While much has been made of the bold new steps taken by China's space program,
the country has still failed to transform these accomplishments into meaningful
and profitable private sector applications. This failure is most evident in its
inability to crack the Southeast Asian satellite communications market.
China has yet to complete a true commercial satellite transaction, and still
relies on government-to-government exchanges for the limited amount of business
it has conducted. While the US and Europe boast powerhouse companies working on
space technology - such as Lockheed-Martin, Boeing, EADS Astrium, and Orbital
Sciences - China still has only one commercial satellite enterprise, China
Great Wall Industry Corp.
China resumed commercial satellite launches, after a prolonged
period of inactivity, in 2005. But questions about its technological aptitude
re-emerged with the well-publicized loss a year later of Sinosat-2. China had
boasted Sinosat-2 would provide 100 million customers with satellite
television, before it failed just 10 days after its launch due to a
malfunctioning solar panel.
There is no question that China is slowly gathering momentum in winning global
market share, but it appears unlikely to catch up with the US and Europe
anytime soon due to a combination of adverse political factors, and a
reluctance of customers to spend on China's low-cost satellites, given the very
low number of "birds" it has in operation.
As Southeast Asia's satellite market has surged in recent years, China has
stood on the sidelines. Southeast Asian ventures aimed at beaming
direct-to-home (DTH) satellite TV services to millions of regional households
including satellite-delivered e-learning, telemedicine, public sector
e-government and interagency teleconferencing, have all seen steady growth.
To meet the emerging demands, new satellites have been launched at a brisk
rate. The US-built Vinasat-1 was sent into orbit for Vietnam in April.
Bermuda-based ProtoStar now has its first US-built satellite in operation
serving the entire Asian market and will launch its second - ProtoStar 2 - next
year.
Patrick French, head of the Singapore office of NSR Telecom Market Research and
Consulting, says other new US-built "birds" are scheduled for launch in the
broader Asia region, including Asiasat-5, Koreasat-6, JCSAT-12, Optus-D3,
Intelsat-18 and SES New Skies Satellite-9.
One senior Asian satellite company executive estimated that over US$2 billion
worth of new satellites will be launched across the wider Asian region,
including coverage for Southeast Asia, by 2011. These include a joint venture
for an ST-2 satellite by Singapore-based SingTel and Taiwan-based Chunghwa
Telecom Co which will replace a jointly-owned ST-1 already serving Southeast
Asia and other parts of the region.
While these big ticket projects come on-line, China's commercial satellite
business is still in its infancy and confined to marginal markets. Although
three recent overseas projects involving Chinese-built satellites, Nigeria's
NigcomSat-1, Venezuela's Venesat-1 and a recent deal announced for Laos, are an
important step towards China's global ambitions, they also demonstrate how far
behind it is.
China provided nearly all the funding for NigcomSat-1, which was launched last
year, and industry analysts believe Venesat-1, now scheduled for launch by
China in November, and the deal inked in August with Laos, are aimed at
extending satellite communications and surveillance capabilities.
The analysts believe there is a hidden agenda to advance the Chinese
government's strategy of securing access to key global natural resources and
commodities.
Offers of government-backed loans and other incentives to sell satellites are
of course nothing new to the industry. Malaysia, Thailand, Indonesia and the
Philippines have all inked US satellite deals backed by loan guarantees issued
by the US Export-Import Bank. The French government recently provided loan
guarantees to cover the launch of a new satellite for the Thailand-based
communications company Thaicom, formerly known as Shin Satellite.
Even so, some industry analysts believe China's satellite industry is still too
close to the government to challenge more established competitors in the global
industry. Peter Evans, a senior analyst for Southeast Asia at Australia-based
BuddeComm, has studied China's Ministry of Information Industry's (MII)
five-year plan for the industry.
"There is passing reference to special planning of international communications
and satellite communications, as well as broad reference to the MII
facilitating the development of internationally competitive companies," says
Evans. "These plans are very ambitious, providing as they do long wish lists of
things to change or build or create, and the immediate question they prompt is,
'How is all this going to get done?'"
Others see positive developments emerging. "China is determined to be the
manufacturer to the world in all [telecom and other high tech] fields," says
Roger Rusch, a California-based satellite industry consultant. "Most
[satellite] operators want the lowest costs, as long as the satellites are
reliable, and China is establishing a reputation that will make the competition
keener in the future."
Limited skies
As China gears up to compete, the average 12 to 15 year lifespan of a typical
communications satellite, as well as neighboring countries' political concerns
of relying on its big northern neighbor for sensitive satellite applications,
will inhibit China Great Wall Industry Corp from making any significant
commercial inroads into Southeast Asia's satellite market for at least a
decade, if not longer, analysts say.
For several Southeast Asian countries, China's controversial history and
proximity to the region are not necessarily strong selling points. Consider,
for instance, Vietnam, which for centuries has had touchy relations with China.
With the recent successful launch of the US-built Vinasat-1, Vietnam joined a
growing list of countries in the region which independently operate their own
satellites.
"When Vietnam launched Vinasat-1 earlier this year, as part of its independent
image it shared the tasks around: Aa US-built satellite, a French launch,
Japanese technical assistance, etc," says BuddeComm's Evans. "It continues to
be wary of excessive Chinese involvement in its economy."
Adds Rusch: "Even given [China's] great desire and ambition, it takes a long
time to become qualified and established as a commercial satellite supplier.
Reputation and experience are essential credentials before low price is the
decisive factor."
So, too, are government-to-government relations. In September, a senior
Vietnamese official visited Laos to offer Lao TV capacity aboard Vietnam's new
satellite at no cost. The following month, Vietnamese Minister of Information
and Communication Le Doan Hop and Lao National Post and Telecom Agency Minister
Khamlouad Sidakone concluded a broad agreement covering satellite television
and other broadcast services.
The neighborly gestures ensure that Lao households will soon have satellite
dishes pointed at Vietnam's new satellite and immediately raise questions about
the economics of Vientiane's recently concluded deal with China.
China's bid to make regional inroads is also complicated by the fact that,
after years of heavy spending and several planned future launches, Southeast
Asia's skies are now saturated with capacity. Several of the region's national
systems are under-utilized, according to consultant Rusch, who describes
Southeast Asia as a "buyers market".
Data he has reviewed shows that only 46% of the region's satellite transponders
are now utilized, although the situation has recently shown signs of
improvement. Whether this improving trend, driven primarily by new service
offerings, can withstand the global economic downturn emanating from the US is
still uncertain.
According to Rusch, several Southeast Asian nations need to rethink their
satellite strategies and consider using the facilities provided by larger
international operators, such as Luxembourg-based SES Global, Bermuda-based
Intelsat, or ProtoStar, or even consider consolidating their individual
satellite operations into a regional network.
He says Southeast Asia is now plagued with "vanity satellites", including in
Indonesia, Malaysia, Thailand and the Philippines, whose commercial operations
have often been loss-making.
China could yet strike a deal with space laggard Myanmar, which now relies
heavily on Thaicom and ST-1 for its satellite links to the outside world.
Otherwise, satellite opportunities for China's largely unproven "birds" will be
few and far between in Southeast Asia. While China is no doubt prepared to take
a long term view towards the regional market, its state-led plans to become a
low cost satellite provider have so far failed to spark much commercial
interest.
Peter J Brown, a Maine-based satellite specialist, writes frequently
about satellite industry trends and developments in Asia.
(Copyright 2008 Asia Times Online (Holdings) Ltd. All rights reserved. Please
contact us about
sales, syndication and
republishing.)
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road,
Hua Hin, Prachuab Kirikhan, Thailand 77110
