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Transponder Prices in Latin America Holding Steady, for Now

Hispasat, now more than ever determined to maintain its Latin American base in the face of a recapitalized Satmex owned by Eutelsat, was the first to introduce a large Ka-band offering into the region with Amazonas 3 (above). Credit: Space Systems/Loral artist's concept

WASHINGTON — Latin American satellite operators and satellite services providers said regional government demand for broadband connectivity should help keep the market from an oversupply that would cause transponder lease prices to crash.

Latin America in the past several years has become the regional equivalent of a hot new restaurant: Everyone wants a seat there. 

The big operators that have established operations — SES, Intelsat, Telesat, Hispasat and Brazil’s Star One among them — are expanding. And new or revitalized companies are on their way in. The Andean Community is providing a slot to SES. Paris-based Eutelsat has purchased Satmex of Mexico, renamed it Eutelsat Americas and is planning a quick expansion of capacity in the region. 

Like Venezuela before it, Bolivia purchased a packaged satellite and launch service from China for a national telecommunications satellite program. Colombia, Chile and Peru are talking of national systems as well. Brazil’s government in late 2013 decided on its own telecommunications satellite, including a Ka-band broadband payload, for civil government and military use.

Madrid-based Hispasat, now more than ever determined to maintain its Latin American base in the face of a recapitalized Satmex owned by Eutelsat, was the first to introduce a large Ka-band offering into the region with Amazonas 3.

Nonetheless, at a panel discussion here March 12 during the Satellite 2014 conference, satellite operators said there were no signs of any widespread or significant decline in prices.

“Some pricing may be down, and there is pressure but the market is demanding more throughput, and governments are putting budgets on the table for more social services to be provided,” said Hugo Frega, director of Latin America for Hughes Network Systems, a division of Englewood, Colo.-based EchoStar Corp. and a large provider of satellite ground systems.

Hughes and EchoStar have access to a Brazilian orbital slot but have not yet begun construction of a new satellite for the slot because of a lack of partners for a direct-to-home satellite television business. Hughes has also expressed its ambition to expand its North American consumer broadband business into Latin America.

Frega said that some of the pressure of an increasing supply is coming in the form of government demands for additional services on the same capacity they have already leased. In this case, he said, transponder prices remain stable, but satellite operators need to add value to the original contract when it comes up for renewal.

“Customers are demanding 6 megabits per second downlink and 1.5 megabits uplink,” Frega said. “You are now talking about 15-18 megabits downlink and 3 megabits uplink. Just a few years ago we were fighting for a 1-megabit uplink.”

Carmen Gonzalez-Sanfeliu, regional vice president for Latin American & Caribbean Sales at Intelsat of Luxembourg and Washington, said she has noticed no material decrease in bandwidth prices, but customers are now more demanding on the total cost of their lease contracts.

Russell Ribeiro, regional vice president for Latin America at Gilat Satellite Networks of Israel, a Hughes competitor in broadband network hardware sales, said high-throughput satellites in Latin America, as elsewhere, will bring down the cost of a megabit of data to users once they are fully present in the region. “This will bring a sharp drop in prices,” Ribeiro said.

For now, “the market is well balanced between supply and demand,” said Jose Antonio C. Gonzalez, special projects manager at Brazil’s commercial satellite operator, Star One. 

“We have a small Ka-band payload on a satellite to be launched in 2016, but real HTS [high-throughput satellite] capacity over the whole region? I don’t see that in the next three to four years. I don’t know if HTS will be a reality anytime soon.”

Gonzales-Sanfeliu said the established operators continue to monitor the supply situation, particularly with the new Bolivian satellite joining Venezuela’s Venesat in orbit, and with Brazil’s decision to launch a national satellite to cover government requirements. One concern of the established operators is that governments launching their own satellites will then erect trade barriers to drive national business to the national spacecraft, she said.

“There are some concerns over landing-rights issues,” Gonzales-Sanfeliu said. “There are some indications of protectionism. But let’s see what happens.”

Sergio Murillo, director general of Red 52, a satellite services provider, said he would like to report that prices for the bandwidth his company purchases are coming down. But they are not.

“I have been asking all these guys for discounts,” Murillo said, referring to the satellite fleet operators. “They have not been forthcoming. Our customers have maintained more or less constant budgets, but they are asking that more sites be added to the network for the same cost, and that more bandwidth be provided.”

Ignacio Sanchis, chief commercial officer of Hispasat, said there appears to be no price pressure yet but that “the regulatory issues need to be watched. We do see some protectionism developing in the region. But so far this is not preventing us, as a satellite operator, from doing business.”

Javier Recio, vice president of sales and marketing at Satmex — now Eutelsat Americas — said that despite the announcement of large fiber networks, none of the satellite operators in Latin America appears to have cut back on plans to add new capacity.

 

Follow Peter on Twitter: @pbdes

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