by James Careless

There’s likely no satellite region more complex and challenging to comprehend than the Middle East. At the heart of the situation is, of course, the ongoing Israeli/Arab power struggle. As the peace process drags on, the conflicts that divide these two potent communities undeniably stunt satellite growth in the region.

Certainly Israel is itself a hotbed of satellite activity. As a European-like economy perched on the edge of Africa and Asia, it’s a sophisticated user of spaceborne communications and an entrepreneurial power in its own right: a fact made clear by Gilat, now the world’s second largest VSAT supplier after Hughes Network Systems.

But the rest of the Middle East is active as well. Despite the tight reins of control that hold back private telecom development in many Arab nations, growth is indeed starting to happen. Driving it all is the Internet: that insatiable cyberspace siren which attracts even the most guarded of nations to itself.

The result: despite the ongoing strife that dogs the Middle East, satellite progress is definitely happening, says Arnon Spitzer, director of marketing and sales for Shiron Satellite Communications. In fact, "most of what used to be considered the ‘hard core’ Islamic countries have been slowly and gradually opening up to Western satellite communications," he says.

Ovadia Cohen, vice president of marketing for Tadiran Scopus, comments that his company, whose core business is in digital video compression, believes itself to be a major world player. According to Cohen, lifting the political barriers and opening the Middle East will enhance the business for the digital video compression segment and for Tadiran Scopus.

So just how important is the Internet to the Middle Eastern market? Well, Intelsat’s Internet-based communications here grew "around 45 percent in 1998," says Samir Dajani, Intelsat’s group director for the Middle East and North Africa, "and we expect it to grow another 40 percent this year."

This growth shouldn’t be seen as proof of radical liberalization in the Middle Eastern market: it isn’t. Despite such rule-loosening, many of the companies exploiting Intelsat’s Internet capacity are "signatories to the Intelsat agreement," says Dajani. In other words, they’re PTTs and other state-run telecommunications firms, who nevertheless understand that they need to stake out cyberspace in order to remain relevant.

Still, growth is growth. Hence, when it comes to satellites, the Internet is good news for companies selling into the Middle East: not just Gilat, Shiron and Tadiran Scopus, but also Intelsat, Hughes Network Systems and Alcatel Space, to name but a few.

A case in point: Intelsat recently signed a deal with Israel’s Israsat, a subsidiary of Gilat Communications, to connect it to the Internet 2 backbone. As a result, U.S. academic institutions will soon be linked to Israel’s Inter Universities Computation Center, at speeds several times faster than today’s Internet can deliver. The two-way service will travel across the Intelsat 801 satellite at 328.5 degrees E. Initially it will run at 45 Mbps using two 36 MHz transponders; eventually that speed will increase to 155 Mbps over two 72 MHz transponders.

Beyond the Internet, there are many other things happening in the Middle Eastern satellite market.

Take DTH/DBS, for instance. In the Middle East, there’s lots of news-both good and bad-regarding satellite-delivered television.

On the bad side, Israel is navigating a rocky road toward receiving locally produced satellite TV. In May, DBS Services, the country’s only licensed DTH provider, decide to call it quits and returned its government license. According to the May 19, 1999, edition of Multichannel News International, "The company alleged a ‘secret agreement’ between the government and cable operators, allowing the latter to offer tiering on terms so favorable that DTH operators would be unable to make a profit." The company has since reversed this decision and returned to the DTH scene. Barring any further incidents, the Iraeli DTH project is scheduled to air in April 2000.

On a more positive note, Arabsat succeeded in launching its Arabsat 3A satellite on February 26, 1999. Built by Alcatel Space, Arabsat 3A has 20 Ku-band transponders for delivering DTH to the Middle East, plus much of Europe. It’s been collocated with Arabsat 2A at 26 degrees E, which means Arabsat users can receive both analog and digital broadcasts using a single antenna.

Meanwhile, Egypt’s Nilesat 101 DTH satellite is now in orbit, having been successfully launched from French Guiana on April 28, 1998. Sent up aboard an Ariane 44P booster, Nilesat 101 is designed to deliver 84 digitally compressed TV channels over 12 transponders, plus audio and data. To date Nilesat has been used for specialized TV broadcasts. On March 23, 1999, Nilesat 101 manufacturer Matra Marconi Space announced that it had been contracted to build Nilesat 102. Similarly based on Matra Marconi Space’s Eurostar platform, Nilesat 102 will provide more than 100 digitally compressed DTH channels when it becomes operational in the third quarter of 2000.

A final note on the TV side: Israel’s Amos 1 satellite is currently delivering Israeli channels 1, 2, 22 and METV. Built by Israel Aircraft Industries in alliance with Germany’s DASA and Alcatel Space, Amos 1 was launched in May 1996. Now located at 4 degrees W, Amos 1 is able to provide DTH, VSAT services, and distribution of television channels to cable TV headends.

Satellite telephony is another hot area of Middle Eastern activity: both wireless and rural. In the rural telephony market, Hughes Network Systems (HNS) announced two major Middle Eastern contracts in the first half of 1999.

In one deal, HNS is supplying the Sultanate of Oman’s PTT, the General Telecommunications Organization, with its TES Quantum satellite-based rural telephony solution. Based on VSAT technology, TES Quantum will provide oil explorers with fast, direct contact back to their head offices, no matter where these explorers are in Oman’s nearly 120,000 square miles.

"HNS’ VSAT network provides an important complement to Oman’s existing terrestrial and microwave telecommunications infrastructure," says Abdullah Al-Rawahy, the GTO’s executive president. "Because time and expense prohibit the expansion of these networks to remote areas, satellite technology presents a flexible and quality alternative that enables field personnel to quickly dial up information and make well-informed decisions."

In the other contract, HNS is providing Alkan Telecom, an Egyptian telecommunications company, with TES Quantum-Direct technology. A VSAT-based system, TES Quantum-Direct delivers a simple, easily deployed rural telephony solution for underserved regions. It should be a welcome addition to Alkan Telecom’s VSAT roster. To date, this Egyptian company has already pioneered video conferencing, distance education and telemedicine throughout Egypt via satellite.

Meanwhile, in the area of wireless communications, Hughes Space and Communications International (HSCI) is prime contractor in the $1 billion rollout of Thuraya.

Based in Abu Dhabi, United Arab Emirates, Thuraya’s goal is to be the Middle East’s leading mobile satellite operator. To achieve this, its first satellite will be launched May 2000 into a geosynchronous orbit at 44 degrees E. When on station, Thuraya’s satellite will offer 250-300 spotbeams to coordinate mobile satellite-based communications throughout the region. All told, HCSI’s turnkey contract includes building two satellites and launching the first, building and installing Thuraya’s ground station, and manufacturing nearly 250,000 mobile handsets.

With a price tag like this to pay, it’s not surprising that Thuraya is establishing partnerships with major players throughout the region.

A recent example: on October 5, 1999, Thuraya signed a distribution and marketing partnership agreement with the National Group for Communications and Computers (NGC) in Saudi Arabia. NGC is a Riyadh-based firm that covers GSM wireless, PABX, pagers, data, call centers and cable. It joins Emirates Telecommunications Corp. (UAE), Qatar Telecom, the Pakistan Telecommunications Co., the Sudan Telecom Co., and Libya’s General Post and Telecommunications Co. in partnering with Thuraya. Together, these groups signal a serious commitment to satellite-based telephony by the region’s Arab community.

These are some snapshots of the major satellite trends in the Middle East: a diverse market covered by Intelsat, Eutelsat, Panamsat, Thaicom, Arabsat, Nilesat, Eutelsat and Amos 1 satellites, among others.

Put together, the picture is one of a market offering unique opportunities, despite its political turmoil and regulatory restrictions.

One thing is clear: should the Middle East ever resolve its differences, this region could be a hotbed of explosive satellite innovation and growth. After all, the Middle East has all the right components for rapid expansion: technological smarts, money and an underdeveloped terrestrial infrastructure in many regions.

So if the peace process one day succeeds here, the Middle Eastern satellite market could come into its own, in a very big way.

James Careless is a contributing writer to Via Satellite.