Satellite 2004 Features Updates On Demand

By | March 8, 2004 | Feature

The performance of fixed satellite operators is hamstrung by a lingering overcapacity problem that generally will exceed demand for years to come.

That is the view of two industry consultants who addressed the fixed satellite services (FSS) sector during the opening panel of the one-day financial forum that kicked off PBI Media’s Satellite 2004 conference last Tuesday in Washington, D.C. The impact is felt by the operators in the form of reduced transponder pricing and stagnant revenue streams, said Andrea Maleter, technical director of the Bethesda, Md.-based Futron consulting firm.

“Supply has vastly exceeded demand,” Maleter said. Operators now are looking to unconventional marketplace opportunities, including in-flight broadband services, Maleter said. A recent example of an operator taking an untraditional approach in pursuit of growth occurred last week when SES Global agreed to invest in Dulles, Va.-based mobile data service Orbcomm, she added.

Steve Symonds, a partner and managing director with Wilton, Conn.-based Symonds & Associates, offered a more downcast view of FSS. He described the FSS companies as enduring a “nuclear winter,” in light of the capacity oversupply and slow economic conditions that are curbing growth.

The distinction between the tone of the two consultants was highlighted when Maleter pointed out that FSS companies increasingly were tapping the U.S. government market, while Symonds suggested that a no “spike” in demand for such services had materialized.

The capacity to build roughly 60 commercial satellites each year, compared to a demand of just 15 to 20 orders this year, is not expected to spur any significant consolidation this year, according to a panel of CEOs from the world’s largest satellite manufacturers. Top officials from EADS Astrium, Alcatel Space, Space Systems/Loral [LOR], Lockheed Martin [LMT], Boeing Satellite Systems [BA], Orbital Communications [ORB] and Mitsubishi Electric said talks about merging or aligning have stopped between EADS Astrium and Alcatel Space, the two big European satellite manufacturers that previously have engaged in such discussions between their respective leaders.

The improving economy is one ray of hope for all the manufacturers that have survived more difficult years to reach this point, several panelists said.

–Paul Dykewicz

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