SATELLITE 2009 opens following a busy 12 months. The sector has seen the emergence of new players, new business models and new opportunities — all coming against the backdrop of the greatest global economic crisis in decades. Industry analysts Patrick French, Claude Rousseau and Carlos Placido of NSR; Near Earth CEO Hoyt Davidson; Andrea Maleter, technical director for Futron; and Idate satellite analyst Stéphanie Villaret discussed the hot topics for the satellite sector.

Show Daily: What are the hottest topics in the satellite industry?

Rousseau: Broadband is going mobile and will likely take a turn for the better in the next two to three years, so players have to invest in equipment and service offerings now to prepare.

Davidson: The satellite industry is no longer the special playpen of the United States and Western Europe. China, India, Russia, Japan, Brazil, Israel and now even Iran are stepping up their space efforts and should be expected to provide ever increasing competitive pressure on the West for satellite and launch orders as well as the emergence of more independent national or regional satellite operators. The impact may be minimal in the short-term, but potentially huge in the medium-to-long term. Second, broadband mobile communications for government, corporate two-way video and large file transfers and eventually consumer mobile video applications. These applications for Western countries and select Asian markets will drive a lot of new investment interest over the next several years. Third, the coming explosion of geospatial linked information, including the mash up of digital databases on to satellite and aerial maps of the Earth and available on laptops and smart phones through powerful Web-based applications.

Maleter: The hottest topics right now are: When or how will the recession lead to lower usage by consumers or enterprise customers, and how will budget restructuring impact military satellite programs, military use of commercial satellites or the ground station procurements associated with both of these.

Villaret: MSS/ATC/CGC in North America and Europe. This has changed from last year because ICO has launched its satellite, and others are about to do the same. Ambitious replacement plans for Orbcomm, Globalstar, Iridium. Strong growth of satellite broadband plans. And of course, the steady growth of DTH, especially in Asia, Africa, and Latin America and at the same time the challenge for the satellite to remain a major TV distribution network for the majority of premium but also FTA channels and not to become a complementary network used to cover remote areas where it is not economically profitable or where it is technically difficult to deploy
terrestrial networks.

Show Daily: How do you assess the prospects for satellite players in markets such as broadband and mobile TV?

French: In the coming year the biggest issue for satellite broadband will be what governments do in terms of policies to guarantee rural areas fair access to metro equivalent broadband services and how much taxpayer money is put up to back these new policies. The satellite industry must not sit on its laurels because it know’ it is the best technology for serving rural areas or else it will risk being run over by the lobbying efforts of the players offering terrestrial wireless/BWA services.

Davidson: People are starting to view broadband like indoor plumbing, and satellite makes that plumbing available anywhere. Mobile TV is currently over hyped but a serious future market. The key is likely the ability to offer mass market pricing with premium content and some level of two-way interactivity. Most likely this will require a hybrid terrestrial/space solution that could involve a massive investment. It may pay to be second or third to this market to learn from others mistakes.

Maleter: Satellite-delivered broadband continues to grow in the established U.S. market as well as the more emergent European market. The key here is that the pockets of demand are in areas that, to date, have had sufficient financial strength to support the service. While there should be a natural market for satellite delivery of broadband in rural or remote locations around the world, the difficulties in getting funding for programs is still a problem, and the trick will be for satellite networks to get underway before terrestrial alternatives become more cost effective. In the case of mobile TV, satellite’s role is primarily for backhaul and/or as part of a satellite/ATC program. With the new terrestrial alternatives coming on line all the time and the technology/cost challenges for satellite, this is not likely to become a major market for the satellite industry.

Show Daily: Which new players excite you?

Del Rosario: O3b. It’s forward-looking, innovative and taps a market where others have failed, given up or just didn’t bother to tap into. They are probably not on top of the “most likely to succeed” list at the moment given the economic times and their need for funds to support the program, but if they do manage to show some degree of success or even merely survive this year and next with enough funding to show tangible results that the program will indeed proceed, they would’ve pulled off a great change in the satellite industry.

Davidson: SpaceX has a chance to radically shift the economic paradigm of the industry with their transparent, very low pricing. We expect new business models to emerge as a result of lower cost access to space.

Maleter: It is exciting to see new companies starting up, in particular those providing alternative approaches to old businesses, such as SpaceX, which is really pushing the launch industry into
a new way of thinking
and operating.

Villaret: O3B has a very innovative business model and has already gained important contracts with leading players on
the African market. ProtoStar was able to register strong successes on the Asian DTH market and is to launch its second spacecraft. SpaceX is also a interesting player to follow, even more since the launcher market is highly competitive and technically challenging. Regarding Solaris Mobile, they modified slightly their business model to incorporate public safety services as well as navigation services. We think this was the right thing to do, as mobile TV is constantly evolving.

Show Daily: Can you name one event you think might happen in 2009?

Placido: A surprising event in 2008 was EchoStar breaking ties with long-standing partner AT&T, killing acquisition rumors and hinting confidence in its long-term multi-platform strategy. While this initially hurts EchoStar in the form of higher churn and net subscriber losses, 2009 could be the year where EchoStar better exposes its cross-platform, game-changing opportunities in a more coordinated fashion.

French: To watch will be if O3b secures the rest of its funding over the course of the coming year. Success here will speak well for O3b and the satellite industry as a whole and how positively banks/venture capitalists view the sector. Failure will be discouraging but not fatal to O3b or the industry.
Davidson: Inmarsat acquires Skyterra, Globalstar restructures and WildBlue gets sold.