Indonesia enters new era in satellite industry

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.