Indonesia enters new era in satellite industry

European consortium Arianespace invited The Jakarta Post's editorial staff member Ardimas Sasdi for a visit to its facilities in Kourou, French Guiana, and its supporting industries near Paris. Arianespace's launcher Ariane4 is scheduled to launch Indonesia's Palapa C2 satellite on May 15. These are the three articles about the nine-day whirlwind visit.

PARIS (JP): The launching of Palapa C2, the third generation of Indonesian telecommunications satellites, from Kourou in French Guiana on May 15, marks a new era in the country's telecommunications industry.

For Indonesia, a vast archipelagic country with over 190 million people, the launching of its ninth satellite not only underlines its progress in the telecommunications sector, but also reflects its continued preoccupation with unifying the country.

From the beginning, Palapa was aimed at bridging the gaps between the islands in the Indonesian archipelago. Indonesia, with more than 17,000 islands sprawling from Aceh in the west to Merauke, Irian Jaya in the east, clearly requires a high performance satellite to enhance communication.

The grand mission was reflected in PT Satelindo's motto of "Unity in Diversity."

PT Satelindo, the owner and operator of the Palapa C series satellite, is a consortium established on Jan. 29, 1993 as a partnership of two state-owned companies, PT Telekomunikasi Indonesia (Telkom) and PT Indosat, and privately owned PT Bimagraha Telekomindo.

Indonesia's entry into the satellite-based telecommunications sector dates back to the historic moment 27 years ago when President Soeharto inaugurated the operation of telecoms technology using a satellite belonging to the International Telecommunications Satellite Organization (Intelsat) on Sept. 27, 1969.

Seven years later, on July 9, 1976, Indonesia launched its first own satellite, Palapa A1, from Cape Canaveral, USA.

Currently Indonesia is running three of the eight orbiters it has launched, the Palapa B2R, Palapa B4 and Palapa C1, with a combined capacity of around 80 solar-powered transponders.

Both the earlier Palapa B and the Palapa A generation satellites, manufactured by Hughes Space and Communications Company of the United States, are still in operation by PT Telkom.

Designed as a backup for Palapa C1, Palapa C2 is scheduled to blast off into orbit on board the European Ariane 4 rocket from Kourou in French Guiana this week together with Amos, a communications satellite owned by the Israeli Aircraft Industry.

The Palapa C series have better coverage, more power and greater flexibility than the Palapa A and Palapa B models. They have 34 transponders, while the Palapa B series has only 24 and Palapa A series a mere 12. The Palapa C satellites also have a longer lifespan of about 14 years (plus two years in inclined orbit).

The new satellite will cover Indonesia, Southeast Asia, parts of China, India and Japan. With the Pacific Rim as its center, the coverage of Palapa C2 will extend westward from Iran to Vladivostok and southward to Sydney in Australia and New Zealand.

PT Satelindo has spent around $190 million on Palapa C1.

No figures are available on how much the consortium invested in Palapa C2 but Arianespace's sales and marketing director, Philippe Berterottiere, said the Indonesian company spent $83.5 million on the launch alone.

Satelindo's general manager for marketing, Retno Setyowati Renggana, told a media workshop for journalists covering the prelaunch of Palapa C2 late last month that prospects in the telecommunications satellite business are quite bright.

Retno said that so far 90 percent of Palapa C1's transponders have been sold.

Some prospective clients, Retno said, have expressed interest in leasing satellite transponders from Palapa C2: "We are now waiting for them to sign on the dotted line."

The subscribers to Palapa C1, many of them former lessees of the Palapa B2P satellite, are domestic and foreign broadcasters such as CNN, the ESPN sports station, entertainment networks HBO, Viacom and Discovery, Asia Business News, NBC Asia and Canal France International as well as users from Australia, Brunei, Malaysia, New Zealand and Papua New Guinea.

Indonesia's state-owned television network, Televisi Republik Indonesia (TVRI), the country's five private television networks and the Ministry of Defense and Security are also on the list.

Targeting a wider market, Satelindo expects telecommunications firms and providers to lease the Palapa C2 for its derivative services of data, voice, image and video transmissions.

The digital compression television system, the next wave in technology, is also the target market of the consortium.

Setting lower leasing fees is a stratagem adopted by Satelindo to lure new customers. The company charges leasing fees of between US$1.6 million and $3 million per annum for one transponder to Palapa C1's 26 lessees, while leasing fees in international markets currently range between $2 million and $4 million per year for one transponder.

With estimated earnings of US$60 million per year, on the assumption that all of the 30 C-band transponders are leased under long-term contracts, PT Satelindo as the operator expects to make considerable profits in this lucrative but risky business.

The consortium's profits are projected to increase further when the government's plan to raise leasing fees of solar-power transponder goes into effect.

As a private company, PT Satelindo is designed to be highly competitive, and to represent Indonesia internationally.

Satelindo will face home-grown competition from Indostar, another Indonesian consortium with a permit from the government to operate satellites in the spirit of market reforms. Indostar plans to launch a satellite early next year to provide direct broadcast television services for the Indonesian archipelago and Asian nations.

But fiercer rivalry is expected to come from regional and international satellite operators, such as Intelsat, AsiaSat, Apstar, Panamsat, Optus, JCsat, Columbia and Mabuhay, the major players in the regional market for broadcasting.

The restrictive regulations imposed by some countries, like Malaysia - a newcomer in the satellite business-- requiring domestic companies to use telecommunications power from their satellite, is another problem faced by Indonesian satellite operators.

"We lost some clients in Malaysia because of Kuala Lumpur's policy requiring domestic companies to use the Measat satellite," Retno acknowledged.

Tough rivalry in the telecommunication satellite industry is unavoidable as more countries launch their own satellites; domestic telecommunications operators must anticipate this, she argued.

"There is no choice but to fight if we want to survive. And thankfully we have experience and know-how in this business," Retno said.

A French expert also acknowledged that Indonesia has the edge in know-how. "I've been working with private companies for 20 of my 27 years in this career," Louk Jurgens, deputy director of PT Satelindo told Asiaweek. "I wouldn't be here if I didn't believe this country was a winner".

The number of satellite operators in the Asia-Pacific region has increased significantly in the last few years.

By early next year, there will be 1,680 communications satellite transponders available in the Asia-Pacific region, and this figure is forecast to reach 2,360 in 2000.

But the demand for solar-powered transponders is also projected to increase as more users look for additional transponders and more efficient digital compression.