Satellite Industry: Growth Outlook for the Medium Term

SUMMARY

Overview

2005 was a year of massive consolidation for the satellite industry: Intelsat's takeover of PanAmSat in August 2005 and SES GLOBAL's acquisition of NSS in December of that year strengthened the two companies' already solid lead over the competition. On the manufacturing side of things, Alcatel and Finmeccanica merged in January 2005. At the same time, competition is heating up across the board. In a market where terrestrial technologies dominate the supply of broadband internet services, satellite is now facing stiff competition from these terrestrial networks, and ADSL in particular, in the video distribution market as well.

In view of the current state of affairs, satellite industry players are now having to ask themselves which new business areas are most likely to ensure their future growth: high definition TV, digital radio, mobile TV, IPTV and two-way internet access are among the applications likely to generate sizeable demand for satellite capacity, along with more traditional markets like DTH which is on the rise in several countries that are only just beginning to deregulate their media sector. So the satellite industry is at a turning point, and operators need to make a series of major decisions concerning their new strategic orientation, which will be key in determining their future.

To shed some light on the market opportunities at hand and the challenges that these players will be facing in the mediumterm, drawing on key satellite market studies, this report provides a detailed analysis of the strategic choices that the satellite industry's key players are facing, and examines the coherence between the strategies being rolled out and the market's opportunities. It also pinpoints the central challenges that satellite operators will have to meet, and the assets they possess when seeking to position themselves effectively in different markets.

Features

• State of development in satellite's key markets
• Satellite operators facing major strategic choices
• Competing with terrestrial technologies
• Disparate market opportunities from region to region
• Satellite's key services
• Expected technological developments
• Impact of mergers and privatisations

Key questions

• What are the winning strategies for satellite operators?
• What are satellite's strengths and weaknesses in the different markets?
• What growth prospects are there for satellite's target markets?
• How should satellite position itself in broadband access, given terrestrial
• technologies domination of the market?
• What are the growth relays for the video distribution market?
• What is the impact of the sector's increasing consolidation and privatisation?
• What are the stakes and challenges of satellite frequency issues?

Who should read this report?

Satellite operators and manufacturers

• Anticipate the most promising medium-term market opportunities
• Assess satellite's best positioning in the different markets
• Gauging the threat from terrestrial technologies

Fixed and mobile telecom operators

• Understanding satellite industry players' global strategies
• Identify partnership possibilities with satellite operators
• Assess satellite's strengths in the different markets

Media industry players and service providers

• Understand the stakes and challenges of the video distribution market
• Assess opportunities in new markets: notably HDTV, mobile TV, digital radio
• Identify partnership possibilities with satellite industry players

Investors and analysts

• Analyse the overall state of competition in global satellite markets
• Anticipate satellite industry players' strategic decisions Ê%

Players

• Asiasat
• Boeing
• Echostar
• Eutelsat
• Galileo
• GlobeCast
• Hughes Network Systems
• Intelsat/PanAmSat
• IPSTAR
• MBCo
• SES GLOBAL/NSS
• Sirius
• Telesat
• TU Media
• WildBlue
• WorldSpace
• XM

TABLE OF CONTENTS

1. Markets likely to increase demand for satellite capacity

• 1.1. Direct to the home broadcasting (DTH)
  • 1.1.1. Market growth
  • 1.1.2. Satellite's technical properties and assets
  • 1.1.3. The market's significance for a operator satellite
• 1.2. High definition TV
  • 1.2.1. Developmental context
  • 1.2.2. Satellite's technical properties and assets
  • 1.2.3. The market's significance for a satellite operator
• 1.3. Mobile TV
  • 1.3.1. Developmental context
  • 1.3.2. State of market development
  • 1.3.3. Satellite's technical properties and assets
  • 1.3.4. The market's significance for a satellite operator
• 1.4. Other media services
  • 1.4.1. Digital cinema
  • 1.4.2. On-demand TV services: PPV, VoD, PVR
  • 1.4.3. In-flight entertainment
• 1.5. Digital radio
  • 1.5.1. State of market development
  • 1.5.2. Satellite's technical properties and assets
  • 1.5.3. The market's significance for a satellite operator
• 1.6. Internet services
  • 1.6.1. One-way internet access services
  • 1.6.2. Backhauling solutions
  • 1.6.3. Two-way broadband access services
  • 1.6.4. Mobile internet access services
• 1.7. Geographical positioning
  • 1.7.1. State of market development
  • 1.7.2. Satellite's technical properties and assets
  • 1.7.3. The market's significance for a satellite operator
  • 1.7.4. Geographical positioning for telemetry

2. Satellite operators' disparate strategies and distinctive positioning in these markets

• 2.1. Principal market opportunities by geographical zone
• 2.2. Positioning of a selection of major satellite operators
• 2.3. Analysis of satellite operators' strategic orientations
  • 2.3.1. Global operators vs. regional operators
  • 2.3.2. Emergence of two global operators
  • 2.3.3. Regional operators' various strategies
  • 2.3.4. Three strategic options for satellite operators

3. The satellite industry facing major challenges

• 3.1. Expected technological innovations
  • 3.1.1. Expected growth of the satellite base
  • 3.1.2. Expected developments for launchers
  • 3.1.3. Developments expected on the ground
• 3.2. New services and the satellite frequency challenge
  • 3.2.1. Principles of spectrum management
  • 3.2.2. Frequency use and availability
  • 3.2.3. Stakes surrounding the L band in Europe
  • 3.2.4. Stakes surrounding the S-UMTS band in Europe
• 3.3. A situation of excess capacity
• 3.4. Growing competition in the video distribution market
  • 3.4.1. Partial recovery of service zones
  • 3.4.2. Growth prospects shaped by network capacity and potential footprint
  • 3.4.3. Competition and broadcasting costs
  • 3.4.4. Satellite vs. rival networks: meeting the TV sector's challenges
  • 3.4.5. Specific business strategies
• 3.5. What role for satellite in the mobile TV market?
  • 3.5.1. Mobile TV: satellite and terrestrial technologies vying for the market
  • 3.5.2. Strengths and weaknesses of satellite solutions
  • 3.5.3. Outlook for satellite vs. terrestrial
• 3.6. What role for satellite in the broadband access market?
  • 3.6.1. A broadband access market dominated by DSL, outdoing cable modem and new alternative technologies
  • 3.6.2. Overriding trends in the internet access market
  • 3.6.3. The most viable positioning for satellite
• 3.7. Satellite industry feeling the impact of consolidation and privatisation
  • 3.7.1. Private shareholders increasingly present in industry players' equity
  • 3.7.2. Further consolidation of the sector?

IDATE

Tables

• Table 1: Summary of the different markets examined in this report, and associated case studies
• Table 2: Breakdown of TV households worldwide (% of TV households)
• Table 3: Satellite pay-TV households around the world, by zone
• Table 4: Breakdown of TV households - North America
• Table 5: Breakdown of TV households - Europe
• Table 6: Breakdown of TV households - Latin America
• Table 7: Breakdown of TV households - Asia-Pacific
• Table 8: Breakdown of TV households - Africa/Middle East
• Table 9: Comparison of network coverage in Europe
• Table 10: Some features of cable, satellite, DTT and ADSL TV networks and services in Europe
• Table 11: Satellite's positioning in the DTH market: SWOT analysis
• Table 12: SkyPerfecTV!'s HD strategy
• Table 13: HDTV offers in the major European markets
• Table 14: HDTV service transport on broadcasting networks in Europe
• Table 15: HDTV service transport on broadcasting networks in the US
• Table 16: Possible space gains on the satellite network (for one repeater)
• Table 17: Comparison of networks enabling HD broadcasting
• Table 18: Satellite's positioning in the HDTV market: SWOT analysis
• Table 19: Subscriber growth forecasts for the TU Media offer
• Table 20: Satellite's positioning in the mobile TV market: SWOT analysis
• Table 21: Satellite's positioning in the digital cinema market: SWOT analysis
• Table 22: Satellite's positioning in the on-demand services market: SWOT analysis
• Table 23: Satellite's positioning in the in-flight entertainment market: SWOT analysis
• Table 24: Partnerships between satellite radio broadcasters in the US and automotive manufacturers
• Table 25: Characteristics of the European E-SDR standard, planned for a digital satellite radio service
• Table 26: Satellite's positioning in the digital radio market: SWOT analysis
• Table 27: Satellite's positioning in the one-way internet access market: SWOT analysis
• Table 28: Satellite's positioning in the backhauling market: SWOT analysis
• Table 29: Number of two-way satellite internet access subscribers
• Table 30: Satellite's positioning in the two-way internet access market: SWOT analysis
• Table 31: Satellite's positioning in the mobile internet access market: SWOT analysis
• Table 32: Status of satellite navigation systems, both operational and in the deployment stage, around the world
• Table 33: Satellite's positioning in the geographical positioning market: SWOT analysis
• Table 34: Principal sectors that use satellite telemetry solutions
• Table 35: Transportation sector applications for satellite navigation systems
• Table 36: Principal opportunities for fixed satellite services in the business and consumer markets around the globe
• Table 37: Profile of the satellite operators being analysed in terms of geographical coverage, service line and satellite fleet
• Table 38: SWOT analysis of a global satellite operator
• Table 39: SWOT analysis for a regional satellite operator
• Table 40: Typology of medium-term strategies likely to be rolled out by satellite operators
• Table 41: Geostationary satellite launch forecasts for 2006 and 2015
• Table 42: Frequencies likely to be used for mobile TV services in Europe
• Table 43: Possible technology/frequency combinations
• Table 44: Comparison of network coverage
• Table 45: Cost structure by type of network
• Table 46: Comparison of the annual cost (€ ) for each broadcasting mode of delivering one channel to a household, according to the service's penetration rate
• Table 47: Comparison of the annual cost (€ ) of delivering one channel to a household, according to penetration rate (including other services)
• Table 48: Some features of cable, satellite, DTT and ADSL TV networks and services in Europe
• Table 49: Comparison of the networks' strengths and weakness, in terms of commercial positioning
• Table 50: 2005 marked by IPOs by five operators satellite

Figures

• Figure 1: Weight of the different TV broadcasting networks around the world in 2005
• Figure 2: Breakdown of satellite TV households around the world, by zone, in 2004
• Figure 3: SDTV, HDTV and 2K (film) picture formats
• Figure 4: Satellite TV broadcasting orbits in Japan
• Figure 5: Channel allocation for digital BS in Japan
• Figure 6: Example of a frequency reuse scheme between several European countries
• Figure 7: Mobile satellite TV broadcasting in S-DMB
• Figure 8: Growth of the number of cinema screens worldwide
• Figure 9: Growth of American operators XM and Sirius's subscriber base up to 2015
• Figure 10: Geographical coverage of the WorldSpace service
• Figure 11: How one-way internet access works
• Figure 12: Options for use of a satellite link within a terrestrial cellular architecture
• Figure 13: Revenue growth for the broadband satellite market worldwide
• Figure 14: How two-way satellite internet access works
• Figure 15: How the CBB service works
• Figure 16: How mobile internet access via satellite/Wi-Fi works
• Figure 17: How a satellite navigation system works
• Figure 18: The most potentially significant markets for satellite operators
• Figure 19: State of development of a selection of satellite markets around the world (subscribers at the end of 2005)
• Figure 20: Medium-term market potential for HDTV services around the world
• Figure 21: Medium-term market potential for DTH services around the world
• Figure 22: Medium-term market potential for two-way internet access services for businesses around the world
• Figure 23: Medium-term market potential for two-way residential internet access services around the world
• Figure 24: Medium-term market potential for digital radio services around the world
• Figure 25: Medium-term market potential for IPTV services around the world
• Figure 26: Medium-term market potential for mobile TV services around the world
• Figure 27: Comparative weight of 2005* revenues generated by the satellite operators being analysed
• Figure 28: Satellite operators' comparative weight in terms of number of commercial geostationary satellites owned
• Figure 29: Eutelsat's medium-term strategy by geographical zone
• Figure 30: SES Global's medium-term strategy by geographical zone
• Figure 31: Telsat's medium-term strategy by geographical zone
• Figure 32: Intelsat/PanAmSat's medium-term strategy by geographical zone
• Figure 33: Asiasat's medium-term strategy by geographical zone
• Figure 34: Percentage of active C and in Ku-band transponders, by region, in 2004
• Figure 35: Comparison of the annual cost (€ ) for each broadcasting mode of delivering one channel to a household, according to the service's penetration rate
• Figure 36: Comparison of the annual cost (€ ) of delivering one channel to a household, according to penetration rate (including other services)
• Figure 37: Comparison of technologies
• Figure 38: DSL variations, by bitrate