Today it is becoming difficult to differentiate distinct national markets from larger regional and global transmission flows. Satellite coverages are increasingly linking emerging markets with those of other global regions. This interdependence should become even more pronounced as demand for Internet-related applications continues its steep growth. While local regulatory, cultural and market forces certainly shape how demand is evolving in emerging markets, the new demand patterns will call for broader connectivities between and among large continental markets.

As a result of these new demand patterns, global satellite operators are focusing their payload designs on intercontinental and trans-oceanic services, putting them in a much better position to compete for Internet-related and other rich media transmission services. Satellites providing flexible connectivity between and among global landmass markets' North America, Latin America and Europe, for example, illustrate this new competitive direction. Larger and more powerful satellites, with help from the regulatory authorities, are making these hemispheric connections possible and profitable. Operators are also looking ahead and evaluating the introduction of small Ka-band payloads in anticipation of the broadband era.

Among the challenges for operators is to provide intercontinental connectivity while still catering to local market forces. The explosion of Internet-related service opportunities is really forcing the issue. With the goal of creating that elusive "one-stop shop," global or near-global operators such as Hughes/PanAmSat, New Skies, the Loral Alliance and Intelsat are striving not only to expand their fleets, but also to broaden their competitive service offerings locally. One way in which operators can expand down the food chain is to bundle bandwidth, teleport and ISP services, or other combinations of value. This can be accomplished through acquisitions or partnerships. If operators in the acquisition mode can develop the skills necessary to manage such downstream businesses, they will be better positioned to compete with the rapidly expanding terrestrial and undersea fiber providers that are positioning themselves for the coming broadband era.

The other avenue is for regional operators to strike alliances to extend their reach beyond their own backyards. In Latin America, Brasilsat is working with Intelsat; in the Middle East and Europe, Arabsat with Eutelsat; and in Asia, SES/Astra has acquired a significant stake in Asiasat. Demand for satellite capacity and services in Africa, for example, may be galvanized in the next few years by increased connectivity to Europe and perhaps the neighboring Middle East, while the region's domestic services gradually evolve.

When asked to pick an emerging market with the most promising potential, the call is a tough one. It really depends on the business you are in. If I were a satellite operator, the markets of Africa, the Middle East and Asia are exciting, particularly if telephony, Internet and video traffic can be carried to and from other global regions. Also, if digital pay television platforms, such as those struggling to build subscribers in the Middle East, can consolidate or be managed more effectively, regional operators Arabsat and Nilesat will benefit greatly. Once a loyal subscriber base is developed through digital pay or free-to-air television, the introduction of Internet and other data applications is a natural extension of the infrastructure.

In Asia and the Middle East, direct-to-home (DTH) television burst onto the scene with great promise in the mid-1990s. But several key DTH projects in Asia have shut down, and in the Middle East, the three DTH players' Showtime, Arab Radio and Television, and Orbits are having a tough time selling the market on their advantages over free-to-air and over each other. The high expectations of DTH in these regions have run directly into the realities of price points, regulatory regimes, distribution and financing. When the prototypical DTH business plans were making the rounds three or four years ago (they all looked very much alike), the difficulty of actually executing these businesses according to plan were underestimated. In addition, DTH ventures typically require enormous capital for infrastructure, programming, marketing and distribution, transponder fees and licensing obligations.

The price points and subscriber ramps required to meet typical revenue projections have been taking longer to achieve in operational DTH services (Latin America, the Middle East and Japan, for example), thereby pushing break-even cash further out into the future. However, I do believe that the DTH sector holds great promise in emerging markets, particularly when bandwidth and digital technologies can be used to localize services and when the DTH infrastructure and subscriber base can act a placeholder for future Internet-related services. Finally, in potentially large DTH markets such as India and China, regulatory and political bodies will end up dictating who and how many parties will operate DTH services, how it will be introduced and who will ultimately benefit from state support.

Wireless technologies and services are also poised for tremendous growth in emerging markets and may end up leapfrogging the West in deployment. While wireless applications are forecast for rapid growth, good old fashioned television will remain immensely popular in emerging markets, particularly as local programming makes up larger proportions of free-to-air and pay lineups.

When looking at the broader supply and demand structure for satellite capacity, most analysts are forecasting a tightening of available FSS space segment relative to demand in the next two years. Of course, regulatory obstacles and old-line monopolies in most emerging markets do not make the task easier. In downstream service businesses, local partnerships will be necessary to fully maximize access and execution in many emerging markets, whether we are talking about regulatory access, DTH, mobile telephony or Internet services. The new broadband players such as Spaceway, Astrolink and Skybridge, understand this very well, and are scouring their target markets for strong local partners.

The North American market is certainly dictating the terms of technology growth, market demand and innovation. But I am regularly reminded, and rightfully so, by my European friends that the larger European sphere is developing its own exciting capabilities and services. European satellite manufacturers, operators and service companies, for a variety of reasons, are well positioned to deepen their presence into the Middle East, Africa and Asia. Eutelsat has its eye on the Middle East and Africa, SES/Astra has invested in Asia, as mentioned, and the French television bouquet, Canal Horizon, is breaking ground in North Africa. After watching European companies operate in emerging markets for many years, I have come to appreciate their unique ability to understand local practices, influence decision-makers and win business.

Emerging markets certainly face serious obstacles, the most consistent of which is the slow movement of national regulatory regimes, followed by the hold of many national telcos. Transitions are on the way, however. In Egypt, I would have said just a few months ago that the prospect of privatizing the state's treasured media sector would be out of the question. Triggered by competing media interests in neighboring countries, however, the Egyptian government announced in January 2000 that the media sector would, in fact, be privatized (although few details are yet available). In what could be a developing trend, state media concerns are beginning to realize the value of programming they own. Amin Bassiouny, chairman of Nilesat and former head of the country's programming arm, the Egyptian Radio and Television Union, indicated that Egypt is planning to catalog and digitize its huge archives of video content in preparation for future Internet distribution.

Underlying the obvious regulatory and licensing problems are the harder to grasp issues of how societies accommodate new technologies, entertainment and information on their own terms, and in ways that are appropriate for their cultures. Old and new media alike are powerful forces in all societies, not just those in the emerging markets. Also, the lack of political stability or continuity in many emerging markets has certainly slowed the development of telecommunications services of all types. For better or worse, when governments change, so do established patronage systems, which, in many emerging markets, directly influence policy and private sector development.

When advising Western companies about deepening their business in emerging markets, I typically stress the importance of understanding the influence relationships at work in both the public and private sectors of a target market. Once the informal patterns of influence are better understood, then one can begin to build local alliances and partnerships with greater confidence and effectiveness. Another key step is to build a business intelligence capability so your company can tap alternative sources of information about policies, licenses and business development. Getting all your information from your local partner or field office is not always wise. Additionally, with all of the glitter of our new satellite technologies, the major success factors in emerging markets remain the nuts and bolts of execution, marketing, pricing, customer service and money collection.

Finally, I would suggest that senior executives visit a target region or national market of interest on a regular basis so that they can break bread and build personal relationships with key local officials and executives. In that same vein, the more a senior executive can empower his or her local executive on the ground, the better. The more power and influence your local office is perceived to have, particularly in the Middle East, Asia and Africa, the better your negotiating and conflict management positions and the more chance you have to protect and strengthen the company's bottom line.

In conclusion, I would like to again emphasize that with all of the new satellite capabilities, intercontinental coverages and performance, the foundational elements of marketing, execution and local influence will continue to be the key success factors for satellite operators and service companies in emerging markets. The parallel development of local market demand, political presence and global connectivity is critical in maintaining the competitive edge of everyone in the satellite services chain.