The Year of Living Dangerously" is a great 1983 film by Australian director Peter Weir about an Aussie journalist (Mel Gibson) covering political turmoil in Indonesia during the reign of Sukarno. He gets caught up in the chaos of an abortive Communist revolution and manages to escape, barely, with his life.
The movie came to mind when I was asked to write about the past year and the year ahead. Starting in late 2008, the Great Recession rolled across the economic landscape of the industrialized nations like a tidal wave, bringing the global financial system to the brink of collapse, destroying jobs and torching real estate markets. But if you were in the satellite business, it was less like a tidal wave and more like whitecaps whipped up by a stiff breeze. Euroconsult pegged 2008 revenue growth for GEO satellite carriers at 11% and forecast in September 2009 that the world will build and launch nearly 1,200 satellites in the next 10 years, 50% more than the last decade, for everything from communications and science to military and meteorology applications. NSR expects transponder leasing to grow 4% per year over the next decade, led by video distribution and DTH, cellular backhaul, Internet access and mobile satellite services. Spacecraft in orbit are not the whole industry – not by a long shot – but they signal its direction.
And it doesn’t sound so bad, does it? Yet when you talked to people this year, it was all worry all the time. Companies made preemptive cuts to costs, including headcount. They deferred investment decisions. New spending was out. Let’s just keep doing what we’re doing today and wait for the skies to clear.
It’s an understandable reaction. When you drive on the highway or motorway and an electronic sign says "Congestion ahead," what do you do? You slow down, even though there’s no congestion where you are. The funny thing is, you create congestion as the faster traffic behind you starts piling up.
In some markets and regions in our business, there was definitely "congestion ahead." Customers put off investment decisions and it rippled through the systems integration side of the business as well as causing the deferral of new service starts. The 2009 revenue figures for carriers, teleport operators and technology providers will doubtless show the effect. But compared to the memorable recession of 2001-2002, caused by the collapse of the telecom and dotcom bubble, this was a walk in the park. With financial markets recovering and early signs of returning vitality in the "real economy," it seems likely that 2010 will bring better times and put deferred projects back on line.
But here’s what I wish. I wish that, in the first quarter of 2009, we had all checked in with John Chambers, the CEO of Cisco Systems. When the telecom bubble burst in 2001, Chambers admitted publicly that his company was stymied. Founded in 1984 and growing up with the Internet, Cisco had never seen a serious recession. "We have no visibility," he said, meaning that the business plan had to be set aside while he and his team ran the company on gut feel. And what did Chambers’ gut tell him to do? Keep investing. Cisco kept putting money into R&D, product development and acquisitions right through the stomach-wrenching plunge into the abyss and back up the other side. In 2001, Cisco had $22 billion in revenue. That fell to $19bn by 2003, when the company’s headcount dropped by 10%. But by 2006, the company was doing $28bn a year, and two years later, Cisco racked up almost $40bn in revenue. That amazing growth surge was made possible, I believe, by decisions made while the company stared into the abyss. While everyone else pulled back, Cisco kept its head, invested wisely, and built a foundation for market dominance.
I know that some companies in the satellite business have kept their heads and continued investing, while others have not. As growth accelerates over the next few years, I expect the differences to become visible to us all.
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Robert Bell is Executive Director of the World Teleport Association, which represents the world’s most innovative teleport operators, carriers and technology providers in 20 nations. He can be reached at rbell@worldteleport.org
