Global satellite market consolidating fast

Intelsat's recently announced intention to purchase PanAmSat will create the world's largest satellite communications operator, but is also likely to spur further market consolidation and increase pressure on smaller regional operators, communications analysts have warned.

According to Gartner, there is a significant oversupply in satellite communications capacity, making it cheaper and faster for companies to acquire in-orbit capacity than to launch new satellites.

"This has driven industry consolidation and depressed the satellite manufacturing and launch businesses," said a Gartner report by analysts Jay Pultz and Patti Reali.

"Two other factors driving industry consolidation are the need to fill in the gaps in operators' geographical coverage and to strengthen overall service portfolios." 

Growth in demand for satellite services is expected to come mainly from video programming, the study noted.

Taking into account projected growth in high-definition channels and ethnic networks in North America and Europe, and growth in other regions, Gartner predicts that 700 or more channels might be necessary by the end of 2009.

"New technology could dampen demand, however, as the introduction of next-generation advanced compression technologies, as well as Digital Video Broadcasting S2 advanced coding and modulation technologies, could reduce transponder needs by as much as 30 per cent," the study predicted.

Gartner advises existing or potential customers of satellite operators to take steps to ensure long-term availability "since these operators are likely to be acquired or to merge".

"Do not worry about locking in today's low prices since new technology, as well as satellite communications and terrestrial competition, are likely to continue to depress prices," the analyst firm stated.