[Satellite Today Web Exclusive – 6-13-08] Measat is one of a number of locally based satellite operators looking to make its presence felt in the region and the launch of the Measat 3 and the scheduled launch of Measat-3a in the third quarter have increased the operator’s capacity at its 91.5° East slot by more than 300 percent since the end of 2006.
    Measat supports direct-to-home (DTH) platforms in Malaysia, Indonesia and India, and as more platforms emerge in the region, the operator’s will hope to gain further growth. Paul Brown-Kenyon, Measat COO, talks about the operator’s plans to build its video business still further.

Via Satellite: What do you see as the major growth markets for Measat?

Brown-Kenyon: At a macro level, we have seen the Asia-Pacific satellite transponder market generally tighten over the last 12 months with demand now more closely aligned with available supply. The major driver for this has been video. The whole pay-TV industry in this region is growing rapidly. with new pay-TV platforms having emerged in countries such as India and Indonesia, and existing platforms — such as Astro in Malaysia — expanding their offerings. The growth in pay-TV is having a knock-on effect on the content distribution sector. We have seen the entry of new channels and new types of channels into the region. Beyond video, we have also seen increase in telecommunications traffic, especially in markets such as Indonesia with the expansion of GSM and VSAT networks.

Via Satellite: What are your satellite plans beyond Measat-3A

Brown-Kenyon: This depends on customer requirements. We are currently in discussions with our core customers about their longer term requirements at 91.5 degrees East as well as looking for opportunities to expand the network into new markets such as Africa. We will plan accordingly.

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

Brown-Kenyon: The key reason why satellite operators have been moving to Ka-band in Europe and North America has been due to congestion in the C- and Ku-band frequency bands, especially for the higher bandwidth broadband type services. Today, we don’t yet see that level of congestion in the wider Asia-Pacific region or strong demand for broadband DTH services. In some of the more developed markets in the region, such as Australia, there may be opportunities today. Across large parts of Southeast [and] South Asia, I still think that this is at least five years away from seriously considering Ka-band satellites. An additional challenge with Ka-band in South and Southeast Asia region is rain attenuation. Large swathes of the region are subject to monsoon rainfall. As you move into the higher frequency bands, this poses increasing challenges on the link budgets. This is an additional challenge that our colleagues in Europe and North America don’t face.

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

Brown-Kenyon: The business case for a satellite investment is not easy. With a large upfront investment, profitability requires transponder lease rates above cost and operating the satellite at high utilization rates over the satellite’s life. Given the transponder rates that some companies are leasing capacity at, I struggle to see how they are able to recoup their investment and justify replacements.
    In terms of what this means to the competition, with a number of satellites coming up for replacement over the next three to four years, I think you will see some of the weaker players/satellites in the market reconsidering the replacement of spacecraft. This pressure at the lower end of the market may also lead to some consolidation, but in an industry where there are other interests at play, this will not always happen as quickly as everyone might want.
    Of some concern in the market, however, is the entry of a number of new operators into the market. Starting a new satellite/new orbital slot is not easy. If these operators fail to establish themselves in the market quickly, [since they] often supporting heavy debt, you could see them reverting to dropping their transponder lease rates to bring in cash flow. This will be bad not only for themselves — once you drop your rates it is difficult for them to recover them — but also for the industry in general.
    With some of the satellites looking like they will be launching without having completed the technical coordination of their satellite with existing operators, this raises an even greater concern.

Via Satellite: Have the dynamics for FSS services in recent years changed?

Brown-Kenyon: I think the supply-and-demand balance has evened out over the last few years so in general, there is less spare capacity and you see less people dumping capacity. I think this statement, however, is heavily dependent on satellite and slot (with some satellite having to manage excess demand and others excess supply). At the lower end of the market I think you will see some turn over of operators, with some new operators entering the market while others may potentially drop out.

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

Brown-Kenyon: I think the prospects for DTH in the region are very good, but as with the market for satellite capacity, I think market dynamics will vary across the market depending on market size and prevalence of other forms of pay-TV platform. To give you an example, in Malaysia, which has relatively poor terrestrial infrastructure, DTH makes sense. It’s the best technology to use. But given the size of the market, and Astro’s relatively strong position, I think it would be challenging for a second DTH operator to develop a strong presence in the market. Compare this to a market such as Indonesia, which has a population of over 200 million. While there are cable networks across major cities, large parts of the country are beyond the reach of existing networks. Given these factors and the economic potential of the country, I think there is the opportunity for a number of competing DTH pay-TV platforms. In other markets, such as Taiwan, cable is dominant and it is difficult to see how DTH could gain a foothold.

Via Satellite: What role will Measat play in the Asian satellite landscape in the future?

Brown-Kenyon: I think we and will continue to be a core part of the regional satellite industry supporting the DTH and video distribution sectors.