“Video in the Satellite World”
It has been a year of great change for the satellite industry. In addition to the COVID-19 pandemic that is creating shockwaves through every industry in the world, near term viability for businesses remains a challenge for satellite industry stakeholders. As capacity pricing pressure continues to accelerate, top line growth remains a big concern.
Despite the financial impact that many are facing, Northern Sky Research (NSR) remains optimistic. According to its prediction, NSR projects a $81.9 billon opportunity for the communications satellite sector over the next decade, with $51.3 billion for Manufacturing, and $30.6 billion for the Launch market.
As we head towards 2021, it will be interesting to look at what new trends the Satellite industry will see play out over the next year in Asia Pacific, how resilient and well positioned the satellite industry will be, in surmounting the challenges ahead and finding new opportunities post COVID-19.
What’s New for 2020?
In anticipation of the upcoming Satellite Industry Forum, AVIA caught up with two leading satellite operators. Let’s hear what they have to say.
AVIA: The satellite industry has already been facing some serious headwinds before the COVID-19 crisis, and is now confronted with even more daunting challenges during these unprecedented times. Where do you see the greatest opportunities and threats lie at this juncture for the satellite industry? Is there any change in business strategy to put your firm in stronger stead for the future?
Roger: COVID-19 is hitting some industries harder than others. Satellite operators are inherently low headcount and capex intensive. We control our satellites remotely and serve the community with less developed terrestrial infrastructure. Thus, from an operational standpoint, the satellite industry is better positioned to weather the storm upon operational shutdown and is not affected as much as many retail businesses. That said, many of our customers have been hit hard by the pandemic, especially those in the oil and gas industry, live event broadcasting, cruise ships and in the In-Flight Connectivity (IFC) business.
There are very limited opportunities in the market right now as new projects are being put on hold and some major Chapter 11 restructuring going on with entities such as Intelsat, Speedcast and Global Eagle. We expect more in the pipeline, partly for companies to clean up their balance sheets and partly because they are really facing an unprecedented challenge.
Two years ago, AsiaSat held back from making a big investment into building our next generation HTS satellite, and we are fortunate to have come to that decision, otherwise we would be facing the problem of trying to fill up the satellite when market demand is severely restricted by the pandemic. However, whether this is the right decision or not is yet to be seen.
AsiaSat has always been conservative and highly focused. It is a double-edged sword, but the company will continue to exercise our diligence (financial prudence) in running our business and serving our customers as a reliable partner. I am a believer in survival of the fittest, we must build our business around the natural advantages of satellites instead of trying to follow the crowd. We are not changing our strategy but we are on the lookout for opportunities that make sense for AsiaSat.
Mark: There is clearly an enormous opportunity for the satellite industry to provide broadband internet connectivity to a broad array of people and places that otherwise would be unserved, or underserved, by alternative terrestrial networks. The COVID-19 crisis, while creating a number of challenges on multiple fronts, also serves to emphasize the critical importance of connectivity in so many ways, many of which are well-suited to be served by satellite broadband: telemedicine, health information, education, remote work, entertainment, social engagement and so much more. Broadband internet communications is only one area of great opportunity. There will likely be new opportunities in narrowband, IoT, earth observation, space relay, navigation & timing and others.
Our greatest threat derives from the inherent complexity of space based systems, the way that governments engage in the space domain itself, and intervene with regulatory and economic policies especially regarding investment and, subsidies. Actual, or threatened, military activities in space, as well as regulatory uncertainty, would certainly slow investment and space entrepreneurship. Likewise, regulations that don’t take into account the common interests of all space faring nations could accelerate space pollution in the form of orbital debris.
The same is true for the failure to regulate the responsible use of space. Misinformed subsidies or economic policies might promote “trendy,” yet fundamentally limited, systems over alternative space technologies that are more scalable, economically-viable and create far less risk of space collisions and orbital debris. Think about WiMax, Ultrawideband, terrestrial free space optics, and numerous other telecom technologies that, while technically innovative, were unable to gain an economically sustainable foothold in the market. The global regulatory environment is very complex, and it will require careful balancing of sovereign and common global interests to get this part right. It will require a judicious mix of light economic touch plus wise and informed regulatory policy to realize the opportunities for everyone involved.
AVIA: In terms of industry news, which recent development or announcement has stood out the most to you in the past year and why?
Roger: There has been a lot of significant changes in the industry. For the satellite industry, the big ones are of course the Chapter 11 of some of the LEO and GEO satellite operators and service providers. Northrop’s success in demonstrating in-orbit re-fueling technology, vertical expansion such as Hughes’ latest announcement of investing in OneWeb are all significant changes.
Media sector wise, industry consolidation/merger including Disney’s acquisition of FOX, the CBS-Viacom merger, who are also engaged and competing directly in the streaming business with their own television channels – all will be revealed which will become mainstream and more sustainable.
The unexpected hit has been satellite In-Flight Connectivity (IFC) solutions that went from being the “star of applications” to being the heaviest hit due to the pandemic’s impact on global travel.
Last but not least, the disbanding of the C-band Alliance which went from an alliance to an open conflict between its key members. It is disheartening to see industry players going from a unified front on 5G issues to becoming rivals in court.
To sum it up, the industry has never seen such significant challenges. It is absolutely essential that we work together to protect and survive (for the betterment of all).
Mark: Probably the most striking aspect to me has been the substantially increased role that government interventions and regulatory actions (or inactions) have had on the satellite industry and marketplaces. We’ve been fortunate to have several decades of relative stability in terms of spectrum policy, orbital allocations and policy and (mostly) relatively modest government economic interventions (with some notable exceptions along the way).
In the last 12 months we’ve seen highly impactful, though not yet stable, regulatory interventions (or the corresponding lack of needed interventions) on NGSO licensing, orbital debris, space safety, spectrum policy regarding both dedicated and shared spectrum allocations, as well as very substantial potential economic interventions in the US, UK, Asia and elsewhere in direct satellite technology investments and/or subsidization policies. Some of these may substantially undermine or delay the role of the free market in determining what the greatest economic opportunities are for satellite and space – and the industry’s ability to connect billions of unserved and underserved individuals.
AVIA: Spectrum issues have subsided for a bit, but they haven’t completely gone away. What do you foresee are the key spectrum challenges facing the satellite industry in the next few years?
Roger: Spectrum is a limited resource. Like all other limited resources, the industry has to protect it and allocate on an “as-needed” basis. Authorities have to develop long-term strategic plans that focus on how to maximize the value of these limited resources instead of what generates the greatest short-term revenue. The challenge for the satellite industry is that our voice is far too small and is considered a niche market during peaceful times. Authorities normally wake up to it only when it is too late, and we are hit with natural disasters such as earthquakes, widespread flooding, etc. This is worsened by the singular focus on short-term profitability on the part of investors and management who see spectrum trading as a means to boost earnings to achieve investment returns.
The key challenge for the industry is to re-establish our unity and to act as one. We have to change but should plan ahead with the authorities in a holistic manner. Satellite is a global industry and the focus should not be limited to a country level.
Mark: Probably the single most important challenge is for the satellite industry, as a whole, to articulate the public benefits derived from making adequate spectrum reliably available for satellite services, so we can connect the unconnected. Articulating this need on a cohesive basis is especially complicated for the satellite industry because the technology and associated services are so fragmented. The main opponent is the mobile wireless industry, which is very highly standardized, and so speaks with a single voice. However, the answer in the satellite industry is almost certainly not standardization – because it’s not clear what to standardize around. The best answer for the satellite industry will be to scale, and show existence proofs that retaining reliable and robust spectrum availability is in the public interest.
We need to continue to demonstrate the value of satellite to extend connectivity throughout the world —- no matter where people live, work or travel. There are plenty of opportunities for that.
AVIA: Quite a number of governments in Asia have reflexively nationalistic reactions to satellite policy-making. They want to have their own national satellite industries and are prepared to handicap their users to promote what they define as national goals. What do you see is the likely future trend on satellite service protectionism? Are similar forces evident in other regions of the globe?
Roger: This is not new in the satellite industry, especially in the Asia-Pacific region. Satellite operators are seen as flag carriers and governments see the need to protect their national interests on the use of these limited resources. That’s why the ITU has to come up with “planned bands”.
However, there is room for a foreign satellite to compete in these domestic markets as the coverage and penetration of national satellites may not fully meet the needs of satellite users. There are also countries that are opening up, such as Thailand, where they are still reviewing their policies.
That is why we are always on the lookout for opportunities to develop in-country partnerships. We have 30 years of experience as a satellite service provider and an in-country partner can bring value withlocal market access which helps make a win-win proposition. AsiaSat wants to contribute to the regions that we serve and establish ourselves as a long-term partner.
Mark: The understanding that satellite and space technology can be important to individual national interests in multiple ways is certainly not a uniquely Asian phenomenon. In fact, satellite and space technology, assets, skills and resources can be important from a national defense perspective, economically in the form of jobs and investments, technically in the form of foundational science and engineering and even socially in the form of national pride. It is not surprising, nor necessarily irrational, for individual countries to engage in some amount of protectionism in an attempt to capture those potential benefits. Ultimately the satellite and space industries will likely need to reconcile desires for individual market access with these underlying needs and desires of countries around the world.
What we’re seeing is that some countries, like China and India for example, are at least considering private investment in space. However, many countries may find that they have even more influence in an NGSO environment where foreign market access is even more important than with GSO satellites because NGSO’s have inherently global (or almost global) geographic coverage. It will require a more globally sensitive regulatory environment to address potential spectrum and orbital conflicts – especially over non-sovereign geographic areas (e.g. oceans, and potentially Polar Regions).
AVIA: Roger, with the rise of online streaming activities in current pandemic situation, will this affect AsiaSat’s roles and prioritisations for your video businesses?
Roger: Well you need to remember that Covid-19 has led to a rise in viewing of all video content, linear and on demand streaming. While the pandemic has greatly accelerated the need for data services to support every aspect of our daily lives, from business to education to healthcare, online video streaming is not what I would call an essential service, at least not when compared with data services in terms of sustaining the digital economy. In times like these the advantages of broadcast television are numerous, and the ability of satellite technology to reach millions from one signal from one satellite is unparalleled. Nobody has been suggesting that we downgrade TV satellite signals from HD to SD, as they have in a streaming environment.
One has to look at the “best use” of a limited resource and video streaming is not the best use of our available resources. It may be the most convenient and flexible from a customer experience standpoint. But is this the best use of network bandwidth?
I am sure people will return to a more balanced view of streaming vs. traditional broadcasting. The impact of the pandemic has brought focus back to the family as an integral unit, and household members have become closer again. While watching primetime TV broadcast is a social and communal event, streaming is more about catering to individual and personal preferences.
Having said that, AsiaSat will have to change with our customers. We have to be selective on how and the rate at which we change. The bottom line is to be prudent and prioritize our business between video and data as things evolve.
AVIA: Mark, how do you think the satellite industry will change over the next 5 years, particularly beyond COVID-19?
Mark: I think the satellite industry will be much larger than it is today, because of the enormous opportunities in broadband internet, IoT, earth observation, and others that I mentioned before. It will require a lot of innovation in both technology and business models to achieve this – which likely will favor more vertically integrated companies that can overcome the limitations of industry “modularization” and specialization that evolved over the last 30 to 40 years when broadcast was the dominant driver in satellite services revenue.
|Time||Day 1: 24 Sept|
|09:30||Welcome Remarks by Chairman of AVIA Satellite Industry Committee
Yew Weng Soo, VP Sales & Market Development, SES Video, SES
Louis Boswell, CEO, AVIA
|09:40||Asia Pacific Thought Leaders Views: The State of the Satellite Industry with the Impact of COVID-19
It has been a year of great change for the satellite industry. In addition to the COVID-19 pandemic, near term viability for businesses remains a challenge for satellite industry stakeholders. As capacity pricing pressure continues to accelerate, top line growth remains a big concern. In this opening panel, thought leaders will share their perspectives and predictions to come from the industry over the course of the coming year and which of the many innovative options available can be applied for short term recovery and long term growth.
• Huang Baozhong, EVP, APT Satellite
• Christophe Cazes, CEO, APAC, Eutelsat
• Terry Bleakley, Regional VP, Asia Pacific, Intelsat
With Christopher Baugh, President, Northern Sky Research (NSR)
|10:10||Weighing the Bear vs Bull Case for 5G
Despite a wave of rosy predictions about the impact of a fifth generation of wireless technology on consumer and enterprise connectivity, not everyone is bullish about 5G’s potential. In this session, we hear opinions on how long it will take for 5G to translate into higher revenue growth. How can satellite play a bigger role in 5G than they have in previous generations of mobile network? How long does it take for satellite to fully join in the 5G ecosystem? What are the challenges when it comes to allocating spectrum (both C-band and 28 GHz band) for 5G in Asia? Can video work on 5G?
• Julian Gorman, Head of APAC, GSMA
• Yi Shen Chan, Director, Plum Consulting
• Yew Weng Soo, VP Sales & Market Development, SES Video, SES
With Andrew Jordan
|10:40||Women in Satellite Talks about Gender Equality and Their Prediction about the Satellite Future
At any major satellite conferences or trade shows, you will see that the audience is still predominately male. While things are changing, the change is slow. In this session, our panel will discuss their perspectives, challenges and ideas for pulling together best practices to strengthen gender equality both in the sector and within our organisations. They will also share their perspectives on what the industry might look like.
• Anita Bernie, Strategic Business Manager, KISPE Space
• Tina Ghataore, President, Mynaric USA
• Nicole Robinson, SVP, Global Government, SES Networks
With Aarti Holla-Maini, Secretary General, EMEA Satellite Operators Association (ESOA)
|11:10||Outcomes from WRC-19: View on Asia
Delegates from around the world attending the WRC-19 arrived at compromise solutions that seem to have had both the interests of the satellite and cellular communications sectors at heart. One of the major themes was the emergence of 5G networks and how to ensure global harmonization and the identification of more high-frequency spectrum that could be set aside for 5G services. In this session, we will address the key outcomes of WRC-19 and how will these have an impact on Asia.
• Per Hovstad, Principal Spectrum Engineer, AsiaSat
• Aarti Holla-Maini, Secretary General, EMEA Satellite Operators Association (ESOA)
• Tare Brisibe, Senior Legal & Regulatory Counsel, Asia-Pacific, SES
With John Medeiros, Chief Policy Officer, AVIA
|11:50||Closing remarks & end of day 1|
|Time||Day 2: 25 Sept|
|09:35||Keynote In Conversation: The Role of a Global Carrier and Network Operator in the World of Converging Over the Air (OTA) and Over the Top (OTT) Services
Marc Halbfinger, CEO, PCCW Global
With Louis Boswell, CEO, AVIA
|09:55||Satellite Financing: What to Watch out for in 2020 and Onwards
According to NSR’s recent report, 2020 and onwards will see major CAPEX investments from a few key satellite operators in largely Aero and Broadband bets. M&A and privatisation are expected to continue, and the industry will slowly consolidate across ecosystem layers. In this session, satellite finance experts will discuss where best to invest in an increasingly transitional market. Going forward, will it be CAPEX costs for new satellites or subscription models? Financial metrics across the satellite industry will be interpreted.
• Juliette Leusink, Senior Investment Specialist, Asian Development Bank (ADB)
• Chris Quilty, Founder and Partner, Quilty Analytics
With Dara Panahy, Partner, Milbank
|10:20||2021: A Landmark Year for 4K UHD?
Making UHD/4K a production reality has certainly been challenging, with implications for every stage of the workflow – from camera capture to domestic reception. But even if consumers are routinely demanding UHD, the challenge for broadcasters remain. The big issue is to integrate [UHD seamlessly] into the overall production, and this is still very much a live issue. In this panel, broadcasters will address the challenges and opportunities in 4K. How are they transitioning from HD to 4K? How are they supporting 4K content going forward?
• Alan Wong, Director, Sales, AsiaSat
• Shakunt Malhotra, MD, Asia, Globecast
• Alistair Roseburgh, Director, Operations APAC, A+E Networks Asia
With Louis Boswell, CEO, AVIA
|10:50||Thought Leaders Closing Roundtable: What’s Driving Global Growth for the Satellite Industry in the Next 10 Years?
It has been a year of great change in the satellite industry. Evolving customer needs and requirements in 2019 have led to the need for fast-paced innovation from manufacturers and operators alike. According to NSR’s report, despite a challenging climate for capacity sales, long term projections are promising with revenues doubling over the next 10 years. In this closing panel, we hear from thought leaders on what will drive or inhibit growth in demand for the industry in the coming decade.
• Roger Tong, CEO, AsiaSat
• Lon Levin, President & CEO, GEOshare
• Alvaro Sanchez, CEO, Integrasys
• Paul Estey, EVP, Customer Relations and Advisor to CEO, Maxar Technologies
• Mark Dankberg, CEO, ViaSat
With Gregg Daffner, CEO, GapSat
|11:30||Closing Remarks & End of Satellite Industry Forum|