CHINA Aerospace International Holdings (CAIH) is forming a joint venture with its parent company, China Aerospace Corporation (CASC), to deliver as many as 100 high quality digital Direct to Home (DTH) satellite television channels to about 250 million households on the mainland with TVs. Full details have yet to be revealed, but CAIH says the US$200 million project will operate from a satellite supplied by partner Deutsche Aerospace. Following the news, CAIH shares rose 50 per cent in Hong Kong. Other participants in the project are reported to include China's Ministry of Radio, Film and Television, the State Education Commission, the State Science and Technology Commission and the computer company Beijing Wan Yuan. Besides managing the delivery of the satellite signals, the new joint venture, Beijing Sat-Way Information System, will produce some of the ground equipment. CAIH, the Hong Kong subsidiary of China Aerospace Corp, the commercial arm of China's former Ministry of Aerospace, said the market could be worth an annual $100 million in hardware and subscription fees if every Chinese household were to install a $300 digital signal decoder and satellite reception dish. Such optimism is not matched by analysts, even though CASC, through its Yuan Wang Group subsidiary, is a 16.7 per cent shareholder in Hong Kong-based APT Satellite, the operator of the Apstar satellite system, which launched the medium power Apstar 1a satellite earlier this month. APT Satellite will launch its next generation, $200 million Apstar 2R satellite early next year, which is being built by the American Space Systems/Loral group and should be capable of delivering DTH services to China, Hong Kong, Taiwan and selected markets such as India. Nevertheless, there could be a number of hurdles before a China-focused DTH project gets off the ground, according to Grantly Brown, vice-president Asia-Pacific region with CEA Pacific Rim, a merchant bank which specialises in media enterprises. 'Until now the Chinese authorities have taken a dim view of Direct to Home satellite TV services, so it will be interesting to see whether a company such as China Aerospace International with its affiliations can succeed in launching a service. We've heard of nobody else doing so, as yet,' he said. Satellite reception dishes for domestic use are currently banned in China, which has in recent years followed a policy of encouraging easily-controlled cable TV networks to blossom rather than giving individual households access to dozens of international satellite channels. Cable systems serving a million households at a time can be made inoperative at the flick of switch, whereas disabling millions of satellite dishes would be a far more complex procedure. As for pricing, the $300 for a home satellite dish and decoder would be a regional breakthrough. To date, the cheapest unsubsidised digital DTH receiver has not been seen in Asia for less than about $500. Thus significant subsidies to consumers would be needed to make a digital DTH system work. But even with funding set aside to subsidise a DTH network there could still be huge problems. Given that by the middle of next year there will be at least a half dozen satellites in the air with signals specifically covering China, China Aerospace International could be just one of several DTH systems aiming at China's 250 million TV-owning households. As for Hong Kong, there will not be a DTH market here for at least two years, after which Wharf Cable's exclusive rights to deliver subscription TV services should have expired. But, even then, the prospect of tens of thousands of 60-centimetre satellite dishes hanging outside the territory's apartments will be remote, if cable TV can deliver all the services it promises. Nevertheless there is a worldwide trend towards DTH satellite systems that can deliver 150 channels to your dish and decoder. Thus even the traditionally sluggish worldwide satellite co-operative Intelsat is launching two DTH satellites for Asia in late 1998 and early 1999. At a price of about $500 million for two digital DTH satellites, Intelsat is concentrating the second one on China, Hong Kong, Taiwan, Japan and Korea. Intelsat signatories Singapore Telecom, China Telecom (the new operating arm of China's Ministry of Posts and Telecommunications) and Korea Telecom requested such a satellite covering the region. A DTH system will probably be launched early next year in Taiwan where, although 3.2 million households already subscribe to cable TV, at least three major groups are showing an interest in DTH hardware and network operations, including the Acer Group computer company and manufacturer Sun Moon Star.