively. All State bankers and State Enterprise managers, such as Zeng Jianhua of the Construction Bank Corporation, and the General Director of Xian s Northwest China Research Institute of Electronic Equipment (NWIEE), are appointed by the Chinese Government and are members of the Communist Party. Kopin Tan recently wrote in 2012 that China begins the second year of the Communist Party s five-year plan, an exhaustive blueprint that aims to transform Earth s factory into a more balanced economy with better living standards, domestic spending, next-generation technology, cleaner energy and advanced manufacturing sales and margins continue to expand thanks to orders from emerging markets Cheah Cheng Hye, the Chairman of Hong Kong Value Partners, pontificated that economic repression allows China to be resilient in today s 2012 environment of world financial pressures. The conclusion from the experts was that China will be investing heavily in infrastructure and that will benefit the Asia-Pacific s satellite industry. Japan The earthquake, tsunami and nuclear crisis in Japan shook world financial markets and disrupted important global supply chains. Mr. Mitsutoshi Akao, General Manager, Global & Mobile Business Division, Space & Satellite Business Group SKY Perfect JSAT Corporation said that: GDP in some Asian countries is growing at a rate that is outpacing other regions of the world. This growth will expand the market population for those looking for the DTH experience. JSAT plans to launch JCSAT-13 in 2012 to meet this demand in the Indonesian market. In addition, there are several new satellites planned for the Asia region which will allow replacements for current satellite assets and will provide new expansion opportunities in markets where further DTH growth is expected. India India has struggled with its own launchers and satellites. The $80 million Chandryaan I lunar probe prematurely shut down after orbiting the moon taking images of the surface and conducting a series of experiments. Chandryaan II will make another attempt in India hopes to launch its heavy Geosynchronous Satellite Launch Vehicle Mark III (GSLV-Mk III), by June 2012, which will give ISRO the confidence in launching heavier communication satellites of the Insat-4 class, which weigh 4,500-5,000 kg (10,000-11,000 lb.). If successful, the rocket would also enhance India s ability to be a competitive player in the multimillion-dollar commercial launch market, providing launch capability for geostationary Earth, low Earth, polar and intermediate circular orbits. Indian Space Research Organization ISRO also is preparing 2012 launches of GSAT-10, GSAT-7, and GSAT-14, which will fly on GSLV-D5. Between , there was an average of 71 orbital space launches per year worldwide. India accounted for one and China two. ISRO successfully placed Singapore s first experimental satellite in space in April India has so far launched 27 foreign satellites and 60 India-made satellites. By 2017, ISRO expects to launch one ASTROSAT, which is a low cost version of the Hubble Telescope, one GPS navigation satellite and a special satellite that can provide Internet services. Internet driving growth The Internet has transformed the world and also the satellite industry. Asia-Pacific certainly will need a 21st Century communication infrastructure to grow economically. China had focused on accomplishing economic growth by first providing US and EU company incentives to build China s communication infrastructure, and then accelerating their exports of high value electronics. Broadband ISRO GSAT 4 payload March/April 2012

4 connections can be established using fixed telephone lines or highgrade mobile networks. Fixed line, dial-up connections are limited by the small number of phone lines in Asia-Pacific. Many Asian-Pacific nations have huge rural areas that require an extensive investment in Internet land-based networks, however, expanding Internet technology for satellite platforms, software, and useful applications will be a powerful incentive to expand their Internet access by flexible satellite networks. William Wade President and Chief Executive Officer said: About 35 percent of our business is this data-type broadband connectivity-type activity, as opposed to video. And I think, for the foreseeable future, that will continue to be a key driver for our development - as there is so much that is still underserved in Asia I think we have a fairly good future. Still we realise that the terrestrial networks will fill in the gaps. We already have a strategy in place to develop our satellites, and to look at beams and coverage for some of these emerging markets and applications that we see on the horizon. As outlined in the 2011 UN Statistical Yearbook, new Internet standards, such as cloud computing and ubiquitous mobile access through smart phones, tablets and mini computers are all very well, but they do place those who do not have access at a technological disadvantage. According to figures, the Asia-Pacific s Internet average annual growth rate of 21 percent, was much higher than the rest of the world s average usage of 15 percent. On the other hand many Pacific Island developing economies have very low Internet access. In 2009 over 530 million Internet users and 154 million broadband users were in East and North-East Asia. China, Japan and the Republic of Korea held the largest percentages. If Australia and New Zealand are excluded, an extremely small number of Internet and broadband users existed in the Pacific Island economies. China s population continues to grow, currently at 1.34 billion inhabitants. In America, 79 percent use the Internet. In China, it is only one in three, but that means that 442 million Chinese versus 245 Americans. The Asia-Pacific population growth continues to mushroom, and the use of the Internet parallels that strong growth rate. Strategy Analytics forecasts that the number of homes using broadband Internet in the Asia-Pacific region had tripled, from 61 million in 2005 to 176 million in percent of South Korean homes use broadband, and over half the homes in Taiwan, Hong Kong and Singapore all have broadband. Will the use of the Internet to view television grow in Asia-Pacific? Dawn Harms stated that IPTV demand Television delivered by Internet is definitely on the rise and we expect that to continue. There is such a proliferation of digital content around the world that demands for both satellite and terrestrial infrastructure will continue to grow. Ultimately we think that satellite capacity will be integrated with fibre and cable networks to provide integrated solutions that meet the market requirements. Of course in areas with low population density, the business case for satellite is strong for a variety of applications including direct-to-home video and broadband solutions. Mitsutoshi Akao General Manager of SKY Perfect JSAT, stated that: the Japanese satellite broadband market is relatively unique compared to other Asian countries because of the extraordinary amount of fibre that now exists throughout Japan. Currently, SKY Perfect JSAT Corporation is focusing on catering to the government and enterprise markets who are receiving SKY Perfect JSAT satellite services to provide backup protection for their existing fibre networks especially during potential disaster periods as well as occasional outages at the terrestrial lines. William Wade acknowledged that: IPTV has had a little bit of a slow start in many parts of Asia, although it s gaining momentum in places like China and Japan. It s very well established here in Hong Kong, Singapore, South Korea, and in those areas that have good fibre connections, and the population density is very high. Some of the major cities in China are installing IPTV systems, and those seem to be picking up momentum and growing at a fairly good rate. China has significant restrictions on satellite distribution and use in China. Therefore, IPTV is a pretty strong growth option there that the government is looking at, because they feel that they have more control over it than they do for DTH or some of the other satellites. Satellite network equipment Will increased demand create a surge of satellite ground equipment, system components and subsystem manufacturing, applications, and satellite services revenue? William Wade said: generally speaking about Asia, Ka-band is more wide beams, as opposed to spot beams. Ka is being used to add more frequency as the Ku-band fills up, but for high-throughput requirements, we are seeing people look to Kaband. The demand for the technologies of Ka high-power spot beams, frequency re-use, and providing services into homes, is being driven by governments looking at their education and medical systems. However, none of them have really caught on yet, and so I think it will take a couple of years before it will be concluded that the Kaband is a good fit. There will be certain markets that will start-off earlier, like Australia and some of these others that have agreed on their national-broadband network plans. China has not decided yet. We are watching the trends. We have got a couple of wide-beam Kaband on our satellites just mainly as kind of testing the market and preserving our frequencies at our orbital slots. Dawn Harms commented: expansion of satellite broadband services, demand for HDTV, 3D video, and availability of satellite capacity for those services (will create a surge). However, direct to consumer broadband and TV via satellite will be a preferable solution due to the geographic complexity of the region. VSAT The 12th edition of the COMSYS VSAT Report included several key findings. VSAT operator service revenues grew by 14 percent to $5.2 billion globally, consumer satellite Internet services now serve over 1.3 million subscribers worldwide, VSAT service revenues grew by almost six percent to $7.3 billion globally, the star data market grew to 320,000 units, and hub sales grew by five percent to 450 units March/April 2012

5 Frost & Sullivan s research also pinpointed several key facts. Small Medium Enterprises dominate 30 to 60 percent of GDP (gross domestic product) across Asia-Pacific. Asia-Pacific VSAT customer premise equipment (CPE) revenues totalled $73 million in 2005, and were forecast to reach an estimated $109 million by the end of The study found that the total installed base for VSAT applications was projected to grow to over 900,000 sites by end-2012, from the approximate 300,000 recorded in VSAT is easily deployable and results in reliable broadband connections. A key trend is the decreasing cost for services and equipment cost. As the economic future brightens for the Asia-Pacific the demand for rural telecommunications, telemedicine and distance education programmes across the entire region has expanded. However, to meet this demand, the supply of deployable wireless and satellite infrastructure systems and subsystems must dramatically increase. To meet this demand will require capital expenditures. At the same time, terrestrial telecommunication providers are not sitting on their hands, but aggressively expanding their terrestrial networks. India, Indonesia, Vietnam, Malaysia, and Thailand should have high growth potential for VSAT manufacturers. The key driver of the VSAT market is value added in the form of applications such as e-learning, e-healthcare, e-commerce, e-government, mobility, e-energy, and e-security. Nothing sells like solutions. Satellite broadband Mitsutoshi Akao of SKY Perfect JSAT believes that the future is likely to see advancements in communications distribution in the DTH, mobile, government and military sectors in the next decade. Many South Asia countries are expected to have growth potential in DTH viewership, especially for the demand in high-definition quality programming. William Wade said that the demand over the next three years ( ) in Asia for satellite capacity, in the FSS (fixed service satellite) space, is going to be DTH. DTH is driving capacity requirements right now, and that s in a number of key markets. India is a real growth driver but other regions are emerging, but video is an underlining factor. DTH will become the main driver for video and then you will see a conversion from standard-definition to high-definition, which has not really taken place fully in Asia. Once the conversion happens then there will be more demand for satellite capacity. Dawn Harms said, We (SS/L) see continued demand for increasingly higher power geostationary satellites and growing demand for the high throughput broadband satellites that we build. SS/L is continuing to work with satellite operators that provide DTH video services in this region to help meet the demand. We currently have several satellites in our backlog that are destined for this region. Competition The technology platforms that have become nodes within a vast global meshed network would never have been realised without a small element located in every digital electronic device that is the brains of the Internet, communications, and satellite growth phenomena. The key enablers are the chips that drive mobility and IPTV. Mobile networks already provide wireless Internet connectivity at speeds superior to fixed-line, dial-up connections. At the 3G and 4G high speeds, the downloading of video, audio and photographic material can be facilitated which promote the expansion of knowledge and economic growth to currently underserved communities. All mobile phones will eventually be able to receive satellite signals and it will be possible for users to know exactly where they are. It will also be possible to equip vehicles, boats, airplanes or animals with devices to see where they are located. This technology will have a positive effect in situations such as rescue operations, when looking for the right address or when managing a flow of public transport. In 2012, satellite transmissions will primarily be used in telephone systems, television, computer systems and air travel. Mitsutoshi Akao pointed out that mobile applications, both in the maritime and aeronautical fields will also show opportunities for expansion in regions of the world where satellite is still the best service choice. Wade said: China has a great opportunity to use positioning and location devices and these chipsets could be manufactured into set-top boxes. If you couple that with the cellular networks, China s fear of unauthorised users accessing DTH could be eliminated. I think that s an area that they are probably looking at quite heavily to help them as they try to roll out a DTH market in China. Growth in wireless backhaul A 2011 NSR report by Jose Del Rosario highlighted the importance of the use of satellites for wireless backhaul. India and China are the largest markets for wireless service, followed by smaller countries like the Philippines that also represent important opportunities. The population sends 650 text messages per user per month, which is the highest in the globe. The Philippines has more than 54 million cell phone subscribers out of a population of some 97 million. The Asian market has thousands of rural villages representing hundreds of millions of wireless users. As Del Rosario points out: Growth is expected to be driven by demand from the largest and most populous countries that include China, India, Indonesia and Australia, while niche opportunities exist for countries such as the Philippines, Cambodia and others. Satellite providers with satellite-based BTS solutions will gain a good niche market in the short term as narrow band moves to broadband, as well as providing space segment assets via C-band and Ku-band transponders. Part two of this article can be found in the next issue of Satellite Evolution Asia Asiasat March/April 2012