[Satellite Today Web Exclusive – 6-13-08] The Cable & Satellite Broadcasting Association of Asia (CASBAA) plays a key role in promoting the rights of satellite and cable companies throughout Asia.
    As it helps satellite players in all markets, CASBAA is able to offer a unique perspective on how markets are going to develop in the region. Simon Twiston Davies, the organization’s CEO, talks about the prospects for satellite players in Asia and the potential for growth in a number of different markets.

Via Satellite: How do you view the opportunities for fixed satellite services (FSS) and direct-to-home (DTH) operators in the region?

Twiston Davies: The demand for communications products in Asia continues to grow in line with economic development. FSS and DTH in particular are a little bit ahead of economic growth, trending upwards with media spend — especially since at least 50 percent of all satellite services are dedicated to video. The demand curve continues to rise across the region. The only caveat I hold is that we work in a patchily restrictive market in terms of regulation.
    CASBAA operates across 15 markets and each has a different set of dynamics compared. India has huge demand for satellite services. Even so, we believe the demand is not being adequately met because, in [the Indian Space Research Organisation], there is a single gatekeeper holding back the additional deployment of capacity over India. China has its own set of dynamics with a single operator, and again the market for fixed satellite services is quite restricted with international players only able to pick up a relatively small percentage of the market.
    The opportunities, for both FSS and DTH, are enormous. The Asia Pacific’s appetite for general communications is increasing. Of course, there is a challenge from fiber networks, but the fact is that we live in multiple markets which are almost perfect for satellite communications. With 13,000 islands in Indonesia and 7,000 in the Philippines, they are both ideal for satellite communications and growth in both of those economies should lead to more opportunities. India, meanwhile, has a vast piece of geography, which is only patchily connected by fiber and fixed ground systems. So India is ideal for DTH, VSAT, satellite backhaul of video and for general communication products.

Via Satellite: Have the dynamics for FSS services changed in the region?

Twiston Davies: I think the dynamics have changed somewhat with major investment groups clearly seeing a return on new investments, which is more attractive than it was three to four years ago. We know that those operators are commissioning new capacity. They clearly see a market.
    Several Asian markets are perfect in terms of the way they are geographically dispersed with very lively economic growth. It may be that the new capacity soaks up that economic growth. If you have got regional economic growth of 8 percent to 9 percent and you have an underdeployed communications infrastructure, there is great opportunity.

Via Satellite: Do you believe the region can sustain a number of FSS players?

Twiston Davies: There should be, and it is desirable, to have consolidation. The question is who should be consolidated with who? You have issues of flagship carriers and the perceived needs of individual jurisdictions such flagship carriers. We know that various multinational players have looked into consolidation or purchasing outright other operators, and we have still not seen the movement we would expect or hope for in the market. I am not sure in the short-to-medium term we are going to see that.

Via Satellite: How satellite as a delivery mechanism for pay-TV compare to cable, terrestrial and IPTV?

Twiston Davies: I think satellite is particularly strong in a market such as Malaysia, where there is a single operator with a long term exclusive license. In other markets such as India, you have DTH in where there are now three established DTH operators with 3 million to 4 million subscribers between them. However, India also has 72 million cable households and the opportunity for DTH remains huge, especially when you have a cable environment, which is largely underinvested in terms of digital services. The upside for satellite is quite clear.
    I think a market like Indonesia already has three DTH operators and there could be more. The Philippines has one satellite operator in a pay-TV market which is still only penetrated at around 10 percent. That is one of the elements that gives you enthusiasm for Asia where pay-TV as a whole is only penetrated at only around 30 percent. There is 70 percent upside in some absolutely enormous markets. That is one of the reasons why we are seeing new investments into the Asia-Pacific satellite services market.

Via Satellite: Do you see any significant changes to the landscape throughout the next year?

Twiston Davies: We can see the demand curve clearly rising across the board. While China is a closed and highly regulated market at the moment, it has no DTH platform. We have got vast opportunity when that happens. China will completely change the shape of the pay-TV market, when satellite comes into play. You have the Philippines with a very low DTH penetration. Indonesia is under-penetrated for cable and satellite services and comes in at below 20 percent penetration of all TV households there, so there is plenty of upside in that market.
    The mature markets such as Hong Kong and Singapore, we don’t see a vast increase in satellite there, but [average revenue per user] will rise. Japan remains 40 percent penetrated by cable, so that growth will be a little slower. Korea has a fairly well-established pay-TV market with one domestic DTH provider in a very competitive media market. Australia is a high-value market also where there is a strong demand for satellite services.