[Satellite News 07-17-08]  A lack of diverse content, desire for a commercial-driven direct-to-home (DTH) market and an ingrained political fear of change will result in slow growth and underperforming Chinese satellite markets, according to the latest NSR report, "China Satellite Markets: Assessment of Commercial Satellite Transponder Demand in China, Hong Kong and Macau."
    The report, which states that the Chinese satellite market will generate 5.3 percent growth and $375 million by 2013, is authored by analyst Patrick French, whose assessments are very conservative and cautious because of the unpredictable and commercially close-minded nature of Chinese markets.
“I repeat that [assertion] in the study quite often,” French said in an interview with Satellite News. “I give, in some of the opening paragraphs, a comparison between the Chinese and North American markets. With a population of roughly one quarter the size of China’s population, North America generated about $1.6 billion just from the lease of transponders in 2007, compared to $237 million generated by China. That doesn’t even take [direct broadcast satellite] services, Dish Network, DirecTV, Bell Express, Star Choice, the VSAT market or satellite broadband service from WildBlue into account. So what that shows is that the 5.3 percent rate of growth mentioned in the report is not really that enormous.”
    French summarizes what has dominated Chinese business practices since the country opened up to the West more than 30 years ago — the ideological divide between a desire for government control and those who see limitless opportunity and revenue serving a population of billions.
“The Chinese market is becoming, and quite intentionally so, more and more of a monopolistic market,” said French. “I hate to use the term monopoly, but it’s becoming that way in the sense that the two domestic players, SinoSat and ChinaSat, have merged into one player, ChinaDBSat. It’s clear that the Chinese government intends to put the majority of the domestic TV market onto Chinese satellites. One of the reasons is because AsiaSat and Arabsat satellites were subject to jamming and hostile takeover of transponders. The Chinese want to be able to have control over the TV market in that way, so they put everything on domestic satellites. A foreign operator will have problems getting into that market.”
    China’s population and diversity can be compared to its neighbor, India, with an incredible rich television market, broadcasting in several different languages to appeal to the whole of its population. “We’re talking news channels, local channels and all the content that comes with it. China is just as big in terms of population and just as diverse,” French said. “There are 55 ethnic diversities in China. Don’t ever forget that. The dialects are so different, beyond the Han majority, the languages sound so different to the people of those different areas. However, because of the government concerns over TV content, there’s simply not that growth that exists in India. The base of the satellite market is TV, if you don’t have an open, free, creative TV market, the rate of growth will remain slow and unimpressive and it’s not going to reach its potential.”
    Beyond the issues of content lie the questions of legality. For years, the regional Asian satellites, which are designated for Macau, Hong Kong and Taiwan, have been able to provide coverage to, at minimum, the eastern coast of China. These services are currently illegal in China, technically.
    “Right now it’s still technically illegal for private individuals to have satellite dishes on their home,” said French. “That’s the number one issue that needs to be addressed — the legal distribution of satellite dishes, installation and ownership of satellite dishes for the home. The DTH service that they want to launch is initially planned to provide the rural, underserved communities with access to cable, terrestrial and over-the-air broadcast services — the old rabbit ears. That’s how the DTH market is going to start.
    “How it evolves over time or if it will become more commercial in nature, only time will tell,” he said. “There are some who certainly want a strong commercial market and will push for that, and there are others who don’t want that. That’s what is slowing it down. There are people in the government who would love a DTH market with tens of millions of subscribers, which would bring a lot of money and revenues and money equals power in China. … Once you open Pandora’s box, allowing people to legally have satellite dishes on their home, you can’t close it back up again.”
    It is clear that the Chinese government wants this DTH service. The government has made it clear that initial priorities lie in providing service to bridge the gap. While one can only speculate on the motivation of this communication infrastructure — whether it is meant to bring rural areas up to date in terms of technology or political propaganda — there are people in China that see DTH service becoming a huge money maker and commercial market. However, according to French, there’s also a large fraction of the government that is concerned about content and wants to control it, and that is what is slowing things down for Chinese markets.