Asia’s complex political dynamics and tough regulatory environment mean the region is likely to remain a fragmented, yet highly important market for the satellite industry, panelists said March 26 at Satellite 2009.

Many countries in Asia impose tough — sometimes insurmountable — restrictions on foreign companies that want to enter their markets, making it difficult for operators to provide service in particular areas or make business deals, said Laurie Sherman, an independent consultant who works for Iridium Satellite. These restrictions range from limiting companies from other countries to minority ownership of local service providers to requiring them to establish a local office and employee base to enter a given market,. “Multiply this by 35 or 40 countries, and the economics are daunting,” she said. “There are a lot of barriers to entry in the Asia-Pacific region.”

Still, global and regional satellite companies are attracted to Asia because its topography, large size and relative lack of terrestrial communications infrastructure make the region well suited to space-based communications, according to industry officials.

Beyond making it hard for satellite companies to break into their markets, some countries in Asia seem bent on operating satellites to serve their own interests even if the market cannot absorb the capacity the spacecraft provide, said Patompob Suwansiri, head of marketing for Thaicom’s IPStar broadband satellite service.  “The existence of many [Asian] satellites is not based on supply and demand. It’s based on national pride,” Suwansiri said. “We don’t think there will be very much consolidation” among Asian satellite operators as a result.

Although Thaicom, formerly Shin Satellite, is based in Thailand, Suwansiri said his company does not enjoy a privileged position when it looks to sell telecommunications services in other countries in the region. It took more than three years after the launch of the satellite in 2005 for Thaicom to finalize service arrangements in most of the Asian markets it wants to operate in, he said. Thaicom officials found that an effective way to win favor with regulators was to highlight the satellite’s ability to efficiently bring communications links to underserved areas, Suwansiri said. “There may be high barriers to entry, but once you’re in, there are high barriers to entry for competitors to get in, too,” he said.

Another strategy that can help satellite companies win support from Asian regulators is to enlist support from government officials at the local level, said Sven Rohte, chief commercial officer, Thuraya.. As a German, Rohte said he was bewildered at first by the way other countries handle satellite regulations, but he found that working with provincial officials can pave the way for gaining approval to serve a particular nation. “They have ways to overcome restrictions,” he said. “These people find ways to have a different approach to it. … We can sell, we can get the money, and that’s fine with me.”

Sherman said some rules imposed on foreign companies are difficult to deal with because they require that companies make investments that would otherwise be unnecessary. These requirements stem from the fact that some regulators treat satellite companies as facilities-based providers, even if they have already paid for their spacecraft, she said. The result is that entering a specific market can involve putting up millions of dollars even if a firm has few capital requirements aside from ongoing obligations such as insurance. Other obstacles can include tariffs on imported equipment, such as handsets, needed to provide service, or a requirement that a provider maintain an in-country gateway even if it is redundant, she said.

Sherman is hopeful that regulators will begin to distinguish between companies that want to develop full-fledged satellite systems to serve a given country and firms whose only goal is to provide service in a particular market using already-established infrastructure.

Government restrictions aside, satellite companies that are either indigenous to a particular country or have negotiated entry to markets outside their home turf are collectively expanding the amount of satellite capacity serving the Asia-Pacific region.

Peter Jackson, CEO, AsiaSat,, noted in a presentation that the number of C- and Ku-band transponders serving Asia is growing. Ku-band transponders, in particular, are proliferating because of the expansion of the direct-to-home television business, which depends on Ku-band transmissions, he said. Satellite operators are busy expanding the number of transponders in C-, extended C- and Ku-band even as the global economic crisis has added a sense of uncertainty to the telecommunications projects that would be able to use that capacity.

Thaicom’s Suwansiri said one key growth driver for the industry that appears largely unscathed by the recession is television distribution, a traditional mainstay of satellite companies throughout the world. In addition to the IPStar spacecraft, Thaicom operates a fleet of broadcast satellites. Thaicom expects the number of TV channels its satellites carry to continue expanding at a single-digit pace, Suwansiri said. “The picture will probably look the same despite the economics.”