The Changing Needs Of The Clients
The SNG operators interviewed were unanimous in describing broadcasters as tough customers. "They used to be happy with QPSK [Quadrature Phase Key Shifting] feeds; now they want higher modulation schemes such as 8PSK and 16QAM [Quadrature Amplitude Modulation] for HDTV," says Nelles. "We manage to reduce costs by shrinking our truck size, then they complain that they can't fit everyone into the truck," adds Maalouf.
Why are broadcasters so cranky these days? One reason is the advertising market; "9/11 really hammered their revenues," says Conover. "Only now, three years later, are things starting to return to normal."
Another reason is the conversion to digital television. In response to Federal Communications Commission demands, U.S. broadcasters are building DTV transmission plants at their own expense, with no apparent options for recouping this multi-billion dollar investment. Faced with this drain on their bottom line, broadcasters are understandably trying to cut costs wherever they can, and SNG is one of those areas where they are looking for savings. In fact, "many local stations that used to use satellites for live feeds have stopped doing so for financial reasons," says Nelles. "Meanwhile, those that are using SNG--both locally and nationally--are demanding lower prices, simply because their budgets are tight."
In addition, part of the problem appears to be attitude. Some broadcasters are accustomed to thinking of themselves, and expect service that matches this expectation. Throw in the pressures of doing live news in remote locations--often in places where the SNG truck is the only source of light, heat and electricity for miles in all directions--and one can see why the life of an SNG technician can be vastly unpleasant. "Typical shifts for an SNG tech run between 10-12 hours a day," says Maalouf. "Often things are so crazy that they find it hard to take a bathroom break, let alone lunch."
Finding Opportunity
Faced with increasing client demands for in-truck Internet connectivity, and no readily available third-party services to provide it, PSSI decided to supply it themselves. "Broadcasters want to be able to connect directly to their network servers, and to access the Web and e-mail wherever they are," Nelles says. "It occurred to us that we could provide such services in-house; not just for PSSI, but the entire North American SNG industry."
This inspiration motivated PSSI, The Space Connection and Panamsat to establish skIP Broadband, a satellite broadband service hosted by PSSI's Las Vegas teleport. Through skIP, reporters can communicate directly with their newsrooms by voice and e-mail in real-time. They can also transmit live voiceovers via satellite to their production centers; either separately, or combined with their video feeds.
"We are also providing skIP connectivity to other SNG companies, and are talking to government and business clients who want this service to back-up their existing communications networks. Moving into 'network disaster recovery' is new to us, but we are happy to be diversifying and adding a new revenue stream; especially one that will help keep us afloat in the current cutthroat SNG environment," says Nelles.
The Road Ahead
The proven economic viability of SNG, combined with the ambitions of its experienced technicians, resulted in a spate of new startups willing to carve their niche by undercutting the big boys. At the same time, SNG customers have become so accustomed to this technology that it has become a commodity to them, like telephone service or the Internet. As a result, they are more than happy to buy it from the lowest bidder, precisely because SNG is seen as a commodity that can be easily supplied by almost anybody.
The fact that the SNG industry is facing these pressures is not unique; they are typical growing pains for any maturing business sector. The hard truth is that the SNG's pioneering days are over; now comes cost cutting and consolidation. The engineers are being replaced by the bean counters. This is what happens when a business sector gets to this stage in its development.
So what lies ahead? Under the rules of supply and demand, SNG operators will have to either cope with the commoditization of their services, or face defeat at the hands of those who do. One solution is to diversify into newer, less competitive arenas. Another is to be so good that customers will not want to go anywhere else. Whatever the case, the changing needs of the SNG operators and their clients will continue to foster a robust market niche that has turned information dissemination into a commodity.
As Via Satellite's senior contributing editor, James Careless has covered all aspects of the global satellite industry for more than six years.
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