By Peter J. Brown
Throughout the next 18 months, commercial Ka-band satellite capacity will grow considerably. New North American broadband multimedia ventures are starting to talk about specific plans rather than a wide range of opportunities. In Europe, however, the initial phase of this trend is almost over.
Military use aside, Ka-band must be seen as more than just a frequency, as spotbeams, phased array antennas and new software technologies entering the picture. Because the hype is gone and the mood is more cautious, yet optimistic nonetheless, there is no real audience for any wild-eyed projections. Most if not all of the early backers with their deep pockets also are gone.
With more than 80 Ka-band geostationary orbital slots assigned to U.S. operators by the FCC, and with almost 50 active licenses assigned in two rounds, there is simply not enough space here to update the status of all the Ka-band ventures, both geostationary and non-geostationary systems.
Still, look at all the recent and quite unexpected developments. Echostar Communications Corp.'s decision to acquire Ka-band capacity on SES Americom's AMC 15, and Liberty Media Corp., Intelsat Inc. and the National Rural Telecommunications Cooperative (NRTC)'s decision to invest in CO-based Wildblue Communications are signs of forward momentum adapted to the new realities of the broadband arena.
Besides obtaining a stake in Wildblue, Liberty Media reached an agreement with Lockheed Martin Corp., Northrop Grumman Space and Mission Systems Corp. (formerly TRW Inc.) and Telespazio S.p.A. involving a proposed restructuring of Astrolink International LLC. Liberty Satellite will acquire substantially all of the assets of Astrolink, which is scheduled to initiate service in late 2005, while the two satellites for Astrolink are simultaneously back on track at Lockheed Martin and Northrop Grumman.
"We here at Astrolink are not familiar with the specifics of Wildblue's market strategy," says Steve Soroka, Astrolink's vice president of operations. "That said, given our performance levels, we believe that our service offerings are complementary with Wildblue's. Our services are directed at the enterprise market, and include bandwidth on demand and Virtual Private Networks (VPNs), as examples."
What does the NRTC, for example, see as the value proposition in this transaction with Wildblue? "Our members will be poised once again to deliver a valuable product that is needed and desired by their customers in rural America," says Roy Heffernan, NRTC's senior vice president of business development. "The ability to deliver a converged data and video product, even potentially bundled with their electric or telephone services, will put our members in a strong strategic position.
"NRTC is thrilled with our new partners, Liberty Satellite and Intelsat, as well as the existing team of investors, and we look forward to maximizing the return on our collective $156 million investment," adds Heffernan.
In Europe, which emerged as the true launch pad for the global Ka-band sector, there are other indicators of changes underway. Eutelsat is now exploring the merging of its Skyplex platform with the Ka-band capabilities on its new Hot Bird 6 satellite to enable micro-broadcasting as one of many possible interactive products, while SES Astra plans to use Ka-band capacity on its Astra 1H for a new always-on satellite return path-based service known as Satmode, short for satellite modem. SES Astra links up with partners Canal Satellite, Canal+ Technologies, Newtec, STMicroelectronics and Thomson in this venture. Satmode is seen as a thin-stream, interactive solution that will boost demand across the board for various new gaming, video-on-demand and messaging services.
As for Ka-band in Asia, Space Systems/Loral completed static load testing of iPSTAR 1, the 14,900 pound 1300 satellite under construction for Shin Satellite Plc in mid-April. With 84 spotbeams, this hybrid Ku-band/Ka-band platform will be operational at 120 degrees E starting in 2004. iPSTAR 1 will join other Ka-band satellites in the region, including New Skies Satellite NV's NSS 6 at 95 degrees E, Koreasat 3 with three Ka-band transponders, and the SCC Superbird and JSAT NStar satellites serving broadband markets in Japan.
"The market is certainly much smarter now and companies cannot justify the deployment of large Ka-band networks. We will not see much demand for these services before early 2005," says Chris Baugh, president of Northern Sky Research in Orland, FL. "Incremental business, with reduced upfront costs, is where the emphasis lies."
According to a recent Northern Sky study of Digital Video Broadcasting-Return Channel Satellite (DVB-RCS) worldwide, there are an estimated 32 hubs and 8,500 terminals in operation today. Baugh reminds readers that few, if any, of these hubs and terminals are using Ka-band capacity, with the exception of a handful that may have a Ka-band return via the SES Astra 1H satellite. Otherwise, the vast majority of DVB-RCS deployments to date are Ku-band only.
"You have a delicate situation here. None of the operators can afford to be late because they risk the fact that their brand will not be associated with this new technology," says Karim Nour, an analyst at Frost and Sullivan. "At the same time, if they come too early to either the enterprise or consumer markets, they will find nobody to sell Ka-band to."
Although subscriber acquisition costs (SAC) will not represent a big hurdle in the enterprise sector, consumer business models are a different matter altogether, according to Nour, because they will need to accommodate a SAC much higher than the one associated with mainstream DTH services, due to significantly higher terminal costs.
"How do you stimulate a broader consumer market? Not through government subsidies. You have to hit a certain price point, a very specific dollar amount in the $40 to $50 per month range," Nour says.
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