Optimizing OpportunitiesOptimizing Opportunities

A Satellite ReportA Satellite Report

Presented byPresented byDonald Donald AbelsonAbelson, Chief, International Bureau, Chief, International Bureau

September 9, 2004September 9, 2004

2

OverviewOverview1. Overall, the satellite industry continues to

show growth and provide critical services.

2. The industry faces a number of challenges that vary from service to service.

3. The industry is analyzing the market and taking action to better serve shareholders and customers.

4. The FCC continues to modernize to foster future innovation.

3

Worldwide Industry RevenueWorldwide Industry Revenue19961996--20032003

Source: SIA, 2004

38

49.155

60.4

73.778.6

9186.8

1996 1997 1998 1999 2000 2001 2002 2003

US

$ bi

llion

s

Source: SIA 2004Source: SIA 2004

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Covering The GlobeCovering The Globe

••408 Commercial 408 Commercial Satellites Operating Satellites Operating WorldwideWorldwide

••58% U.S.58% U.S.--LicensedLicensed(approx.)(approx.)

••59% Serving U.S. 59% Serving U.S. ConsumersConsumers (approx.)(approx.)

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Satellite Industry: Four Major Components

Satellite Satellite ManufacturingManufacturing

Satellite Satellite ServicesServicesLaunchLaunch

Ground Ground Equipment Equipment

ManufacturingManufacturing

•Providers of

•Voice

•Video

•Data

•Gateways

•Control Stations

•Earth Terminals

•VSATs

•DBS Dishes

•Handheld Phones

•Launch Services

•Manufacturing of Launch Vehicles, Subsystems & Components

•Satellites for MSS, FSS and BSS Systems

•Subsystems

•Components

6

$3$10

$22 $56

satelliteservices

groundequip. mftg

satellitemftg

launchindustry

Source: SIA, 2004

Global Revenue by Industry SectorGlobal Revenue by Industry Sector2003, US$ billions 2003, US$ billions

+12%

-13.5%-19%

4%

7

Satellite TV and RadioSatellite TV and Radio(BSS Direct to the (BSS Direct to the

American Consumer)American Consumer)

8

U.S. DBS and DARS Subscriber GrowthU.S. DBS and DARS Subscriber GrowthSubscribers in millions, 1999Subscribers in millions, 1999--20042004

10.08

12.99

16.0718.24

20.36

0.14

0.80

2.58

0.00

5.00

10.00

15.00

20.00

25.00

99 00 01 02 03 04

DB

S S

ub

scri

ber

s (m

illio

ns)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

DA

RS

Su

bsc

rib

ers

(mill

ion

s)

DBS Subscribers DARS Subscribers

Source: Company News Releases; FCC Source: Company News Releases; FCC 2004 Video Competition Report2004 Video Competition Report

9

Mobile Satellite Services Mobile Satellite Services (MSS)(MSS)

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Mobile Satellite Phone Use is GrowingMobile Satellite Phone Use is GrowingGlobal Mobile Satellite Service Subscribers (Voice)

Source: TelAstra, 2004

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

11

Fixed Satellite Services Fixed Satellite Services (FSS)(FSS)

The “Silent Partner”The “Silent Partner”

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Challenge to Service Providers: Global Challenge to Service Providers: Global Bandwidth Supply and DemandBandwidth Supply and Demand

CAGR: compound annual growth rate

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

1995 1996 1997 1998 1999 2000 2001 2002 2003

Year

36 M

Hz

Tra

nsp

on

der

Eq

uiv

alen

ts

Voice Data Video SupplySource: Futron Corporation, 2004

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FSS: Core CustomersFSS: Core Customers

•Broadcast•Internet•Cable

14

Satellite Internet,

0.7%

HDTV, 0.3%

Other, 0.7%

Satellite Feeds, 12.6%

Unused, 29.6%Analog

TV, 24.4%

Digital TV, 31.7%

Relative Use of Transponder CapacityRelative Use of Transponder CapacityUnited States 2004 United States 2004

Source: Roger Rusch, TelAstra, 2004 –For FCC Use Only

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Government as a Commercial Satellite CustomerGovernment as a Commercial Satellite CustomerØHomeland SecurityØNational DefenseØ Public SafetyØ Emergency Services

Data Communication• Public safety (police dispatch)• Communications during disasters

for First Responders and Others• Information dissemination

– Media– Public

Data Collection• Monitoring Events

– Geological– Meteorological– Human Instigated– Area Restoration

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Satellites and Rural ServicesSatellites and Rural ServicesOpportunities exist for satellite companies to serve specialized needs of rural and remote communities

• Voice• Data/Internet

• Video• Imaging

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Optimizing Opportunities: Optimizing Opportunities: Industry ObservationsIndustry Observations

• Fewer But Stronger Competitors

• New Investment Paradigm

• Efficient Fleet Management

• Revised Business Plans/Approach– Letting customer demand and requirements drive how

spectrum is used

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The Role of the FCCThe Role of the FCC– Policies that Facilitate Innovation and Agility

in Satellite Operations• Fleet management• First-Come, First Served Policy

– Fast, Efficient Licensing• Satellite Licensing Reform

– Strong Global Representation• WRC

– 2003; 2007– Regional Outreach

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Licensing Disposal Speed in DaysLicensing Disposal Speed in DaysFor All GSOFor All GSO--like Applications Subject to like Applications Subject to

Licensing Procedures (8/03Licensing Procedures (8/03--6/04)6/04)

Source: FCC

92180

1311

Average Licensing Speed Prior to August 2003 (1990-2004)

Expected Speed After August 2003

Implementation of New Licensing Procedures

Actual Average Licensing Speed

After August 2003

20

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Sources for the 2004 Satellite ReportSources for the 2004 Satellite Report• Futron Corporation, Bethesda, Maryland. “How Many Satellites are Enough? A

Forecast of Demand for Satellites, 2004-2012.” February 16, 2004.

• Federal Communications Commision. Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming. January 28, 2004.

• Roger Rusch, President, TelAstra, Palos Verdes, California. “Satellite Statistics: Is Recovery a Mirage?” Presentation at Satellite 2004, Washington, D.C., March 3, 2004.

• Edward Morgan, President, Communications Center, Clarksbury, Maryland. “Satellite Supply and Demand.” Presentation at Satellite 2004, Washington, D.C. March 3, 2004.

• Satellite Industry Association. “State of the Satellite Industry Report.” June 2, 2004.

• Sirius Satellite Radio. Quarterly News Releases on Financial and Operating Results. www.sirius.com

• XM Satellite Radio. News Releases on Quarterly Results. www.xmradio.com.