Demand Drivers
The two main drivers of broadband demand in the region are enterprise connectivity, which typically is corporate and government users, network, traditional IP access, and intranets. “The number one driver for Latin America satellite services would be banking and finance, next would be oil and gas, although prices have come down, and then IP connectivity,” says Elinav. “We are also talking about enterprise government and cellular backhaul and I have seen all three of these continuing to demonstrate growth in the future as well.” The other driver is “digital inclusion” projects, which basically extend the traditional Web access with low-cost computers to rural remote schools, and rural governments. “You should know demand in the region is high and prices are rising,” Gibson says. “There are a number of key countries in Latin America where you are seeing digital inclusion,’ whether it is in Colombia, Brazil, or Mexico. We do provide service on Anik F1 to a major digital inclusion Colombian program called Compartel. The Compartel Program seeks to promote IP connectivity to public institutions such as schools, municipal governments and hospitals,” he says.
With the 2010 World Cup approaching and the Olympics in Brazil in 2016, Latin American broadcasters are planning ahead to determine how they can improve their coverage of the event via the deployment of occasional-use broadcast satellite services. “Video is not a huge driver for us, but DTH is growing in the region and the other thing that’s growing in the region is just traditional Ku-band distribution, broadcast distribution of content by Ku-band as opposed to cable headends and receive sites as opposed to direct-to-home,” says Gibson.
Latin American telecom operators are striving to meet increasing demand for more powerful communications networks to serve enterprises and governments. These same operators also seek creative ways to meet surging consumer demand for mobile voice and Internet connectivity. Internet backbone connectivity in rural areas lacking the terrestrial infrastructure to access major fiber routes is a key growth area. “We don’t see the (vertically integrated consumer market) per se as really a big potential industry. What we do see is a mix of enterprise, government projects as being the big drivers. Internet connectivity is probably the number one application,” says Elinav.
As of October, Iridium Comunicaciones de Mexico SAPI de CV (a subsidiary of Iridium Communications Inc.) will operate, provide and sell MSS in Mexico. Iridium partnered with Spacenet Communications Services de Mexico SA de CV, a Mexican telecommunications company. Matt Desch, CEO, Iridium says, “Mexico is a market requiring broader services than are available today given the country’s extensive, open land masses that have no telecommunications infrastructure, expansive coast lines, growing remote industries and the need for effective response tools in natural disasters,” he says.
In terms of cellular backhaul, Elinav says, “The bigger the country, the more cellular backhaul is an issue. For example, it is a much bigger issue in Brazil than in Nicaragua, but we have networks in both countries. Brazil has a huge potential and the government is driving the cellular backhaul over satellite by making mandates to provide services to more villages and more small towns. But besides that (other Latin American countries are potential such as), Bolivia, Colombia, Peru, and Argentina.”
SkyAbis is a cellular backhaul solution for both GSM and CDMA2000 that lowers the cost of using satellites for wireless backhaul by up 70 percent over SCPC links. Empresa Nicaraguense de Telecomunicaciones (EniTel), a subsidiary of Mexico’s América Móvil, provides a range of telecommunications services in Nicaragua, including PSTN, GSM, Internet access and satellite communications and uses. Distance education is another important area where satellite communications is contributing to strong growth. “In Mexico, we have contracts for broadband satellite terminals for the Enciclomedia project which is an initiative of Mexico’s Ministry of Education to bring an enhanced learning environment to over 150,000 classrooms throughout Mexico,” says Frega.
Conclusion
There appears to be a strong return for economic stability and an ascending growth cycle in the Latin American region where satellite services are sure to grow. Operators appear to be consistent in diversifying beyond their traditional services such as basic video distribution and basic telecommunication services. Operators are creating greater value propositions such as value added services and reaching out for end-users. E-government, long distance learning, DTH services, video distribution and wireless backhaul will drive demand in the future. It is clear that the region is building on a lot of strengths in the underlying foundations of telecom services and video services businesses to expand profits for the satellite industry.
Richard Theodor Kusiolek has been an early innovator of wireless technologies in Northern California’s Silicon Valley with digital battlefields and the High Tech Multimedia City. Kusiolek is chairman and president of TransGlobalNet, a management consultancy specializing in strategic technical marketing. He can be reached at richardtheodor@aol.com
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