The Leading Lights of Telecoms - Shin Satellite
With the footprint of its three Thaicom satellites spread across four continents, Shin Satellite’s (www.thaicom.net) influence extends well beyond the boundaries of Thailand. In fact, 50% of Shin’s revenue is generated from foreign markets. Executive chairman Dumrong Kasemset plans to usher in a new breed of broadband satellite—iPSTAR. While the first iPSTAR satellite will not go up before 2003, the ground equipment will soon be used to provide two-way broadband Internet access to its existing ThaiCom customers. Dumrong talks about the prospects of telecoms market in Asia-Pacific.
Which area of your business requires greater attention next year? Why?
The main area of activity for the company next year will be broadband communications for carriers, businesses, and consumers. For the carriers and businesses, we will concentrate on the rollout of iPSTAR terminals using our existing satellite capacity and those of others to expand the reach of broadband satellite technology into the telecoms sector, for which satellite operators still have low penetration overall. For the consumer sector, the emphasis will be on contents and low-cost modems which will drive the take-up rate of broadband access via satellite to the consumers.
Who are Shin’s main technology/equipment partners?
Space Systems/Loral is our main technology partner which builds the satellite. [Others are] Efficient Channel Coding which builds the iPSTAR satellite modems, and Nera which builds the gateway control system for iPSTAR.
Can you give us an indication of the Asia-Pacific telecoms scene in 2002. What do you expect it to be like?
The outlook overall is still positive despite the looming global economic slow down. The reasons are that much of telecoms demand is driven by the low penetration of basic and mobile telephone in this region.
For the more mature markets of the region, the driver will be wireless narrowband data access. Less certain are demands for wireless broadband and fixed consumer broadband. The former is due to timing to the market of the GPRS and 3G technology, together with the inherent limitations of the wireless spectrum, which will constrain the bandwidth of the applications and slow down consumer acceptance. Fixed consumer broadband demand will be limited by the availability of killer applications and content that will drive consumers to take up fixed broadband technology.
What is the current status of the iPSTAR system?
iPSTAR reached a critical milestone recently when we demonstrated the prototype ground system. About 80% of the “smarts” are on the ground. The dynamic management of resources is done on the ground. The new generation user terminals for satellite communications are all on the ground and the gateways and the time frequency equipment have all been designed on IP technology. So we basically [discarded] all the old VSAT equipment.
Why did we do that? Because the old VSAT equipment was costly and built for large companies for volume in the hundreds; therefore, costs were very high and the technology used was old communications protocols such as x.25. We achieved a milestone when we were able to bring all these pieces that we have been developing globally together in Phuket. The net result is a very small terminal—about 75 cm dishes—smaller than anything in use today in the VSAT world. And it’s low cost; instead of costing US$5000, it’s in the range of about US$1000.
Has there been volume production of the terminals yet? That will be the next step. What we have done in Phuket was an alpha stage, whereby a prototype that works and demonstrates all the functionality and technology and concepts was created for the first time. We were able to transmit a live videostreaming file from Bangkok to Phuket at about 700 Kbps. For example, you could watch a Ricky Martin video and, at the same time, the people over there could talk to the people at the gateway by a live video feed on a 500-Kbps line, so altogether we were doing about 2 Mbps of streaming video and live video.
There has been a perception that satellite is not the best means of delivering broadband Internet to the home and much focus has been on fibre, DSL and cable. Do you think, on the technology side, that satellite has suffered as a result?
I would say that there’s some truth to what you say, but it’s a little bit more complicated. Up to now, satellite has been very effective and very successful in broadcast. It is the best technology, bar none, in delivering high quality video services to tens of millions of people across a large area. So because of that success, people are focused, particularly European and US operators, on that broadcasting side.
In Asia, 70–80% of revenue for most of our competitors comes from broadcasting. However, for us, we’ve ended up providing a lot of telecoms infrastructure to users. We did the reverse, 60% of our revenue base comes from telecoms customers and 40% from broadcasting customers. Therefore, we are in a position to hear from our users, who say ‘this technology isn’t good enough, you have to do a better job’. But others perhaps don’t hear from the customers as much as we do. We also saw a tremendous opportunity to do a much better job in serving the telecoms market that basically most of the satellite market doesn’t pay attention to. Satellite, when put together properly, can be very efficient for telecoms, but it’s true, you’re not going to take 100% of the market away from fibre optics, DSL and cable. In the suburbs, you can be very competitive; in the rural areas, and even in some city areas, you’re very competitive because these other technologies have limitations.
Frost & Sullivan’s take on: Shin Corp
Shin Corp is a conglomerate with significant assets in the network and communications services sector. Its core businesses include wireless telecoms, satellite communications, media and broadcasting, and e-businesses.
The company owns 41% of Thailand’s largest mobile network operator, Advanced Information Services and has a 46% holding in Digital Phone Company, 52% of Shin Satellite and 39% of iTV—the country’s only private TV on UHF system. Shin has been able to attract foreign partners like NTT for data-centre services in Thailand and managed to sell 30% of Shin Digital Company to SingTel. Shin’s cellular and satellite businesses are its most valuable assets as they are the major earnings contributors.
Shin Satellite in particular enjoyed over 20% growth in revenue and close to 40% growth in operating profits owing to rising overseas demand for capacity from the region in both telecommunications and broadcasting areas. Due to this, capacity utilisation for both its C-band and Ku-band transponders have increased substantially.
Upon full liberalisation by 2006 pursuant to WTO agreements, Shin Satellite’s regional foothold via iPstar is likely to more than offset any reduction in marketshare at the domestic level. It also enjoys a top three position in the Internet industry with subscriber growth rates of about 300% in year 2000.
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