[Satellite Today Web Exclusive – 6-9-08]  Asia Broadcast Satellite (ABS) is one of the new breed of satellite operators trying to make an impact in Asia. The company, founded less than two years ago, was established to meet the growing demands of broadcast and telecoms operators in the Indian Ocean region. CEO of ABS, Tom Choi, talks about the operator’s growth plans and how the new satellites it is planning will enable it to become more of a force across the region.

Via Satellite: What demands do you see for satellite capacity in Asia?

Choi: The demand for satellite capacity in Asia is currently being driven by growth in cellular trunking, VSAT and local cable TV distribution channels. Currently a lot of C-band capacity in the Asia-Pacific is being used for IP-transit, point-to-point backbone services, but this segment of the market is diminishing in both profitability as well as volume. From the 75 degree East position, we see a lot more of the world than only Asia and Asia remains our smallest market. However, we are bullish in the growth of [cable TV] distribution and cellular backhaul as well as the emergence of low-cost Ku-band VSAT terminals for affordable rural connectivity services.

Via Satellite: Do you expect transponder prices in the region to remain depressed?

Choi: The Asia-Pacific region will continue to suffer from pricing pressure due to the continual investments in satellite capacity by new national and commercial operators. The emergence of the newly merged Chinese satellite operator (composed of the merger between SinoSat and ChinaSat) along with their new satellites has resulted in a loss of capacity to both AsiaSat and APT Telecommunications. Both Indonesian satellite operators will be launching new and larger satellites in the next three years. They will be both adding significant amount of Ku-band capacity over Southeast Asia. Protostar will be launching two satellites in 2008 and 2009, and VinaSat just successfully launched their new satellite VinaSat-1. ABS commercialized the sales and marketing of our satellite ABS-1 in [the 2006 fourth quarter], and we will be launching a 60-plus transponder satellite in 2010 as well. Ku-band over China and C-band over Asia will continue to be under pricing pressure for many years to come.

Via Satellite: How important is it to be at the cutting edge when bringing new satellites to the region?

Choi: Not including the markets of India, Russia, China and Japan, the investments in AsiaSat-5, VinaSat-1, Intelsat-15, MeaSat-3A, ST-2, Protostar 1 and 2, Telstar-10R, Palapa-D and Telkom-3 as well as ABS-2, will represent over $2.2 billion of new satellite hardware being launched into geostationary stationary orbit over the Asia-Pacific region in the next three years. Fortunately for ABS, we will not have to compete with all of these satellites, as ABS-2 will be serving markets in capacity-constrained markets of the Middle East, Eastern Europe and Africa as well as Asia Pacific. Almost all of the newly planned satellites including ABS-2 will use traditional transponder bent-pipe technologies. I don’t believe that we will see any new investments in cutting-edge technology such as IPStar in the near future. Cutting-edge technology investments sometimes tend to cut both sides.

Via Satellite: How do you view the opportunities for Ka-Band in the region?

Choi: ISRO, KT and JSAT are all either operating or planning to fly Ka-band payloads in the near future. The newly formed operator Yahsat will deploy Ka-band services on their new satellite in the Middle East and Africa. Asian operators that are planning to serve Southeast Asia are discouraged from offering Ka-band services in that region due to the high levels of rain fade.

Via Satellite: Do you see consolidation among operators in the region?

Choi: As the investment in satellites and launch vehicles continue to skyrocket, we will see more partnerships developing to coordinate investment costs between satellite operators — as Intelsat has done with JSAT for their Horizon’s investments. ABS is always interested in partnering with other regional operators to explore mutually attractive investment opportunities. Although people discuss consolidation amongst Asian FSS operators, due to the political complexities of satellite investments, I don’t believe we will be witnessing a flurry of activities any time soon.

Via Satellite: Have the dynamics for fixed satellite services changed in recent years in the region?

Choi: The dynamics of the FSS industry has changed quite substantially over the past several years brought on by the rapid pace of consolidation amongst the larger global operators. Although there is less commercial competition, we are seeing more trade barriers being imposed on our business in Asia. One key concern that I have for the region is the signs of protectionism that is appearing in key domestic markets. Without naming names, a significant number of domestic markets that have either launched or are launching new or replacement satellites are putting in either regulatory or commercial pressure to their domestic customers to “buy local.” This doesn’t bode well for global or regional satellite operators for every country to have a satellite network and put in protectionist barriers against foreign satellite operators. Fortunately, some countries with domestic satellite operators such as Malaysia have maintained an open skies policy. We hope that this trend continues for the health of the satellite industry.

Via Satellite: How do you assess the prospects for DTH across the region

Choi: I believe that some of the essential ingredients for successful DTH operations include a large domestic population base with upper class income segment with sufficient disposable income as well as a dynamic domestic television and media market. India embodies these traits. Although some of these countries have had limited success in DTH operations, I believe countries such as the Philippines, Indonesia, Thailand and Pakistan also have the basics for future DTH success. Let’s hope for the satellite industry that the local companies with sufficient investment capabilities are awarded licenses to see those plans come to fruition.

Via Satellite: How do you see the satellite landscape developing in Asia?

Choi: The satellite market in Asia will continue to be a fiercely competitive landscape with the emergence of new domestic operators as well as other regional operators joining the market. The [cable TV] distribution market is being fragmented on domestic [and] local levels, and the days of paying premium for one or two satellite positions for a pan-Asian distribution will diminish over time. The IP-backbone market will continue to dwindle and simultaneously result in low revenue yields per transponder due to increasing competition from fiber. The cellular backhaul market segments will stay strong, if not growing, in the intermediate future, however, this segment, too, will be substituted with domestic fiber and microwave links.