A Familiar Pattern

By | April 1, 2009 | Editor's Note, Telecom

Members of the Via Satellite editorial team attended CABSAT MENA and Satellite MENA 2009, the first trip to this Middle East communications show for many of us. This trip was overdue, as the region is forecasted to be one of the hot markets for the next several years.

While this was my first time in Dubai, the show followed the same basic script that I have seen in the past few years at large show such as NAB, CommunicAsia and IBC, and at smaller shows.

First, while most satellite executives and analysts maintain that the sector is somewhat recession proof or at least recession resistant, shows are not. Foot traffic at many shows is down slightly, according to exhibitors, but on a positive note, the declines are coming from the "tourists" attendees and not the customers.

The biggest problem for exhibitors and customers in Dubai is that the Middle East suffers from a severe capacity crunch that also plagues Africa. Customers are willing to buy capacity if only it was available. That situation is set to be remedied, with at least 13 satellites scheduled for launch by the end of 2010, but many of those transponders already have been reserved prior to launch, so it’s difficult to predict when the shortage will be alleviated.

Second, the two biggest booths on the show floor in Dubai belonged to SmartSat and Yahsat, two satellite operators without any hardware in orbit. Normally that strikes me as a warning sign: The company with the flashiest booth is trying to draw attention away from the fact that they don’t actually have anything to offer except videos and graphs describing all the great services they are going to provide the public. With the history of the satellite sector littered with grand plans that never came to pass, it’s easy to look at a new operator with a jaundiced eye, because the business is harder and more expensive than it looks.

But after spending time with SmartSat and Yahsat, it’s easier to feel confident about their prospects. Neither company is trying to come in and claim it will revolutionize the satellite communications sector. They simply are making a business decision and looking to address a market thirsting for capacity. They also appear to have the necessary funding backing their plans, something that is becoming harder and harder to find.

Third, there was discussion about the future of the market for government services, and specifically for the Middle East, the future of military operations in Iraq. The drawing down of U.S. troops may mean that the Pentagon will not need as much bandwidth in the region, but there will be plenty of other government and private organizations eager to take over the capacity. Any unused satellite capacity will be in demand by government organizations tasked with rebuilding Iraq, private companies ready to rebuild businesses as the country recovers and others – and there is no guarantee that the U.S. military won’t continue to be a heavy user of satellite bandwidth in the Middle East for years to come.

Still, while many in attendance believed there was still strong demand for all this capacity, it is important to remain cautious. The Middle East has been a vibrant market for new TV channels, but with the economic credit crunch curtailing advertising, it remains to be seen whether broadcasters will continue to demand such high levels of capacity. Also, will HD make a strong impact in the region? No one can predict for sure what the levels of demand for capacity will be, so while the market looks an attractive one going forward, it is by no means a sure thing.

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