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Bolivia Orders Satellite from China to Serve Growing Latin America Market

By | December 16, 2010

      [Satellite TODAY Insider 12-16-10] The Bolivian Space Agency has been selected by China Great Wall Industry Corp. (CGWIC) to build its TKSat-1satellite, the agency announced Dec. 14.
          The satellite will be based on the DFH-4 platform, which is manufactured by the China Academy of Space Technology. CGWIC estimates that TKSat-1 will be delivered to orbit in less than three years to provide communications and broadcasting services to the whole territory of Bolivia and the surrounding areas as well as facilitate the development of civil projects, such as remote education and telemedicine.
          NSR Senior Analyst Patrick French told Satellite TODAY Insider that Bolivia is following in the footsteps of one of its Venezuela’s footsteps and will face the same obstacles. “I would not qualify it as a landmark deal since the exact same set of circumstances existed for the Venezuelan satellite contract several years ago. Just as Venesat-1/ Simón Bolívar has not made a significant impact on the overall Latin American market, odds are the same will be true for TKSat-1. Further, one of the biggest businesses in Latin America is pan-regional cable distribution and DTH. The large broadcasters will not nor need to move off of existing cable video hot spots to serve Bolivia and any new commercial DTH service for Bolivia will hesitate to use TKSat-1, especially given that the DFH-4 platform has yet to prove it is has overcome past technical issues.”
          Maria Velez de Berliner, president of Latin Intelligence Corp., disagrees with that assessment. “It is landmark deal in the sense that China has entered into an area previously dominated by Brazilian, American and European corporations. Like all other Latin American countries, Bolivia is diversifying its strategic alliance base. It is no surprise this involves CGWIC. China is on a well-delineated campaign to enter or expand into critical sectors of Latin America, such as telecommunications, critical infrastructure, natural resources and energy.” 
          French believes the deal follows the trend in the region. “In most cases, CGWIC international contracts for satellites tend to be wrapped up in China’s efforts to secure natural resources in countries that are leaning away from most Western governments (as is the case with the Morales administration in Bolivia or Chavez in Venezuela). They also serve as means to strengthen overall political and economic ties between China and the same set of countries,” he said.
          French believes that the best use of the new satellite’s capacity in Latin America will continue to involve government services. “No doubt, Bolivia has its own domestic market and one can expect the traditional applications for broadcast, broadband, etc. The best application for this satellite is most likely government-backed rural connectivity and school networks plus maybe some cellular backhaul. However, short of forcing all domestic players to cancel their existing capacity contracts and move immediately onto TKSat-1 as soon as it is launched, it is unlikely that the Bolivian market from a strict business point of view justifies this much new capacity.”
          Velez de Berliner asserted that market relevance and cost to the consumer is what drives penetration in Latin America. “If prices and content are right, the market segment will be there. Bolivia has been progressive in its selection of a partner. It remains to be seen whether it will be progressive in other areas.”

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