Satellite Manufacturing
The global satellite manufacturing market was a tough place to do business in 2008. According to the SIA report, global satellite manufacturing revenues decreased from $11.6 billion in 2007 to $10.5 billion in 2008 due to the number of satellites launched falling from 102 in 2007 to 94 in 2008. U.S. satellite manufacturers were particularly hard hit. In 2007, U.S. satellite manufacturing revenues were $4.8 billion, but in 2008, they were just slightly more than $3 billion. The SIA reports said the number of U.S.-manufactured satellites launched between 2007 and 2008 dropped by more than 50 percent, from 48 in 2007 to 21 in 2008, and the U.S. share of manufacturing revenues was less than 30 percent in 2008, compared to more than 40 percent in 2007.
Out of the 21 geosynchronous orbit satellite orders announced in 2008, U.S. manufacturers received 52 percent, while European satellite manufacturers captured 33 percent, down from 43 percent compared to 2007. The figures also hint at growing competition from Russian, Chinese and Japanese satellite manufacturers, which each gained one satellite order in 2008, a combined 14 percent of the market, up from 5 percent in 2007. “If you look at the geostationary satellite market last year, we saw around 24 satellite orders, which was a very good year,” Caceres says. “Some of those are large satellites, and some are more on the smaller side. It is much more diverse than in the past because you have companies like Orbital Sciences with their small satellites. They are competing for business against bigger buses. I don’t think we will repeat that this year.”
Future Drivers
One of the major growth markets for satellite operators over the next year could be HDTV as pay-TV operators look to ramp up their offerings to customers. According to the SIA report, the number of HDTV channels worldwide nearly by almost 170 percent between the end of 2006 and May. At the end of May, there were nearly 1,500 HD channel broadcast around the globe, with more than 60 percent serving North America. IMS Research, an Austin, Texas-based research consultancy, says it expects total worldwide HDTV households to increase at an average annual rate of 33.8 percent during the next five years, reaching 255 million households at the end of 2013. The DTH platform is expected to be the market leader with 38.1 percent of these households, cable is expected to follow with 26.5 percent of households and IPTV third with 12.3 percent.
“We have still not the full impact of demand for HD video services and, with the prospect of 3D-HD not far behind, these opportunities could be quite substantial,” Mechanick says. “Indeed, it seems that every new trendy application has resulted in greater and greater demand for bandwidth, and bandwidth hogs are generally music to the satellite industry’s ears. Similarly, there is no question but that the explosion of Internet-related wireless applications are straining the capabilities of the existing terrestrial wireless 3G networks, as powerful as they are supposed to be, and satellite should be well positioned to help alleviate some of these pressures. Finally, there is at least one emerging opportunity, which Intelsat in particular has been adept at exploiting, that being hosted payloads,” he says.
“DTH TV broadcasting remains the primary growth driver for the FSS sector. With 17 new DTH TV platforms launched last year, the number of platforms has now reached around 110, close to double the number of 2005,” says Revillon. Satellite remains the primary solution to provide digital TV in emerging countries, a situation that should not change in the foreseeable future. While the current economic crisis may limit new launches, additional platforms are still expected. In Vietnam, new services have for example just been introduced.”
Despite the emergence of telcos into the TV market, satellite operators remain well-placed to continue to monetize video markets around the world. “These trends should be viewed as fundamentally synergistic as between satellite and telecom technologies, as satellites have an important role to play in fueling the growth in IPTV services. In this regard, evolution in the way content is consumed is more of an opportunity than a threat, because in order to keep up with these changes, the creative ways in which satellites can support broadcast content delivery will continue to be very important,” says Mechanick.
Another potential strong growth market for satellite operators could be broadband. “The demand for Ka-band capacity continues to lag expectations,” Maleter says. “Consumer satellite broadband has taken off well in the United States, with operators reporting some 30,000 new subscribers a month. Outside of the United States, the take-up is very diverse, with government subsidy programs being important to promoting satellite growth.” Mechanick is more cautious and says the industry should be wary of false dawns which have plagued the satellite sector. “I am hopeful that Ka-band’s moment has finally arrived. There are still significant gaps in how global demand for consumer broadband is being addressed, and I believe that satellite has a golden opportunity to capture a significant portion of that demand. At the same time, recurring false perceptions regarding what satellite technology is capable of delivering continue to haunt the industry and serve as an impediment to its more serious consideration as a major player in broadband extension to rural and remote areas in the United States,” he says.
Outside of the United States, growth of satellite broadband services varies. “For Europe, a significant challenge is anticipated to be the fragmentation of the European market and the difficulty to develop efficient distribution networks,” says Revillon. This is why Eutelsat, SES and Avanti Communications are currently largely involved in the signing of agreements with service providers/resellers in different European countries. Worth noticing, SES has so far not committed to procure Ka-band capacity, while Eutelsat and Avanti satellites are currently being manufactured. The MENA market should present opportunities, but the distribution of services could also prove relatively challenging. In Asia, no major announcement has been observed so far, and the current question will be to see whether IPStar is able to accelerate its growth in a number of countries including China and India” with its Ku-band capacity, he says.
Military Market
With a global economic recession, there could be tough times ahead in the military space arena. The cancellation of the Transformational Communications Satellite (T-Sat)) program in the United States could be evidence of belts being tightened in this area. “If you look at a dozen of the U.S. military satellite programs which are at different stages of development, almost all of them suffer from cost overruns, sometimes over 100 percent,” says Caceres. “At some point, you have to look at the military budget and say what can we afford. We still need satellites, but we need to find more innovative ways to provide these services for less money. You can’t continually pump money into systems when they are being delayed and suffer technology problems. The reality is that you are fighting two wars. The requirements have not diminished for the U.S. military. I think you will see a re-evaluation of the systems under development, but there may not be less satellites, but rather the satellite themselves may not deploy the latest and greatest technology.
Forecast International is projecting that defense departments worldwide will spend about $11 billion on 25 different multimission communications development, acquisition, and maintenance programs over the next decade. Specifically, this amount will be allocated for the development, procurement or maintenance of multimission communications systems or technology. ■
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