Star One CEO: Latin America Markets Challenged by Overcapacity, Increased Costs

November 24, 2010 | Satellite News | Mark Holmes

In an effort to increase its presence in Latin America, operator Star One will launch its new StarOne C3 satellite in 2012 to replace Brasilsat B3. Latin and South America are lucrative markets for Star One, primarily driven by strong growth in Brazil. However, Star One CEO Gustavo Silbert admits that the operator’s biggest challenge is to avoid a new cycle of oversupply in this region.

“Most operators are announcing new satellites and/or replacements for the region. There is a potential risk of oversupply within the next two to three years, similar to what happened in 2003 and 2004,” Silbert told Satellite News.

Star One’s second biggest challenge is dealing with increased costs for building and launching a satellite. The company is in the middle of a new cycle of investment, which Silbert hopes will bring a number of new satellites to the region. “We look forward to continue our expansion as a regional player, rather than a Brazilian domestic player. We successfully started this strategy two years ago, with the launch of Star One C1 and C2, and will consolidate it with Star One C3 launch, in 2012,” said Silbert. “The three satellites form our new generation and provide excellent power and coverage throughout Latin America, as they were designed specifically for this region. We look forward to keep fulfilling the market demands and to be prepared in order to face new opportunities, while maintaining our investments and our differentiation in the satellite market.”

Silbert is confident that his company can continue to perform in tough global economic conditions due to a number of new DTH platforms launching across Latin America. “During the global recession, several segments showed significant growth. As an example, cellular backhaul projects, broadcasting (HD distribution and DTH) and digital inclusion programs have showed significant growth during this period,” said Silbert. “We are observing a strong demand for DTH in the region, which is occupying a prominent position caused by its growing penetration in Brazil and in other countries of Latin America. Many of them are provided by telcos aiming to expand their services portfolio with video. Star One is providing capacity in Star One C2 at 70 degrees West for Via Embratel, a recent and successful DTH player in Brazil.”

Embratel, one of the region’s major telcos, is led by Executive Director Antonio Joao, who told Satellite News that it was shooting at a potential target market of 20 million households just after the operator had launched pay-TV in Brazil last year.

For Star One, demand for capacity to carry HD and even 3-D channels has increased significantly as the number of regional DTH and pay-TV players also continues to rise.

“In Brazil, as the rest of the world, the number of HD channels is growing and the major broadcasters are providing their main programs in that technology. The pay-TV operators – cable and DTH – are significantly increasing the number of HD channels in their offers. Also, considering the Nipo-Brazilian Digital terrestrial TV system adoption by several countries in Latin America, we expect a potential growth in the number of HD channels throughout Latin America,” Silbert said.

3-D TV also is starting to see the light of day in the region. During the 2010 World Cup in South Africa, 25 soccer games were transmitted in 3-D to Latin and South American audiences and Brazilian TV broadcaster are starting to transmit other 3-D programs in the country. “There are others testing the 3-D technology. However, it should be noted that this 3-D scenario is not increasing the amount of satellite bandwidth used in the country. This occurs, basically, due to the fact that these 3-D transmissions are not 3-D-HD transmissions,” Silbert said.

While pay-TV markets offer strong opportunities for Star One growth, Silber said it is harder to predict what will happen in the broadband market and admitted that the operator is in no rush to look at procuring a dedicated Ka-band satellite. “We are studying the Ka-band potential for our region. Many challenges are involved, for example, market size for broadband services, time to market, performance in rainy areas, etc. But, that doesn’t mean the opportunities don’t exist. The growth of broadband market will impact us on two fronts. Firstly, you have an increasing number of digital inclusion programs, which will lead to increased demand for satellite broadband. The second one concerns terrestrial broadband (DSL/HFC) and mobile 3G services expansion in less populated cities, which need a backbone / backhaul satellite solution in order to transmit the consolidated traffic for other locations. Each scenario shows that the broadband growth, in any technology, results in potential growth for satellite usage.”