• The African Demand For Satellite Equipment
• Australian Satellite Market
• Asian Transponder Demand
• Multimedia Satellites - The Ka-band Report
• A Concept of Advanced Technology Satellite Systems for Asia Pacific: Rural
  Communications Applications

Regulations
The Australian Communications Authority (ACA), formed through the merger of the Australian Telecommunications Authority (Austel) and the Spectrum Management Agency (SMA) in July 1997, is responsible for the overall regulation and licensing of the satellite and cable industries. The Australian Broadcasting Authority (ABA) is responsible for frequency allocation within the broadcasting service bands. Both sectors are open to competition. Cable operators are legally obliged to offer third party programme providers open access to their networks.

Satellite market overview
The market for satellite business services in Australia is dominated by the country’s principal telecoms carriers Telstra and Cable & Wireless Optus (Optus). Optus is the larger, having acquired the national satellite system Aussat from the government in 1992. At the end of 1998 Optus had four satellites in operation, two A series and two B series, all manufactured by Hughes. The latest of these - Optus B3 - became operational in August 1995. Satellites B1 and A3 are used mainly for TV broadcasting and trunking as well as catering for the needs of governmental departments, though all four also perform telecoms roles. Together the Optus satellites have a footprint covering Australia, Tasmania and New Zealand. Although it is expected that the ‘B’ series satellites will provide services until at least 2005, in June 1998 Optus began inviting tender applications to build the first C series satellite.

Among the satellite business services on offer from Optus are VSAT, Audiocast - a private digital satellite service providing one-way audio links; Multicast - a digital point-to-multipoint facility offering direct video service capability to individually addressable locations; VideoConnect - an analogue satellite video service for the networking of video between program sites, studios and re-broadcast sites around Australia; City Link - an end-to-end voice and data service; Taslink - offering voice, video and data connections to Tasmania; Austlink - a two-way dedicated service between two customer premises; Optus Aurora - a suite of advanced digital satellite services enabling the simultaneous broadcast of video, audio and data to an extensive number of sites throughout Australia, and RemoteCast - a full-time, point-to-mass market delivery medium, transmitting broadcast signals to homesteads, retransmission sites and National Transmission Agency sites in the remoter areas of Australia. Optus also offers customers access to a transportable earth station which provides full broadcast quality video uplinks and downlinks to Optus satellite transponders.

In August 1994 Optus launched a satellite-based mobile telecoms service known as MobileSat which uses the Aussat satellites to footprint the whole of Australia (as well as a 200km perimeter around the coast). Providing a range of services including fax and data transmissions to areas of the outback which fall outside the coverage of traditional mobile services, the service is, according to Optus, particularly popular with the emergency services, transport companies and rural homesteads and has around 7,000 customers.

Telstra, with no platforms of its own, is forced to lease transponders on the Optus satellites in order to offer satellite business services. Its main offerings in this realm come under the Interra Business Services (IBS) and Interra Network Services (INS) banners; IBS affords connection between state capitals and access to regional locations via shared earth stations. It is used for digital broadcasting, data, audio and video networking and its main customers are in the financial community. INS provides mobile and remote voice and data services via small terminals.

Telstra has been offering access to the Inmarsat-M service since 1993 but in the autumn of 1997 it introduced a satellite mobile phone of its own - the Telstra MiniSat, based on Inmarsat’s new Mini-M product - to compete directly with Optus’ MobileSat. At present, both Optus and Telstra’s offerings are beyond the average consumer’s price range, though this should change before long with the advent of commercial low earth and medium earth orbit satellite systems (LEOs and MEOs) such as Iridium, Globstar and ICO.

In May 1998 the ACA awarded a licence to PanAmSat Corporation to provide domestic satellite services in Australia. PanAmSat has said it will lease capacity on its PAS-2 satellite directly to Australian customers through its subsidiary PanAmSat Asia Carrier Services.

Cable market overview
Not surprisingly, the market for cable television services in Australia is also dominated by Telstra and Optus, with the former leading the way in terms of subscribers. Telstra’s interest in the sector is managed by Foxtel, its 50/50 pay-TV joint venture with Rupert Murdoch’s News Corporation, which uses Telstra’s broadband cable network for the distribution of its basic package of 30 TV channels. When Telstra commenced the rollout of its broadband network in 1994 it announced it was aiming to pass four million homes within five years. However, due to a number of competitive changes in the country’s telecoms market and pay-TV industry, in early 1997 the operator reduced this target to 2.5 million homes by June 1998. At that date the operator announced it had just managed to meet the revised target, having passed 2.505 million homes with 750MHz hybrid fibre coaxial (HFC) cable, up from 2.088 million in June 1997. In some regions not accessible by cable, such as Western Australia, the company uses satellite links for the transmission of its programmes. In June 1998 Foxtel claimed 320,000 cable TV subscribers, up from 205,000 twelve months earlier. In accordance with its distribution agreement with Telstra, Foxtel does not offer cable telephony or Internet access services but does provide a limited range of information and home shopping services. In the year ending 30 June 1998 Telstra claimed to have invested A$92 million and incurred losses of A$83 million in connection with Foxtel.

In preparation for the Olympic Games in Sydney next year, Telstra has custom built at a cost of US$200 million a 4,500km fibre-optic network around the city to meet the additional transmission requirements of the broadcasting companies sure to be present. Telstra is refusing to reveal its plans for the network once the games are over.

Optus began rolling out its own broadband cable network in September 1995 but, like Telstra, has felt the effects of changes in the country’s operating environment. In particular Optus claims to have been suffering from a high rate of churn with subscribers migrating to, amongst others, Foxtel. As a result, in late 1997 the company announced it too was reducing the number of homes it planned to pass with its 750MHz HFC network, the equipment for which was supplied chiefly by Motorola and Nortel. Optus had initially been planning to cover selected suburban areas of Adelaide, Sydney, Melbourne and Brisbane with its network but has since taken Adelaide off this list. Nevertheless, at the end of June 1998 the operator had fulfilled its targets in the other areas with a total of 2.2 million homes and 145,000 businesses passed, from which it claimed 186,000 cable TV subscribers - a market share of approximately 24%. While this was an increase of around 200,000 in the number of homes passed, over the year the number of CATV subscribers increased by just 6,000. The majority of the 20,000km of fibre-optic cable in Optus’ network is suspended aerially around electricity cables.

In June 1996 Optus began offering local telephony services to a limited number of customers in Sydney and Melbourne and in May 1997 the service launched in Brisbane. By June 1998 however, the company revealed it had managed to pick up only 48,000 local call customers. Optus claimed this was at least partly due to the obstructive manner of rival operator Telstra. In the twelve months to June 1998 Optus said it had paid over A$904 million in interconnection fees, the majority of which went to Telstra. Nevertheless, in mid-1998 Optus claimed the number of its local telephony subscribers was growing by 1,000 a week with a target of 2,000 new connections per week by the end of the year. In the year ending 30 June 1998 Optus earned 4% of its total turnover from the provision of pay-TV services and 1% from local telephony.

The other main provider of pay-TV services in Australia is Austar, a wholly owned subsidiary of US-based United International Holdings (UIH). Due to the relatively small size and low housing densities which characterise its franchise areas, the vast majority of Austar’s programming is delivered by MMDS (metropolitan areas) or DTH (rural). However, the company has constructed a wireline cable network in Darwin, a city of approximately 27,000 serviceable homes, where dense vegetation makes an MMDS service impractical. Since it first began marketing services in late 1995, Austar has witnessed healthy increases in its subscriber base - a fact it attributes to the lack of competition within its franchise areas which covered approximately 1.63 million homes at the end of June 1998; at that date the operator had 215,275 subscribers, up from around 85,000 at the end of 1996 and 196,000 one year later. In September 1998 Austar said that although it holds a telecoms carrier licence through its wholly owned subsidiary Windytide Pty, it has no plans to enter the country’s local telecoms market.

In May 1998 Austar announced it had set up a 50/50 joint venture with Optus to own and operate the satellite distribution network currently delivering Austar’s full range of channels. Under the deal, the two operators have pooled their existing programming resources, and as a result, the number of premium and subscription channels available to the subscribers of each has been increased.

The big talking point in Australia’s pay-TV industry during 1997 was the much-mooted merger of Foxtel and the financially-troubled satellite pay-TV operator Australis Media. Having been immediately turned down by the Australian Competition and Consumer Commission (ACCC) on the grounds that such a move would give News Corporation (owner of a half share in Foxtel) an unfair advantage in both satellite and cable TV, Australis and Foxtel were under the impression that the new deregulated telecoms regime after July 1997 would make it easier for the venture to get the go-ahead.
However, this was obviously not a view shared by either the ACCC or Optus which both vehemently opposed the consolidation and forced the case to be referred to the Australian Federal Court. In addition to the ramifications the merger would have for the country’s pay-TV industry, ACCC and Optus argued that the merger would have negative downstream effects on local telephony and, in particular, on Optus’ ability to become a force in this important market. Finally, it was announced in mid-November 1997 that the Foxtel partners, Telstra and News Corporation, had decided to abandon the merger agreement prior to a hearing in the Federal Court at the end of that month. Telstra’s decision to quit the battle can be attributed in part to the fact that it was due to float on the stock market a matter of days later and any official ban of the merger would have damaged its medium-term earnings growth.

While the Foxtel pair emerged from the lengthy proceedings relatively unscathed, the same cannot be said for Australis Media. Having exhausted all avenues of escape, including a last ditch attempt to resurrect a satellite joint venture with Optus that was first struck in 1996, the company was officially declared bankrupt in June 1998. Somewhat ironically, it seems as if it will be Foxtel that will benefit from Australis’ downfall following the July 1998 announcement that it had bought the satellite dishes and receivers in the homes of 50,000 of Australis’ 100,000 subscribers. The deal was approved by the ACCC even though it had previously vetoed the merger between the two operators. In order to begin offering satellite-delivered pay-TV services however, Foxtel must gain transpondency on the B3 satellite operated by Optus, and such an alliance might not be out of the question after an announcement in the same month by Optus that it was keen to set up a joint programming venture with Foxtel. Both companies are keeping their cards close to their chests; to confuse matters more, in September 1998 Foxtel said it was trialling PanAmSat2 as a possible alternative carrier for satellite programming.

Multimedia market overview
To date Optus’ and Telstra’s activity in the multimedia sector has been limited to the provision of Internet access, intranet services and related information offerings. Even in the market for basic Internet access however, both are a long way behind the market leader OzEmail. Listed on the Nasdaq and Australian stock exchanges, at the end of July 1998 OzEmail had 80 points of presence in Australia - giving it local access to approximately 80% of the population - from which it had around 180,000 subscribers. The company has a satellite link from the US to its own base station in Australia, and is part of a consortium which has acquired rights to fibre capacity between Australia, New Zealand and the US in an attempt to cut what it claims is its main expense - the provision of bandwidth between the US and Australia. In July 1998 OzEmail signed an agreement with the Catholic church to provide Internet services to 6,000 catholic groups in Australia. It also has an Internet telephony business, Interline, though it admits this is very much in the nascent stage at present. More than 60% of the equity in OzEmail is controlled by three private investors.

Through its wholly owned subsidiary On Australia, Telstra offers high speed residential and corporate Internet access under the banners Big Pond Home and Big Pond Business. Despite being available to more than 1.5 million Telstra customers in the Sydney and Melbourne areas, by the company’s own admission take-up has been slow. To remedy this, in early 1998 the operator announced it had signed up 13 web development companies to provide new content for the network. In June 1998 Telstra announced it was in talks with Microsoft over the possible formation of a joint venture aimed at introducing new multimedia and web TV applications over Telstra’s cable network. At the time a spokesman for Microsoft said that his company viewed Australia as a good testbed for its future multimedia strategies. In July 1998 Telstra announced it was launching a trial of Internet telephony services to a test sample of 250 customers in Sydney. The trial is due to be evaluated upon completion in mid-1999.

Optus marked its entry into the Internet market at the end of 1997 with the launch of Optus Spinnaker, a wholesale Internet service provider. By the end of 1998 Spinnaker claimed to have 33 ISPs and content providers directly connected to its network with another 25 in negotiation. Among the ISPs connected to the service are Alta, Big Networks, iiNet, OneNet, SE Networks, KidzNet and OzEmail. Several Pacific islands, including Vanuatu and the Soloman Islands, are also using Spinnaker for Internet access. Optus Spinnaker claims to service approximately 30% of the major ISPs in Australia.

In May 1998 Optus gained a footing in Australia’s dial-up Internet market when it acquired ISP Microplex for an undisclosed fee. At the time of purchase Microplex had 26,000 dial-up customers and had sold over 80,000 Internet access cards.

Main cable operators (June 1998):

*includes an estimated 30 MMDS operators