Asia Pacific Satellite Driving New Services
By Peter J. Brown
In the Asian Pacific region, there are new opportunities for direct-to-home (DTH) service providers and other entrepreneurs. High-definition television (HDTV) is coming to the region slowly, and cellular phone backhauling, Internet protocol (IP) broadband and enterprise sector activities are picking up. Add it all up and one can see why the Asia-Pacific region may be experiencing steady growth in the next few years.
At Thailand-based Shin Satellite Plc, Thaicom 5 will support HDTV broadcast and turnaround services, along with additional DTH channels to the Indochina market at a time when the sub-region is liberalizing, says Paiboon Panuwattanawong, managing director at IPStar, Shin’s new broadband startup. "We foresee more demand for DTH broadcasting in Thailand whenever the regulatory authority is able to issue licenses," Panuwattanawong says. According to Panuwattanawong, Shin still sees a lot of opportunity in its conventional video services business as new markets start to open up. "We are well known in the region and in some markets, like Pakistan, we are the number one supplier of transponders. As the industry returns to a cycle of growth this year, we are seeing demand for video services growth," Panuwattanawong says.
Shin Satellite’s parent company, Shin Corp., now is owned by Singapore-based Temasek Holdings, which is the investment arm of the Singapore government. Temasek Holdings also owns a 63 percent stake in Australia-based Singtel Optus, which has been providing IP over satellite services for the past six years. It has developed a whole range of applications including broadband Internet access and tailor-made IP solutions for corporate and government customers.
On the heels of the Singtel / Optus deal in particular, the recent moves by the government of Singapore strongly suggest that Singapore is betting with more enthusiasm on the role of satellite in the region.
"Singtel’s purchase of Optus can be considered as a safe bet since most of the transponders on the Optus fleet were at high fill rates that were serving mostly the Australian market. With Shin Satellite, specifically with the iPStar asset, this bet is a little riskier since the value proposition and the brief market performance of the iPStar satellite is still undetermined in terms of success rate," says del Rosario. "Temasek Holdings’ move definitely is a huge bet that iPStar will be a success regionwide since the Thai market is rather limited for the kind of ambitious program that iPStar was developed for."
Optus Satellite’s two new Ku-band D Series satellites are designed to provide Fixed Satellite Services (FSS) and DTH services to Australia and New Zealand. By co-locating Optus D2, which will go up in 2007 with C1 at Australia’s hotbird location at 156 degrees East, the available DTH capacity will double, according to Paul Sheridan, acting director at Optus Satellite.
"Certainly Asia will be quite busy with DTH platform services in the near future. Also, HDTV broadcasting brings extra demand for bandwidth capacity as even incumbent players will require more bandwidth," says Eui Koh, president of the Asia-Pacific Satellite Communications Council. "Entirely new markets are emerging in China, Pakistan and Vietnam. Although China already has DTH platform services, it plans to have a full blown DTH platform for the 2008 Olympics including HDTV programming broadcasting on the platform."
Koh sees a strong demand for satellite capacity in the next few years in India, Indonesia and Pakistan, where poor existing terrestrial backhaul trunking cannot support the projected exponential growth in mobile subscription services.
According to Jose del Rosario, senior analyst and regional director for the Asia Pacific region at Northern Sky Research, China and India remain the big markets to target. "In terms of applications, video for contribution and distribution remain the bread-and-butter of the industry, so strategies will remain focused on this key area," says del Rosario. "Other areas where risk-taking has begun include IPTV, broadband provisioning, government and, to some extent, mobile services, although there has been no definitive historical trend to suggest that these services are clear winners."
Seah Moon Ming, deputy CEO of ST Engineering and president of ST Electronics in Singapore, describes the competition in Asia is as challenging as anywhere in the world. The Agilis and iDirect brands comprise the ST Electronics’ satellite business group, which focuses on developing next generation IP over satellite networking solutions that can support services comparable in price and quality to traditional landline networks.
Temasek Holdings also owns a 55 percent stake in ST Engineering, the parent company of ST Electronics.
"End customers expect quality on par with landline networks, service providers put a high priority on network efficiency and performance, and technology providers and manufacturers clearly understand the value of this market and are competing very aggressively for it," says Seah.
IP Broadband For Consumers And Enterprises Alike
Thaicom 4/IPstar is Shin’s new two-way consumer and enterprise broadband platform. IPstar’s Voice-over-IP (VoIP) services are in the process of being rolled out by customers such as VTI in Vietnam, TOT in Thailand and the Myanmar government. As for broadband access, Macquarie Telecom is probably IPstar’s most well-know customer in Australia, along with Bay City in New Zealand, according to Panuwattanawong. "Several local cable TV customers like Nation Multimedia are already using our equipment at remote sites for satellite news gathering. Our IPStar SNG equipment can be loaded on the back of a pickup truck, and we also have a custom-made four-wheel drive vehicle that lowers the cost of outside broadcasting to local customers," he says.
According to Koh, although satellite broadband services in Asia have not been successful thus far, it may be different this year. "Connectivity is available via satellite using narrowband services, but broadband services are now required even in unserved remote areas," he adds. "With affordable terminals — both from IPstar and Inmarsat via its new i-4 satellite-based BGAN service — SOHOs and SMEs (Small Offices/Home Offices and Small and Medium Enterprises) will take advantage of satellite broadband services. Countries like Australia, China, India, Indonesia, Malaysia, New Zealand and Vietnam will lead the pack."
IPstar has already created effective partnerships in Australia and New Zealand, for example, with national service operators who sell directly to ISPs (Internet Service Providers). "This allows us to hear from the end user very quickly, so we know whether or not we are on the right track with service quality and variety," says Panuwattanawong.
IPTV is taking off in Asia as well. However, according to Thierry Fautier, director of IPTV solutions at Harmonic Inc. Most of Harmonic’s Asia IPTV clients are downlinking MPEG-2 feeds via satellite and doing IP conversion on the ground at their brand new headends. In Japan, for example, Softbank Yahoo! BB’s headend serves more than 5 million ADSL subscribers with more than 60 channels.
Perhaps the greatest change in the Asian IPTV market throughout the past couple of years involves local loop unbundling — the capability for a competitive local exchange carrier (CLEC) to use the telephone connections from the incumbent carrier’s (ILEC) central office to the customer premises. The CLEC installs its own DSLAM (Digital Subscriber Line Access Multiplexer) at the ILEC. This requires CLECs to have their own transport and in most instances, pay a fee for access to the last mile phone line from the ILEC. This is opening up competition, according to Fautier. Another trend is the increasing competition from cable; countries that saw the first IPTV startups such as Japan, Hong Kong and Taiwan now see fierce competition from cable operators. "Government broadband initiatives in countries such as Korea and Taiwan are enabling service providers to make high-speed broadband services available everywhere at a very attractive price point," says Fautier. "Operators are more confident that IPTV services will be profitable, successful ventures for their telco businesses."
S-Band Shines As S-DMB Services Are Gearing Up
The joint Japanese/Korean Satellite-Digital Multimedia Broadcast (S-DMB) venture known as MBSAT stands out as one of the region’s primary examples of an innovative mobile service business model at work. S-DMB services in Asia may be expanding as there are reports that Colorado-based Echostar Communications Corp. is on the list of possible players who might build and launch a new S-DMB, S-Band-equipped satellite for China in time to provide mobile services for the 2008 Olympics. A spokesperson for Echostar declined to comment on this in late March.
According to Thierry Rayamaekers, managing director, Asia Pacific marketing at Netherlands-based Irdeto Access NV, China and India are showing great interest in S-DMB. "After visiting Korea in 2005, SARFT (China’s Ministry of Radio, Film and Television) appointed an internal workgroup that is working on new standards for a two-satellite S-DMB variant (called TiMi), which would require less gap fillers. A prototype product is already been finalized and they hope to fill the standards by end of this year," says Rayamaekers.
India will launch a multimedia mobile satellite system built by the Indian Space Research Organization to offer S-DMB services via mobile phones and mobile video/audio receivers for vehicles, according to Rayamaekers. The successful rollout of S-DMB by TU Media in Korea is a big factor here.
"TU Media in Korea seems to be on target. By the end of March 2006, more than 500,000 subscribers will be signed up and they are on track to reach the 1 million mark before the end of 2006. Currently more than 25 client devices including handsets, PDA’s, PMP’s and in-car devices are commercially available. A pay-per-channel service on top of the flat fee subscription will be available soon as well," Rayamaekers says.
Video And IPTV Look Good
The Asia Pacific region is still burdened by an oversupply of capacity and yet this is an accepted fact of life, rather than a reason for bold Asian entrepreneurs to steer clear of satellite-based activity altogether.
"More importantly, the fill rates of the larger, more competitive operators have remained stable for some time now," says del Rosario. "It is really the smaller, marginal operators that are causing the glut problem. The outlook is good for the region and even better for the large operators that carry video traffic."
Throughout the past few years, aggressive partnering is emerging as the tactic of choice when it comes to gaining market entry, according to del Rosario. "This is beginning to emerge as the model by which Asian operators consolidate compared to the outright financial M&A [merger and acquisition] activities that have taken place on the global operator level," he says.
The demand for agnostic networking solutions that can function flawlessly as traffic moves across a variety of advanced hybrid wireless and wired pathways is driving this trend.
"The most significant change has been the integration of satellite networks into larger hybrid networks. With advancements in satellite technology, particularly network efficiency, data throughput and support for real time applications, hybrid networks have made communications ubiquitous for customers across networks that combine satellite and traditional land lines," says Seah. "Until now, service providers needed to strike a balance between customer requirements and the cost of deploying landline infrastructure. True IP over satellite hybrid networks allow them to meet any customer requirements, regardless of location through the most cost effective means."
Still, government control makes consolidation perhaps more difficult. "Unlike multinational operators elsewhere, some satellite operators in Asia are directly or indirectly owned by government-related companies and some of them are not doing great financially," says Koh. "Although global satellite operators might be looking for merger opportunities in regional systems, particularly in Asia, due diligence will be slow and complex because of government involvement in the region."
As the markets in Asia change, for example, Irdeto is expanding its market segments to include IPTV and mobile TV, a shift that requires a different sales approach, according to Rayamaekers. "IPTV and mobile TV markets are more channel driven, hence the importance to attain the right positioning with key network vendors, system integrators and handset manufacturers," he says. "Irdeto is aligning itself with various APAC partners, such as Samsung and LG for mobile TV. In the coming months, our Beijing-based client device integration team will be expanded too to support future Chinese handset integrations to support local and regional rollouts."
Irdeto’s customers include Austar in Australia, which is rolling out a significant DVR project. In Southeast Asia, Irdeto is partnered with ABS-CBN in the Philippines and CEC- VTC in Vietnam as well as Times of India and EETV in India. "In the IPTV market, during the past year, we signed up IPstar in Thailand, which will deliver in the near future via IPTV over satellite to Tier 2 Telco operators across Asia. We have been recently selected by Huawei as the incumbent conditional access provider for their worldwide IPTV rollout as well as ZTE, another major Chinese IPTV key network vendor and system integrator," says Rayamaekers.
3G Impact in Cities Only
The impact of 3G phone and advanced wireless broadband services is being felt all across urban Asia in particular. "3G has had little to no impact in rural, remote and underserved areas where satellites are the best fit," says del Rosario. "S-DMB in South Korea is an exception since mobile video to the handset services are being served using the satellite platform in urban areas as well. But over time, as terrestrial networks come on line, Terrestrial DMB (T-DMB) should surpass S-DMB by a widening margin."
Seah sees 3G as a possible competitive threat for lower end VSAT equipment vendors. However, as 3G networks in particular continue to increase, there is an enormous opportunity for the satellite industry to provide backhaul networks.
"Cellular companies are discovering that in many cases, extending the edge of their coverage network can be accomplished more cost effectively utilizing shared satellite networks," says Seah. "IP over satellite allows easy network integration between various satellite, wireless and landline assets, and provides seamless, quality communications to customers regardless of their location or available network infrastructure."
Panuwattanawong sees no real competitors to broadband via satellite as IPStar obviously does not compete directly with ADSL in major urban areas. "3G is still not that advanced in the region. Our IPStar Trunking platform allows 3G to be extended into remote areas, so we see ourselves as complimentary to wireless services by acting as the second mile if the need arises," he says. "When WiMax is introduced, we will probably be the second mile to help extend networks further outside urban areas than ever before."
The December 2004 tsunami is another important consideration. Satellite technology can beam instantaneous alerts and warnings over a broad region. This part of the world will be well served in the future by all sorts of additional satellite capacity and robust satellite communications links along with satellite surveillance platforms. However, the effort to implement an advanced warning network remains a work in progress.
As for the mood surrounding the satellite sector in Asia as a whole, Asia seems less subdued. It is understood that only a limited number of satellite services will turn a profit and that not every business model can be guaranteed to go cash positive as the Asian satellite market enjoys perhaps a bit more freedom and less government oversight or regulation. Asians can now point to the sky and say that the region is starting to reap the benefits of satellite, both in terms of economic development and technological advancement.