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The Latin American Satellite Markets: An Assessment
by Ahsun H. Murad, President + CEO, Optimal Satcom

Latin America, broadly identified as the countries of Central America, South America, and the island states of the Caribbean, represents approximately 8.5 percent of the world’s population and about 7.6 percent of the world’s gross domestic product (GDP).

MuradFig1 In recent years, as the world has seen a marked economic slowdown, Latin America has realized somewhat stronger growth with the five largest regional economies—Brazil, Mexico, Venezuela, Argentina and Colombia—having a combined GDP growth rate of 6.0 percent and 3.9 percent in 2010 and 2011, respectively; compared to global GDP growth rates of 4.3 percent and 2.7 percent over the same years according to figures released by The World Bank.

Latin America holds a lot of promise as a market for the satellite industry, and major satellite operators and service providers have identified it as an important market for their future growth. Economic growth in Latin America along with an increasing trend towards globalization—both from multinationals looking to invest and expand into the region; and from regional companies looking to gain global presence—has resulted in an increase in demand for satellite bandwidth for corporate infrastructure needs.

One of the major drivers of growth in the region is Brazil, which contains 48 percent of the Latin American population and accounts for about 41 percent of the region’s economy. It is currently ranked sixth in the world behind the United States, China, Japan, Germany, and France, based on World Bank 2011 GDP numbers, but is expected to overtake France as the fifth largest national economy by the end of 2012.

Though somewhat depressed by the world’s economic slowdown, growth in energy, manufacturing, mining, food production and distribution, and retail industry are fueling a net increase in demand across Latin America for satellite capacity for enterprise and infrastructure needs.

MuradFig2 Another important driver of growth in demand for satellite capacity is the direct-to-home (DTH) satellite TV market. Here, the market is also following trends in globalization with greater numbers of international channels being brought in for regional consumption with content in Spanish, English, and Portuguese. Even economically disadvantaged populations now consider TV to be a necessity and it is the primary medium for consumption of news and entertainment in these markets.

DTH satellite TV providers are increasingly offering high definition (HD) channel lineups to augment or replace their standard definition (SD) offerings. For example, Sky Brazil, which was founded in 1996 and is now majority owned by DirecTV, started its HD offering in 2009 with 10 HD channels and now carries over 40 HD channels. (Sky Brazil is carried on Intelsat 11, whose Ku-band payload supports the DirecTV coverage.)

MuradFig3 Sky Mexico, which was also founded in 1996 and is jointly owned by Groupo Televisa and DirecTV, also offers about 40 HD channels. (Sky Mexico operates from Intelsat-9 and Intelsat-16.) The 2014 Soccer World Cup in Brazil, followed by the 2016 Summer Olympics also in Brazil, will no doubt accelerate the growth in demand for satellite capacity for satellite TV in Latin America with an increase in the number of channels offered; the conversion of SD to HD; the growth in satellite capacity for enterprise needs to support the economic development and infrastructure growth associated with these world events; and the temporal growth in demand for satellite capacity for occasional use satellite news gathering (SNG) services surrounding these events.

There are a number of global and regional satellite operators that offer satellite coverage to Latin America. According to information published by the Brazilian Agency of TelecommunicationsAgência Nacional de Telecomunicações (ANATEL), amongst FSS satellite operators, Intelsat, SES, Eutelsat, Telesat, Star One, Hispasat/Hispamar, HNS Americas, DirecTV, and SatMex are permitted to operate in Brazil.

Intelsat is currently the largest provider of satellite capacity to Latin America with 13 satellites covering the region: G-28 at 89 degrees West, IS-21 at 302 degrees East, IS-16 at 302 degrees East which is leased to DirecTV for providing DTH services, IS-9 at 302 degrees East, G-11 at 304.5 degrees East, IS-1R at 310 degrees East, IS-14 at 315 degrees East, IS-11 at 317 degrees East, IS-903 at 325.5 degrees East, IS-801 at 330.5 degrees East, IS-907 at 332.5 degrees East, IS-905 at 335.5 degrees East, and IS-901 at 342 degrees East.

MuradFig4 Intelsat has a recent launch and an upcoming launch: IS-23, built by Orbital Sciences was successfully launched by International Launch Services (ILS) on October 14, 2012 to replace IS-707 at 307 degrees East; and IS-27, based on the Boeing 702MP platform, which is expected to be launched in January 2013 by Sea Launch to replace IS-805 at 304.5 degrees East. (IS-805 will then be relocated to 310 degrees East and may continue to serve the Latin American market in a more limited capacity.) Both satellites have significant C- and Ku-band coverage over Latin America.

Seven satellites in the SES global fleet provide Latin American coverage: QuetzSat-1 at 77 degrees West, which is leased to Dish Mexico, AMC-4 at 67 degrees West, NSS-703 at 47 degrees West, NSS-806 at 319.5 degrees E, NSS-10 at 322.5 degrees East, SES-4 at 338 degrees East, and NSS-7 at 340 degrees East.

Several additional SES satellites in the AMC (heritage Americom) series have continental U.S. coverage that also extends into Central America and parts of the Caribbean. An additional satellite, SES-6 is being built by EADS Astrium and is expected to be launched in 2013 to replace NSS-806 at 319.5 degrees East, which is past the end of its design life.

EUTELSAT currently operates three satellites providing Latin American coverage: EUTELSAT 12 West A (formerly Atlantic Bird 1) at 12.5 degrees West, EUTELSAT 8 West A (formerly Atlantic Bird 2) at 8 degrees West, and EUTELSAT 5 West A (formerly Atlantic Bird 3) at 5 degrees West.

An additional satellite, EUTELSAT 3B that is being built by EADS Astrium is expected to be launched in 2014 to the 3 degrees East orbital position and will provide C-, Ku-, and Ka-band coverage, some of which will be over Latin America.

MuradFig5 Four Telesat-operated satellites provide Latin American coverage: Anik F1 at 107.3 degrees West, Telstar 14R at 63 degrees West, Telstar 11N at 37.5 degrees West, and Telstar 12 at 15 degrees West.

An additional satellite, Anik G1, is being built by Space Systems/Loral and is expected to be launched in Q1 2013 to the 107.3 degrees West orbital position and will provide C-, Ku-, and X-band coverage over Latin America.

Hispamar is a joint partnership between Hispasat of Spain, and, the largest fixed telephony operator in Latin America. Hispasat/Hispamar currently operate six satellites with coverage over Latin America: Hispasat 1C, 1D, and 1E at 30 degrees West, Amazonas 1 and 2 at 61 degrees West, and SpainSat at 30 degrees West.

Mexico City-based satellite operator Satmex (Satélites Mexicanos S.A. de C.V.) currently operates Satmex 5 and Satmex 6.

A third satellite, Satmex 8, is being built by Space Systems/Loral, and is expected to be launched in December 2012, just in time to replace the ageing Satmex 5 satellite, which only has a few months of fuel left. Satmex 8 has 64 Ku- and C-band transponders, and will replace Satmex 5 at 116.8 degrees West, subsequent to which, Satmex 5 may be deorbited or moved to an inclined orbit at another orbital location.

Satmex has also teamed with Hong Kong based operator Asia Broadcast Satellite (ABS) on a package deal with Boeing to build four satellites based on their 702SP “small platform” that employs the revolutionary, light-weight, all-electric propulsion system, with an option for four more satellites. As part of the deal, Satmex is expected to acquire two of the satellites, the first of which will be named Satmex-7 and will carry the equivalent of 61 36-MHz Ku- and C-band transponders and will operate at Satmex’s 114.9 degrees West orbital slot. Satmex is expected to make a final decision on the second satellite no later than July of 2013.

The Mexican government has contracted with Boeing to build a three-satellite geo-mobile satellite system to provide next-generation satellite services to the Mexican government for military, civilian, and humanitarian purposes. The Mexican Satellite (MEXSAT) System consists of two L- and Ku-band satellites operating in the Mobile Satellite Services (MSS) segment (MEXSAT-1 and MEXSAT-2) based on the Boeing 702HP bus with 14kW of power, a 22-meter L-band reflector for mobile terminal links, and a 2-meter Ku-band antenna.

Boeing subcontracted with Orbital Sciences to build the third satellite (MEXSAT-3) operating in the Fixed Satellite Services (FSS) segment with 12 extended C- and 12 extended Ku-band transponders. MEXSAT-3 is expected to be launched in December of 2012.

MuradFig6 The Mexican government currently operates a number of services on Satmex satellites. Once the MEXSAT satellites become operational, a substantial portion of these Government services are expected to be moved from Satmex to MEXSAT, freeing a significant amount of capacity which will then be available for commercial use.

Brazilian satellite operator Star One (a subsidiary of Embratel, a major Brazilian telecommunications company) currently operates six satellites: BrasilSat B2, B3, and B4, and Star One C1, C2, and C12.

A seventh satellite, Star One C3 built by Orbital Sciences and scheduled for launch by Arianespace in late 2012 will have 28 active C-band transponders for coverage of South America and 16 x 72 MHz Ku-band transponders with six channels switchable between a Brazilian and an Andean coverage region. The Star One C3 satellite will replace Brasilsat B3 at 75 degrees West.

Earlier in 2012, Star One also contracted with Space Systems/Loral to build an eighth satellite, Star One C4, which will have 48 Ku-band transponders. There are also future plans to develop additional satellites C5, C6, D1, and D2 with Star One D1 and D2 expected to carry Ka-band high-throughput multi-beam payloads. With the new C generation of satellites, Star One is seeking to grow its DTH TV business and rebrand itself as a regional, rather than a Brazilian domestic operator, with coverage designed to cater to the broader Latin American region. Star One is headquartered in Rio de Janeiro, Brazil.

Venezuela launched its first geosynchronous satellite, Venesat-1 (also known as Simón Bolívar) in 2008. Venesat-1 is owned by Venezuela’s Ministry of Science and Technology and operated by the state-owned telecommunications company, CA Nacional Télefonos de Venezuela (CANTV). Venesat-1 has 12 C- and 14 Ku-band transponders and operates at 78 degrees West, an orbital slot assigned to Uruguay and used by Venezuela under mutual agreement. It was launched on a Chinese Long March 3B rocket, from the Xichang Satellite Launch Centre on October 29, 2008. A second satellite, Venesat-2 is expected to be launched in 2015.

Argentina’s state-owned satellite company, ARSAT has contracted INVAP, an Argentinian space contractor, to build the ARSAT-1 satellite to be launched in mid-2013 by Arianespace to be followed by ARSAT-2 and ARSAT-3 which will also be built by INVAP. The satellites will be deployed at 81 degrees West and 72 degrees West and will operate in C- and Ku-band.

MuradFig7 The adoption of Ka-band for delivering high throughput multi-beam satellites capable of providing broadband services throughout the world has not gone unnoticed in Latin America. In November 2011, ANATEL, the Brazilian Agency of Telecommunications, released a document soliciting comments from the public regarding standards for operation of geostationary satellites operating in Ka-band over the Brazilian territory. The solicitation, which was received favorably by the industry, sought to set clear standards for operation in Ka-band with specified limits and methods for computation of adjacent satellite interference, and the coordination process.

ANATEL’s May 2012 report on the list of satellites authorized to operate at Ka-band lists orbital slot exploitation rights for Hispasat/Hispamar at 61 degrees West, HNS Americas at 45 degrees West, Star One D1 at 70 degrees West, and Star One D2 at 84 degrees West.

The Amazonas-3 satellite built for Hispasat by Space Systems/Loral and expected to be launched in the first half of 2013 (delayed from late 2012) by Arianespace carries 9 Ka-band broadband spot beams (in addition to 33 Ku-band and 19 C-band transponders), and will be deployed at Hispasat’s 61 degrees West location. It has also been reported that Eutelsat won an auction for Ka-band exploitation rights at 65 degrees West earlier this year—as of this writing, that company has not announced any plans for use of the slot.

Global operators Inmarsat and O3b Networks are also building systems to bring high-throughput Ka-band satellite capacity to Latin America—Inmarsat with its Global Xpress system consisting of three initial Inmarsat 5 Ka-band satellites; and O3b with its medium Earth orbit (MEO) low-latency system consisting of an initial fleet of eight satellites. Two O3b gateways are planned in Latin America, one in Lima, Peru and another in Rio de Janeiro, Brazil. The O3b satellites are expected to launch in 2013, with the system commencing commercial operations in early 2014. Inmarsat also expects to launch its Global Xpress satellites starting in 2013 with global coverage becoming available with the launch of its third satellite expected in late 2014.

MuradFig8 Changing Dynamics
With this level of activity from global and regional satellite operators in Latin America, there is some concern that there will be an oversupply of capacity in the 2013-2016 timeframe before demand catches up with supply. However, some of this oversupply is likely to be offset by the increase in demand and the premium that is expected to be placed on satellite capacity in Latin America around the 2014 World Cup and 2016 Summer Olympics, which will no doubt bolster the profitability of the satellite business in this interim period.

The changing dynamics of the Latin American market brings new challenges for regional and global satellite operators and service providers. Regional satellite operators with available satellite capacity need to appeal to, and gain access to, a broader base of customers. Some of these customers are global service providers that have established Latin American subsidiaries, but in other cases, they are service providers who have historically operated in other markets such as North America, Europe, and the Middle East, and now seek to tap the growth potential of the Latin American market, but have little or no prior experience operating there.

On the other hand, global satellite operators wishing to operate in Latin America face competition from these regional operators, and in some cases, protectionist government agencies and regulations that place hurdles before international companies. Global operators that tend to see Latin America as a monolithic market bloc often fail to realize the differences between the many cultures and regional alliances.

MuradFig9 For example, Mexico, although a Latin American country, has stronger ties to the North America market and historical alliances with United States and Canada, rather than with the South American countries, and is worth considering as a separate sub-market with its somewhat distinct business practices. Similarly, while resident populations in the island countries of the Caribbean represent a relatively small market for satellite capacity, the extensive oil and gas exploration and drilling activities in the Gulf of Mexico sharply define this market with major oil multinationals, drilling and exploration companies, rig operators, service and supply ships generating significant demand for satellite bandwidth to fulfill their remote communications requirements.

Brazil, which represents almost half of the Latin American economy, is also a different sub-market. First, unlike the other countries in Latin America, Brazil’s primary language is Portuguese, not Spanish, and though a majority of the educated population can understand both languages as well as English, Portuguese is still the language for most business conversation.

Second, due to its size as a regional economy, it is worth adapting business practices to Brazil’s legal and regulatory environment that is under the jurisdiction of ANATEL, which governs all commercial satellite communications within the country, sets its own limits and guidelines for interference and coordination, and authorizes companies for access to space. ANATEL, in most cases, requires that business contracts be executed through a Brazilian company, which, in the case of international satellite operators and service providers, means establishing a subsidiary to conduct business in Brazil.

MuradHead About the author
Ahsun H. Murad is the President and CEO of Optimal Satcom, which he co-founded as a spin-off from Lockheed Martin Corporation in 2002. Since creating the company, Mr. Murad has focused Optimal Satcom on developing new applications for fully-integrated, enterprise management systems. In addition, he continues to pursue various market opportunities around the world, targeting satellite operators, satellite service providers, and satellite-centric MILSATCOM initiatives, and their requirements for efficient management of their satellite capacity and associated networks.

Prior to Optimal Satcom, Mr. Murad worked in various positions across the satellite communications industry. Immediately before founding Optimal Satcom, he held management positions at Lockheed Martin and COMSAT Laboratories. In these positions, he headed the development of products for transmission planning and satellite capacity management and was the lead system architect for a number of commercial SATCOM and MILSATCOM projects.

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MuradFig10 About the company
Optimal Satcom® has been supporting its customers who operate in the Latin American market for a number of years, working with global satellite operators that serve Latin America, Latin American regional satellite operators, major satellite service providers that operate in the region, and governmental entities. As a provider of enterprise software systems for satellite capacity management including market-leading products Enterprise Capacity Manager®(ECM) and COMPLAN®, Optimal Satcom seeks to support its customers with planning, management, and operations of their satellite business, facilitating expansion in global markets and adaptation to regional markets.

ECM is a software system that integrates all the functions related to satellite capacity planning, management, operations, sales, cost and revenue tracking, and customer management into a single system; and is in operational use by a number of satellite operators, some of the world’s largest satellite service providers, and several governmental agencies.

Global companies seeking to expand into Latin America and regional companies wishing to expand into international markets find ECM’s ability to support multi-site integrated operations, multiple currencies, multi-language reporting, and easy customizability to be attractive. The ability to easily segregate and track business performance by regions, market verticals, product types, technologies, etc. provides real-time business intelligence to help them understand their market and identify metrics for success. For companies that need to operate through regional subsidiaries in different markets, ECM also supports the use of a single system that reduces overhead by integrating the planning, operation, and management of satellite capacity at the parent organization level, while allowing financial functions to be segregated amongst the separate business entities.