Satellite Transponder Leasing Flat Despite Battered Economy

Pricing for North American satellites has flattened but not declined as some companies rethink their needs for increased capacity, said Peggy Slye, the chief operating officer of Futron research, which gathers confidential figures on transponder leasing. “That tells you market is tentative,” she said. “Not negative, but paused in its growth.” The pause is something new for the North American market, which grew steadily in previous years as the economy flourished. Now, though, with many satellite companies in consumer services business such as DBS and broadband, growth in demand for some of the services has slowed, Slye said.

Satellite companies typically keep their market- sensitive pricing confidential in the interest of deal- making. But some major companies have said they have very high fill rates this year. Intelsat’s rate was about 85 percent at the end of the second quarter, a record high for the company, said Dianne VanBeber, the vice president of investor relations and communications. She credited the figure to the company’s “limits on adding capacity and focus on improving how we manage our inventory, paired with attractive growth -- particularly from the emerging regions, broadband applications, and direct-to-home (DTH) television networks.” SES said it has had growth, too, and its fill rate was 80.5 percent at the end of Q2.

Technological advances have slowed growth in capacity needs, said Patrick French, an analyst at Northern Sky Research. For instance, many TV content providers companies have figured out how to use their capacity more efficiently, though the increased push for HD content goes in the other direction, he said.

Previous recessions have lagged in their effects on the satellite leasing business, Slye said, so it’s unclear whether the industry will eventually go through a steep decline this time.

Satellite license surrenders and dismissals at the FCC have increased in some bands in recent months. Seven of the 16 satellite authorizations in the 17/24 GHz “reverse band” have been surrendered (CD Sept 8 p8), a higher-than-usual rate. Five Ka-band authorization applications -- four from AtContact Communications, which is facing financial problems and failed to reach a construction milestone -- have been dismissed (CD Aug 25 p7). The FCC said it doesn’t track or comment on industry trends.

Still, some bands remain hot, especially in particular regions. Capacity needs on satellites for the Mideast continue to grow because of the communications requirements for military operations. The African market is also on the upswing, though a large amount of new capacity is expected to open up over the next year and a half, possibly driving down demand, said Northen Sky’s French.

The Asia-Pacific region is also seeing a growing need for capacity, because of its healthy DTH market. Indian companies Bharti and Reliance have launched satellites this year. The Cable and Satellite Broadcasting Association of Asia said six TV satellites are to be launched for the region by early 2010 and others are in the works. In June, EchoStar announced a DTH partnership with AsiaSat. AsiaSat also recently ordered AsiaSat 5C from Space Systems Loral for launch this year. Recent figures indicate that 60 percent of all Asian satellite transponders are in use, slightly lower than the worldwide average of about 74 percent. Transponder use increased 9 percent in 2008, the association’s figures show. - Tim Warren