Digitally-compressed television (DTV) and Internet traffic: together, these two forces are fundamentally reshaping the teleport business. Thankfully, these changes are for the better, as far as teleport operators are concerned. As they adapt to new technologies--becoming as expert in networking as they already are in two-way RF transmissions--the world's teleport operators are expanding opportunities and their chances to make money.
Of course, change comes with a cost. In the case of teleports, the price is giving up their traditional "satellite-centric" approach to business, and replacing it with a hybrid satellite-terrestrial platform that always puts customers first. "We don't define ourselves as a teleport company, and haven't for the past five years," explains David Liddle, Verestar's vice president of global sales. "Instead, we're a company that delivers transmission solutions for our customers, in the best, most cost-effective manner possible. For some customers, it's not as important how we deliver their signals, as long as we deliver them efficiently."
Liddle's attitude is shared by other major teleport operators such as Globecast. These days, "what's at stake is the service to the final customer," says Globecast CEO Robert Pinon in the World Teleport Association's (WTA) Spring 2003 edition of Uplink, "and that the customer doesn't care how it works. He's just looking for something efficient and reliable."
Changing The Teleport Business
In the past, teleport operators uplinked one-way video and two-way voice/data, and that was about it. Moreover, they did the uplinks much like an old-fashioned telephone operator connected calls. The teleports provided the path between the sender and the recipient and let them take care of the rest.
Then things started to change, radically. It began in the 1980s with "digitally-compressed television, which has had a huge impact on the teleport industry," says WTA Executive Director Robert Bell. "Initially, digital compression allowed customers to squeeze more channels into fewer transponders, something that appeared to be bad news for our industry. However, broadcasters subsequently responded to digital compression by adding many, many more TV channels to their lineups, which has actually driven sales volume up. Meanwhile, the move to High Definition Television (HDTV) could be a major opportunity, because the configuration of the average 36 MHz transponder is a much better match for the bandwidth requirements of compressed HDTV than a fiber DS-3, on top of satellite's inherent one-to-many cost advantage."
"Digitization means we need a lot more customers to fill a transponder," says Bill McNamara, general manager of BT Broadcast Services in the Americas. "However, the rapid digitization of content has reduced the barriers to market entry to a whole new cache of customers. Those customers whose business cases could not support the cost of an entire transponder to carry an analog signal for distribution now find that a 4 Mbs channel on any one of many of our platforms--such as Telstar 5, Hot Bird, or Eurobird--are easily affordable."
In the 1990s, the Internet hit the mainstream, and the teleport business began to change once more as IP data took to the airwaves. According to the WTA's Teleports Benchmarks 2002 Report, Internet/IP traffic as a share of global teleport revenues rose from three percent in 1998 to 16 percent in 2002. Three percent to 16 percent, is a 533 percent increase in five years.
"Despite the exploding of the dot.com bomb, IP trunking is still the fastest growing sector of the teleport business," says Bell. "Even teleport operators that concentrate on broadcast video are seeing new opportunities in IP broadcast for store-and-forward and other applications. It's happening already with local TV stations. Many receive low-res video files from the network via satellite for use in their local news broadcasts. They use the low-res files for shot selection and then request high-res versions for download via satellite. The result is much more efficient use of the bandwidth."
Taken as a whole, "The emergence of digital TV and the Internet as new transmission pathways for distribution [have] increased the volume and variety of content exponentially," says Vince Matherne, Crawford Communications' director of sales and business development for satellite. "In turn, the entire thought process of the business--from operations through sales--has had to evolve, and continues to morph. Shared platforms, niche markets, last-mile opportunities, legacy system migrations, mixed-use platforms and protocol compatibility are all ideas and issues that are continually being addressed through all facets of the business cycle."
"We have reinvented ourselves a few times to meet the shifting demands of the market," says Verestar's Liddle. "Doubtless we will continue to do so in the years ahead, as more opportunities arise."