Thaicom Plc has finally scrapped its plan to construct the Thaicom 9 satellite because of an unsettled regulatory dispute and a sharp drop in demand for satellite transponder capacity, spurred by the growing popularity of over-the-top (OTT) broadcasting platforms.
The decision followed a prolonged period of uncertainty about the operating fee structure of satellite businesses implemented by the government, causing Softbank, Thaicom's major customer, to cancel its agreement to rent 30% of Thaicom 9's transponder capacity.
The satellite TV business has struggled to adapt to rapidly developing technology and threats from OTT services.
Thaicom will not build any new satellites over the next three years, rather focusing on maximising its existing satellite resources that already meet market demand, said chief executive Paiboon Panuwattanawong.
The move is part of the company's business restructuring plan, he said.
As part of the plan, Thaicom ventured into other businesses late last year to create new revenue streams. The new businesses include a mobile integrated TV content digital platform and a maritime transport communication platform.
"The satellite business is still an interesting industry, but its technology and business model have evolved," Mr Paiboon said.
Thaicom will not quit the satellite industry, but there will not any construction or acquisition project until 2021, he said, adding that the company will be more focused on maximising operations under all existing satellite resources.
Currently, Thaicom operates three satellites under a concession regime: Thaicom 4 or iPSTAR, a broadband satellite; and Thaicom 5 and Thaicom 6, which are broadcast satellites.
Thaicom 4 is in the orbital slot at 119.5 degrees east and Thaicom 5 is at 78.5 degrees east. The concession of Thaicom 4 and 5 under the Digital Economy and Society Ministry will expire in 2021.
Today, Thaicom also operates Thaicom 7 and 8 under a single licence from the National Broadcasting and Telecommunications Commission (NBTC), which only requires a 5.75% licence fee payment.
Previously, Thaicom planned to sign an agreement to hire an international satellite builder by early 2016 to construct Thaicom 9, which was to be launched next year to replace Thaicom 4.
But the company suspended its plan to hire a satellite builder in early 2017 after Deputy Prime Minister Prajin Juntong began studying ways to revamp the structure of the satellite industry.
More importantly, the government has forced Thaicom 7 and 8 to operate under the old concession system instead of a licensing regime, reasoning that the 5.75% licence fee payment to the NBTC was too low, compared with the 20.5% revenue sharing arrangement under the concession regime.
The government has said it needs to ensure greater benefits from the space economy for the public.
Thaicom has negotiated with government representatives several times but failed to resolve the dispute over Thaicom 7 and 8.
Mr Paiboon said the uncertainty over the Thaicom 9 had prompted other customers apart from Softbank to cancel their agreements with Thaicom, including satellite TV operator CTH and the state enterprise TOT.
"The satellite TV ecosystem has rapidly changed over the last two years, and launching a new satellite is no longer worth it," he said.
Thaicom 4 and 5 have lifetimes of another four years, while Thaicom 6 has 10 years left and Thaicom 7 and 8 each have 18.
Mr Paiboon said that going forward, low earth satellites, orbiting 1,000 kilometres above the earth, might become more popular than those operating at 30,000 kilometres and above.
With their lower range, low earth satellites can ensure greater efficiency of their signal transmissions back to earth.
He said low earth satellites can also be adopted as base stations for other communication systems.