Asia Pacific VSAT Market Continues Steady Growth

DUBLIN, Ireland, Dec. 8, 2006/Satnews Daily/ — The Asia Pacific very small aperture terminal (VSAT) market continues to see steady growth even as the VSAT markets in other regions begin to show signs of saturation, according to a new Research and Markets’ report.

Titled “Asia Pacific VSAT Markets,” the report noted that the total installed sites for all VSAT applications numbered over 300,000 in 2005, and predicted that this is expected to grow to over 900,000 sites by 2012, presenting huge opportunities for both VSAT equipment vendors and satellite service providers alike.

In the corporate and enterprise VSAT segment, future growth will be driven by the ever increasing number of small and medium enterprises (SMEs) and the associated demand for easily deployable, reliable broadband connections in areas underserved by terrestrial services, the report said. While rural telecommunications are also expected to play a big part in the future growth of this market segment, the consumer and small office/home office (SOHO) VSAT segment in Asia Pacific is still in its early stages, with the installed base being under 60,000 in 2005.

However, a significant challenge confronting market participants is the growing competition from telephone companies (Telcos). Sensing the same opportunities, telcos are aggressively expanding terrestrial services into areas proved profitable by VSAT deployments. VSAT used for corporate networking and SME broadband are the sectors that are more directly threatened by the expanding activities of telcos.

“An added challenges lies in the relatively higher cost of satellite bandwidth, and although the cost of bandwidth has decreased in recent years, it will always remain higher than terrestrial services in most instances,” notes the analyst of the research service. “This is especially true for small businesses, which may not need to fully utilize the advantages of a large content distribution network.”

The growing focus on rural telecommunications is expected to be a key factor in the future growth of VSAT services in the Asia Pacific, the report said. This is an especially strong driver in the region, as many rural and suburban communities in the emerging markets of the region are still underserved by terrestrial communications infrastructure. As governments have universal access programs as well as funds and subsidies set aside to achieve this goal, initial capital expenditure is partially offset by these developmental subsidies. By providing telephony, video, Internet access, and education programs, satellite service providers have a chance to establish themselves as the complete as well as only communications provider to these communities, and margins beyond the short term can prove profitable, the report said.

In respect to the corporate and enterprise VSAT application breakup, the majority of the VSAT sites are still for narrowband applications, such as automated teller machines (ATM), credit card transactions, gas stations, and logistics dispatch systems.

Approximately 29 percent of VSAT sites are used for traditional corporate networking functions such as internal networking, information broadcast, or Internet access, and it is this 29 percent that represents the most lucrative segment for service revenues, as corporate customers typically engage in a complete solution of managed services.

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