Impending consolidations will create massive global Fixed Satellite Service operators that will dwarf their regional competitors.

But sheer size alone will not bring the largest operators competitive advantages, and the regional operators continue to pursue new and exciting business opportunities that will help them compete not only against the global operators but also against the rising threat of terrestrial competitors, top executives said during the SATELLITE 2006 "Regional Roundtable: Smaller Players Offer Innovation" panel session.

While considered a regional operator, Telesat Canada, which reported revenues of nearly $400 million in 2005, is on track to become the fifth largest satellite operator in the world once Intelsat completes its acquisition of Panamsat, Telesat President and CEO Larry Boisvert said. Telesat Canada continues following its aggressive growth plans, and with room for "ample growth in the Americas," the company should generate $625 million in annual revenue by the end of the decade, he said.

While the majority of Telesat Canada’s revenue will continue to come from space-related activity, specifically broadcasting, the company is developing its other businesses. The company’s Anik F2 satellite, which provides satellite broadband access to consumers, currently serves 30,000 customers between Telesat Canada and Wildblue, which leases transponders aboard the spacecraft.

Boisvert expects that between Wildblue and six service resellers Telesat Canada has licensed throughout the country, satellite broadband subscribers using Anik F2 will reach 200,000 very shortly, he said.

Telesat Canada will announce plans for a second-generation Ka- band spacecraft later this year, he said.

Telesat Canada also brings in revenue from spacecraft operations. The company’s facilities currently control six Telesat spacecraft and six spacecraft owned by other operators, Boisvert said. The company plans to add another Telesat spacecraft and one from other operator in 2006, and two more non-Telesat birds in 2007, he said.

The Canadian operator also is moving into terrestrial services, adding DSL lines to help one-stop shopping for broadband customers, Boisvert said. "Some areas of Canada are better served by satellite and some by best way to get service. We will launch the business in the fall and hope to announce some large contracts."

Telesat Canada also announced recently its plans to perform an initial public offering in the second half of 2006. Up to 49 percent of the company will be made avail able, as laws require that the company remain under Canadian control, Boisvert said. "We believe as a result of our innovation we are able to develop services that use our satellite capacity," Boisvert said.

Another broadband satellite push is being made in Asia, where Shin Satellite PLC, a regional operator based in Thailand, initiated service with its IPStar satellite in December.

The spacecraft, built by Space Systems/Loral and also known as Thaicom 4, provides varying levels of Internet service to customers throughout Asia, Australia and New Zealand.

Shin Satellite is in the process of transferring its consumer broadband traffic from other satellites to IPStar and already had installed 27,000 terminals by the end of 2005, said Dumrong Kasemset, executive chairman of Shin Satellite. Shin hopes to expand its number of gateways from seven to 18 before the end of the year, which will help the company reach its goal of 100,000 subscribers before the end of 2006, he said.

"The largest barrier to broadband subscriber growth remains the cost of consumer terminals," Dumrong said. While IPStar allows Shin Satellite to offer broadband service for less than $50 per month, competitive with many terrestrial offerings in Asia, the cost of the terminals must be cut in half to help the end user, "but I don’t think we will see such a cut anytime soon," he said.

While Shin Satellite’s IPStar efforts are receiving most of the attention, the company also is continuing to strengthen its broadcasting business.

The Thaicom 5 satellite, being manufactured by Alcatel, has been fully financed and is on schedule to be launched in May, Dumrong said. The satellite will help Shin Satellite launch high-definition (HD) TV service in the Asian region in 2006.

European regional operator SES Astra, which operates 13 satellites, can be compared in size to Eutelsat, said Alexander Oudendijk, SES Astra’s chief commercial officer. SES Astra’s broadcast services reached more than 100 million households in 2004 and that number is expected to grow in 2005 once the figures are compiled, he said.

The company is expanding its satellite fleet, with a pair of spacecraft expected to be launched in 2006 and a third in 2008, and also is expanding its business focus throughout the Middle East and parts of Africa, Oudendijk said. SES Astra also is looking to expand into Eastern Europe, already having deals in the Czech Republic and Poland and setting up an office in Moscow.

"We are looking at different ways to expand our business," Oudendijk said. "The major development in 2006 will be the introduction of HD. Astra has been instrumental in pushing for this." But other challenges remain for the direct-to-home market, which has seen little innovation throughout the last 15 years and is losing ground to terrestrial providers who are pushing innovation further and further, Oudendijk said.

"We are working on new innovations and technology in order to reduce the size of the dish," but there are limits to how small dish size can be reduced due to interference issues, he said. "Active cancellation of interference may help bring dish size down."

SES Astra will not be taking the same terrestrial path as Telesat Canada, Oudendijk said. "There is no need to own fiber when there is so much available for lease," he said.

In the Middle East, Arabsat, a 30-year-old consortium of 21 Arab states, continues to dominate the landscape and is retooling itself to maintain its advantage, said Khalid Balkheyour, the company’s CEO. The company targets the Middle East and Africa with a pair of leased satellites but found itself losing market share in the early 2000s. But a decision to become more aggressive and restructure the company to be more competitive has paid off, he said.

Arabsat is scheduled to launch its first satellite Feb. 28 and a second spacecraft at the end of July or in early August, Balkheyour said. The two spacecraft will replace the leased satellites Arabsat current operates, and the company plans to procure another pair of spacecraft for launch in 2008 or 2009.

"We have an aggressive program, because we realize we have to grow," he said. "… Competition is really high, but we believe we are the leader in the region." Balkheyour declined to disclose Arabsat’s 2005 revenues, which are being audited. Arabsat will be the 10th largest operator in the world once the Intelsat-Panamsat deal and SES Global‘s acquisition of New Skies are completed, Balkheyour said.

The regional operators will never be able to match the massive global operators in size, but the smaller players will more than hold their own in the market with innovative business ideas.