Optimizing OpportunitiesOptimizing Opportunities
A Satellite ReportA Satellite Report
Presented byPresented byDonald Donald AbelsonAbelson, Chief, International Bureau, Chief, International Bureau
September 9, 2004September 9, 2004
2
OverviewOverview1. Overall, the satellite industry continues to
show growth and provide critical services.
2. The industry faces a number of challenges that vary from service to service.
3. The industry is analyzing the market and taking action to better serve shareholders and customers.
4. The FCC continues to modernize to foster future innovation.
3
Worldwide Industry RevenueWorldwide Industry Revenue19961996--20032003
Source: SIA, 2004
38
49.155
60.4
73.778.6
9186.8
1996 1997 1998 1999 2000 2001 2002 2003
US
$ bi
llion
s
Source: SIA 2004Source: SIA 2004
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Covering The GlobeCovering The Globe
••408 Commercial 408 Commercial Satellites Operating Satellites Operating WorldwideWorldwide
••58% U.S.58% U.S.--LicensedLicensed(approx.)(approx.)
••59% Serving U.S. 59% Serving U.S. ConsumersConsumers (approx.)(approx.)
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Satellite Industry: Four Major Components
Satellite Satellite ManufacturingManufacturing
Satellite Satellite ServicesServicesLaunchLaunch
Ground Ground Equipment Equipment
ManufacturingManufacturing
•Providers of
•Voice
•Video
•Data
•Gateways
•Control Stations
•Earth Terminals
•VSATs
•DBS Dishes
•Handheld Phones
•Launch Services
•Manufacturing of Launch Vehicles, Subsystems & Components
•Satellites for MSS, FSS and BSS Systems
•Subsystems
•Components
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$3$10
$22 $56
satelliteservices
groundequip. mftg
satellitemftg
launchindustry
Source: SIA, 2004
Global Revenue by Industry SectorGlobal Revenue by Industry Sector2003, US$ billions 2003, US$ billions
+12%
-13.5%-19%
4%
7
Satellite TV and RadioSatellite TV and Radio(BSS Direct to the (BSS Direct to the
American Consumer)American Consumer)
8
U.S. DBS and DARS Subscriber GrowthU.S. DBS and DARS Subscriber GrowthSubscribers in millions, 1999Subscribers in millions, 1999--20042004
10.08
12.99
16.0718.24
20.36
0.14
0.80
2.58
0.00
5.00
10.00
15.00
20.00
25.00
99 00 01 02 03 04
DB
S S
ub
scri
ber
s (m
illio
ns)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
DA
RS
Su
bsc
rib
ers
(mill
ion
s)
DBS Subscribers DARS Subscribers
Source: Company News Releases; FCC Source: Company News Releases; FCC 2004 Video Competition Report2004 Video Competition Report
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Mobile Satellite Services Mobile Satellite Services (MSS)(MSS)
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Mobile Satellite Phone Use is GrowingMobile Satellite Phone Use is GrowingGlobal Mobile Satellite Service Subscribers (Voice)
Source: TelAstra, 2004
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
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Fixed Satellite Services Fixed Satellite Services (FSS)(FSS)
The “Silent Partner”The “Silent Partner”
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Challenge to Service Providers: Global Challenge to Service Providers: Global Bandwidth Supply and DemandBandwidth Supply and Demand
CAGR: compound annual growth rate
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
1995 1996 1997 1998 1999 2000 2001 2002 2003
Year
36 M
Hz
Tra
nsp
on
der
Eq
uiv
alen
ts
Voice Data Video SupplySource: Futron Corporation, 2004
13
FSS: Core CustomersFSS: Core Customers
•Broadcast•Internet•Cable
14
Satellite Internet,
0.7%
HDTV, 0.3%
Other, 0.7%
Satellite Feeds, 12.6%
Unused, 29.6%Analog
TV, 24.4%
Digital TV, 31.7%
Relative Use of Transponder CapacityRelative Use of Transponder CapacityUnited States 2004 United States 2004
Source: Roger Rusch, TelAstra, 2004 –For FCC Use Only
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Government as a Commercial Satellite CustomerGovernment as a Commercial Satellite CustomerØHomeland SecurityØNational DefenseØ Public SafetyØ Emergency Services
Data Communication• Public safety (police dispatch)• Communications during disasters
for First Responders and Others• Information dissemination
– Media– Public
Data Collection• Monitoring Events
– Geological– Meteorological– Human Instigated– Area Restoration
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Satellites and Rural ServicesSatellites and Rural ServicesOpportunities exist for satellite companies to serve specialized needs of rural and remote communities
• Voice• Data/Internet
• Video• Imaging
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Optimizing Opportunities: Optimizing Opportunities: Industry ObservationsIndustry Observations
• Fewer But Stronger Competitors
• New Investment Paradigm
• Efficient Fleet Management
• Revised Business Plans/Approach– Letting customer demand and requirements drive how
spectrum is used
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The Role of the FCCThe Role of the FCC– Policies that Facilitate Innovation and Agility
in Satellite Operations• Fleet management• First-Come, First Served Policy
– Fast, Efficient Licensing• Satellite Licensing Reform
– Strong Global Representation• WRC
– 2003; 2007– Regional Outreach
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Licensing Disposal Speed in DaysLicensing Disposal Speed in DaysFor All GSOFor All GSO--like Applications Subject to like Applications Subject to
Licensing Procedures (8/03Licensing Procedures (8/03--6/04)6/04)
Source: FCC
92180
1311
Average Licensing Speed Prior to August 2003 (1990-2004)
Expected Speed After August 2003
Implementation of New Licensing Procedures
Actual Average Licensing Speed
After August 2003
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Sources for the 2004 Satellite ReportSources for the 2004 Satellite Report• Futron Corporation, Bethesda, Maryland. “How Many Satellites are Enough? A
Forecast of Demand for Satellites, 2004-2012.” February 16, 2004.
• Federal Communications Commision. Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming. January 28, 2004.
• Roger Rusch, President, TelAstra, Palos Verdes, California. “Satellite Statistics: Is Recovery a Mirage?” Presentation at Satellite 2004, Washington, D.C., March 3, 2004.
• Edward Morgan, President, Communications Center, Clarksbury, Maryland. “Satellite Supply and Demand.” Presentation at Satellite 2004, Washington, D.C. March 3, 2004.
• Satellite Industry Association. “State of the Satellite Industry Report.” June 2, 2004.
• Sirius Satellite Radio. Quarterly News Releases on Financial and Operating Results. www.sirius.com
• XM Satellite Radio. News Releases on Quarterly Results. www.xmradio.com.