HONOLULU–Asia represents one of the world’s largest markets for satellite products and services, with 67 commercial satellites transmitting to a third of the world’s population.

Asian satellite operators “may be faring better than their foreign counterparts” in terms of stock performance, observed Phillip Spector, an attorney with the Paul, Weiss, Rifkind, Wharton & Garrison firm of Washington, D.C. However, “persistent weakness in the regional and global economies and excess satellite capacity” is coupled with “tepid demand for new products and services,” Spector said. Other factors contributing to market stagnation include “regulatory obstacles to growth” and competitive pressures from fiber optic cable,” he told a panel here at the Pacific Telecommunications Council’s (PTC) annual trade show and conference last week.

In the long term, demand for satellite services will rebound, Spector predicted. “Industry will benefit from restructuring as firms are likely to continue merging and consolidating to capture economies of scale and facilitate future financing needs.” Keys to industry success, he concluded, are “expansion and integration of existing services, exploitation of markets for DTH [direct-to-home] and broadband to stimulate demand for new satellites, and regulatory reform.”

Compliance with existing deregulation commitments, as well as “synthesis of national regulatory schemes to promote regional service initiatives” will boost the satellite market in Asia, Spector opined. The satellite industry, he said, “must distinguish itself as a preferred alternative, offer niche programming that caters to Asia’s diverse populace, exploit its advantages of low cost and better rural accessibility, and develop innovative new applications that differentiate satellite services.”

Two key executives at Loral Space and Communications agreed with this positive assessment of the Asian satellite market. They told the PTC show that the Asian market will be good for up to six new commercial satellite orders over the next 24 months.

Paul Davis, president of Loral Asia-Pacific, and Tony Colucci, Space Systems/Loral (SS/L) vice president for sales and marketing, predicted that two new Asian operators would emerge during the same period, offering enough potential business to “keep us interested.” SS/L plans to deliver between seven and 10 satellites this year.

The digital audio radio service (DARS) applications now spreading in the United States will power some of the demand in the Asia-Pacific, Davis said. He also said that so- called “condosats,” satellites carrying capacity for a consortium of independent operators, would increasingly become popular, particularly in areas or situations where the capacity of a regular vanilla spacecraft might exceed the requirements of a single participant. Broadband applications, Colucci said, might also be significant in spurring Asian demand. However, he added, “We can’t be certain that consumer demand will require broadband via satellite” in the near future. “I have never seen more competitive wariness than among those operators who could compete with [New Skies Satellites’] NSS-6 and IPStar.”

Referring to the evolving China market, Davis said, “Tele-education and distance-learning applications may drive the adoption of satellite solutions” over the next few years. He added, “This may be the decade when a concept of universal service for the region takes hold across Asia, especially in China and India.”

At the PTC show, Boeing Satellite Systems (BSS) President Randy Brinkley said that his firm has used current global market circumstances to “look at what is really core to our business. We’re faced with reality. We will have to re-size to that reality while maintaining the quality of what we procure and what we produce,” he said.

Last year, BSS, the commercial satellite arm of Boeing, resolved a number of issues related to spacecraft reliability. Brinkley said his company this year needs “to focus on implementation.” Predicting a “gradual shift” in the marketplace, Brinkley predicted that BSS would “win six and possibly more” of an estimated 15 to 17 commercial satellite procurements worldwide this year. The upturn should continue in 2004, Brinkley said.

–Scott Chase