Not only do satellite telecom executives say, almost unanimously, that their sector will weather the global economic downturn, they also see some unexpected new engines of growth down the road.

Officials across the industry gathered at the Satellite 2009 conference here last week agreed that the sector's fundamentals remain sound. Market capitalization and other indicators are down and merger activity is at a standstill, but the sector is still outstripping the economy as a whole, says Hoyt Davidson, managing partner of investment bank Near Earth LLC.

Revenues are strong, the ground segment in particular is hot and the industry's key growth engine, video, shows little sign of slowing. Only the margins of the industry - such as the more questionable mobile satellite service ventures - give cause for concern, analysts say (see p. 25). Since the satcom sector typically lags behind the economy as a whole by 2-3 years, the recovery should start kicking in before there is much impact, says Peggy Slye, space and telecom director at Futron.

SES Chairman Romain Bausch says that he is even more optimistic than a month ago, when he was predicting no likely impact from the downturn (AW&ST Mar. 23, p. 43). Bausch notes his company managed a big refinancing of debt last month without any difficulty and at favorable terms. "The industry's not immune to the crisis," he acknowleges, "and if it continues through the end of 2010-11, we will definitely see an impact. But if the recovery starts in the second half and the market stabilizes by the first half of 2010, as most economists are predicting, then the satcom sector will be one of the few segments of the economy not to be touched by the crisis."

Executives even see some new growth opportunities they had not anticipated. One is a political push to extend broadband to rural areas as part of economic stimulus infrastructure initiatives.

For instance, this month the European Commission approved a €1.1-billion ($1.7-billion) program, as part of its economic stimulus package, aimed at bringing broadband to rural areas throughout the European Union by 2010. Although nothing in the decision specifies the use of satellites, it will be virtually impossible to reach the objective without them, says Bausch. This is good news for SES, which together with Eutelsat will start Europe's first mobile satellite service this spring using a Eutelsat satellite, W2A, to be launched on Apr. 3.

In the U.S., the Obama administration is planning a $7-billion stimulus project to bridge the digital divide. As in Europe, it does not specify utilization of satellites. However, Intelsat CEO David McGlade says there will be strong incentive to turn to broadband operators like Wild Blue, which is partly owned by the National Rural Telecommunications Cooperative.

The initiatives, if they go forward, would help consolidate the takeoff of satellite broadband, a long-time potential "killer application" just now beginning to show its promise. Commercial operators such as WildBlue, Hughes Network Systems and Telesat have posted strong growth in the past couple of years.

The arrival of a new generation of broadband satellites like ViaSat-1 and Eutelsat's KA-SAT in 2010-11 should accelerate the process even further by offering terrestrial-like speeds and rates and an order-of-magnitude increase in capacity compared to existing satellites, says ViaSat CEO Mark Denkberg. "All issues have by and large been addressed, and we'll see growth shifting now from the hundreds of thousands of subscribers to the millions," says Amnon Carr, managing director of investment banking at Jefferies & Co.

Other new killer applications are on the way, satcom executives say, particularly in video. Broadcasters are moving rapidly toward high-definition TV, which requires much more bandwidth than standard broadcasting. There are more than 115 HDTV channels in North America now, and 75 in Europe, satcom executives say. But three-dimensional TV, still in development, is coming along fast and will use even more bandwidth, says Giuliano Berretta, CEO of Eutelsat. "HDTV is an evolutionary development, 3DTV will be a real revolution," Berretta says.

In mid-March, Eutelsat demonstrated a 3DTV system in Rome, based on the MPEG 2 standard, that is earmarked initially for movie theaters. Some 30 theaters in Italy are equipped to test the system, Berretta says, and it will be tried out in homes, too - screen prices are similar to conventional flatscreen TVs.

The next phase, says Bausch of SES, will be to adopt MPEG 4 hardware being developed in Japan, technology that does not require the use of special glasses to perceive the 3D images, as does MPEG 2. SES executives note that 3DTV was featured in commercials during the recent Super Bowl, using capacity from SES Americom, and it is supposed to be rolled out by BSKyB in the U.K. this year. The executives think 3DTV will begin to make an impact on the industry in 3-5 years.

Such developments are part of the reason operators are investing so much in new satellite capacity, Bausch says. Between them, the big four fixed-satellite service operators - Intelsat, SES, Eutelsat and Telesat - have more than 30 spacecraft under construction.

However, analysts note that the satellite industry has seen plenty of supposed killer apps fizzle over the years, and 3DTV may have the same fate. And rural broadband could present a threat as well as an opportunity, says Dan Goldberg, CEO of Telesat. "If it's done at the federal level, the government stimulus may prove a boon. But if decisions are pushed down to the local level, there could be a distortion in competition that we might live to regret." Bausch says fear of distortion from EU regional politics is one reason SES has hesitated to invest in a dedicated Ka-band satellite.