Satellite Capacity ‘Vastly Outstripping’ Demand

The financial performance of fixed satellite operators is hamstrung by a lingering overcapacity problem that generally will exceed demand for years to come. Such is the view of two industry consultants who addressed the FSS sector during the opening panel of the one-day financial forum that kicked off PBI Media’s Satellite 2004 conference. The impact is felt by the operators in the form of reduced transponder pricing and stagnant revenue streams, said Andrea Maleter, technical director of the Bethesda, Md.-based Futron consulting firm.

“Supply has vastly exceeded demand,” Maleter said. Operators now are forced to consider such unconventional marketplace opportunities as in-flight broadband services, she added. A recent example of an operator taking an untraditional approach in pursuit of growth occurred last week when SES Global agreed to invest in Dulles, Va.-based mobile data service Orbcomm.

Steve Symonds, a partner and managing director with Wilton, Conn.-based Symonds & Associates, offered a more downcast view of FSS. He characterized FSS companies as survivors of a “nuclear winter,” in light of the capacity oversupply and slow economic conditions that are curbing growth.

The distinction between the tone of the two consultants was highlighted when Maleter pointed out FSS companies increasingly were tapping the U.S. government market, while Symonds suggested the “spike” in demand for such services had failed to materialize.