february 2004 worldwide satellite magazine · long beach, california june 1-3, 2004 now going on...
TRANSCRIPT
SATMAGAZINE.COM
2Back to Contents
Febuary 2004
CONTENTS TABLE OF
Click on the title to godirectly to the story
COVER STORY
12/ WhitherBroadband: What’s
in Store for 2004
24/ Dubai’s Showtime:Worth $ 1 Billion+
19/ VSATTechnology: WhichWay to Go?
3 / Note from the Editor
4 / Calendar of Events
5/ Featured Event: ISCe 2004
8/ Industry News
10/ Special Event: NewSat Launch
11/ Executive Moves
29/ Financial Snapshot: EUTELSAT
34/ New Products
35/ Market Intelligience: Iraq: The New ‘Killer App’
(Rebuilding a Country)
(presented by the Global VSAT Forum)
36/ Advertisers’ Index
REGULAR
Bruce Elbert outlines thenew strategies forsuccessful broadbandmakret rollout.
15/SES Global: StillLooking to Buy
FEATURES
2004 may be the yearbroadband satelliteservices finally takesoff.
An exhaustive interviewwith SES Global EVPRobert Bednarekprovides an update onSES Global and it plans for2004 and beyond
22/ Pilgrimage toSri Lanka
By Peter Escher
.
DEPARTMENTS
27/Broadband SatelliteServices: AnotherYear, Another Strategy
By Bruce Elbert
VIEWPOINT
By Virgil Labrador By Chris Forrester
FEBRUARY 2004
By Frank Francyzk
Satellite entrepeneurPeter Escher recounts hisvisit to Sri Lanka to meetthe father ofcommunication satellites,Sir Arthur C. Clarke.
Frank Francyzk examinesthe decision-makingprocess involved inselecting and designing aVSAT system.
An incisive look intoShowtime-- the MiddleEast’s most successful payTV platform.
By Chris Forrester
SATMAGAZINE.COM
3Back to Contents
Febuary 2004
Satnews Publishers is theleading provider of informationon the worldwide satelliteindustry. Fore more informa-tion, go to www.satnews.com.
Published monthly bySatnews Publishers800 Siesta Way,Sonoma, CA 95476 USAPhone (707) 939-9306Fax (707) 939-9235E-mail: [email protected]: www.satmagazine.com
Contributing Writer, Africa
Jill Durfee([email protected])Advertising Sales
Joyce Schneider([email protected])Advertising Sales
Copyright © 2004Satnews PublishersAll rights reserved.
EDITORIALSilvano PaynePublisher
Virgil LabradorManaging Editorand Editor, The Americas
Chris ForresterEditor, Europe, Middle Eastand Africa
Stuart P. BrowneEditor, Asia-Pacific
John Puetz, Bruce ElbertDan Freyer, Howard GreenfieldDan MakinsterContributing Writers,The Americas
Peter Marshall, Roger StanyardContributing Writers, Europe
Baden Woodford
NOTE FROM THE MANAGING EDITOR
To Mars and Beyond...
Although not quite as dramatic as PresidentKennedy’s “Our Urgent Tasks” speech before
a Joint Session of Congress in 1961 when heannounced the goal of landing a man in the moon ,President Bush’ announcement of returning to themoon by 2020 and eventually launch missions to Marsand beyond last January 14 before a packed
auditorium at NASA Headquarters in Washington was as significant andfar reaching.
The speech was well received here and abroad, eliciting favorablereactions from space agencies and companies in Europe and even Asia.Unlike the first Space Program, President Bush said this is a “journey, nota race.”
As it is now commonly known, the U.S. Space program whichaccelerated in the 60s has had many commercial benefits, not the least ofwhich is the development of a global commercial satellite industry. Afterexperiencing the severest downturn in its history in the last few years, arenewed and reinvigorated U.S. Space program might just be thejumpstart the satellite industry needs to take it to the next level.
“We will give NASA a new focus and vision for future exploration. Wewill build new ships to carry man forward into the universe, to gain afoothold on the moon, and to prepare for new journeys to worlds beyondour moon,” said President Bush.
It is this kind of spirit and visionary thinking that have inspire people likeArthur C. Clarke , a keen space enthusiast, to conceive of thegeostationary satellite in 1945 ( see article by Peter Escher in this issuewhere Clarke proudly shows him photos of Mars taken by NASA).
The poet T.S. Elliot once said that “between the vision and reality, fallsthe shadow.” Granted that there is a lot to be done to make this newvision a reality. But we have been there before and we made it a glorioussuccess. It is hard to imagine the end result of this second wave will beany different.
SATMAGAZINE.COM
4Back to Contents
Febuary 2004
CALENDAR OF EVENTS
Don’t Miss ISCe 2004:
June 1-3,2004 Long Beach, CA, USA
ISCe is the premier annual conference and expo highlighting dual-use satellite-basedservices, applications and innovative technologies for the commercial, civil and militarysectors. Key program highlights for ISCe 2004 include: Satellite Users Forum; Defenseand Security Forum ; Global Navigation Forum ; Next-Generation Capabilities Forum ;Satellite Entertainment/DBS Forum ; U.S.-Asia Satellite Business Roundtable ; GPS Tutorials ; SatelliteCareer Day Program ; Innovation Gateway Pavilion.
For more information, please visit www.isce.com or contact Gina Lerma of Hannover Fairs USA, Inc. at (310) 410-9191 or [email protected].
\
February 10-13 Moscow, Russia Cable, Satellite, TV & Radio Broadcasting, Broadband (CSTB)Project Manager - Anastasia Kasatkina Exhibition manager - Victoria Senukhinaphone. +7-95 7377479 fax +1-95 1455133 E-mail: [email protected]: http://www.cstb.ru
February 17-19 Johannesberg, South Afirica Satcom Africa 2004Alwyn Peacock, Telemarketing ManagerTel: +27 11 463 2802 Fax: +27 11 463 6000E-mail: [email protected]://www.satcomafrica.com
February 23-24 Yarra Valley, Australia NewSat Launch ConferenceKimberly Palmer, Brazen Productions (in behalf of Multiemedia)Tel: +61-3-9690-7022E-mail: [email protected]
February 25-26 Brussels, Belgium Broadband via Satellite ConferenceTel: +44 (0)20 7098 0400Fax: +44 (0)20 70980401E-mail: [email protected]
FEBRUARY 2004
SATMAGAZINE.COM
5Back to Contents
Febuary 2004
FEATURED EVENT
ISCe 2004: Conference to HighlightKey Industry IssuesLong Beach, California June 1-3, 2004
Now going on its third year, ISCe 2004 in LongBeach California is a must-attend event that featuresleading industry executives and decision makers in athree-day conference and expo fromJune 1-3, 2004.Organized byHannover Fairs,USA, one of theleading eventorganizers in theworld, ISCe hascarved a niche as thepremier annualconference and expohighlighting dual-use satellite-based services,applications and innovative technologies for thecommercial, civil and military sectors.
The Conference component of ISCe is organized in aforum format will be tackling key issues affectingvarous segments of the satellite industry including:
• Satellite Users Forum
••••• Defense and Security Forum
••••• Global Navigation Forum
••••• Next-Generation CapabilitiesForum
••••• Satellite Entertainment/DBSForum
••••• U.S.-Asia Satellite BusinessRoundtable
••••• GPS Tutorials
Richard DalBello Capt. PeterNeffinger
Dean Olmstead Keith Hall
••••• Satellite Career Day Program
••••• Innovation Gateway Pavilion
Commenting on theForum format of theconference, JoachimSchafer, President ofHannover Fairs USAsays: “The forumdesign is a productof discussions with
both our partner organizations andattendees from last year’s show. It provides attendeeswith an easy way to learn about various aspects of aparticular topic and provides presenting companieswith a platform to reach decision-makers in a particularmarket segment.”
Speaking at the conference will be leading executivesand personalities in the industry. To date, confirmedspeakers include Dean Olmstead, President and CEO ofSES AMERICOM; Richard DalBello, President of theSatellite Industry Association; Captain Peter Neffinger,Commanding Officer and Captain, Port of Los Angeles/Long Beach; and Keith Hall, Vice-president of BoozAllen Hamilton (and former Director, NationalReconnaissance Office), among others.
The conference include other special sessions andactivities designed to generate business and promotenetworking. “Our extra-curricular activities that aredesigned to be the blueprint for winning some of themost important and sought-after contracts andpartnerships in the market today,” said Art Paredes,
SATMAGAZINE.COM
6Back to Contents
Febuary 2004
FEATURED EVENT
SM
Vice-President and General Manager of West CoastOperations for Hannover Fairs USA.
“We have added on another dimension to ourconference program by increasing the number ofsessions either dedicated to or of interest to end users,”added Schafer. “While this move will obviously bebeneficial to the growing amount of end users thatcome to ISCe every year, it will also help serviceproviders understand what needs they should beaddressing with their end user communities,” he said.
An example of this innovative and business-drivenapproach to the conference is the session on “GalileoOpportunities for U.S. Providers” which will explorebusiness opportunities in the European GPS systemthat is currently being developed and built. There willalso be a tutorial session on GPS to be led by KeithMcDonald of Navtech Seminars.
SPONSORSHIP/ REGISTRATION
To get more information on sponsorshipopportunities or to register, visit www.isce.com orcontact Gina Lerma of Hannover Fairs USA, Inc. at(310) 410-9191 or [email protected].
With the unique conference format and the participationof key industry leaders, ISCe 2004 promises to be aexciting event where you could learn more about theissues affecting the industry and identify opportunities,network and do business all at the same time.
For more information on sponsorship or registration,visit www.isce.com or contact Gina Lerma of HannoverFairs USA, Inc. at (310) 410-9191 or [email protected].
SATMAGAZINE.COM
8Back to Contents
Febuary 2004
INDUSTRY NEWS
New Report Out on Technology, Business, andRegulatory Issues of Telecom and ICT
Salamander Systems Inc. has released a report on thetechnology, business, and regulatory issues
influencing the Telecommunication Services (Telecom)and Information-Communication-Technology (ICT)industries. The International TelecommunicationsUnion (ITU) Technology Forum, held every four yearsin Geneva, is the pre-eminent world event that bringstogether industry leaders and representatives fromforeign governments into a single venue to fosterdebate and discussion on environmental trends in theseconverging industries. The 87 page report synthesizesthe keynote speeches, plenarysessions, panel sessions, and
formal presentations and bundlesthe topic areas with secondary research on the threekey themes: Broadband technology, Business modelsand strategies, and Regulation and market liberalization.Technology trends developing within the Telecom-ICTindustries are of major significance to satellite networkand service providers, given that many of the issues areequally important and have ramifications on satellitenetwork utilization and new service deployment. Theseramifications are viewed as a competitive threat to someorganizations, and as a complementary opportunity toother organizations involved in bridging emergingTelecom-ICT standards and specifications over satellitenetworks. The context of the report is about thiscomplementary ecosystem and about getting back tobusiness and validating a business initiative by
managing the environmental variability and uncertaintywith sufficient information to make informed decisions.
For example, many existing satellite network serviceproviders have struggled with the development of aprofitable business model for deploying InternetProtocol (IP) based VSAT satellite networks directly toconsumers. The “technology-fit” decision is usuallythe most difficult for many of these organizations, giventhe demands for provisioning the variety of Internetapplications to the end user in a transparent broadband
connection over satellite.Protocol compatibility, technologyfunctionality, network
maintenance and systemscalability are important considerations and suchcriteria need to be applied in considering each VSATalternative. The uncertainty in the decision can also beminimized by considering additional business criterialinked to an organization’s business model and itsability to bundle multiple services for minimalincremental investments, to offer end-user devices thatare in-line with the end-user’s ability to pay, andperhaps most importantly, to satisfy the end-user’sexpectations of a broadband experience.The report highlights the significant investments madeby large Telecom-ICT enterprises in buildingconverged, multi-service broadband and mobile accessnetworks with the intent to provide bundled IP services,and how the Wi-Fi (Wireless Fidelity) accesstechnology is being considered as the industry growth
SATMAGAZINE.COM
9Back to Contents
Febuary 2004
engine. This trend is a direct result of the disruptivenature of the Internet as a technology influencing thetransportability of all forms of information over an inter-networked global society that seeks conveniencethrough mobile and portable network access.
Industry success is no longer measured by market sharealone, but by profitability, and in this context, byrevenue growth per subscriber (also known as ARPU orAverage Revenue Per User). ARPU improves when theindustry value chain becomes synchronized, a processthat is increasingly more complex given the accelerationin technology innovations and the frequent applicationof technology-based solutions looking for marketproblems.
Such an analogy could be applied to VSAT technologydevelopments, as there has been a significantdevelopmental effort to bridge in IP networktechnologies and optimize them over satellite, while atthe same time, there have been significantdevelopments in extending existing broadcast standardsto incorporate two-way interactivity. The appropriatephilosophy and technology is best determined byreturning to the market and understanding the need andhow this market need fits in with the overallorganizational capability to deliver a solution.
To help decision makers involved in VSAT technologydeployments, the report introduces the DVB-RCSstandard, the issue of conformance and interoperability,and develops a framework of criteria to consider inevaluating the alternatives. From informal interviewstaken with telecommunication operators and serviceproviders, it was evident that DVB-RCS and compatibleDVB-RCS technologies are dominating VSAT networkdeployments today.
The report costs US$500 and is provided in apersonalized electronic form (PDF) to the organization.The report can be ordered by contacting Frank Franczykat [email protected]. For further details, a managementsummary with Table of Contents is available at http://www.salsys.ca.
INDUSTRY NEWS
SM
SATMAGAZINE.COM
10Back to Contents
Febuary 2004
SPECIAL EVENT
New Broadband Service, NewSat to be Launched atTwo-Day Industry Conference in Australia
A new two-way satellite broadband service called“NewSat” will be launched this month in a two-day
conference to be held in Australia’s wine region of theYarra Valley from February 23-24. The conferencetheme is on “The Future of Communication” and over100 representatives from industry and the media areexpected to attend.
NewSat is a new division of Multiemedia--one of theleading satellite service providers in Australia. It aimsto fill a void in the market for next generation Video,Internet, Voice over IP and data communicationsservices for organizations not adequately served bytraditional broadband technologies such as ADSL, ISDNand cable.
NewSat willhave thecapability todeliver high-speedcommunicationsto 60% percentof the world’spopulation,providingaccess toNorth and South East Asia, the Indian sub-continent, China, the Middle East, SouthernAfrica and Australia.
It has alredy secured a $5 million deal, whichcould be worth $ 40 million over the life of thecontract, with the United Sates Agency forInternational Development (USAID) for sites acrossIraq as part of its post-war enforcement and governanceprogram.
SM
The two-day conference has attracted sponsorsrepresenting major players in the industry. Conferencespeakers include:
--Scott J. Sprague, Senior Vice-President, Global Sales, New Skies Satellites
--Mark Dankberg, CEO and Chairman of the Board, ViaSat, Inc.
--Patrick Matthews, President and CEO, SeaTel
“You can’t beat reality. Two- way satellite is suddenlythe number one option for companies and this event hascaptured all the majors,” said Adrian Ballintine,Multiemedia founder and CEO.
For more information on the event, contactKimberly Palmer, of Brazen Productions (in behalf ofMultiemedia) at Tel: +61-3-9690-7022 or E-mail:
For more information on Multiemedia and NewSat go to:www.multiemedia.com
By Dan Makinster
SATMAGAZINE.COM
11Back to Contents
Febuary 2004
EXECUTIVE MOVES
Verdisys Appoints DavidAdams as President andCOO
The board of Houston-based oiland gas industry satellite servicesprovider Verdisys, Inc has electedDavid Adams as its President andChief Operating Officer.
He has a strong background indrilling operations in the US andoverseas. He has also specialized indeveloping new drilling technologyapplications. David has a degree inpetroleum engineering from theUniversity of Texas and isregistered Professional Engineer.
SM
The Board of Directors of DigitalAngel Corporation announced thatit has elected Kevin N. McGrath, 50,to the positions of President andChief Executive Officer of theCompany, replacing outgoing CEOVan Chu, 57.
Prior to joining Digital Angel,McGrath spent16 years at ElSegundo, CA-based HughesElectronicsCorp., including
seven years asChairman of DirecTV Latin America,a Hughes subsidiary based in FortLauderdale, FL. McGrath was aHughes Corporate Vice Presidentand a member of its ManagementCommittee.
Digital Angel’s Board ElectKevin McGrath as Presidentand CEO
Kevin N. McGrath
Mabuhay Satellite AppointsMark P. Gilroy as COO
Philippine-basedsatellite operator,Mabuhay hasappointed Mark P.Gilroy as ChiefOperating Officer.Mark hasextensiveinternationalexperiencein the satellite industry and waspreviously Vice-President andGeneral Manager of Loral Cyberstarbased in Singapore. Mark will beresponsible for the strategicdirection of the company and allsales and marketing activities.
Mark P. Gilroy
Crystal Computer Corp.Hires Director of Operations
William (Bill)Kaufmann hasjoined CrystalComputerCorporation inthe newlycreated positionof Director ofOperations. Hewill be responsible for managingCrystal Computer Corporation’soperations and supportdepartments while workingclosely with the research &development and sales& marketing departments.
Bill Kaufmann
SATMAGAZINE.COM
12Back to Contents
Febuary 2004
COVER STORY
Whither Broadband?What’s in Store for in 2004
By Virgil Labrador
After several rollercoaster years
which has seenbroadband satellite servicesrise and fall from being thenext “killer app” that willsave the industry to being
one of the biggest busts the industry has ever seen(with the multibillion dollar failures of the Teledesicand Astrolink projects). 2004 may be the year in whichbroadband finally turns the corner.
For starters, the Gilat-backed StarBand Communicationhas emerged from Chapter 11 Bankruptcy protectionlast November and together with Hughes’ Direcway arenow competing in a field that will see new entrants andintense competition this year.
Starband also settled it’s dispute with erstwhile partnerDBS operator Echostar Communications and renewedits marketing efforts with new residential service planspricing as low as $39.99 per month. In a companystatement, Starband said that it’s capital structure hassignificantly improved with the conversion ofapproximately $113 million of bank debt to equity. Inaddition, approximately $90 million of debt to GilatSatellite Networks Ltd. will convert to equity and a $14million post-emergence note. Further, StarBand andGilat have entered into a new technology and hardwaresupply agreement providing for $7.5 million inadditional financing.
“The last year has generated a number of importantgains in penetrating the small and medium enterprisesector for broadband network services, while othermarket segments have stalled or have only seen slightgrowth,” stated Patrick French, Senior Analyst ofNorthern Sky Research and author of the study“Broadband Satellite Markets.”.
“Yet, broadband satellite markets are on the verge of apotential revolution with the expected launch of at leastthree next generation platforms in 2004. Success will notbe automatic with these new services, but the industryhas learned from its mistakes of the past and knows theprice points it needs to meet, the service levels thatmust be offered, and where it can best compete againstother broadband terrestrial offerings.”
Indeed, given the problems that broadband satelliteservice providers have faced in the past, it has cededvaluable market share to cable and other terrestrialproviders such as ADSL and DSL who have madesubstantial inroads especially in highly populatedurban areas. Leslie Taylor and Associates projectedthat Wireless’ (including satellite) share of the U.S.Broadband market to be about 14 % compared tocable’s 45% in 2004(see table 1).
No doubt new market entrants will help gain more
Projected U.S. Broadband Connections (in millions)
Type of Provider 2002 2004
Cable 8.5 13.9
DSL 6.4 12.3
Wireless 1.9 4.3 (including satellite)Total 15.68 30.35Source: Leslie Taylor and Associates (Presentation atPTC 2002)
SATMAGAZINE.COM
13Back to Contents
Febuary 2004
COVER STORY
broadband market share for satellite-based services.Wildblue Communications--which is backed byINTELSAT, Liberty Media, Telesat and Kleiner PerkinsCaufield and Byers and the National RuralTelecommunications Cooperative (NRTC) --is goingafter the rural market in order to avoid competing withwell-entrenched terrestrial services in the urban areas.
Brad Greenwald, VPof Marketing forWildblue estimatesthat there are about25 million ruralhouseholds (about1/4 of the totalnumber ofhouseholds) with a 50 percent internet penetrationin the U.S (compared to 65 percent penetration in urbanareas). In addition, Wildblue is aiming at the estimated2.3 million small home/home offices (SOHO) market thatare not adequately served by DSL or Cable modems.
Greenwald said that Wildblue is on schedule for alaunch of their service in the second half of 2004. Theywill be using ka-band capacity on Telesat’s ANIK F2(111 degrees W) which is scheduled for launch on May21, 2004. Wildblue will follow-up ANIK F2’s launchwith a launch of its own satellite, Wildblue 1 next year.
Meanwhile, another service aggressively entering themarket is SES Americom’s Americom2Home DBS andbroadband service which was originally announced inApril 2002 to launch this year. The projected launch isexperiencing delays due to the pending FCC decisionon its application for 105.5 degrees W slot. Theproblem is the established model of having 9 degrees ofseparation between operators, and grumbles fromDirecTV over possible interference.
However, SES spokesperson Monica Morgan said thatthey are very optimistic and are encouraged by theprogress they are making. Sergy Mummert, SESAmericom Vice-President for Americom2Home, said thatas far as they are concerned they have alreadylaunched the service in August 7, 2003 by virtue oftheir agreement with Echostar, when Echostar IXsatellite was launched. Echostar is providing the firstcommercial Ka-band spot beam capacity on thatsatellite located at 121 degrees W.
Wildblue modem and dish
What is not in doubt is SES Americom will be launchingthe Ka/Ku-band AMC-15 satellite to be located at 105degrees W for the Americom2Home service in August2004 from Baikonur Cosmodrome.
Other initiatives include Hughes’ $ 1.4 billion Spacewaybroadband satellite service in 2004. Spaceway aims atthe SOHO and eventually consumer markets and willintegrate with existing land-based and local wide areanetworks.
Meanwhile in Europe, the SES Global, Gilat and Alcatel-backed Satlynx two-way broadband service is adaptingthe same strategy as their counterparts in NorthAmerica of going after the underserved rural and SOHOmarkets are well underway in making inroads in differentcountries in Europe. In January 2004 Satlynx teamed upwith networking leader Cisco to offer Wi-Fi services viasatellite.
In other parts of the world, Asia, which is projected tobe the world’s largest market, will see the launch in thesecond quarter of 2004 of the highly-touted iPSTARbroadband satellite by Thailand’s Shin Satellite Co.This will be Asia’s first commercial satellite dedicated tobroadband applications.
Shin Satellite does not necessarily see the headstartterrestrial services has had over satellite-basedbroadband services as a negative. “We feel thatsatellite broadband will ‘piggy back’ on the growth ofmainstream terrestrial broadband growth and will itselfnot be the main driver,” according to YongsitRojsrivichaikul, VP and Chief Commercial Officer ofShin.
“Satellite broadband will help fill in the demand createdby the telcos in the unserved and underserved marketsor so called ‘blind spots’. However, existing‘conventional’ satellites, even when used with newgeneration ground systems, can only address part ofthe market unserved by ADSL due to its high coststructure and limited bandwidth. Because iPSTAR’splatform provides a significant drop in bandwidth costand is large scale (45 Gbps), we are confident thatiPSTAR will open up new markets for the broadbandsatellite industry that has never before existed, addedYongsit.
SATMAGAZINE.COM
14Back to Contents
Febuary 2004
COVER STORY
In addition to managing editor ofSATMAGAZINE, Virgil Labrador isthe editor of the subscription dailyservice, Satnews Daily and the freeweekly website, Satnews Online. Hehas worked in various capacities inthe satellite industry for the last 14years, most recently as marketing director of the AsiaBroadcast Centre in Singapore--a full-service teleport.He holds a master’s degree in communicationsmanagement from the Unviersity of SouthernCalifornia. He can be reached at [email protected]
The competition for satellite services worldwide isheating up. However, the threat to satellite broadbandservices may not just come from cable and otherterrestrial providers. The European Union announcedin January 2004 that it will fund a 5.6 million Euro (aboutUS $ 4.7 million) project to study the possibility of“high-altitude platforms” (HAPs)-- which will consist ofairships or solar-powered aircraft, which will bepermanently located in the skies at an altitude of 20kilometers (above airplane routes but below satellites),providing high speed broadband internet connections.The project, dubbed Capanina, is part of a larger projectaimed at providing “broadband for all” led by theUniversity of York, England.
Satellite, however does have distinct advantages overother broadband delivery systems. “No doubt forcertain applications, such as networks with hundreds orthousands of sites, satellite will always be the bestsolution. But true growth will come from competingmore for those clients that were previous ceded toterrestrial service providers without a fight,” said Northern Sky Research’ French.
Wherever the competition is coming from, satellitebroadband seem to be back on track and will be slowlybut surely gaining market share. In total, servicerevenues for the broadband satellite market areexpected to increase two and a half times between 2003and 2008, reaching US$5.2 billion according to NorthernSky Research. In addition, even though the number ofsatellite ISP sites will peak during the forecast period,revenues for this sector will continue to grow becauseof increasing bandwidth demand from individual ISPs,according to the Northern Sky Research study.
No matter what happens, 2004 will be an interestingyear to watch for satellite delivery of broadbandservices. SM
SATMAGAZINE.COM
15Back to Contents
Febuary 2004
FEATURES
SES GLOBAL: Still Looking to Buy
By Chris ForresterSatMagazine Editor forEurope, Middle Eastand Africa
As we enter 2004 Telenor’ssatellite arm remains up for sale
and there’s as yet no ‘white smoke’as to which bidder has won thisScandinavian maiden’s hand. At thetail end of 2003 SES Global’s EVPRobert Bednarek was staying silenton the specifics (as was New SkiesSatellite’s Dan Goldberg). Bothoperators declined to elaborate oneither of their bids or how Telenor’sin-orbit satellites and groundfacilities might be absorbed intotheir own fleets. Both New Skiesand SES could have been singingfrom the same song-sheet: Theyboth talked about shareholdervalue, about capital efficiency andthe ease – or otherwise – of pickingup a few orbiting assets withestablished clients on board, or thealternate of developing a marketfrom scratch.
However, Robert Bednarek washappy to outline SES Global’sfurther consolidation strategy. “Wecontinue to look all over the globefor opportunities. We think as moresystems privatise or the originalowners look to exit or replace asatellite, then each of thoserepresents a good time to look for apartner. If the satellite isn’tcompletely full then that makes thesituation even more urgent. So we
continue to entertain such ideas,and look. First though, we look tosee whether a deal wouldstrengthen our local affiliatewhether AsiaSat or StarOne oranywhere else. AsiaSat will be thefirst to tell you that important asthey are they are certainly notNumber One in every market in theirregion. Asia is by no means amonolithic market and we continueto look at various sub-marketsalthough I wouldn’t say the onlyroute is [to acquire] via AsiaSat.”
Bednarek said that the ‘five year’cycle was crucial from some smalleroperators, when a player was some5-6 years out from replacing asatellite and yet still had sparecapacity on board. “Whereacquisition makes sense we will beactive, and where organic growth isthe logical step forward we’ll adoptthat role. We sort the world intothree major segments. The first issatellites in orbit; the second istraditional value-added resellers likeGlobecast and the others whosemain job is to resell capacity. Theyhave bought transponders on alease and re-lease slices of thatcapacity. The third, is a group thatis inventing new industries. Theymight be new distribution paths, likein the VOD space or video-to-mobile. They are not value-added inthe traditional way we look at ourindustry. So our focus is onreinforcing our primary mission,looking at what I call the ‘end to’,and if this means paying attentionto these emerging-type services and
acquiring in that space makes moresense than to organically grow ourown, then this makes sense. Butgoing after re-sellers [foracquisition] is not a high priority forus. Remember, we are the maindistribution paths for the likes ofNews Corp or Viacom. They use usnot just for DTH but for distributingto cable. They are all experimentingwith other distributiontechnologies, whether streaming tobroadband or wireless, mobile…..We want to make sure, as thesetechnologies emerge, that we canhelp these major clients do the jobthey want. Right now broadband isbeginning to tip the scale andbecome really interesting for all ofus.”
But any major player is having tomake those 5-6 year decisions now,on satellite design, position, sizeand end use in new markets. Weasked Bednarek what his view ofSES was for 2007-2008: “I am fondof saying this is an interestingbusiness! We have to scope a
SES Global’s EVP Robert Bednarek
SATMAGAZINE.COM
16Back to Contents
Febuary 2004
FEATURESFEATURES
business that’s not just 5 years outbut is closer to 10 years out. It takes3 years to build a satellite, and othercouple or three years to establish itin its marketplace and then the realeconomic recovery on the craftbegins. So before you know whereyou are you are predicting 7 and 8years down the line, and imaginetrying to second-guess the mediabusiness 8 or 10 years from now?Our vision is additive, where little ofwhat we see today will disappear.Video distribution and DTH will stillbe here, cable will still be here, Ithink the regional markets willbecome more robust as they pickthemselves up. Markets like Chinawill be heavy users of multi-channelvideo, although South America
might continue to lag. So I don’t seeany reduction. The introduction ofMPEG4 will make a change withfurther compression but that will beoffset by HDTV and the demand forhigher image quality. In other wordswe are not going backward. Thethere’s broadband which I fullybelieve will be used to deliver video,it will become more pervasive, andsome will get delivered terrestriallybut satellite definitely has a role toplay, especially in the waybroadband looks like a broadcastingmedium. The whole video-on-demand notion is going to explode.This may not be in the classic senseof sending me this or that movie orshow. It is more like the internetmodel where there is a vast library
which is tied into a highly efficientdelivery method. Using the TV andset-top box together, and the mainchange which will shift us up a gearis the use of dynamic storage atevery level in the distribution chain.At the moment the user controls thehard disc and space is tight, butthat’s changing, and pretty soon weare going to get people offering tofill our hard disc with specialisedcontent, suggesting different thingsto us. Why shouldn’t someone, invideo, echo the role of thesupermarket making all sorts ofsuggestions as to how we might fillour basket? Instead of competingby owning a full time channel theymight compete with more interestingofferings. We are already seeing
SATMAGAZINE.COM
17Back to Contents
Febuary 2004
FEATURES
FEATURES
FEATURES
FEATURES
some outfits experimenting withthese technologies. ESPN, forexample, is already experimenting inbroadband and everything thatgoes out on broadband can beadapted to video on demand. ThePVRs are being enthusiasticallysupported by the likes of Echostarand News Corp, and I see no end tothe possibilities. Conventional 24/7channels will still be with us butsatellite is the most efficient way offilling those storage devices sothere’s some opportunity for us inthat space.”
In comes Worldsat
Last year SES announced‘Crosslinks’, its plan for a globaldivision to exploit some of SESAmericom’s trans-Oceanic assets.Not helped by a Scottish web-sitedevoted to cross-dressingfetishists, the name has beenchanged to Worldsat, and is beingrun as a business division of SESGlobal with offices in Princeton NJ,London and Singapore, as well asrepresentative offices in SESGlobal’s affiliates in Beijing,Bogotá, Hong Kong and Rio deJaneiro. On January 15th SESannounced that Worldsat hadordered its first satellite fromAlcatel, dubbed Worldsat 3, fordelivery at the end of 2005 and willbe located at 172 deg E.
Bednarek says Worldsat will helpthem focus more attention adifferent area of their business.“Astra, and to a certain extentAmericom, are very much focusedon land-mass satellites. It’s muchthe same with all our affiliatebusinesses, like StarOne, or AsiaSator NSAB. They are all focusing
their activity on land-basedactivities and this is our primarybusiness. But as part of theAmericom purchase we inheritedsatellites, like AMC12 and 13 andAAP over Asia, that have adifferent role. We haverecognised their Oceanic role isdifferent and are treating them asa separate asset with differentsales cycles and prospects. Sowe have assigned a special teamto address these issues, and tosupport and allow our affiliatesto use this capacity. We are
realistic enough to recognise thatthe existing international players,like Intelsat and my old company[PanAmSat] are entrenched and itis a challenging market, especiallywhen compared to the videodistribution market. So this is not anew strategic direction, it is justorganising ourselves better toaddress this market.”
But transponder prices are low andcompetition fierce. We askedBednarek how valuable the marketwas. “There are opportunities outthere, for example, there are anumber of satellite operators outthere with just one or twosatellites. Many of them will needto replace their capacity over thenext few years and our strategy isto discuss the opportunities withthem to work together,consolidating with them so thatthey can outsource their needs tous, taking a condominiumapproach. We think there are
enough of those around to soak upsome of the capacity. Certainly, in acouple of markets there is strength:Africa, for a start, has a real shortageof C-Band capacity and while SouthAmerica is a difficult propositionright now as time goes on someoperators are going to choose not toreplace spacecraft. We are stayingfocussed on our core business, butwe see other opportunities throughWorldsat.”
Teleports a GoGo
Besides outfits like Telenor, andother regional players, it is alsoknown that France Telecom islooking for a buyer for its Globecastbusiness, and there are otherteleport opportunities out there:“Americom has four US teleports,and I think satellite operators needto become more involved in value-added services like content hosting.The services are becoming morecomplex, although I am not sure thatowing teleports is necessary for that.There are lots of teleports in theworld and I don’t think [owningthem] is as important as putting theassorted pieces together. Owning a
Worldsat’s AssetsCurrent• Worldsat 1 108.2 E (formerly AAP-1)• Satcom C1 37.5W• Spacenet 4 172.0 E• TDRS-5 174.3 E• TDRS-6 47.0WPlanned• Worldsat 2 37.5 W(formerly referred as AMC-12)• Worldsat 3 172.0 E(formerly referred as AMC-13)
SATMAGAZINE.COM
18Back to Contents
Febuary 2004
London-based Chris Forrester, a well-knownbroadcasting journalist is the Editor for Europe,Middle East and Africa for SATMAGAZINE. Hereports on all aspects of the industry with specialemphasis on content, the business of television andemerging technologies. He has a unique knowledge ofthe Middle East broadcasting scene, havinginterviewed at length the operational heads of each ofthe main channels and pay-TV platforms.He can be reached at [email protected]
teleport is but one element and moreimportant to my mind is, forexample, supplying the completesystem, from send to receive. Thefinancial strength of operators putsus in a good position to supplythose services.”SES has raised a ton of cash overthe past 6 months or so, mostrecently in a six-timesoversubscribed Bond issue thatraised EUR500m. We askedBednarek how soon it might bebefore the stock market generallylooked on satellite stocks morefavourably. “I see this changing inthe next year, and it is alreadychanging. We probably need todo a little more education of WallStreet and the market, removingsome of the high-tech mystiquefrom our message. Satelliteservices are prettystraightforward. We have had, as
an industry, some problems andthese have given the impressionthat satellites are a technologicallyrisky business. We’re not. The corebusiness is robust. Some of thesenew commercial developmentsmight be market risky, but theyaren’t technologically risky. Thetechnologies are in place. So weshould shift, from selling thetechnology to selling the business.SES has always done a pretty good
FEATURES
SM
job in selling the business models,and when satellites becameinfamous as being a riskyinvestment we were all draggeddown with people saying if this orthat satellite was bad then ourshad to be bad too! We know thenonsense of that, but maybe weneed to deliver more education.We need to make sure wedifferentiate ourselves from thosebad-news stories.”
SATMAGAZINE.COM
19Back to Contents
Febuary 2004
FEATURES
VSAT Technology: Which Way to Go?By Frank Francyzk, P.Eng.
Over the last several years, thedemand for Internet
connectivity has been the maindriver in the satellite industryincreasing IP-based networkdeployment. The issue of the highcost of satellite provisioned dataservices dominates decisionsrelating to deploy satellite networks,although technology developmentsin spacecraft, VSAT equipment, andsatellite access techniques haveprogressed considerably. Suchimprovements in the ground andspace segment now offer operatorsand service providers withalternatives that can be translatedinto profitable business plans. Thekey factors in achieving profitabilityare not unlike those facingtraditional telecommunicationincumbents including technologyselection, bundling servicesaccording to specific customerapplications, offering userequipment and service charges in-line with the end-user’s ability topay and, satisfying the end-user’sbroadband experience. Thetechnology decision is at the coreof business plan but isinterdependent with organizationalstrengths, preferences, and with themarket opportunity. This articlepresents an overview of technologydevelopments and a generalselection framework to helporganizations minimize decisionuncertainties and validate thetechnology selection initiative.
Why Satellite?
Satellite-based communicationnetwork services are usually not thefirst choice for most commercialenterprises. The primary reason forthis is the higher cost of the mediumfor data communications involvinga small number of point-to-point
links or Internet access points. Thealternative terrestrial infrastructurefor such links is usually lessexpensive. Those companies thatdo seek out satellite-based servicesdo so because of the economies ofscale involved with manydistributed locations across aregion, or because of a lack ofsuitable alternatives offering similarcapacity. This is particularly the
case for rural and remote communityconnectivity and for large nationaland multi-national organizationswith multiple points or accesspoints located across largegeographic areas. VSATtechnologies are well suited forsuch applications and are usuallycharacterized according to networktraffic utilization as “EnterpriseNetworks,” “ProfessionalNetworks,” or “ResidentialNetworks.” Each profile hasspecific data-networking demands,which in turn, require a selection ofa technology that suits therequirements.
Supply-Demand Trends
Over the last 7 years, largetelecommunications and networkingorganizations have built-out corecommunications infrastructure overfibre and cellular wireless networks.Recent investment trends by thesesame organizations focus on multi-service broadband and mobileaccess networks with the intent toprovision bundled IP-basedservices and increase the averagerevenue per user (ARPU). SatelliteVSAT network technology has beeninfluenced by this demand whichhas resulted in innovations in bothground segment and space segmenttechnologies includingsophisticated on-board processingwith Ka-Band spot beamtechnologies, satellite-optimizedrouting algorithms, and more
“...Satellite-basedcommunicationnetwork servicesare usually not thefirst choice for mostcommercialenterprises. Theprimary reason forthis is the highercost of the mediumfor datacommunications...”
SATMAGAZINE.COM
20Back to Contents
Febuary 2004
efficient connection and accessschemes. The efforts to developVSAT solutions incorporatinginnovative technologies haveresulted in threecategories ofequipment: (1)modified legacyVSAT equipmentfrom singlesuppliers, (2) IPprotocoloptimizedequipment, againproprietary innature, and (3)open-standardsbased equipment,known as DVB-RCS1, promotinginteroperabilityand multipleVSAT terminalsuppliers.With multipletechnologyalternativesconfronting manynetworkoperators, manyquestions ariseincluding: Whatsystem andtechnology isbest? What arethe differencesbetweenproprietary VSATsystems andDVB-RCSsystems? AreDVB-RCSsystems interoperable and candifferent terminal equipment beused with different DVB-RCS hubs?What does a low cost VSATterminal really cost? Whatapplications are running over theVSAT networks and will VoIP work?
Getting answers to the technicalquestions are sometimes difficultgiven the early state of newtechnology deployments and the
various biased “technical camps”promoting specific solutions.However, any organization seekingto develop profitable VSATnetworking services must return toits business core and primarymarket and understand the need
and how this market need fits inwith the overall organizationalcapability to deliver a solution.
Decision Framework
Theuncertaintyassociatedwith thedecision toimplement asatellite VSATnetwork can beminimized if therelevantinformationabout themarketplace,the intendedapplications,and thebusinessmodel areknown. Theseare just asample of someof the keycriteria, aseveryorganizationwill havespecific criteriaapplicable totheir ownbusinesssituation. Forexample, atechnologydecisioncannot bemade withoutan
understanding of the corporatestrategy and stakeholderpreferences including itsexpectation on the Return OnInvestment (ROI). The VSATconsumer profiles described earlieridentify the end user from thesupplier perspective. Qualifying
FEATURES
SATMAGAZINE.COM
21Back to Contents
Febuary 2004
FEATURES
oneself from such a perspectiveallows the organization to questionwhat business it is in, and then toidentify the alternative networkarchitecture to narrow down thetechnology alternatives in theselection process. At that point,comparisons are made between thetechnologies and a scoring model oran Analytical Hierarchy Process(AHP) formulation can be used toprioritize the alternatives. Theoutcome from this process is theselection of an alternative whichmost strongly fulfills the entire setof objectives, defined by the criteriaand the preferences and judgmentsof those involved in scoring orranking the importance of thecriteria. As in any decision-makingprocess, uncertainty is managed byhaving access to as muchinformation as possible to cut downon the sphere of uncertainty,making the decision more obviousby limiting the amount of personal“gut-feel” or biased discretion.Figure 1 illustrates a simple AHPdecision making tree and theresulting equations to be used incomparing three VSAT alternativeswith two criteria.
Technology Developments andBusiness Models
In the past, many satellite networkoperators and service providersstruggled with the development of aprofitable business model for IP-based satellite network services. Atypical scenario involved rushing todeploy the most recent technology,heralded as a FSN solution, only tofind that not all applications couldbe supported. Moreover, thepromise of mass-market affordablesatellite VSAT terminals added to
the hype and deployment forecasts,which could not be realized becauseof the state of technology and theoverall economy after the correctionin the equity markets in the year2000. Past solutions involvedproprietary single suppliertechnology, early versions ofstandards-based technology(multiple suppliers with littleinteroperability), and everything in-between including suppliersclaiming open standardscompatibility.There has been a significant effortby many organizations to bridge inIP network technologies andoptimize them over satellite, and atthe same time, there have beensignificant developments inextending existing broadcaststandards to incorporate two-wayinteractivity. Which of these
Frank Francyzk’ career spans 17 years with abackground in satellite communication systemsand international business development. Frankhas held senior management positions in bothprivate and public operating companies inEngineering and Product Marketing and currentlyoffers management and telecom consultingservices through Salamander Systems. Frank canbe reached at [email protected]
philosophies and resultingtechnologies is best for anorganization depends on thebusiness model and the numerousother criteria already mentioned.Suppliers and consumers of VSATsystems must remember that theirsuccesses are inter-dependent andthat there is a difference between aninvestment to save money and oneto make money. The righttechnology choice will maximize theorganization’s ROI and ensurebusiness sustainability in the futureby making money.
Notes
1 Digital Video Broadcast ReturnChannel over Satellite standard,published by ETSI as EN 301 790v1.3.1 SM
SATMAGAZINE.COM
22Back to Contents
Febuary 2004
FEATURESPilgrimage to Sri LankaA meeting with the Father of Communications Satellites, Arthur C. Clarke
By Peter Escher
The Dream
Ever since myschool days I
have beenunusually“obsessed” byastronomy, andspace. My hobbiestended towardelectronics at a earlyage.
After seeing the film“2001: A SpaceOdyssey” andgetting over a shortreligious time in myearly life, I began tobe “obsessed” bythis film. Had thisinner knowing thatwe were not justaccidents on thisbeautiful planet, and wondered, even to this day(49years old now !) , when man will actually makecontact, or ‘they” with us ! Where is the ‘monolith’?perhaps Mars will unveil some distant secrets ! (If youhaven’t seen 2001, then this will all mean nothing- get itand watch it ( then the sequel, 2010 ).
The Pilgrimage
We landed in Colombo, Ski Lanka’s ramshackle capital,in June 2001. It was hot and sticky and we checked inthe Galle Face Hotel—an old colonial hotel by the seaand Sir Arthur C.Clarke’s favorite place. It was a bitwild, coastal and full of old colonial english charm. “Why do you live here, Sir Arthur? “ His answer, “30English winters!”
Next day we got a taxi to his home. Funny enough nextdoor was the Iraq Embassy ! Hot and highly excited we
waited to meet the man who had created our life long“obsession” (2001-A Space Odyssey).
How do you greet such a person? Do you shake hishand, what, how, say ?? My mind was beginning to feellike a “stunned mullet” ! I was ushered into his office…reached out my hand, we shook, placed my other handon top of his.I felt like I had met a long lostparent….god !
“Sir Arthur…have you ever been contacted, or madecontact with any extraterrestrial intelligence?” Heinstantly replied: “too many people are far too quick tojump to conclusions…as far as I am concerned, theUFO issue is closed.” Sir Arthur quickly started on the
The author with Sir Arthur C. Clarke in his Colombooffice signing one of his numerous books.
SATMAGAZINE.COM
23Back to Contents
Febuary 2004
FEATURES
topic,”life on Mars,” and started showing me photosfrom NASA of amazingformations on theplanet surface. I hadtriggered the greatman’s mind, just as hehad so triggered minewith his film 2001.
The Interview
We had some specificquestions for the Man,regarding satellite TV.We ventured outsidewith him in his wheelchair…he can still playtable tennis! Placed amicrophone on his shirtand set up the videocamera. We were very nervous that something could gowrong with camera….all this way for this, and it breaksdown!
‘Satellite communications has made the ‘global familyof man’possible…governments and people are unableto hide their crimes, now with the advent of worldwidesatellite TV and the Internet.”
This comment stuck in my mind, after 9/11 disaster. “TheInternet is as revolutionary, as was the printing press,and will probably out do books.”
Sir Arthur humbly admitted that someone else wouldhave thought of the ‘geostationary communications
“..Satellite communications has made the‘global family of man’ possible…”
Peter Escher is with Satlink NewZealand—a distributor of satelliteequipment. They produce anddistribute among others the“Coship” brand of satellite free-to-air receivers. For moreinformation on their products goto www.satlinknz.co.nzHe can be reached [email protected]
One hundred years from now, what would you best likedto be remembered for? “ My movie 2001, andsubsequent books on science fiction”
If anybody reading this has not seen this movie, or2010 - I strongly recommend both. Remember the“monolith” is purely symbolic (we are NOT just“accidents” on this planet).
When I asked Sir Arthur; if we might find the“monolith” on Mars…he answered: “ You might find itanywhere!” SM
satellite ‘ way back in 1945. “I just happened to be thefirst to get it onpaper!”
He made a interestingcomment about therevolutionary“transistor” : “When Iproposed the idea ofcommunicationssatellites covering theglobe, it was withvalves(vacuumtubes)--nottransistors. Theadvent of thetransistor andsubsequent “‘microchips,’ hasescalated satellitedevelopment .The
advent of the transistor has hindered ‘man in space’too! I imagined ‘manned space stations’…as valveshave a limited life, and need maintenance!”
Unique Receiver-Autoscan any satellite- DXer’s dream machine”
www.satlink.co.nz/receivers.html
SATMAGAZINE.COM
24Back to Contents
Febuary 2004
FEATURES
Dubai’s Showtime: Worth $ 1 Billion+
By Chris Forrester
Showtime is the Middle East’smost successful pay-TV
platform, and 2003 examinations bytwo investment bankers (CreditSuisse and UBS) have alreadyvalued the company at $750m, somethree times its nominal book value.Showtime is a joint-venture betweenentertainment conglomerate Viacomand Kuwait-based investmentcompany KIPCO. Showtime islicensed to operate in 22 Mid-Eastand North African countries. Kipcois understood to be talking to anumber of banks about a potentialIPO, and a January board meeting inKuwait discussed a timetable thatwould lead to a probable stockmarket listing.
However, Showtime’s IPO valuationis expected to be much more than$1bn. The earlier valuations werecarried out on the basis of historicalinformation based on 2002 and early2003 trading results, and when theBaghdad/Iraq war and regionalcommercial anxieties were at theirheight. More recent trading hasbeen robust and all-importantmonthly ARPU levels (at $54amongst the highest in the world)have been maintained despite fiercelocal competition from rivals.Subscription numbers are thehighest in the industry locally andstood at 281,000 at December 31st.Moreover, this current winter’strading continues in a buoyantfashion, and a third investmentbank will be looking at the companyaround March, helped then by morefavourable data from 2003, and an
expectation that 2004 and 2005numbers can be met and possiblysurpassed. Indeed, one seniorcompany executive told us that2004’s end-results could be“amazing” helped by tough anti-churn measures planned for 2004.Showtime has its own internalprojections looking at trading up to2010.
Showtime has in the past made nosecret of its plans to exploit itshealthy position with a market float.It achieved cash-flow breakevenlast May and is now makingpositive profits. 2003 was achallenging year for the companywith ample customer nervousnessin the company’s core markets ofKuwait, the United Arab Emiratesand Saudi Arabia. Nevertheless,Showtime is believed to have fullymet its budgeted cash net income
for 2003. Kipco’s CEO Faisal HamadAlAyyar is on record as saying thatShowtime intends contracting withan investment bank that will lead toa listing “on an international stockexchange, such as the Londonstock exchange”. Kipco (KuwaitInvestment Projects Co) is a widelydiversified business with majorinvestments in banking andtelecommunications. Its Kuwait-based Wataniya mobile telephoneoutfit has just been awarded one ofthree mobile licences in Iraq (in a j/vwith a Kurdish company), and havesimilar cellular licences in Tunisiaand Algeria. Wataniya has a marketcapitalisation of some $3bn.
Iraq is seen as a valuable additionto Showtime’s portfolio of markets.However, the first flood of TV-basedenthusiasm has been for free-to-airdishes and receivers, and the market
SATMAGAZINE.COM
25Back to Contents
Febuary 2004
is seen as needing to go throughthis stage. Nevertheless, Showtimehas appointed its own dealers in themain cities and Iraqi subscriptionsare starting to come in. One spin-offfrom the Iraq has been with valuablecontracts with the US armed forceswhich have set up Showtimesystems for serving troops.Showtime intends establishing itsown wholly-owned Iraqi dealer/installation operation oncenormality and a secure environmentexists for staff.
Showtime is also in the middle of atransition whereby it is relocatingits London managerial staff andplayout/operational staff to a new,purpose-built facility at Dubai’sfuturistic Media City, situated afew miles up the coast near JebelAli, and directly across from theentrance to the much publicised‘Palm’ massive housing and hotelproject now being built in theArabian Gulf. The new buildingwill be occupied in April and May,and officially opened on May 26by Sheikh Mohammed alMaktoum, Dubai’s Crown Princeand the power behind Dubai plc.Showtime’s belief is that the newbuilding brings together for the firsttime the whole company, and thiswill help boost growth, possibly atthe expense of their rivals, andconsequently represent anattractive investment opportunity toinvestors world-wide.
The platform is firmly claiming theNumber One position in pay-TVlocally. It is also admitted that whathave been described as “friendlytalks” with rivals have taken placerecently. “There is no TV company,pay or free, that makes as muchmoney as we do,” one insider told
us in January, “And that’s the waywe intend to stay”. It is expectedthat while Showtime’s investorsmight want to realise some cashfrom a floatation, the bulk of anymonies raised in an IPO would gointo a war-chest for planned futuredevelopments. It is known thatShowtime/Kipco is looking at otheropportunities outside its currentoperating region in media, and thisincludes potential mergers,partnerships or green-fielddevelopments and senior stafffirmly believe Showtime can becomea global media player.
But competition still exists. Thereare two major rival operations: Orbit(headquartered in Rome, but with
operations in Cyprus and Bahrain),and Arab Radio & Television (ART)which now trades under the ADD(Arab Digital Distribution) banner.The wealthy Mawared group ofcompanies owned by Prince Khalidbin Abdullah of Saudi Arabia backsOrbit. Saudi millionaire SheikhSaleh Kamel backs ART/ADD.Neither is profitable, nor has eitherever released hard data on theirprogress so far. Both have recentlydeeply discounted theirsubscription prices in an effort towin viewers. Orbit’s current top-tieroffer in Dubai is Dirhams 120 a
month (about $32) covering theirown 28 channels and potentiallyanother 400 free-to-air channels.ART’s introductory offers havebeen as low as $5 a month, whichhas led to impressive take-up forinitial three-month ‘trial’ periods butequally massive churn at the end ofthe day. One source said the netresult was a “fractional” increase inART’s core subscriber numbers butadministering the various in and outsurges created a back-officenightmare. Within the ART ‘family’of channels is Star Select (bestconsidered as a mini-tier) havingconsiderable appeal to Gulfaudiences thanks to its exclusivecricket coverage, but this attractiontends to diminish in non-Gulf
countries. ART’s full-pricebouquet (Al Awael World) ispriced in the UAE at around$64, but has few takers. Incountries like Egypt allplatforms price their offeringslower. The market sees Orbit asa well-run operation but quitedefinitely in the Number 2position. ART/1st Net lags thefield, and unless it achievessustainable and long-termgrowth is seen as a basket case,
with little prospect of breakingthrough.
The tough competition createdmuch confusion in an already fragilemarketplace. First, some expatriatesleft because of the war. They arenow returning. Second, thesubscription price-wars left someviewers re-examining their loyalty,and inevitably some churn betweenplatforms. However, Showtime saysQ3 and Q4 saw that drift reversed.Local insiders now ask: “Where canthe competition go?” They suggestthat once rival’s introductory prices
FEATURES
SATMAGAZINE.COM
26Back to Contents
Febuary 2004
hit rock-bottom, and still cannothold onto viewer loyalty, then thegap in Showtime’s favour is boundto grow. ART/1st Net has investedhuge sums into product (includingpaying more than $80m for exclusivecoverage of the last FIFA soccerWorld Cup competition), its ownstudios and exclusive entertainmentbut has seen no commensuratebenefit in subscriber growth.
Showtime’s advertising pushescelebrity endorsements andemphasises the quality aspect ofsome of the world’s best-knownentertainment brands likeNickelodeon, MTV, Paramount andThe Movie Channel. 2004 will seeextra channels emerge, but alsomakes more of the marriage betweenbox and ‘smart’ card. This is neededto avoid so-called grey-marketimports of legitimate cards sourcedin low-value countries like Egyptflooding into higher-value marketslike Saudi Arabia, Kuwait and theEmirates. Showtime intends re-introducing its ‘Smart TV’interactive elements, with long-formEPG and games as part of thepackage. They also intend blockingreception of free-to-air signals forviewers who continue to useShowtime-provided boxes oncetheir subscription has lapsed. Thisis seen as a major churn-buster.
Back in the autumn of 2003 therewas again local talk of consolidationbetween platforms. In manyrespects the working relationshipbetween ART and Showtime isbetter than it has been for someyears. They both use the same box,smart card (Irdeto) and satellite(NileSat). Subscribers to Showtimecan add ART channels to theirbouquet for a modest fee, and vice-
versa. It’s known that there havebeen frequent discussions betweenShowtime and ART at the mostsenior levels, and also betweenShowtime and Orbit. An investor inART is Prince Waleed bin Talal, whois also a major investor in NewsCorp and was seen as a key playerin winning the Murdoch-backedStar Select bundle away from Orbitand onto ART/1st Net. At the timethere was increasing talk of greaterco-operation between the variousrivals, and even a high-levelmeeting at the exclusive Sharm el-Sheikh holiday resort on the RedSea. But those discussions came tonothing. Perhaps it is time foranother high-level chat, becauseoperators, dealers and probablyeven viewers would welcome asingle platform and faster progressmight well be made if customerconfusion were eliminated.
One challenge to overcome is thehuge legacy of Irdeto boxes in themarketplace. While Orbit mademuch of its “1m unit box order” theyhave not percolated into the market(other than for subscribers, ofcourse). And Orbit is very muchcommitted to its box. They alsofavour Arabsat as a platform,although now also use NileSat fortheir premium channels. Showtime’s
London-based Chris Forrester, a well-knownbroadcasting journalist is the Editor for Europe,Middle East and Africa for SATMAGAZINE. Hereports on all aspects of the industry with specialemphasis on content, the business of television andemerging technologies. He has a unique knowledgeof the Middle East broadcasting scene, havinginterviewed at length the operational heads of eachof the main channels and pay-TV platforms.He can be reached at [email protected]
view is that whether viaconsolidation of a simple form ofco-operation, a single combinedplatform would benefit all parties,allowing dual illumination to bothsets of boxes for a period butmigrating towards Irdeto within ashort period. The obvious benefitsto all 3 players from lowered stafflevels, call centres and perhapsmost importantly, the elimination ofcompetition in rights negotiations,would be impressive. But mediaegos are perhaps the most difficultobstacle in any negotiations.
There is, of course, another level ofcompetition: there are more than 100free-to-air channels available toviewers – and more joining everymonth. The pay-platforms arguethat their first-run offerings,exclusive programming and usualcluster of thematic channels hasworked for pay-TV almosteverywhere else on the planet, andwhy should the Mid-East be anydifferent? SM
FEATURES
SATMAGAZINE.COM
27Back to Contents
Febuary 2004
VIEWPOINTBroadband Satellite Services:Another Year, Another Strategy
“...Without the limitations ofconventional wire line networks,satellite broadband can providea foundation for growth not onlyof user terminals and content,but of the satellite industry as awhole. ...”
By Bruce ElbertPresident,Application Technology Strategy, Inc.
That GEO satellites can provide broadbandcommunications services of high quality is not
really subject to debate. A properly engineered high-data rate link will offer bandwidth and quality of serviceon par with what’s available globally from terrestrialwire line and wireless networks. Where the debate reallycomes into play is on the marketing and distributionscene, where one worries about practical things likeprice, equipment availability and installation. The thrustof this article is to look specifically at the issue ofbroadband access servicesby satellite, which is the fieldalready populated by USproviders Direcway andStarband, and which is likelyto get substantial newentrants in 2004. We leaveaside the subject of thebackhaul of high speed dataas practiced between majorlocations and countries.
The satellite broadbandofferings to date havefocused on serving the small office/home officeenvironment for individuals and small businesses thatare not reached by existing terrestrial carriers and cablecompanies. This market has proved to be rather smalland has resulted in the bankruptcy of Starband, whichnevertheless continues in business. Neither Direcwaynor Starband advertises in any significant way, which isprobably smart seeing the small market and high fixedcosts of the satellite bandwidth currently employed.Quality of service on these networks, as well as othersusing similar technology but targeted to verticalmarkets such as retail and the government, is on parwith lower-priced DSL and cable modems. And ofcourse, the popularity of DBS has made the once-offensive dish into a fixture of some pride. Perhaps
there is a consumer offering of satellite broadband thatwill likewise reach that golden tier of one millionsubscribers.
Long in the developmental pipeline, several Ka bandsatellite operators have announced launches for thisyear. In addition to being first to apply the higherspectrum to direct access services, these satellitesemploy multiple spot beams to multiply the availablespectrum through frequency reuse. Capacity is likewisemultiplied and the cost per Mbps of space segment isreduced by nearly the same factor (because Ka bandsatellites tend to be more expensive due to developmentand hardware costs). A reduction of between five andten to one is possible, subject to how the service
provider can load the bird. Sincespace segment power andbandwidth drive fixed andvariable costs in satellitebroadband access services,more competitive pricing islikely. Added to this is thehigher data rates that can beprovided through the greaterconcentration of power from thespot beams themselves.
The new systems alreadyannounced include Spaceway,
Echostar, WildBlue, Telesat, SES and IPStar. Some of thesatellite hardware is already in space; other vehicleshave completed testing and are presumably on theirway to the launch pad. Owing to the highly competitivenature of this new business as well as the risks of beingfirst to market with a new kind of satellite application,there is a paucity of information on these systems. Onecan examine FCC and ITU filings, but these containgeneric data filed some time ago. One cannot simply goto the operators’ websites. Similarly, the technical staffsof these companies have not been very helpful with thedetails needed to verify what the service can do. Whatwe are left with is general engineering principles for thedesign of broadband Ka band systems. Based on yearsof hardware and systems experience with Ka band
SATMAGAZINE.COM
28Back to Contents
Febuary 2004
VIEWPOINT
SM
Bruce Elbert has over 30 years ofexperience in satellite communications and is the Presi-dent of Application Technology Strategy, Inc., which as-sists satellite operators, network providers and users inthe public and private sectors. He is an author and educa-tor in these fields, having produced seven titles and con-ducted technical and business training around the world.During 25 years with Hughes Electronics, he directed ma-jor technical projects and led business activities in theU.S. and overseas.He is the author of The Satellite Com-munication Applications Handbook, second edition (ArtechHouse, 2004). Web site: www.applicationstrategy.comEmail: [email protected]
devices in orbit, propagation characteristics measuredand verified by NASA, Intelsat, ESA and otherorganizations, and operational experience from anumber of Ka band projects, the operators cited abovecan, from a physical perspective, do what they claim.The devil is in the details, so to speak.
Among the important details is the user terminal thatincludes the dish, RF electronics (e.g., the outdoor unit)and the satellite modem (the indoor unit). Thisconsumer version of the very small aperture terminal(VSAT) has been on the market from Gilat and HughesNetwork Systems since the rollout of Starband andDirecway, respectively. The new generation of userterminal will have a price in the range of $200 to $400 yetprovide two-way broadband data in the hundreds ofkilobits and even megabits per second speed regime. Atthe Global VSAT Forum Satellite CommunicationsSummit at the PTC Conference just concluded inHonolulu, Hawaii, Mark Dankberg, CEO and Chairmanof ViaSat, Inc., made clear that products like this areentering production and will appear in the market thisyear. He attributes this to the benefits of standards tofacilitate high production volumes and low unit costs.The two standards that he and his company activelysupport are: Data Over Cable Service InterfaceSpecification (DOCSIS) and Digital Video Broadcast –Return Channel by Satellite (DVB-RCS).
Mark Dankberg remarks that one or possibly both ofthese standards could dominate the consumerbroadband market, and he wants his company to ridealong with it. He cites advantages to DOCSIS as theapproach favored by cable TV companies who continueto lead consumer broadband Internet access. By takingthe back office elements of cable and attaching them toa high-performance satellite access technology,providers of services and hardware can ramp upquickly. Not to be left behind, Alcatel is pushing their“DSL In The Sky” along with DVB-RCS so as not todeprive that technology from a back office strategy ofits own. Either way, service providers could ramp upquickly and provide the kind of high quality customerservice that companies like DIRECTV and XM SatelliteRadio pride themselves in.
It’s anyone’s guess how these new birds and thebenefits will fly in the consumer and SOHO market.Both DIRECTV and Echostar have a decided leg up onthe pure-plays in this field – they already have morethan 20 million of combined customers. By playing the
same game as the cable TV companies and localexchange carriers, they have the marketing power topush this service to subscribers. This sounds like I’mcontradicting my previous point about the value ofhardware standards – perhaps I am. One never knowshow such things play out.
Here is the argument to support the forgoing. At thesame GVF session at PTC, Jimmy Schaeffler, Chairman &Chief Service Officer, The Carmel Group, emphasizedthat DBS customers already accept the notion of a dishon their homes and seem to prefer the entertainmentpackage that comes through it. Adding broadband,even with another dish (something now commonplacefor TV reception), is not a major obstacle for thesehomes. Attractive pricing and good service is what willsell the package.
But, is there a killer app for satellite broadband access,something not available through conventional DSL andcable modem service? Quite possibly, it could be themulti-cast feature of satellites with the use of the PChard drive as a caching device. Jimmy Schaefflerobserved that 400 channels is becoming the norm, notbecause people care for all of that, but because it allowseach individual to select those channels most ofinterest. It’s not too many choices; it’s the freedom tochoose that which satisfies best. With satellitedelivered broadband multicast, Ican imagine that the contentoptions will multiply by tens andthousands. Without the limitationsof conventional wire line networks,satellite broadband can provide afoundation for growth not only ofuser terminals and content, but ofthe satellite industry as a whole.At least, it is a possibility.
SATMAGAZINE.COM
29Back to Contents
Febuary 2004
FINANCIAL SNAPSHOTEUTELSAT Cuts Hispasat Investment ValueBy Chris Forrester
Paris-based Eutelsat enjoyed arobust 2002-2003 trading year
with all of its key metrics benefitingfrom its increased orbiting capacity.However, Eutelsat also took theview that the time was now right torevalue its 27.69% stake in Hispasatat just EUR110m, thereby writing offEUR144.2m. Giuliano Berretta,Eutelsat’s CEO says the reductionin value is not related to Hispasat’strading or performance but reflectsthe lowered value of satellite stocksgenerally. “Over the past few yearsthere has been a general downwardshift in the value of satellite assets,and when we bought into Hispasatwe bought at a quite high multipleof earnings, set by the Astra/Americom deal, amongst others.Values have shifted anddepreciation has also taken place,and we have recognised that fall. Ithas no real impact, being just anaccounting valuation, but wethought it wise to make thoseadjustments within our accountsthis year. We recognise thedecrease in that value, expressed asa multiple of earnings, and also totake into account the generaldecrease in EBITDA earningssuffered over the past year. There isnothing dramatic here, and Hispasatcontinues its full investmentstrategy, but [the decision]recognises the current economicsituation. It might seem severegiven that we have done it in onego, and discharged the situationand therefore present a very cleanbill of health to the financialcommunity. Perhaps othercompanies should do the same.”
Berretta says Eutelsat took aconsensus view from its financialadvisors prior to writing off theEUR144m. “Some other transactionsundertaken at the same time havenot been readjusted, although wewere lucky in that our investmentwas small in comparison to others.As for Hispasat, it continues doingwhat it does best, and has a veryreal valuation in the marketalthough we must all recognise thereduction in values expressed asmultiple of earnings. Should themarket rise, and multiples rise withit, then our valuation will rise. But asitting value is now fairlyrecognised in our balance sheet.”
Berretta said the once-planned IPOis now off Eutelsat’s agenda andthere was no longer any sort of
pistol to its head. “The decisionrecognises that the market hasn’tchanged that much and we are stillliving in an uncertain period. Inother words the market could rise orfall, and the same with the value ofthe Euro or Dollar. All are highlyvolatile, and the world marketdoesn’t lend itself to many IPOs. Asfar as Brussels is concerned, we nolonger are obliged to reduce our oldshareholders for that has happened,and new shareholders have comeinto the company in other ways.”He also confirmed that Eutelsat willnow start buying back up to 15% ofits share capital, thereby following atrend set by New Skies and others,and Eutelsat has set a time limit ofFebruary 15th 2004. “Again, this isanother normal decision and manycompanies are doing it. [Our]
Eutelsat’s Paris Headquarters
SATMAGAZINE.COM
30Back to Contents
Febuary 2004
FINANCIAL SNAPSHOT
advantage is that the decision isentirely up to shareholders. If theydon’t want to sell they can holdonto their shares. It is voluntary,and I see the decision helpingsmaller operators. Frankly, I’d besurprised if our larger shareholderswould want to sell. The share buy-back will help smaller shareholderswho might find it difficult to securea buyer.”
It has been widely reported thatBritish Telecom is still looking tosell its Eutelsat stake, but it must beassumed has notyet been offeredan appealing pricefor its Eutelsatstock.
Eutelsat’s tradingperformance was“very satisfying”according toBerretta. “2002-2003 was nevergoing to be easyto continueachieving double-digit growth, but at8.6% that’s pretty near. Three yearsago I said I was aiming for anaverage of 9% growth per annum,and in view of the last year’s eventsthis is a good result. Three yearsago were at the peak of the dot.comboom and we all know the problemsof the past two years or so, notleast September 11, our ownindustry crisis, satellites and launchproblems…. I do not think ourworld in space has been particularlysuccessful this past few years. Inmany ways it has beencatastrophic, because anything badthat could have happened hashappened.”
Spain’s Digital+, winner or loser?
Just ahead of our conversation theagreement was announced coveringSES Astra and Hispasat, and thebattle over which company wouldcarry Spain’s Digital+ signals. Thesolution is that both rivals willcontinue to distribute Digital+ until2017. Local reports state thatSogecable will pay both Hispasatand Astra an annual fee of EUR18mfor distributing Digital+’s signal.Under the terms of its existingcontract with Hispasat, whichexpires this December, Sogecable
pays an annual fee of EUR27m,while Astra’s fee was quoted as justover EUR30m. Berretta said anyoperator would treat the decision asgood news. “It looks like it is apositive result for Hispasat.”
Transponder Pricing
A couple of months back Berrettawas highly vocal in criticising thetrend from some satellite operatorsto price transponders below cost,and even threatened to take legalaction. He admits there’s been noimprovement in the overall pricingof space capacity. “There is still anexcess of capacity, and there areeven lower prices than Mr Goldberg
quoted [CEO at New Skies, andstated as $1.3m/annum]. The fact isthat the quality of capacity is whatis important. I believe our averageprice achieved is better than thatquoted by Mr Goldberg because weoffer security of service with back-up, and these help with marketingEutelsat.”
Berretta gave guidance onmeasuring the impact low priceswould have on any operator. “Wecan all understand any operatorreducing a price for 6 months or ayear, but if these prices then
become permanentthen it is simplyselling below cost.Everyone knowsthe cost ofbuilding andlaunching asatellite, and ifanyone can offerlow prices it is us,because we havebought well-pricedsatellites. Butpeople are sellingbelow $1m, and
this makes it impossible to makeprofit. There are operators with fillrates of just 60%, and this meanseach of their transponder leases hasto have an additional burden ofalmost 100% to be able to recovercosts, because the empty capacityalso has to be paid for. How do theydo it? I don’t know? What I doknow is that our 80-81% fill rateallows us to be aggressive onprices.”
“[Low prices] make a war whichnobody can win. I am surprised thatthese prices can even be offered. Itmeans, I am certain, that theindustry is desperate and can only
“We have generally concentratedon internal growth, but in thefuture we might well considerbuying growth. It is not that weare not looking.”
-Eutelsat CEO Giuliano Berretta
SATMAGAZINE.COM
31Back to Contents
Febuary 2004
FINANCIAL SNAPSHOT
lead to more satellite assets comingonto the market.”We are designing new satellites sothat we will be able to stayprofitable even if prices remaindepressed. E-Bird is one of these,where we can offer the market lowerprices and yet still remain profitable.It has 20 transponders, of which 4are return transponders each with108 MHz, so can carry manyservices. E-Bird was alwaysoptimised for the Internet, and willbe offering highly-competitiveprices. It is technologically veryadvanced.”
E-Bird
Eutelsat concluded its pre-acceptance tests on E-Bird,launched in September, beforeChristmas. “The tests [took] a longtime because the craft has barelybeen in one location. We started at21.5 degrees East, to secure thatorbital position, and those tests arenot valid at 33 deg East. So thatmeant repeating the tests again at33 deg, so that the signals can beseen in every area and they are acomplex series of tests because ofthe complex configuration of thesatellite.” It is now known that atleast one of E-Bird’s four beams iscreating problems and
consequently an insurance claimseems inevitable.
HDTV in Europe
On January 1st Europe’s firstbroadcast transmissions in high-definition took place from Astra at19.2 deg East (on transponder 88).Berretta says Antwerp-basedAlfacam approached Eutelsat tohost the HD telecasts. “I wish theBelgians well, of course, and I lovewhat they are doing, but we believethe European Space Agency is theplace for this sort of experiment[SES Astra is supplying capacity toAlfaCam’s Euro1080 services]. Wewould like to start an HDTV servicewith a real broadcaster who wants
to start a full commercial service.But even before that, the mostimportant element is for people tohave receivers that are ready forHDTV. We have been carryingHDTV for two years, but done forevents, d-cinema and the like. As forour Hotbirds, we have such littlecapacity available that I have nospace for such a test. But we dohave satellites with more capacityand they could be used, indeedAlfacam uses them, for distributingto D-cinemas throughout Europe. Idon’t want to sound pessimistic butwe still have some way to go. Twoevents, however, might help changethe picture: The first is the AthensOlympics, and the European soccer
championships. But to see apenguin running about the snowis not that interesting. We arelooking for a real business, notjust for fun. But I do hope therewill be a real HDTV businesssoon. However, I am not sure thateven with the Olympics there willbe enough continuoustransmissions to generateconsumer demand.”
Ten years ago when Berretta wascommercial director at the then
Eutelsat’s numbers* (EuroM) 2002-3 2001-2
Revenues 715 659EBITDA 540 506Net income 262 270Net income (see note) 59.6 226Cashflow, provided 414 540Cashflow, used 336 616Net debt 1,051 891Backlog 3.8bn 3.7bnNet debt/equity 76.3% 67.6%Note: after special adjustments*Data: Annual report, as at June 30
But technical problems remain:
--Atlantic Bird 1, which orbits at 12.5 deg W, has stabilityproblems. Built by Italy’s Alenia Spazio and owned by a Romemerchant bank, AB1 is largely leased by Eutelsat and occupiesa key mid-Atlantic position. The satellite has a defect that takesit out of service for hours at a time, which is likely to result inan insurance claim.
--E-Bird (33 deg East) is now known to have problems withone of its four operational beams. Coverage over Germany andPoland is affected.
SATMAGAZINE.COM
32Back to Contents
Febuary 2004
signatory-controlled Eutelsat, theiraim was to take a more directlycommercial role in negotiating leaserentals. This sentiment was againmade ahead of Eutelsat’sprivatisation. We put it to him thatthis desire has not wholly beenfulfilled given that the bulk ofEutelsat’s sales are still undertakenthrough established resellers likeGlobecast, Kingston, BT andothers. He said Eutelsat’sdistributors today are much moreefficient in their own operations.“The bulk of our capacity still goesvia distributors. In fact we havedoubled their number. When adistributor wins a contract they areusually providing something moreto their customer by way of addedvalue services, and not just a simplemark-up. The likes of Globecast, BTand Telespazio, when they sell, andsell well, then we are very happy.When a distributor sells extraservices, it is also good newsbecause it means that our customeris happy with us, and the serviceswe are supplying. So, either way, weare happy with the state of thebusiness. For example, recentlythere was the renewal of the TPScontracts, and TPS were at liberty tocome direct to us. But finally, forvarious reasons they stayed withGlobeCast. They stayed becauseGlobeCast could provide them withadditional added-value services thatmade the mark-up justified. [Ourresellers] all now offer excellentsupport.”
Eutelsat added 30% more capacitythrough its 2002-2003 business year,although its fill-rate sufferedslightly as a consequence [Berrettastates Eutelsat’s fill-rate exceeded80% up until April 2003], althoughthe catastrophic loss of HotBird 7
(on launch in December 2002) musthave been something of a setback.Berretta says Eurobird (co-locatedwith Astra’s second position fleet at28.5 deg East) is to all intents full.Same with the HotBird slot at 13 degEast. “I am always afraid that animportant customer comes to uslooking for extra capacity and wecannot help. A 100% fill factor isdangerous,” says Berretta. “Wehave a 16% increase in the numberof our channels during the lastbusiness year, although it must bemeasured correctly. For example, insome cases we have seen the end ofanalogue and the completeadoption of digital and this can leadto a reduction in capacity. Sorevenue has increased 3.5% invideo applications, even though thenumber of channels has grownhugely. Analogue continues todecline, and digital grows, and asfor predicting when analogue willcompletely die is difficult. We knowthat on average every analoguechannel that closes needs 10 digitalchannels to take its place. Theproblem is less dramatic for us thansome of our competitors, and Iwould now say that our analogue[wastage] is replaceable throughnatural growth.”
Nevertheless, Eutelsat is movingsome clients away from 13 deg East,in particular those interested in theBalkan market, to 16 deg E. “Peoplein that region can now buy a simpledouble LNB which gives them both16 degrees and the HotBirdtransmissions. A local operator isnow offering a digital bouquet andwe see 16 degrees as a ‘daughter’position to 13 degrees. Otherwisewe could be full. We count on ananalogue to digital conversion tocreate more capacity, and we
continue to help people to relocateto other spots.”
Italy is Europe’s latest market to seetwo rival DTH players merge theirinterests. Berretta is Italian, andkeeps a weather eye on the market.We asked him what his prognosiswas for the Italian DTH market.“Murdoch is very clever. He offersmore than people want.” Berrettapraised the way Sky Italia (and its17 transponders) was comingtogether, although questionedwhether the DTH broadcaster waswise to ignore some of Europe’sother languages in particularGerman, which are not included inSky Italia’s EPG even though thesignals were free-to-air. “There are300,000 Italian nationals living in theAlpine region who have German astheir mother tongue, and then thereare plenty of Italians who want toview the German transmissions.”Nevertheless, Berretta said SkyItalia’s target was to build themarket to equal or better that of theUK. Berretta didn’t need to saymore, the smile on his face wasanticipation of the fresh contractsthat could mean in the years tocome.
SkyPlex – Slow to happen
Over the past few years Berretta hasheld high hopes for Eutelsat’sSkyPlex on-board digital processingunits, currently on HotBird 6.Unfortunately, the manufacture ofground-based units was somewhatslower than Berretta hoped, and headmits it is a lesson for anyoperator. “We thought it would beready, but it wasn’t. We, at Eutelsat,now have 100 SkyPlex data groundstations here in Paris ready to shipto customers. And the prices areexcellent. They are about EUR3,000.This would be for SkyPlex data
FINANCIAL SNAPSHOT
SATMAGAZINE.COM
33Back to Contents
Febuary 2004
customers, and for broadcasters it isa little more using MPEG2 which willcost about EUR5,000.”
SkyPlex uses Eutelsat’s Ka-bandcapacity, and any consumption ofKa-band is good news. “Generallythe demand for Ka-Band is very low[and] is the part of our fleet least indemand.” Berretta admitted thatdemand simply hasn’t happenedand that growth has notmaterialised in the way assortedresearch studies predicted. “Canyou imagine what [our] state wouldhave been if we had built a satellitethat was full of Ka-Band capacity?We all need a demand for Ka-Band,
our neighbours, as well asourselves. In a few months [Q1/2004] we will launch W3A whichoperates in a mix of Ku and Ka-band.” Eutelsat intends directlyinvesting in Ka ground stations andinstalling them for customers,especially in Africa.
Telenor, as widely reported, has itssatellites up for sale, and Eutelsathas expressed its interest. Berrettawas silent on the precise details ofhis thinking, but in terms of orbitalassets coming onto the market hewas philosophical. “There are lotsof opportunities. Rather than a bigacquisition which has never been
our style, and now that Loral isgone there is not much left in termsof a major acquisition, but we arestill interested in smaller operations.Small systems are interestingprovided they are commerciallyinteresting. We are looking atseveral opportunities today, inparallel and in different areas of theworld. As far as the Americas isconcerned we are well covered withHispasat, and Amazonas will be ahuge provider of capacity. I believethat China and India are veryinteresting.”
FINANCIAL SNAPSHOT
SM
SATMAGAZINE.COM
34Back to Contents
Febuary 2004
NEW PRODUCTS
Codem System, Inc. announced the release of amodular, touch screen antenna control unit (ACU)workstation to complement it suite of antenna controlproducts.The ACUworkstationincludestheextensiveantennacontrolfeaturestraditionally provided in a Codem controller along withan ergonomic touch screen interface plus integratedweb cam and VOIP intercom.
With the new ACU, a remote user can maintain real-timeobservation of the antenna and establish a voiceintercom link with the local ground station personnelwithout the need for separate video or phone networks.And the user configurable drag and drop touch screeninterface is easily tailored for specific applications.
Comtech EF Data Corp., a subsidiary of ComtechTelecommunications Corp. (NASDAQ: CMTL),
announced the release of the CLM-9600L SatelliteModem. This advanced, high performance L-Bandsatellite modem is ideally suited for military applications,offering variable data rates from 2.4 kbps to 20 Mbps,providing high-level modulation techniques, operatingwith an array of forward error correction codecs andsupporting OM-73 plus other scrambling methods.The CLM-9600L Satellite Modem provides the industry’smost bandwidth efficient forward error correctionand modulation. By deploying the optional Turbo
Codem Releses New Antenna ControlSystem
Comtech EF Data Inroduces New L-BandSatellite Modem
PROMAX Upgrades Prolink Series
Promax of Spain recentlyupgraded its popularProlink series of TV andsatelitte level meters. Itintroduced a premiumseries of products whichhave upgraedcapabilities from their successful Prolink series. Formore information go to www.promax.es
Product Coding (TPC), the inherent decoding delay issignificantly reduced, enabling optimization on evenmarginal satellite links. Comtech EF Data’s TPC alsooffers increased coding gain, lower decoding delay plussignificant bandwidth savings. Other forward errorcorrection options for the CLM-9600L are Viterbi,Sequential and Reed-Solomon. Featured modulationtechniques are Phase Shift Keying (PSK) andQuadrature Amplitude Modulation (QAM), specifically,8-PSK, BPSK, QPSK, OQPSK and 16-QAM.
Management of the CLM-9600L can be done bothlocally or remotely. The modem can be configured andmonitored from the front panel featuring a VacuumFlorescent Display (VFD), a keypad and eight LEDindicators, or through the remote Monitor and Controlport. And, in closed network configurations, a specialfeature can be utilized to control the distant end of asatellite link using a Comtech EF Data proprietaryoverhead channel, called Embedded Distant-EndMonitor and Control (EDMAC). The EDMAC mode istransparent to the user and requires no additionalequipment or cabling. For further advanced control ofthe remote end, the Automatic Uplink Power Control(AUPC) feature can be used in conjunction withEDMAC, enabling the modem to automatically adjust itsoutput power to maintain the Eb/No of the remote endof the satellite link constant for protection against rainfading.
This newest member of Comtech EF Data’s bandwidthefficient satellite modem product line includes auniversal data interface that eliminates the need toexchange interface cards for different applications. Theinterfaces offered include EIA -422/530, V.35,Synchronous RS -232, G.703, Low Voltage DifferentialSignal (LVDS) and High Speed Serial Interface (HSSI).
SM
SATMAGAZINE.COM
35Back to Contents
Febuary 2004
MARKET INTELLIGENCE
Iraq and the New ‘Killer App’(Rebuilding a Country)
By David HartshornSecretary GeneralGlobal VSAT Forum
First Afghanistan and now Iraq:The hostilities characterizing the
post 9/11 world have given rise to anew type of “vertical market” for thesatellite communications industry –national reconstruction. Definingthe scope of Iraq’s requirements is,at best, a tricky business, butcurrent indications stronglysuggest that fixed and mobilesatellite services will play animportant role in rebuilding thenation’s communicationsinfrastructure.
That’s the conclusion of DTTConsulting Ltd., which has releaseda 66-page report, “SatelliteCommunications in Iraq”. On themobile side of the equation, thereport shows that satellite serviceproviders made short-term inroadsin the Iraqi market because of bombdamage to six telephone exchangesin Baghdad and the generalshortage of fixed-line connections.
Conventional wisdom holds thatdemand for satellite phones willdrop as GSM penetration increasesand telephone exchanges arerepaired (now due in February).Although GSM licenses were notfinally awarded until mid-December,construction had been underwaybefore this, so a relatively quickuptake of service is expected.
However, satellite-based dual-modeGSM handsets are available,providing a useful tool in areasuncovered by terrestrial mobile.Moreover, there looks to be a smallbut significant market for the call-box version of mobile satelliteservice operation. That is apotential option for a form of thin-route service for rural areas.
DTT reports a number of medium-to long-term market opportunitiesfor specialised applications withinIraq using mobile satellitetechnology, including data-transaction services (connectingATMs, credit card verification andso on). As it stands, it looks as ifGSM will dominate the market forvoice services leaving the low-penetration fixed-line service asalmost a niche business. The fixed
network is woefully short of datacapabilities, although currentreconstruction plans partiallyaddress this, which suggestscontinuing opportunities forsatellite communications, mostly inthe broadband access, corporateand transactional VSAT sectors. Inthe point-to-point ISP sector, DTTforecasts significant migration tointernational fibre.
As it stands there is a significantamount of activity for satellite-based quick-fix applications. Theseinclude local loop wirelesstelephony and data and Wi-Fi. Aplethora of new Internet cafes andcall centres make use of broadbandsatellite access. Indeed, the militaryhas been making good use ofcivilian satellite-based broadbandaccess to keep the troops happy.
The new Iraqi Media Network studio in Central Baghdad (photo: USAID)
SATMAGAZINE.COM
36Back to Contents
Febuary 2004
MARKET INTELLIGENCE
(One major VSAT terminal supplierconfirmed that most of its sales inIraq have been to this sector.)
More broadly, the sums now linedup for reconstruction are trulyimpressive, some 10 times or morewhat was spent in 2003. That clearlysuggests substantial demand forsatellite communications rangingfrom broadcasting services andequipment through VSATs,broadband access and a variety ofpoint-to-point applications.
DTT estimates that up to £50 billionis available for reconstructionthrough the U.S. supplementalbudget (US$18.6 billion), as well asthrough donor funds agreed at theOctober Madrid conference andIMF and World Bank sources.Demand for satellite services andequipment will not be limited by thisfunding. There has been a mini-boom in consumer demand for DTH,for example. And the PTT lookslikely, in the medium term, to investthrough its own resources.Moreover, businesses in oil and gasare likely to generate demand, aswell as Iraqi business in general,mostly controlled by 12-16 familieson a regional basis.
On the DTH side, it looks as if Iraqis going the way of Algeria, withvery high penetration levels. Algeriahas the highest penetration rate, interms of DTH households, in theworld. Iraq is woefully short of anyserious domestic broadcastingoutside of the Kurdish Northernarea. There have also been attemptsto establish commercialbroadcasting in Iraq, although theseare likely to be a longer-termproposition.
It is clearly not easy doing businessin Iraq: The country’s main airportsin Baghdad and Basra remain closedto scheduled commercial passengeraviation; the U.S. administration hasfound it difficult to issue the 26primary reconstruction contracts;and the satellite industry is largelytoo specialised to bid for these andits role will be at sub-contract oreven lower support levels.
However, the satellite industry haslearned much about how to providesolutions in Iraq, and these lessons– which are referenced in the DTTConsulting report – will be exploredfurther during a workshop to beheld in Beirut, Lebanon on 8 March.Organized by the GVF inconjunction with the UN Economicand Social Commission for WesternAsia (UN-ESCWA) and CWCAssociates, the workshop is
ADVERTISER’S INDEX
(Click on the page no. to go directly to the ad; click on the url address to go to website)
Comtech EF Data 18www.comtechefdata.com
ISCe 2004 7www.isce.com
Kavera Software 16www.kavera.com
MITEQ 33www.miteq.com
PanAmSat 6www.panamsat.com
PROMAX 11www.promax.es
SatLink 23www.satlink.co.nz
SES GLOBAL 9www.ses-global.com
entitled “The Effective Applicationof Satellite Solutions in Iraq” andwill include case studies given bycurrent providers of satellite-basedsolutions in the country and willexamine the practical steps thatmust be taken to participate in thisnew vertical market.
Editor’s Note: For more informationabout the Iraq satellite workshop,contact David Hartshorn [email protected] or go towww.gvf.org. To purchase a copy ofthe Iraq report, contact RogerStanyard [email protected]. (GVF-Member discounts apply to boththe workshop and report.)
SM