Peter J. Brown
Asia remains fragmented when it comes to the state of the regional economy. Although news in mid-November of a second large IPO in the Asian telecom sector seemed to point to a possible turnaround, this development is tempered by the fact that only East Asia and India are poised to see any substantial capital investments as 2003 gets underway. The jury, however, is still out as far as the overall health and robustness of the Asian economy as a whole is concerned.
"All of the countries in Asia that went into recession in the last two years have emerged again and growth has resumed around the region," says Bruce Middleton, managing director at Asia Pacific Aerospace Consultants Pty. Ltd., in Hawker, Australia. "Growth is not as strong as it was in 1996, but probably on a more sound footing after reforms that followed the 1997 crash." The degree of economic rebounding, on the other hand, is garnering mixed views from many satellite executives working in the Asian region. "I am still waiting to see an upturn," says Asiasat CEO Peter Jackson in Hong Kong.
Eui Koh, vice president for Asia Pacific at Netherlands-based New Skies Satellite N.V., travels throughout the region. He sees promising signs of economic recovery, especially in the People's Republic of China and South Korea, while the majority of Southeast Asian countries are still coping with economic uncertainties. "We in the satellite communications industry tended to be perhaps six to 12 months behind in feeling the downturn, and I expect that may be true in any recovery we are likely to see," says Koh. "While we see regions of demand for our services, we do not see signs of a sustained recovery yet."
"The overall economic climate is still very difficult. One has to be very careful qualifying projects in terms of technical and commercial feasibility. Any money available is very reluctantly and selectively spent as everyone is waiting for the recovery," says Bernd Steinebrunner, vice president of marketing at CA-based STM Wireless Inc. "Having said that, I can see a turn in capital spending and investment coming in a six-to-nine month timeframe, as there will always be the increasing need for communication."
The satellite industry in Asia has a pretty good idea of where the indicators are pointing. The business models are not new in every instance, and there is always a concern about the ability to move quickly on a sequence of new opportunities across multiple markets.
"The biggest growth prospects in Asia for satellite services are digital TV and broadband. DTH services only have been available relatively recently in just a few countries and are growing," says Middleton. "The takeup of terrestrial broadband services in some places like Korea, Taiwan and Singapore is encouraging for prospects in other [places] where satellite is the only practicable delivery technology."
Propelling this satellite engine ahead is the growing recognition that any remaining regulatory obstacles need prompt attention. "There is an irresistible trend toward more open markets that is sweeping through telecom markets and starting in broadcasting markets. Recent accession to the World Trade Organization in the case of China and Taiwan with interest by other countries, such as Vietnam, is giving more impetus to the trend," says Middleton.
"In most developing countries, and in many developed countries, there is a legitimate concern to manage the trend toward open markets in a way that does not cause undue economic damage and social upheaval," he adds. "The policy implements used for this objective frequently involve constraints on unfettered participation by foreign companies. The United States does it, Europe does it and so do countries in Asia."