Tuesday September 18, 7:35 am Eastern Time Chinese satellite firm fears post-WTO onslaught By Jonah Greenberg
BEIJING, Sept 18 (Reuters) - China Telecommunications Broadcasting Satellite Corp said on Tuesday its lack of capacity had made it vulnerable to global competition which will increase after China joins the World Trade Organisation.
The state-owned satellite operator is struggling with low capacity as it has only one satellite in orbit with another held up by U.S. export controls.
Deputy general manager of ChinaSat, Wu Jinfeng, said the firm would have to fight for survival after an expected rush of competition when China allows foreign investment into its telecommunications market after WTO entry later this year.
``What we are faced with is a situation of 'to be or not to be,''' he told an industry conference.
Upon WTO entry, China will allow investment of up 25 percent in telecommunications firms, which are likely to use satellite communications for data transmission and other services.
After three years, foreign firms will be allowed to own up to 49 percent of telecommunications firms in China.
Although China has seen strong demand for satellite services from securities firms and other corporate clients, U.S. export controls have contributed to a capacity crunch for ChinaSat, leaving the firm unable to serve potential customers.
``We do not have strong capacity, yet at the same time we are faced with strong competition,'' Wu said.
ChinaSat was unable to meet demand in the market because the United States had not approved the export of its $200 million second satellite, Chinasat-8, made by Loral Space Systems (NYSE:LOR - news), he said.
``Even though we paid for the product, we cannot be sure we will get it,'' Wu said.
ChinaSat planned to launch the satellite in 1998, but a Republican-led House of Representatives panel concluded at the time that China had used launches of U.S.-built satellites in the past to steal data that could be used to fine-tune Red Army missile-firing capabilities.
MORE SATELLITES OVER CHINA
With only one satellite in orbit, according to its Web site, ChinaSat fears its capacity will be dwarfed by multinational operators such as Washington-based Intelsat, which covers China with nine of its 21 satellites in orbit.
After China joins the WTO, multinational satellite operators such as Intelsat and PanAmSat Corp (NasdaqNM:SPOT - news) will be in the position to offer more broadcasting and telecommunications services to strong demand.
``We might start putting more and more (satellites) over China to take advantage of the growth it has been enjoying,'' said John Stanton, president of global sales for Intelsat, which will seek an initial public offering next year.
``China is going to be one of the most exciting markets over the next three to four years,'' said Quentin Kilian, regional manager of regulatory affairs in Asia Pacific for global satellite operator PanAmSat.
PanAmSat's Kilian said it hopes China will open up its VSAT (Very Small Aperture Terminal) market, which would allow people far from the city to set up phone lines, television, or broadband Internet services with a personal satellite dish.
``Don't be afraid to open up a market. It's good for this country,'' Kilian said.