The latest annual report from the Satellite Industry Association on the state of the industry brought another round of good news for everyone. Well, almost everyone. Satellite manufacturers saw revenues drop 24% between 2004 and 2005, thanks to the declining value of government contracts. All other sectors experienced revenue growth, and leading the charge once again is satellite services.
And not just any satellite services, but DBS-type services. FSS and MSS revenues have been relatively steady with slight dips and peaks over the last five years, but DBS (which includes DTH, DAR and satellite broadband) has been growing steadily, earning $41.3 billion in 2005, compared to $35.8 billion in 2004. DTH alone saw a 14% increase in revenues, while satellite radio is just getting started, recording 165% growth in a market driven ostensibly by North America alone.
By no coincidence, the same market has been driving revenue growth for the satellite ground equipment sector. According to the SIA/Futron report, while earth stations experienced a rebound, consumer services like satellite radio and DTH are the biggest drivers.
The reasons vary, but one point not to be overlooked is one bullet point in the back of the SIA/Futron report: "Regulatory changes are increasing the number of channels carried and markets opened around the world."
Put another way, the satellite sector is just now finding out about market liberalization.
Well, that's not quite accurate. The satellite sector has known about the concept of market liberalization for years. It's just that governments have been slow to apply them to satellite services.
Indeed, satellite is one of the few telecoms sectors left where you can still find tightly regulated markets closed off to foreign players unless they're willing to partner with local players who are likely state-run or managed. International law firm Freshfields Bruckhaus Deringer lists China , India , Korea , Taiwan and Vietnam as among the most barrier-ridden satellite markets in Asia - which is ironic in the cases of India , Korea and Taiwan , which have liberalized virtually every other telecoms sector, and know full well the benefits that liberalization brings. If the total satellite industry is managing to grow 7.4% a year in its current state, what numbers would it be seeing if liberalization was the default setting‾
The issue was raised early on in last Monday's CASBAA Satellite Industry Forum, with operators like Intelsat and SES Global calling for sat lib. Granted, it's in their self-interest for markets to let them in, but the point is valid.
The trick, of course, is in getting governments to listen, but can it really be that hard‾ If you look at all the other excuses governments have made to put off liberalizing the satellite space, they essentially boil down to a couple of premises: protecting national security and preventing the incumbent from losing money to competition. Which is exactly what they used to say about their incumbent telco monopolies.
Some regulators are already realizing that there's more to be gained from opening up the satellite sector to varying degrees. India 's TRAI has a proposition on the table to implement an "Open Skies" policy (although it's been on the table for over six months). Meanwhile, organizations like the Global VSAT Forum have been making headway regarding the relaxing of VSAT regulations in several African nations. In some cases, as APSCC president Dr Eui Koh pointed out, it's a matter of commercial forces at work, such as Malaysia 's Astro service launching in Indonesia , which - after the inevitable protests from Indonesian pay-TV players - resulted in a reciprocity agreement.
It's going to take numerous initiatives and a lot of industry-regulator dialogue to make it happen, which means we're still several years away from seeing much reform - in the case of markets like China where liberalization of any market comes slowly, it will take perhaps a decade or two. But the evidence has been presented and the jury is in on liberalization. Regulators have run out of excuses to keep satellite behind a barrier of red tape and national security fears. It's time to open the skies.