Latin America: A “Dream” Market for Satellite Going Forward?
The Latin America region has probably frustrated and intrigued the satellite sector in equal measure throughout the years. With economic instability rife in the early part of the previous decade, Latin America always seemed to be one of those regions where satellite could never quite reach its true potential.
Fast forward to 2011, and Latin America now represents an almost ‘perfect storm’ of opportunity for satellite players as everything is falling into place. Despite global economic turbulence, many countries in the region are seeing solid economic growth. Better yet, governments in the region are showing increasingly progressive attitudes toward using satellite in their communications’ infrastructure. Late last year, the Mexican Government signed a $1 billion contract with Boeing to build a state-of-the-art satellite system. Countries such as Venezuela and Bolivia are also developing space-based capability and spending significant money building new satellites.
It is refreshing to see governments’ in the region absolutely convinced about the benefits of satellite technology, whereas In Europe, and even in North America, the satellite industry has to fight long and hard to be part of broadband projects. Despite intense lobbying efforts that have been met with varying degrees of success, satellite remains a tough sell in some regions.
To add to that perfect storm, two of the world’s largest sporting events — the World Cup and the Olympics — will be held in Brazil during the next five years, fuelling even more demand. Both of these events are likely to see blanket HD coverage, and probably a fair bit of 3-D TV coverage too. The world will have their eyes on the Latin America region, creating two of the most spectacular broadcast sights in recent times and promoting the region as a prototype emerging market for the satellite sector.
The dynamics are in place for long-term sustained success for satellite players, but before we get too carried away with all this talk of growth potential, we should also focus on the here and now. Telcos and service providers want more capacity and operators are scrambling to find it, despite the promise of more capacity coming online in the near future. Werner Schuler, CEO of Media Networks Latin America (MNLA), a major acquirer of satellite capacity, issues a warning that while the satellite industry may be “living the golden dream in Latin America,” this golden dream could turn into a “nightmare” considering the lack of capacity currently available. In fact, Schuler goes on to say that the capacity situation could become “unbearable.” This warning should not go unheeded.
The question is whether this perfect storm will last. There have been many false dawns before and economic stability cannot be taken for granted. With many satellite players believing that the emerging market environment is where they will see real growth, the stakes are quite high. But, with a number of new satellites going up providing capacity, one can only hope that the “golden dream,” as Schuler puts it, can actually be realized this time.