Satellite TV in India Expected to Triple by 2013

WASHINGTON
— During the next five years, the direct-to-home satellite television subscriber base in
India
is expected to triple, while the VSAT, or very small aperture terminals, market grows at a rate of 20 to 30 percent per year, according to a new market study.

The report, “Indian Satellite Markets,” by Bombay, India-based analyst PrashantButani of Northern Sky Research, predicts that a surge in demand for direct-to-home broadcast delivery in the Ku-band will boost the subscriber base from about 8 million this year to 25 million in 2013, which would represent 36 percent of
India
‘s households.

The Indian government will endeavor to launch enough domestic satellites to keep pace with the exploding direct-to-home television market, leaving little room for international commercial operators except to fill gaps before the launches can occur, Butani said.

The Indian Space Research Organisation (ISRO) “prides itself on being able to do everything in-house,” Butani said. “Really, there are no signs from ISRO that they are looking to give up this hold on the transponder market anytime soon.”

Butani
estimates
India
will need to increase transponders from its current capacity of about 200 to 500 Ku- and C-band transponders during the next five years.
India
plans to launch satellites with a total of 400 transponders during the same timeframe, he said.

During that time,
India
will increase its leasing of commercial Ku- and C-band transponders slightly from $210 million per year to about $300 million per year just to meet the short-term gap that will be created by the growing demand in the direct-to-home television market, Butani said.
India
announced in July that it would launch an additional six Gsat series communications satellites, bringing the total to 12, by 2012 to address growing capacity needs.

Satellite operators have long complained that
India
‘s highly regulated satellite market and pricing controls make it tough to do business there, but companies like SES NewSkies of
The Hague
,
Netherlands
, and Measat Satellite Systems of Kuala Lumpur, Malaysia, in recent years have been able to win contracts with Antrix Corp., the commercial arm of the Indian Space Research Organisation.

NewSkies
, for example, served as temporary transponder gap filler while an Indian direct-to-home television provider waited for
India
‘s Insat 4b satellite to be launched in March 2007.

Butani
said he sees that scenario reoccurring, but views
India
‘s transponder shortfall and growing markets such as VSAT as an opportunity for international business there.

“
India
is still viewed by many as a market where one really has to be able to cut down pricing to sell transponder capability and equipment. That’s not going to be true in the future,” Butani said. “A significant chunk of
India
is willing to pay the price but the service providers must convince customers it’s value for money.”

While revenue from service contracts for VSATs has fallen to less than $1,000 per user in
India
, opportunities exist for VSAT equipment sales. Primarily used to connect bank Automatic Teller Machines and stock brokering houses, The number of VSAT terminals is expected to grow at a rate of 16,000 to 24,000 per year, Butani said. One state government placed an order for 30,000 recently, and several others for about 8,000.

The key for companies seeking to break through the barriers to doing business in
India
is to find local partners and establish a continuous presence there, Butani said.

“Operators have to constantly keep their eyes open, be very observant of trends and opportunity and establish local partners,” Butani said. “Having a local presence helps a lot. Most of the news that is reported ends up being a little too late for communications providers.”

A part of the study that surprised the author was the mobile satellite services industry, which is relatively untapped because of pricing and regulatory challenges.

Inmarsat
of London has some presence in
India
, operating primarily through content distribution, Butani said. Other venders complained that the significant investment in infrastructure, partnerships and local control required to enter the Indian market discouraged business ventures there.

The outlook for the future of mobile satellite services in
India
might be improving.

“Regulatory parties we talked to said mobile satellite services regulations are due to be relaxed in the next couple years,” Butani said. “For now, the market has truly been neglected.”