The market for satellite technology has remained strong over the last few years, shrugging off the financial woes experienced in consumer markets. Although sales curves are at a notably lower pitch than two years prior, the satellite market is still relatively healthy, avoiding, to date, the doom and gloom scenarios being experienced in other industries. The appetite for broadband connectivity amongst the world’s population has increased and governments around the world have begun rolling out some of the largest satellite networks ever deployed to meet this growing demand.
Market opportunities in regions around the globe are strong. Satellite’s ability to cost-effectively blanket land masses with high-quality digital service makes it the logical choice for many innovative government programs. In turn, these government programs — and a host of others — provide good opportunities to players in the satellite market.
Government Drivers
Nations which lack highly developed telecommunication infrastructures are languishing as neighboring countries take advantage of Internet connectivity and the benefits that come with connectivity to the World Wide Web. With the exception of a handful of dictatorial regimes and countries mired in civil conflicts, nations around the world are investigating ways to improve their existing infrastructure.
"How can you make sure all of a government’s services reaches all of its citizens?" says Ramesh Ramaswamy, vice president of international marketing at Hughes Network Systems. "The provision of these so called e-governance services involves three different aspects: information, interaction, and transformation. Information can be many things. For instance, an individual might want to know where to apply for a driver’s license or download the application form. Then comes the interaction phase, where he actually applies for it online. Reliable broadband services are obviously a necessity to allow the individual to interact with the government in some way. Once there is information and interaction, then you can effectively transform communities. Governments thus realize their populations need broadband connectivity. Nine out of 10 government funded telecom projects are to bring broadband to underserved areas. Depending on the country, these programs take on different forms to help bridge the gap in communications"
Follow the Money
As the world shifted from wired to wireless technologies, the demand for basic voice connectivity exploded, allowing untold millions to experience their first phone call. Now telecommunication providers of all stripes are racing to meet the pent-up demand for broadband connectivity. But one major hurdle faces all of the contestants: money. Money is the lubricant of industry, and countries use several different approaches to fund regional or state broadband initiatives. "Different countries use different approaches to expand their telecommunication infrastructures," says Doron Elinav, vice president of marketing for Gilat. "Universal Service Obligation (USO) is a very common approach. The government mandates that carriers provide services to underserved areas, but the government doesn’t provide the funding. If you want to keep your license, you must provide these services whether they are profitable or not. Funding can also come from a country’s Universal Service Fund (USF), where a fee is levied on all telecommunication services. The fund is then used to subsidize services which otherwise wouldn’t be profitable. Of course, there is still the classic funding mechanism for new initiatives where the government outlines the size and scope of a satellite project and then sets asides funds specifically for the project."
The success of government-sponsored satellite programs around the world, combined with the dramatic drop in prices for VSAT hardware throughout the last decade, has stoked further demand for satellite services. In March, more than 1 billion euros ($1.4 billion) were allocated in the European Union (EU) Economic Recovery Package to promote broadband connectivity across Europe. The goal is to provide access to broadband services to all of Europe’s 500 million citizens. "If we’re serious about having prosperous and vibrant rural areas, we still need to help everyone get the most out of modern technologies. We must do our utmost to bringing Internet technologies to all citizens of Europe. Internet technologies contribute to half of productivity growth in the EU, and the EU’s member states cannot afford their rural areas missing out on this potential, especially not in these times of economic crisis," says Viviane Redding, European Commissioner for Information Society and Media.
As with the broadband stimulus plan in the United States, members of the satellite sector had to close ranks and educate government officials on the advantages and costs effectiveness of utilizing satellite technology in rural and areas. The European Satellite Operators Association (ESOA) has taken an active role in the educational process. "Satellite capacity is already in place to enable a sizeable and rapid roll-out of satellite broadband services throughout Europe. With the right application of funds, satellites can connect at least a million farmers, local residents and rural businesses to the Internet by the end of 2010," Giuliano Berretta, chairman of ESOA, says.
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