Convergence
With revenues increasing across the industry and more growth opportunities in market segments such as broadband, mobile TV, military, government, it is a good time to be a satellite player. With demand for information seemingly insatiable, satellite players are well positioned to take advantage of the convergence taking place in the media and telecoms industries. "The traditional silos of satellite-delivery (e.g. DTH) and terrestrial-delivery (e.g. cable/telephony line) of television content are breaking down," says French. "In the near future (and it is already happening now), a company will provide a pay-television service and use whatever mix of delivery mechanisms is most suitable to maximize their subscriber base. For the subscriber, the key value is the services and options that can be delivered inside the home (channel options, HD options, telephony options, VOD options, DVR options, broadband options, iTV options) and how those services get to the home of the subscriber are irrelevant to the subscriber," he says.
"Technological convergence and operator diversification actually go hand-in-hand, which is why you are seeing the mixing and matching of infrastructure platforms that are starting to take place today," says Mechanick.
Complacency
There is little doubt that the satellite industry has had some positive years recently with revenues going up throughout multiple segments. Also, with new opportunities in terms of markets, both in terms of applications and geographically, there is reason to be optimistic over the next few years. However, with more competition between infrastructures than ever before, the satellite industry certainly cannot afford to get complacent.
"I firmly believe that the satellite players are well poised to respond to competitive threats in the broadband, telecoms and broadcast arenas," says Mechanick. "I think the biggest challenge may actually be complacency. While the industry appears to be on an upward trajectory right now, new challenges abound, and the key to success is through continued innovation and creativity. Don’t rest on your laurels and don’t believe all your press clippings."
Factors That May Affect Future DemandGlobal and industry environmental factors can affect current and future demand forecasts for commercial GS0 satellite launches. The 2007 Commercial Space Transportation Forecasts published May, 2007 by the FAA Commercial Space Transportation and the Commercial Space Transportation Advisory Committee, has identified the following issues as potential factors that may impact satellite demand in the future: -
Economic Conditions continue to improve. Low interest rates have allowed for a stable to increasing amount of financial venture capital for commercial space businesses. Many global fixed satellite service (FSS) operators are highly leveraged with debt levels more than six times earnings before interest, taxes, depreciation and amortization (EBITDA). The debt market’s willingness to offer financing and the low interest rates have allowed mature operators like SF5 and Intelsat to refinance to more favorable rates, decreasing their interest expenses. This high level of debt combined with continuing excess satellite transponder capacity in some regions may impede short-term demand for satellites. -
High-speed terrestrial services have lowered demand for satellite-based data transfer because of existing terrestrial capacity and price competition. There remains an overcapacity of inexpensive land-based fiber optic assets. -
Data compression technology has been steadily increasing the amount of information carried over a given satellite channel. Improvement in video compression methods especially has allowed expan-sion in the number of video channels carried over satellite with increasing transponder demand. In addition, data compression also allows more information to cross terrestrial systems, decreasing the need for space-based systems. -
U.S. Government regulatory environment continues to be a factor in the redistribution of market share from the domestic market. More international operators are purchasing their satellites and launchers from international manufacturers to avoid the U.S.-imposed restrictions. -
Private equity firms have purchased controlling stakes and other significant equity positions in some of the largest satellite operators in the world. It has yet to be seen how the strategic plans of these new owners will affect the demand of new and replacement satellites from these operators. -
Satellite operator consolidations are occurring as operators are seeking complementary markets and services to offer global solutions. Low capacity utilization rates allow for consolidation of capacity on fewer satellites. Consolidation appears to impact the timing of and funding for anticipated replacement orders. -
New commercial competitors will impact the launch market over the next few years with increased competition. -
Indigenous launch vehicles will likely decrease the demand for internationally competed commercial launches as more countries decide to build and launch their own government and commercial payloads. -
New market applications have increased the demand for satellite services. Ka-band satellites have become a reality with the launch of high-definition television (HDTV) and broadband satellites. Business success of broadband systems are determining the rate of future demand, while HDTV appears to be headed for success. Other emerging applications that could impact future demand include mobile video broadcast services to wireless handsets/terminals as well as emerging Internet Protocol television (IPTV) applications. Another new service is being developed in the mobile satellite services (MSS) sector. If these systems are successful, similar systems could be developed worldwide. |
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