Shin Corp to wholesale Ipstar services to resellers

MUMBAI: Shin Satellite, which plans to launch Ipstar between mid-February and mid-March and belongs to Thai prime minister Thaksin Shinawatra's family, will wholesale services to resellers across Asia, leaving them to deal with local regulators while battling stiff competition from ever cheaper, faster wired and wireless broadband.

The massive satellite beaming broadband Internet across Asia, conceived in the dial-up dot-com mania of the 1990s, when millions of speed-hungry urbanites promised soaring revenues, the largest commercial satellite ever now seems destined to serve dull, but steady, income-seeking governments, telcos and consumers beyond wired broadband's reach in rural Asia.

"I'm not sure a satellite guy charging higher up-front fees is really a threat to ADSL (asymmetric digital subscriber line) operators in urban areas," a MacQuarie Securities telecom analyst Richard Moe says. "The Shin Corp has always had a bias towards the higher end of the market. To be honest, I was more bullish a few years ago."

ADSL is a technology that provides broadband cheaply, for about US$25 (1,040 baht) a month or less. It uses telephone lines, usually more reliable and faster than satellite links, and works best in urban areas where customers pack around telephone exchanges.

Ipstar's earth stations have provided a low-key first-generation service using current satellites for the past two years. Suppliers targeting users in rural Thailand ask $100 a month for this service. Ipstar is keeping mum about prices for second-generation services using the new Ipstar satellite. "We will charge consumers the market rate in each territory," says an Ipstar spokeswoman. "We will break even when we have 20 per cent of capacity booked."

That may be so, but with broadband prices on a one-way trip south it may not be true for long. "The primary challenge is to get some payback in a reasonable amount of time in a market that is fast commoditising," says research house Intercedent's Hong Kong managing director Ross O'Brien.

"The perception that bandwidth is a commodity has driven long-distance rates down to unprecedented levels. Bandwidth is not a commodity like coffee or orange juice, the price is not going to come back," O'Brien adds.

So far two major customers have signed up, neither of which seems destined to deliver fat revenues. Chinasat, a second-tier telco, faces a tough fight from China's huge incumbents China Telecom and China Unicom. While Software Technology Parks of India (STPI), which runs a network of high-tech industrial estates in India, does not appear well positioned for expansion.

In Japan and South Korea, which together account for about half of Asia's 70 million broadband connections, fiber-optic cables, which are even faster and more reliable, are becoming common as prices fall and companies battle fiercely.

"How are they going to compete in the real money markets like Korea, Japan, Singapore and Hong Kong that are wired to the max?" wonders O'Brien. "You aren't going to pull anybody away from a fiber-optic cable to their home with satellite Internet."

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