Growth Opportunities for Satellite in the Chinese Market – From Our Archives

Between the launch of a new communications satellite this month, ChinaSat 9A, and researchers’ refinement of satellite quantum teleportation, all eyes are on China’s satellite and space industry right now. In this 2008 interview, China DB Sat’s general manager laid out his predictions on where satcom in China would be today. This article was originally published on November 2008.

China represents a huge potential market for satellite communications, and with huge pent-up demand for communications, Internet and video services among the country’s 1.3 billion people, it is likely that satellite players will be at the forefront of providing these services to China’s vast population.

One of the main company’s responsible for bringing these services to a wider audience will be China Direct Broadcast Satellite Co., Ltd (China DBSat) a joint venture between China Satellite Communications Corp. and Sino Satellite Communications Co. Ltd. The two companies merged in 2007 to form China DBSat, the exclusive domestic satellite operator in China. Wu Jinfeng, general manager of China DBSat, spoke with Via Satellite about the role satellites will play in China and the growth opportunities for China DBSat.

Via Satellite: What are the major growth opportunities for the company over the next years?

Wu Jinfeng, general manager of China DBSat

Wu: Being one of the major satellite service providers in the Asia-Pacific region, China DBSat has focused its near future business strategy based on the regional regulation changes and market dynamics. Satellite service operators were mostly small and scattered in this area in the past years, which may have had a negative impact on the market potential. With [mergers and acquisitions] prevailing in the international satellite service industry, governments in the region have also started to be more open in policies regarding capital and operations, and this brings more opportunities for satellite operators. China DBSat, now operating a fleet of five in-orbit satellites, is a direct outcome of satellite service industry integration in mainland China. With such a scale of business, we may provide to our customers more cost effective and better quality services. The continuous economic growth in China has enabled the state-advocated ideas of universal services to be practiced in fields of education, telecommunications, TV and broadcasting. Such a practice has certainly created more opportunities for China DBSat. Having operated the first DBS satellite in China, China DBSat hopes to grasp new opportunities for its business development in DBS and DTH, which is now just in its initial stage.

Via Satellite: What are the major financial challenges for the company now? Do you need further funding?

Wu: China DBSat has just successfully launched three satellites in two years to date and is planning to launch some other three or more satellites in the next three to four years. Undoubtedly this plan requires a big scale of investment, and China DBSat will be in need of quite a large funding in the coming years.

Via Satellite: How do you view the opportunities for satellite players on the communications landscape in China? What role can satellite technology play in terms of bringing advanced communication services to different parts of China?

Wu: Just like in other regions in the world, satellite communications in China has also been challenged by alternative technologies such as fibre optics. However, its unique features of wide coverage and rapid deployment have been gradually recognized to have advantages especially for PTN backup and extension and communications in remote areas.
China DBSat has [several] years of collaboration with major Chinese cellular operators, and by applying cellular backhaul technology, we help them substantially extending the reach of their mobile networks. The latest statistics from the Ministry of Industry and Information Technology of China shows that by the end of June 2008, the total mobile subscribers in China have reached 601 million. During the first half of 2008, the number of mobile subscribers has increased by 53.451 million, mainly came from rural areas thanks to satellites. In year 2007 alone, 3,759 Chinese administrative villages and over 20,000 natural villages in China have access to telephony services, 70 percent achieved via satellites.
With large, diverse landmass and enormous population, and with a government actively promoting to bridge the digital divide, satellite operators may have a mission to play an ever-growing role in the universal services and helping to connect the unconnected in China. And besides those domestic endeavours, we have been, in process to cooperate with telecommunications providers in our neighboring countries, Indonesia, Laos and Nepal for example, to make joint efforts to narrow the digital divide in the whole Asia-Pacific region.

Via Satellite: How do you see the broadcast market developing in China in the post-Olympic period?

Wu: China has made significant progress in the past years in providing TV and radio broadcasting services to rural and underdeveloped areas. Up to now, more than 99 percent of the Chinese population is covered by radio and TV broadcasting, 13 percent up from 86 percent in 1997. The most recent four percent is achieved by Chinasat-9, the first national DBS satellite launched in June 2008, a new bird of the China DBSat fleet. TV coverage over all villages is still a highly promoted project in China and satellite will play a very important role therein. The 2008 Olympics has, for the first time in history, achieved HD transmission, making a historical record of transmission both in terms of time length and the quantity of media agencies. China, after the Olympic Games, will undoubtedly see further development in digital TV and HDTV. Pay-TV and customized TV services are in the trial stage, too, and the program delivery market may develop and mature gradually. All those tendencies mean business opportunities for satellite operators.

Via Satellite: Do you need more capacity to serve rural and remote areas?

Wu: Our in-orbit satellites are more or less providing communications and broadcasting services for rural and remote areas. The ChinaSat-9 satellite, which is newly launched this year, started to provide TV and broadcasting services to the countryside a few days right after the completion of its in-orbit test. The planned satellites to launch in the coming years are mainly for supplement, backup and replacement of the currently operating satellites. They may be used also to better serve the remote areas for broadcasting and communications requirements.

Via Satellite: Do you think satellite broadband can make an impact in China?

Wu: Satellite broadband is another practice that we have paid much attention to, as recently some Asian countries have also gave broadband business a chance to see how the market may respond. The relatively low cost for bandwidth should attract individual, family and SME customers in the future, making up for the unbalanced digital divide between urban and rural areas and in different regions.

Via Satellite: Can you play a role in the mobile broadcast market?

Wu: This year, China suffered unprecedented natural catastrophes and enjoyed hosting an unprecedented great event, the Olympic Games, so a sharp increase in market demand for mobile broadcasting and communications is obvious. China DBSat will observe closely this tendency and respond to market demands. As a matter of fact, we have already made some preparations such as frequency filing years before and expect to see if we can contribute something in this respect.