The Satellite Boom Continues Over Asia

Growth and diversification. In fact, booming growth and rapid diversification. These are the current watchwords for the satellite industry in the Asia/Pacific region. In fact, it is getting to be more and more difficult to keep track of the various satellite systems being announced and contracts being signed with major Western spacecraft manufacturers. More to the point, the list of countries in the region without a resident commercial satellite venture is getting shorter and shorter. And, if a country does not have its own "native" system up or planned, then it is certainly within the coverage pattern, or footprint, of several other systems.

To illustrate continued national diversification of satellite providers, in the last year, companies from tiny Singapore have announced involvement in two new satellite ventures. In addition, Laos has seemingly found a way to launch a satellite, with Thai help, and Taiwan has finally found a partner for a commercial satellite system, too. They join Japan, South Korea, China, Hong Kong, Australia, Thailand, Malaysia, India and Indonesia with orbiting satellites. The Philippines has two projects underway, as well. In addition, satellites controlled by American and Russian organizations provide significant regional coverage, as well.

More than two dozen satellites have been launched or moved into orbit over the region since April 1990, when AsiaSat 1 was launched to provide video distribution and telecommunications services over Asia. It was not the first satellite to serve Asia, by any measure. But, its primary customer, StarTV, the satellite television programmer, set off an explosion of interest among consumers on the ground. That in turn caught the attention of potential StarTV competitors from Bombay to Hollywood and New York. Thus, the explosion became a chain reaction and the result has been rampaging demand for satellite capacity.

The problem at the time was that there were not many satellites, or individual transponders on such satellites, available with the desired coverage patterns and sufficient power levels to permit the use of small satellite dishes. The possibility of using inexpensive, small dishes, often on the order of 1.5 to 3 meters in diameter, has brought the benefits -- or enticements, depending on your viewpoint -- of satellite communications within at least the theoretical reach of every village and baranguay in the region. Powerful satellites and small dishes also make practical the supply of private network services to businesses that previously would have been happy with a working telephone.

AsiaSat was, of course, not the first satellite system to serve the region. INTELSAT brought satellite communications to the region in the 1960s, completing regional coverage just in time for live television coverage of Neil Armstrong's first steps on the Moon in 1969. INTELSAT is an international organization owned by companies representing more than 130 nations. Headquartered in Washington, D.C., this year it responded to increased competition by opening regional sales offices in Bombay and Singapore.

INTELSAT's primary business is providing international, especially transoceanic, telephone connections and video exchanges. It also leases transponders to countries for domestic services. China, Iran, Malaysia, Thailand and Korea, among others, have leased INTELSAT transponders for internal communications, either in advance of launching their own satellites or to supplement them. For decades, INTELSAT provided most of the transoceanic connections between Asia and North America and Europe. Today, in this region and in the Atlantic basin, it faces tremendous pressure as telephone traffic is moved to undersea fiber optic cables by many of INTELSAT's owners, the national PTTs. It is responding in a number of ways, including placing increasing emphasis on provision of private corporate networks for business users, as well as thin route services for rural and remote areas. It also hopes to hold onto and increase its share of the video market.

To that end, INTELSAT's Board of Governors may decide in September or December to issue a request for proposals to satellite manufacturers for one or two direct broadcasting satellites (DBS). Such satellites can transmit video and other information to very small dishes, probably on the order of one meter in diameter or less. They are now the rage in the U.S. and Europe. Malaysia and Korea are trying out DBS service as well, with a few transponders on their satellites. The first INTELSAT DBS satellite would have around 20 channels and would focus on certain key markets, such as China, India, Indonesia and Australia. It might be in orbit over Asia by late 1998 or early the next year. Another, larger satellite with more channels would follow thereafter and be collocated with the first one.

Contemplation of such a plan comes at a sensitive time for INTELSAT, however. Facing loss of core traffic to undersea cables and increasing competition from alternative satellite systems, like the dozens being launched to serve Asia, INTELSAT decided a year ago that it had to restructure or, put too simply, to privatize. Recommendations are expected by the end of the year from internal study committees. Because INTELSAT was established by treaty, any restructuring proposals will have to be approved by both national governments and the telecom operators who own INTELSAT. The basic outline of those recommendations has already emerged. They call for the creation of a subsidiary which would compete in the markets that are not core to INTELSAT's treaty, such as provision of corporate private networks and video services. Shareholding would be diversified away from the present ownership over time. A core of the old international organization would remain and provide basic interconnection services for all the nations of the world, especially the poorest.

The result for Asia could be an opportunity for the region's second, and third and fourth carriers to invest in a property with great name recognition, and a fleet of satellites already in orbit. In addition, the region is likely to see a reinvigorated competitor, which is now being shouldered aside by aggressive newcomers.

In the last several months, those newcomers have being launching satellites at a rapid pace. Malaysia's Binariang launched MEASAT 1 in January, and Indonesia's Satelindo and Pacifik Satellit Nusantara (PSN) launched the first of the new generation of the Palapa series, Palapa C1 and C2. Indonesia, of course, was the first to reduce its reliance on INTELSAT for domestic and regional satellite communications with the launch of Palapa A1 in 1976. In addition, Korea launched a second satellite to replace one that had difficulties making orbit.

This continued a pace set in the latter part of 1995. Among others, INTELSAT's global competitor PanAmSat launched PAS-4 to serve the Indian Ocean region. That satellite has provided a new home for satellite distribution and DBS-like services to India, the Middle East and Central Asia. Japanese commercial operator JCSAT launched its third satellite, with enhanced regional coverage, and AsiaSat also finally responded to its own success and launched AsiaSat 2. India launched the third of the second generation of its domestic satellite system, INSAT 2C. Hong Kong-based APStar saw the Chinese Long March 3 rocket successfully double its in-orbit capacity with the launch of APStar 1A, replacing a satellite lost on a Long March launch in 1995. In the coming months, additional satellites will be launched for MEASAT, Thaicom, INSAT and INTELSAT which will provide services over the region.

The list of new satellites being launched almost forces one's eyes to glaze over. But among the stories of new systems announced this year are some notable new entrants. For example, with Shinawatra's Thaicom subsidiary holding the license for Thailand, Thai media mogul Sondhi Limthongkul turned to Laos to find a "home port" for two new satellites. Called L-Stars, naturally, Sondhi promises they will deliver services directly to homes and businesses throughout Asia. L-Star 1 will be launched late next year. The Laotian government, along with three other Thai companies, plus companies controlled by Sondhi are shareholders in Lao-Star, the operating company.

Another intriguing entry in the crowded Asian satellite scene is Taiwan. It has been casting around for the right partner for some time and dallied a bit some years ago with PacStar, the first regional satellite venture proposed nearly a decade ago by the Government of Papua New Guinea and American entrepreneurs. Taiwan backed out and PacStar died. This time, The Directorate General of Telecommunications of Taiwan, and Singapore Telecom have agreed to split the shareholding in a large satellite with broad coverage over Asia. The first will be launched in early 1988.

The current regional satellite soap opera can be found in the Philippines. There, talk over the years of having a national satellite, a natural in a country with 7,001 islands, has produced two different systems. The government helped bring together a group of Philippine carriers, who christened their system Agila. However, the egalitarian nature of the consortium, as devised by the government, made Philippine Long Distance Telephone Co. (PLDT), the country's dominant carrier, walk out of Agila. It immediately formed Mabuhay Philippines Satellite Corporation, along with PhilComsat, the Philippines INTELSAT signatory, a local television network and two other companies, China Everbright Group Limited and Indonesia's PSN. China Everbright is also a shareholder in APStar and PSN appears to be supplying an Indonesia registered orbital location for the satellite. Launch of Mabuhay-1 is scheduled for the end of the year. Without PLDT, however, Agila has struggled financially and only recently completed the first phase of financing so that it could sign and make effective its contract with Aerospatiale, the French aerospace company. Agila's first launch will probably come in 1998.

That date, however, is far later than Philippine President Fidel Ramos had hoped. He had wanted a national satellite in orbit by the time APEC heads of state meet in Manila in November this year. To meet that deadline, Agila considered buying an old INTELSAT 5 class satellite to begin service. However, that deal appears to be dead. Nevertheless, Mabuhay jumped ahead anyway, buying the retired Palapa B2P in July from PSN, promising to place it into service by August for service in the Philippines and Southeast Asia.

The satellite business has not been without its other troubles as well. China's Long March rocket, a favorite among many for its less expensive launch prices, has proven to be an uneven performer. A Long March 3B version destroyed an INTELSAT satellite and the deaths of civilians around the launch site in Sichuan, China in February of this year. While that satellite was destined for service outside of the region, a failure in January 1995 deprived APStar of its second satellite, and in 1992 Australia's OPTUS lost a spacecraft aboard Long March, as well. However, recent failures of the first European Ariane 5 rocket and Russian Soyuz rockets have served as a reminder to everyone that launch troubles are not uncommon on all rockets.

Problems have also been plaguing satellites in-orbit, especially over Asia. Once past the launch phase, satellites are usually in the clear. However, in the past year, JCSAT 3, AsiaSat 2 and Palapa C1 have all had power-related problems which have reduced their capacity to provide services. Ironically, all three problems have resulted in reduced availability of Ku-band capacity. Ku-band is being developed by operators because of radio frequency congestion at the so-called C-band frequencies, which have traditionally been used to provide satellite communications throughout the region. Many of the satellites now being launched for Asian service have at least a handful of such transponders. The advantage of using Ku-band is that permissible power levels are higher, making it especially attractive for near-DBS type services (true DBS satellites use similar Ku-band frequencies at even higher power) or for provision of private corporate network services. However, operators have moved cautiously in implementing Ku-band services, because the frequencies are prone to interference during periods of heavy rain, a seasonal hazard in many sections of Asia. Heavy usage of C-band will undoubtedly force operators eventually to fully embrace Ku-band.

These problems have neither stopped the dealmaking nor slowed demand. So far, demand and marketing has focused on services largely familiar to satellite providers in other parts of the world. Thus, equipment was available and uses well understood. The present dealmaking shows that conventional, so-called fixed satellite services have hardly played out their potential in the region. Video services, especially, are still attracting increasing investment from Rupert Murdoch's media empire and its erstwhile allies and competitors throughout the region. The video market is evolving rapidly in the region with the recognition that there at least two separate types of markets. One is for programming from Hollywood and other foreign sources. The other, perhaps larger market, is for video programming that is along more familiar cultural and linguistic lines for audiences in the region. In many cases, of course, related linguistic and cultural groupings are found in several countries, whether because of ancient settlement patterns or more recent migrations of guest workers to various employment markets in the region and outside of it. In recent months, for example, plans have been made or service begun for region-wide Japanese and Tagalog (Pilipino)-language video services.

While video tends to get most of the attention, other services are likely also to become increasingly important to satellite operators. Hutchison Telecom's Corporate Access venture is still breaking down national barriers so that it can provide transborder corporate network services throughout the region. With business booming in the region, the only barrier to expansion of such services are antiquated regulatory structures and the resistance of national telecom operators to the breaking of their monopolies.

In addition, with telephone penetration below 10 per hundred population in much of the region, especially China, India and virtually all of Southeast Asia, countries have gone on massive telecommunications infrastructure-building projects. Satellites can offer a quick means to lay in trunk lines throughout a country, as well as reach out to remote communities with just a few telephone circuits.

On the horizon for telecommunications users in the region are entirely new classes of satellite services. The London-based International Mobile Satellite Organization (INMARSAT) recently moved a powerful new INMARSAT-3 satellite into the Indian Ocean region. INMARSAT has been offering mobile satellite communications services for nearly 15 years, mostly to ships and oil platforms. The power of the INMARSAT 3 will allow INMARSAT to offer businessmen service directly through what it calls Mini-M class terminals. These terminals, about the size of a laptop computer, with a built-in handset and antenna that must be pointed in the general direction of the satellite in geostationary orbit above the equator, will permit users to phone, fax or e-mail from anywhere within the coverage pattern to anywhere in the world. Neither the terminals nor the calling charges will initially be cheap, but they may prove indispensable for some businessmen and government officials who need to be in reach of a telephone at all times.

The Mini-M is a taste of things to come. Several regional competitors have emerged in the last year or so to challenge INMARSAT before it gets much of a grip on the land-based market with its new service. PT. Asia Cellular Satellite (ACeS) plans to launch its first Garuda geostationary mobile satellite system in 1998. It will provide coverage over a wide swath of the continent, from Mongolia and China to India, Indonesia and Papua New Guinea. ACeS is owned by PSN of Indonesia, an affiliate of Satelindo, the Philippine Long Distance Telephone Company and Jasmine International Overseas Company, Ltd., of Thailand. It will offer services to customers with handheld, mobile (truck and car mounted) or fixed terminals. Voice, data and facsimile services are planned, along with paging and related alerting services. Its primary mission will be to provide cost-effective, fill-in service for cellular operators and users, where ground-based terrestrial systems do not reach. Handsets are planned which will operate with both the terrestrial cellular and the Garuda satellite at the option of the user.

ACeS faces serious competition from two other organizations from the region. The first is Afro-Asian Satellite Communications (ASC), lead by Subhash Chandra, the Indian communications entrepreneur. ASC plans to launch satellites to serve India and other countries in Central and South Asia, the Middle East and eventually Africa. ASC has been rumored to have had disagreements with its satellite manufacturer, Hughes Space and Communications. Nevertheless, it is expected to be a strong competitor for the handheld market in south Asia.

Six companies from Singapore and China formally founded Asia-Pacific Mobile Telecommunications Satellite (APMT) in the waning days of 1995 and then chose Hughes, again, to build a satellite to cover the same vast region as ACeS' Garuda will. APMT also plans a 1998 launch and operational date.

These three, if they make it into orbit on time -- no small feat for satellite ventures using highly advanced technology and finicky rockets -- will likely face competition of another sort as well. Between 1997 and 2000, as many as four satellite systems offering similar handheld services will be launched into low earth orbits covering the entire planet. These four are Iridium, Globalstar, Odyssey, and ICO Global Communications. All four plan to launch what are being called constellations of satellites into orbits closer to earth than the geostationary orbit used by ACeS, APMT, ACS or INMARSAT. That means they have to launch more satellites to provide global coverage, but also that users will not have to put up with annoying delay caused by the distance a signal must travel from earth to geostationary orbit.

Iridium, Globalstar and ICO all have put together international partnerships and distribution channels spanning most or all of Asia. Odyssey has yet to announce its full line-up of investors and the start of its satellite manufacturing contract.

Thus, within a few years, the fierce competition for satellite customers will extend to mobile satellite services. Asian users will surely benefit from competitive prices and innovative service packages.

The economic boom in Asia is fueling the boom in satellite services. The barriers so far are the availability of orbital locations and frequencies associated with them. The "wars" over orbital locations seen a few years ago seem to be settling down, though coordinating the operations of so many new satellites is keeping a handful of satellite radio frequency engineers so busy they can be regularly seen in airport waiting areas throughout the region. They are easy to spot. They have worried, but somehow happy looks on their faces. There is nothing a good engineer likes more than a challenging problem. The success of the satellite operators in Asia will partly depend on these engineers' imagination and the operators' own willingness to be flexible so that as many as possible have an opportunity to take part in the boom.