[Satellite News 12-29-09] Analysts made a wide range of predictions this year as the satellite industry adjusted to rapidly developing technology and emerging markets in a slow-moving global economy.
    Satellite News has gathered some of this year’s projections from the industry’s top analysis firms, by sector, in a list presented below. We ask our readers – at the end of 2009, which of these reports were most accurate? Has the industry landscape changed since these reports were released? Which sectors of the satellite industry are poised for growth in 2010?

Anlaysys Mason –  WiMax investors writing off billions of dollars in Clearwire.
    In a report released in August, Terry Norman, senior analyst at Anlaysys Mason, said his firm especially was alarmed by WiMax investors writing off billions of dollars in Clearwire, majority owned by Sprint, which was planning to roll out with a national WiMax network through Clearwire this year. Norman said that in developed markets like the United States and Europe, the WiMax industry is in hot water, as its investments are disappearing due to a shift in interest towards Long-Term Evolution (LTE) platforms. The drain of WiMax financing may have a major impact on the future health of the U.S. mobile operator market.

Informa Telecoms & Media – Mobile operators in the United States are now more likely to consolidate as smaller carriers struggle to find success with revamped pricing schemes and product-positioning strategies in a saturated domestic communications market environment.
    In September, Informa analyst Tammy Parker released a report which claimed that market maturation and price wars have led to rumors of significant consolidation in the U.S. mobile industry. Deutsche Telekom, parent company of T-Mobile USA, is considering a bid for Sprint Nextel, which is already intending to take over Virgin Mobile USA in a $483 million stock deal. If the transaction happens, Deutsche Telekom will acquire Sprint’s existing 13.1 percent stake in Virgin Mobile.
    Parker said that the mergers and acquisitions would face scrutiny from industry regulators and the aggressively anti-trust Obama administration. “This could keep large [acquisition] deals from coming to fruition anytime soon. A combination of T-Mobile and Sprint could be particularly tricky in the current environment, not only due to the size of the potential deal but also because of foreign-ownership issues that would have to be debated on both sides of the Atlantic,” said Parker, who added that T-Mobile and Sprint operate several networks, all with different air-interface technologies, which could create an integration nightmare.

Informa Telecoms & Media – Mobile enterprise revenues will reach $92.6 billion with more than 479 million subscribers by 2014.
    According to Informa’s October study, “Mobile Enterprise Report (Third Edition),” the mobile enterprise sector to generate 24 percent of total mobile data service revenues by 2014, representing a potentially strong revenue generation opportunity for mobile operators and providers where cellular operators have failed to capitalize.
    “One of the key drivers of this growth is cellular operator interest in new service segments, including the SME and Soho sector, the opportunities created by mobile convergence, growth in end user outsourcing and software as services. These factors will be magnified in the short term by the impact of the global economic downturn,” Informa senior analyst and author of the report, Paul Merry, said in a statement.
    Merry also identifies mobile device manufacturers as a valuable industry due to the potential uptake of smartphone devices.

Juniper Research – Up to 12 percent of DSL broadband subscribers will transfer to fixed WiMAX connections within five years.
     According a May report from Juniper Research, satellite services may lose even more customers than DSL, because of what the report cites as “sub-par service.”
     According to the study, the annual fixed WiMAX global market size will exceed 13 million subscribers by 2013. The WiMAX device market, which is comprised of CPE, chipsets, minicards, and USB dongles will be a $6 billion a year industry by 2013. The growth of WiMax will be driven by regional gains in Asia, North America and Western Europe, which combined, will represent over 60 percent of the projected $20 billion in global WiMAX service revenues by 2013, Juniper Research said.

NSR- Satellite broadband is the industry’s current hot topic as the sector has recently been boosted by strong performances from Hughes and WildBlue in the United States.
    In September, NSR senior analyst Patrick French and IDATE satellite analyst Maxime Baudry praised the strength and potential of the broadband sector and predicted that the the sector will be compounded with even more growth as governments and administrations around the world look to reduce digital divides by investing into connecting rural communities to broadband.
The firms released two reports on the satellite broadband market. IDATE’s was titled “Satellite Broadband in Europe & North Africa: Residential Market Outlook,” and NSR’s was titled “Satellite Markets, Eigth Edition.”
    “NSR’s current assumption is if the economic recession in North America and Europe begins to turn around at the end of this year, there will probably be no significant impact on satellite broadband services. If the recession continues beyond 2009 and into 2010, then all bets are off. If things go really bad, it will be really bad for everyone, not just in the satellite sector,” said French.
    Baudry believes the satellite broadband sector has little to fear from tough economic circumstances. “We don’t see any threat on satellite broadband (from the global economic downturn). In fact, it could be the opposite, satellite broadband could benefit from the numerous ongoing governmental plans. The European Commission (EC) and the U.S. Administration have demonstrated their will to connect the remaining households. Several countries such as the U.S., Switzerland, France, the U.K. have adopted programs to do so, and satellite will probably take part in this but satellite operators have to be proactive in demonstrating their offerings and their competitiveness, as terrestrial players are often seen as offering better solutions,” she said.
    Both analysts gave some credit to government-sponsored stimulus packages in the United States and Europe. The satellite industry has been involved in an intense lobbying process to try to secure funds. While there is a lot of money at stake, French does not believe this is a “live or die” situation for satellite broadband players.
    “Getting stimulus money is not a live or die situation issue for satellite broadband, but it would certainly be a nice plus for the market. It would probably be a way to guarantee that satellite will not be a tiny niche in the long-term, but a substantial niche. The question is does satellite serve the 1-2 percent of remote households or maybe up to 10 percent of rural households long-term. I think the stimulus could make the addressable market for satellite in the long-term larger, meaning that it will be a larger niche,” said French
    Baudry highlighted three key findings of IDATE’s satellite broadband report as major talking points. “Firstly, in people’s mind, satellite broadband is a very expensive solution with limited bitrates. But, if you check the latest offerings from Tooway, Astra2Connect, or HughesNet (based on Spaceway-3) in the U.S., prices have sharply declined in the last few years and in France for instance, Eutelsat and Astra offer satellite broadband for 35 euros ($45.67) a month (including CPE),” said Baudry.

Arab Advisors Group – The number of free-to-air satellite TV channels in the Arab World grew nearly 30 percent growth in 18 months.
    In a June report, “Satellite TV in the Arab World 2009," Arab Advisors Groups said that the total number of free-to-air channels broadcasting on Arabsat, Nilesat and/or Noorsat was 474 at the end of March. The highest numbers of channel types were in the private sector followed by government sector general channels. Nearly 19 percent of these channels are located in Saudi Arabia.
    “Of the 474 channels, 46 were in test transmission mode. 82.7 percent of the 428 fully launched and operational [free-to-air] satellite channels broadcast exclusively in Arabic. The remaining languages lag far behind the Arabic language. English follows with a 7.2 percent share,” said Nusseir.

ABI Research – Pay-TV offerings will continue to see the strongest growth in Asia throughout the next three years.
    In a June report from U.S. research firm ABI Research, “Pay-TV Subscriptions,” the firm predicted that the Asia-Pacific region will continue leading subscription growth, delivering a 37 percent compound annual growth rate over the next three years.
    The study claimed that growth in IPTV also will be strong with telco-provided TV growing at an estimated compound annual growth rate of 29 percent over the next three years to 47 million subscribers globally by the end of 2011.
    “By the end of 2008, telco TV usage continued to be concentrated in countries such as France, South Korea and Hong Kong. Massive countries such as China and India are still very much inhibited by the lack of sufficiently broad bandwidth, but they are expected to be high growth markets in the years to come,” ABI Research industry analyst Serene Fong said in a statement.

ABI Research – The number of paying handset-based turn-by-turn navigation users to increase to 26 million by the end of 2010, primarily driven by strong growth in the Asia-Pacific region.
    In a July report, "Automotive Navigation Forecasts Market Data,” ABI analyst Dominque Bonte said that while automotive in-dash navigation device sales continue to suffer from the economic recession, handset-based turn-by-turn navigation is boosted by the rapidly growing smartphone segment, according
    “The most significant driver for the uptake of handset navigation is expected to come from the iPhone, following Apple’s decision to finally enable turn-by-turn navigation on its latest 3.0 platform version," Bonte said in the report.
    However, Bonte added that "high monthly subscription fees and data roaming costs will need to be addressed for off-board navigation on handsets to reach high penetration levels.”

Arab Advisors Group – Free-to-air satellite TV advertising rates in the Arab region are low compared to other global markets due to the lack of an agreed-upon audience measuring system that diminishes the bargaining power of the popular TV stations.
    In an August report, Arab Advisors Group said that In 2009, ad rates on free-to-air satellite channels in the region were at their highest level at an average rate of $3,362 for a 30-second advertisement during peak times between 9 p.m. and 10 p.m., according to Arab Advisors Group’s report, “Satellite TV Advertising Rates in the Arab World 2009.” The study, which looked at advertising rates across 35 free-to-air satellite TV channels, found peak average advertising rates of major free-to-air satellite channels were 25 percent higher than in 2007, when rates stabilized slightly above those of 2005 and below those of 2004.  
    “General channels, movies and series, news, and current affairs channels have the highest average advertising rates amongst the channel types,” Arab Advisors Senior Research Analyst Danya Nusseir said in a statement. “The reasons why these channel types have considerably higher advertising rates than the rest of channels could be attributed to a number of factors such as: high viewership and wide variety of content.”
    Despite the boom in the supply of free-to-air channels in the region, Arab Advisors said that few popular channels are emerging and that the existing programming is not retaining an adequate share of the region’s viewer base, resulting in satellite-TV providers having weaker bargaining power with advertisers. If Arab Advisors’ assertions turn into long-term trends, it could create difficulties for upcoming platforms planned for the region.

IMS Research –  By 2014, 40.1 million TV households around the globe will be subscribers of tier 1 telco IPTV services.
    In a September report, “IPTV: A Global Market Analysis,” IMS stated that teir 1 telcos have the advantages of both scalability and the imminent opportunity for return on investment that has placed forerunners like AT&T and France Telecom in a favorable position in the pay-TV environment.
     “Not only will AT&T and France Telecom continue to see uptake in their acquisition of subscribers, but China Telecom, BBTV, NTT, FREE, Neuf Cegetel, Telefonica’s Imagenio and BT will also see extraordinary uptake of their IPTV services,” Rebecca Kurlak, IMS research analyst and author of the study, said in a statement.
    Kurlak also said Tier 2 and 3 telcos will continue to experience subscriber growth as well. In 2008, tier 2 and tier 3 telcos comprised almost 46 percent of subscribers. However, Kurlak forecasts that small telcos will only garner close to 23 million TV households by the end of 2014, half the potential of what tier 1 telcos are anticipated to achieve.

Pyramid Research – Pay-TV revenues in the United Kingdom are set to increase from $6.2 billion in 2009 to $8.2 billion in 2014.   
    In a September report, Pyramid said it expects IPTV to grow at a compound annual growth rate of 26 percent within the forecast period.   
    Andrei Tchadliev, analyst at Pyramid Research and author of the report, expects significant increases in interest for triple play packages in the United Kingdom. “We believe that by 2013, triple-play services, namely fixed voice, broadband and pay-TV, will overtake double play. It is estimated that in 2009, close to 19.4 million households will have signed up for triple-play services, largely on account of the value the offer over stand-alone Internet, voice, mobile and pay-TV packages,” he said in the report.

Morgan Stanley – Upgrades the U.S. cable and satellite sector to "in-line" from "cautious."
    In an industry analysis report released in October, Morgan Stanley said that 4G wireless technologies will not be strong substitutes for higher speed wire-line and satellite data access in the near- or medium-term.
    The "in-line" mark is applied to industries who will meet performance expectations over the next 12 to 18 months, according to Morgan Stanley’s rating system.

NSR – Satellite operators have yet to report any substantial damage from the global economic crisis and will most likely escape the crisis unscathed if the economy stays on track to recover at the end of 2009.
    In a September report, “Global Assessment of Satellite Supply Demand (GASD), 6th Edition,” NSR highlighted a strong 2008 for commercial operators, with significant overall revenue increases in the sector. Leasing contracts have generated $9.1 billion for satellite operators this year, and revenues could reach $13.8 billion by 2018, according to the report.
    NSR estimated that combined C-, Ku- and Ka-band global transponder demand has yielded 5,130 TPEs (36 MHz transponder equivalents) worth of capacity leases in 2008 and that growth will increase at the average annual rate of 2.2 percent, reaching reach more than 6,370 TPEs in the next ten years.
    Commercial High Throughput Satellite (HTS) operators also had a strong year, leasing 16 Gbps of capacity in 2008. NSR expects HTS growth to increase more than ten-fold by 2018. These satellites use either Ku-band or Ka-band frequencies to provide services that reuse frequencies and multiple spot beams to increase throughput and reduce the price-per-bit delivered. NSR projects the cost of HTS ground and customer premise equipment should not be a barrier to HTS capacity being substituted for FSS capacity for commercial satellite applications.
    Despite the strong performance, NSR analysts wrote that the industry is not yet completely out of rough economic waters as some risk still exists due to the fact that satellite capacity leasing, historically, is a trailing indicator of economic strength.
    Excluding TV broadcasting, where leasing has increased across the board, NSR noted some cases of slowing sales cycles. VSAT networking service operators showed slower sales in 2008. However, similar tends to be offset by growth in other segments like backhaul or government leasing, which will likely see a spike in demand in 2010 to 2011 as new capacity becomes available and the improving business climate leads to re-launching of delayed spending or investment for future growth, NSR said.
    Looking forward, NSR urged the industry to track developments in the satellite broadband Internet access services segment, which could lead to a major shift in how parts of the market are seen in the future, as well as other services like maritime, aeronautical and other mobility services.

Frost and Sullivan – The European satellite defense market will earn revenues of $1.1 billion in 2009 and reach $2.4 billion by 2018.
    The transformation of the European defense into an expeditionary force has allowed satellite communication to become the primary means of integrating platforms and forces under one umbrella,” according to Frost and Sullivan’s July report, "European Defence Strategic Communication Market Assessment.”
    The European defense strategic communication market is poised to grow at a compound annual growth rate of 8 percent from 2009 to 2018, defying the economic downturn. The projected revenue growth is attributed to the incorporation of satellite communication is a key enabler of networked communication, fundamental to network-centric warfare, the report said.
    "From 2013 onward, the Ka-band will rapidly acquire market share thanks to increasingly number of satellite launches carrying EHF payloads. Unlike the already widely used X- and Ku-bands, the sky remains relatively open for the Ka-band. In the terminal market, multi-band terminals are replacing single bands to claim an increasing stake in procurement across platforms and are set to grow even more robustly with the onslaught of EHF and AEHF bands in the market from 2013 onwards. The coms-on-the-move terminals should see significant penetration from 2016 onwards," Frost and Sullivan research analyst retired Maj. Sabbir Ahmed, said in a statement.

NSR – The GMSC market alone will grow from $3.5 billion in 2008 to $9.3 billion at the end of 2018, driven in large part by land-mobile narrowband units and revenues from unmanned aerial vehicles (UAVs) and communications-on-the-pause (COTP) services.
    According to a December NSR report, "Government and Military Satellite Communications (GMSC), 6th Edition," the growing transponder supply will shift the market towards one of two solutions: proprietary or commercial systems. The situation will drive commercial revenues in the next 10 years.
    Despite the growth projection NSR’s forecast outlined growth in some markets and raised warning flags in others.  "In an economic downturn that readjusted priorities in public spending and tightened the race for dollars, the government and military commercial satellite market has developed a growing following with bright spots related to future demand in key application markets" said Claude Rousseau, Senior Analyst for NSR and author of the report.  "One warning flag concerns commercial satellite transponder bulk leasing, which will compete more heavily against internal military capacity." said Rousseau. 
    NSR also claimed that global programs and initiatives by institutional customers will have a lasting impact on capacity demand in the GMSC market, and deployment of troops called into action in the short-term will give a reprieve to operators from longer-term negative trends.  While applications in the market have a promising future to varying degrees, the overall NSR assessment points to the bottom line for each segment and offers a unique view for those looking for the right angle to address the GMSC market.
    The reports examined demand for all commercial frequencies (C-, Ku-, Ka-, L- and X-band) and for all mobile (aeronautical, UAVs, maritime, and land-mobile) and VSAT platforms.  Beyond these segmentations, the report’s region-by-region analysis of applications and transponder demand, and the high-granularity outlook on future growth in this high barrier-to-entry market, provide information that is second-to-none.