Monday, May 25, 2009

Satellite Radio: Will It Bring Taiwan to the World and the World to Taiwan?

The Chinese government television network (CCTV) carried a brief article today on the upcoming Golden Melody awards. The Golden Melody awards, hosted by Taiwan, are intended to recognize the world's best in Chinese popular music, or Mandopop, over the course of a given year. As usual, Taiwanese musicians dominate the list of nominees. Since the days of Teresa Teng (), Taiwanese music has perhaps the most unique cultural trademark that the island offers to Chinese speakers around the world, especially in China itself. Although its soap operas are popular also, it's hard to find a mall, local pub, or KTV in China in which most of the music isn't from Taiwan. In fact, to much of China's 1.3 billion people, Taiwanese music is Taiwan.
  • {{NOTE: Click here for an overview of Taiwan's cultural influence in China, here for another perspective posted in April 2009 in the Shanghaiist, and here for a perspective that's resentful or skeptical of Taiwan's hold on China's music scene.}}
Despite Taiwan's dominance over the Chinese music market, XM and Sirius satellite radio's international counterpart -- Worldspace -- wouldn't bring Taiwan into its global broadcasting network. Partially owned and licensed by XM Radio, Worldspace wouldn't even market its music lineup in Taiwan. In fact, for those of us living in Taiwan and wanting XM Radio music, getting a Worldspace radio and subscription was extremely difficult. Worldspace's Asia-wide marketing office in Singapore wouldn't sell to listeners in Taiwan, and eventually one had to go through a circuitous route in the UAE.

Why wouldn't Worldspace touch Taiwan? Because senior management didn't want to do anything that could detract from winning Chinese government approval for broadcasting Worldspace satellite radio to the mass Chinese market. As part of its market entry efforts, Worldspace's uplink station for ASIASTAR's main beam for the Asia-Pacific region was located in Beijing, and Beijing's ChinaSat allegedly had rights to all content for listeners in the satellite's northeast beam. Worldspace's contract manufacturer for its best receivers has been Xian-based Tongshi Data, Ltd. Its receivers were adequate, but certainly no match for the ones that Taiwan's Wistron NeWeb manufactures for Sirius XM.

What was the end result of the company's refusal to bring Taiwan in to its network? The greater Washington DC-based Worldspace (actually called "1Worldspace" since July 2008) filed for bankruptcy in November 2008. In March 2009, U.S. courts approved the sale of Worldspace's assets for a paltry U.S. $28 million. Presumably, this includes ASIASTAR, Worldspace/XM's satellite that hovers above the Asia-Pacific region. The ASIASTAR satellite, which operates in a portion of the frequency spectrum often preferred by military users (L-Band), went into operation in 2000 and has a 12-15 year life expectancy (out to 2012-2015). ASIASTAR was up for auction, with bids due on January 26, 2009. It's not clear yet if ASIASTAR was included in that March 2009 court announcement. The satellite still has three to five years of life left.

Worldspace's Darker Side

Worldspace's delusional hunger for the China market and inability to see how Taiwan could have enabled access to the China shouldn't be a surprise. In fact, it's probably best that Worldspace kept its lips locked onto Beijing's rear end, and stayed away from Taiwan. Allegations of Al Qaida links had long hounded Worldspace since its initial public offering in the 1990s. A major shareholder in the entity that bought Worldspace's remaining assets in March 2009, the Singapore-based Yenura Pte Ltd, owned the pharmaceutical factory in Sudan that was allegedly manufacturing chemical weapons. The Clinton administration used cruise missiles to put the factory out of business in 1999.

The Other Side of Worldspace: Satellite Radio and Emergency Response

These allegations aside, Worldspace was much more than music. Maybe this partially explains why Beijing frowned upon Worldspace bringing Taiwan into its network. Media reporting in 2005 indicated that Worldspace partner XM Radio was teamed with a major Pentagon contractor to offer disaster warning, recovery and response (DWRR) services to military and civilian emergency responders around the world. This included links to an earthquake warning system to warn populations along coastlines of possible tsunamis. People often forget that before 2004, Taiwan had the record for most lives lost in the Asia-Pacific region due to a 19th century tsunami.

Under a related but separate program, Worldspace was a player in the Pentagon's Mobile Enhanced Situational Awareness (MESA) initiative, which offered a cost effective means of communicating globally in areas where no communications infrastructure exists or when national communications systems have failed. MESA also has been viewed as a cost effective means of beaming educational material, such as standardized English teaching curricula, to classrooms around the world. The system also is ideal for emergency broadcasting for fishing boats and other ships at sea, and has been tested and adopted for use on United and other airlines that cross the Pacific Ocean.

As an aside, Worldspace's website still reflects William Schneider as one of the few remaining members of its board of directors. Schneider served as chairman of the Pentagon's Defense Science Board under the Bush administration.

It's no wonder that satellite radio is very attractive for users in areas with limited communications, areas where there is a serious risk of communciations failures, or where music choices or emergency broadcasting are limited. Once you got your hands on it, Worldspace satellite radio was easy to use and easily proliferated. All one needed was a Tongshi receiver that was barely larger than your hand, an unobstructed view toward the south (from Taiwan), a U.S. $8.00 a month subscription, and line to some speakers or headsets. A terrestrial repeater network, either independent or overlayed onto existing networks, offers a redundant communications pathway.

Satellite Radio, Worldspace, and Taiwan: Good Idea But Bad Partner

So Worldspace wasn't the wisest choice as a partner for XM Radio, the Pentagon, or U.S. defense industry. Allegations of ties with Al Qaida, its zeal for the China market, and the fact that a Chinese state-owned company controlled Worldspace's ASIASTAR Northeast beam should have offered some clues.

This still doesn't negate the fact that satellite radio and Taiwan are made for each other. With Worldspace and its Chinese partnerships presumably out of the picture, maybe now is the time that the Ma administration or the private sector in Taiwan take a close look at satellite radio. Here are four reasons why:

Bring the World to Taiwan. Taiwan needs more international radio broadcasting. There is only one English radio station on the island -- ICRT. There is no Japanese station as far as I know, despite the island having more Japanese speakers than anywhere else outside of Japan (click here for a list of Taiwan's current radio stations). ICRT is OK, but there could be alot more for the 6000+ foreign English teachers on the island and other expats who may want some good rock, hip hop, or even country in their local bar or for partying at home. Countless Taiwanese may want more variety in music and news broadcasting, including NPR, BBC, Bloomberg, CNN, etc, etc. Even Taiwan's growing Indian population may enjoy Sirius XM's Indian content. Sure, you can get Sirius XM through the internet. But the buffering is a problem sometimes, and there's just something magical about a "voice from the sky" when listening to American radio beaming down from a satellite to a small receiver hanging on a balcony looking out toward the mountains of central Taiwan.

Bringing it back down to earth, an opportunity exists for ICRT, Kiss, UFO, or any station to add another dimension to its terrestrial broadcasting, and make a case to Taiwan's National Communications Commission (NCC) to license satellite digital audio broadcasting. For funding sources, one possibility could be to leverage the Ministry of Economic Affairs (MOEA) Industrial Cooperation Program (ICP). With billions of dollars in arms sales contracts being signed in the wake of the Congressional notifications that went forward last Fall, U.S. defense industry may be looking for ideas on how to satisfy their offset obligations that MOEA manages.

Bring Taiwan to the World. Taiwan dominates the global Chinese-speaking music industry. Worldspace could have leveraged the artistic and entrepreneurial talent in Taiwan, and used it as a platform for regional expansion instead of trying to go direct to China and shutting Taiwan out. Taiwan needs to share itself with the world, and satellite radio is an opportunity. So what did Worldspace have in mind in terms of its content to broadcast to audiences in China? According to Worldspace's annual report for 2008, only China National Radio, China Radio International, SEEC Media Group, Ltd. (HK based company with exclusive rights granted by authorities in Beijing to broadcast in China), and Hunan Radio & TV would able to provide content. Woo-hoo! That sounds like a really exciting menu after more than eight years of fruitless Worldspace negotiations with the Chinese government. Even Jaw Shao-kang's UFO network would have been threatening to Chinese authorities in Beijing.

Add Resilience to Taiwan's Communications Infrastructure. Taiwan is prone to earthquakes, typhoons, and other natural disasters and communications are sometimes taken for granted. However, the reality is that Taiwan's communications links with the outside world are pretty tenuous. There are two ways that communications get in and out -- undersea cable and satellite. Its current satellite communications rely on a small number of fixed ground stations, which then hook into the island's main telecommunications switching network. Taiwan has a half dozen or so undersea cables that are small spurs from major undersea trunk lines that by-pass the island. A rupture of one or two of these cables, such as what happened during the December 2006 earthquake off the coast of Kaohsiung, can have major effects on international communications, including internet access. The World Bank in 2005 assessed Taiwan to be one of the most dangerous places on earth, at least when it comes to natural disasters. And satellite radio is a good, cost effective way to make sure you're hooked up with the world when all else fails.

This doesn't even begin to address what would happen when someone or a group of people such as the PLA make it a point to take out Taiwan's fixed SATCOM sites and small number of undersea spurs. Nothing beats small, individual satellite radio receivers as a survivable, last resort means of communications. This, and the fact that it's really cheap, is why the Pentagon likes satellite radio. Maybe Taiwan could follow their lead...

Get Traction for Procurement of Taiwan's Own Communications Satellite. Taiwan has had a plan to procure a broadband communications satellite since at least 1999. There's a good military rationale for the satellite, as well as for homeland security. However, what's been lacking is a good business argument in which there could be at least some return on investment. Worldspace, backed by XM Radio, made the business investment into a satellite to cover the Asia-Pacific region. Having made some bad business decisions, Worldspace went bankrupt. However, one could be assured that Taiwan's entrepreneurial spirit, augmented by both ROC and U.S. government support, would lead to better results. Taiwan currently rents a single transponder on Singapore's ST-1 satellite, and plans for a second satellite deal on ST-2 appear to be on track, with launched scheduled for 4Q 2010. However, if the ST-2 satellite consists of only C- and Ku-band transponders, its uses for disaster relief and homeland security likely would be limited due to the requirement for large antenna dishes. ST-1 probably will hear its last transmission next year.

As an aside, other broadband satellites in the region that are used for homeland security and disaster relief purposes include Japan's Ka-Band KIZUNA satellite. Its high speed and large bandwidth enable "super high speed" internet-via-satellite, basically taking the WiFi capability one has a Starbucks and applying to a region as a whole. With a 45 centimeter antenna, internet downlink speeds of up to 155Mbps have been reported.

In short, goodbye to Worldspace. Its experience should be a lesson to American businesses. Doing business in China is OK. But the way to do it is via Taiwan. Beyond this, the Bush administration is lucky word never leaked that the Pentagon was using a satellite communications network that was partially controlled by China (the ASIASTAR northeast beam). With prominent figures in authoritative positions in the Pentagon serving on the Worldspace board of directors, senior Bush administration officials should have known better.

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