Emerging Markets: Rural Telephony, Internet Services Gaining Ground
satellitetoday.com
Monday, Feb 8
by Amy Hellickson
The buzzwords for the emerging markets in the satellite industry that will
drive growth in the next 10 years are rural telephony, data broadcast and
broadband Internet content, according to the industry analysts who
addressed SATELLITE 99 on Wednesday (2/3).
Jimmy Schaeffler, chairman and CEO of The Carmel Group, said there
are an estimated 120 million Internet users worldwide today which will
swell to 520 million by year-end 2007. To tap into this growth,
telecommunications providers are targeting rural telephony in Sub-Saharan
Africa, Southeast Asia and the Middle East. The result, Schaeffler said,
will be the development of two-way satellite capabilities that will turn the
industry upside down.
"Where there's a strain on land-based networks because of high
bandwidth … satellites will deliver back-haul type services to DSL [digital
subscriber service] headends," Schaeffler predicted.
One such system targeting rural telephony in Sub-Saharan Africa is
RASCOM, which has partnered with Alcatel [ALA] to launch a $1
billion geostationary satellite service that will use 500,000 terminals for
total coverage of Africa. Gounde Adadja, director general of RASCOM,
said the need for rural telephony is tremendous, as 70 percent of Africa's
population live in rural areas and there are only .52 phones per 100
people.
"RASCOM has responded by not targeting individual phones lines, but to
provide access to telecommunications service providers at very low costs
to customers," he said.
With the main concern focused on cost for rural customers, Adadja said
the RASCOM service will provide terminals at $1,000 each and phone
service priced at 10 cents per minute charged to the end user.
"This gives tremendous business to private sectors," he said. The
RASCOM system will provide digital television, radio broadcasting,
very-small-aperature-terminal, wireless local loop and high-speed Internet
connection. Alcatel will design, finance, launch and operate RASCOM's
system under a 10-year contract.
But whether there is a need for rural telephony if the pricetag is pricey
remains a question.
Dan Ellenbogen, managing director of Germany-based Spaceline
Communications, said for rural European countries such as Romania,
Albania, Bulgaria and the CIS countries, there is a great need for
point-to-point and local telecommunications solutions.
"In my crystal ball, what I see is demand growing from point-to-point to
national corporate networks in Europe as satellite spectrum becomes more
available," he said.
However, the success of these rural telephony satellite plans will depend
on keeping a focused business plan in order to secure financing, said Dan
Flatley, managing director and head of space and satellite finance for
Donaldson, Lufkin & Jenrette.
"Satellite financing by region has been very low for Asia and we didn't see
anything from Africa from 1993 on," he said. Though WorldSpace has
targeted the rural market in Africa with its digital audio radio service
(DARS), Flatley believes the satellite applications that will have the
greatest growth opportunity will be rural telephony.
"But in emerging markets, once they get telephone service, there's going to
be a big demand for DBS, then as income levels rise, data and Internet will
be important," he added.
Schaeffler said the result of the projected increasing subscriber base over
the next eight years will be a concomitant rise in total industry Web
revenues to about $17.3 million by 2007 from $2.2 million this year.
With these projections, the current reality of rural telephony is one of both
"hope and disillusion," said Krysten Jenci, a satellite industry analyst at
the U.S. Department of Commerce.
"There are few [rural] places that can afford GMPCS services, but
regulators are moving forward to [help]," she said. "[Rural telephony] is an
untapped market with great growth potential for both fixed satellite
services and mobile satellite services."
Amy Hellickson is assistant editor of Mobile Satellite News.
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