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To: Miguel M. de la O who wrote (6610)	8/11/1999 10:25:00 PM
From: djane	Respond to of 10852

Make space for satellites Wednesday, August 11, 1999 BUSINESS ANDREW CHETHAM Parked high above the earth in the remoteness of space, satellites on first appearances may seem ill-placed in the drive to wire up offices and homes ready for the multimedia age. Efforts to deploy high-speed Internet and entertainment services are often portrayed as a "two-horse" race between telephone companies and cable-operators. Or put in Hong Kong terms, a battle between Cable & Wireless HKT and Wharf Cable TV operations. Both have recently enjoyed higher investment ratings based on this apparent duopoly position. However, satellite delivery of broadband high-speed services is not just a real possibility - it is already happening. In fact, Internet-related traffic could emerge as one of the main long-term drivers of the satellite industry. In Asia, with its less-developed terrestrial-based communications infrastructure, the impact on the industry could be even more profound. Internet services by satellite means using a dish rather than a phone line to access the Web. Satellite transponders can offer stunning download speeds of 38 megabits per second (Mbps), faster than almost any other mode of delivery. Contrast that with HKT's state-of-the-art SuperNetvigator service offering 1.5 Mbps through the phone line using so-called digital subscriber line (DSL) technology. But download speeds are not the only advantage. Satellite-based networks can also be quick to establish. This gives them an added edge in markets where little fibre has been laid or where cable-TV networks have not been upgraded to multimedia-compatible. In theory, satellite-delivery systems could give that farmer with a small dish on his roof in the wilds of Mongolia as good an Internet service as anywhere in the world. There are also cost benefits. The price of providing a terrestrial version of that service to that same farmer would also undoubtedly be a lot higher. Looked at on the above advantages, Internet access via satellite offers an exciting prospect. "The biggest potential for satellites in the long term is as the dominant means of delivering broadband services in areas of low [fibre] subscriber density," investment bank ABN Amro Asia said recently. The idea has some heavyweight backers. Richard Li Tzar-kai's Pacific Convergence plans to deliver its high-bandwidth services into homes across Asia via satellite. Mr Li said on Monday the company had already signed agreements to lease transponder space from SAR-based AsiaSat and was also in talks with other satellite operators. Bill Gates is just one of several high-profile investors in US-based Teledesic, which plans to put a whole new constellation of satellites into space to deliver high-bandwidth services seamlessly across the globe. But despite this seemingly compelling story, there are drawbacks associated with satellites. Indeed, some pessimistic analysts think the satellite industry is destined to remain peripheral in the delivery of high-speed access. They argue that such is the march gained by the cable and telephone industry in wiring up homes that satellite will only ever be involved at the margins. In addition, where deployed, cable and telephone technologies will always beat satellite on price. Even the satellite operators agree their services could well be limited. The main limitation is that existing satellite networks are only a one-way proposition. Given the expense of transponder capacity, it is better to use it all for downloading, rather than uploading (the bandwidth used by a subscriber requesting information from the Internet). However, since most of the bandwidth demands are on files being downloaded, this is less of a constraint than it might seem. The request signals (mostly small in capacity) can be routed through a traditional phone line to the Internet service provider. This is the model being employed by Europe Online, which is leasing capacity from Societe Europeene des Satellites (SES). SES is also the major shareholder in AsiaSat. The service was launched in May and AsiaSat is looking at the results to see if the model can be applied in this region. However, this asymmetrical style of Internet delivery means that satellite may never rival cable or DSL-based delivery for true multimedia applications, which demand high bandwidth in both directions. But the operators argue that is not necessarily where satellite will excel. The great benefit of satellite delivery is its ability to multicast to millions of homes at the same time from a single source. As such the best use would be to find material of interest to everyone that can be downloaded very quickly, cached (stored) locally in a TV set-top box, or other local server, and viewed when people want to access it. Operators reckon in the not-too-distant future it should be possible to download several feature films during the small hours of the night, offering an "on-demand" menu of films to watch the next day. It does not have to be films. It could of course be a whole range of downloadable material that does not require immediate two-way interaction. You could see what was on offer one day, request it and it would be there several hours later. As the ability to cache locally improves, the amount of information that can be accessed immediately will also multiply. You could, for example, ask for all the films of Alfred Hitchcock to be downloaded to your home and the next day have a choice of all of them to watch from the hard disk of the TV set-top box. Under this scenario, satellite services will not necessarily be a direct competitor for other broadband delivery mechanisms but a complementary service. It is hard to see satellite broadband making a significant splash in the Hong Kong consumer market. The densely populated SAR is about as perfect a platform for DSL and cable technologies as you can get. But consider instead the infrastructure-starved and potentially massive consumer markets of Indonesia, India and the mainland. Those who tend to write off the satellite influence on broadband have usually taken a US-centric view of the world, where satellite has to compete against established and extensive brands which have "first-mover" advantage. In Asia, these arguments appear to be less valid. The broadband industry is still very much in its infancy. Who would be brave enough at this stage to write anything in or out of the information-age equation? Andrew Chetham is a director of Orb International. E-mail him at Chet@orb.com.hk Copyright (c)1999. South China Morning Post Publishers Ltd. All Rights Reserved.