Data Driven Teleports
The business dynamics of operating a teleport that delivers data services to enterprise and government customers differs greatly from teleports supporting the needs of broadcasters. As the business model changes, so do the cost drivers. IsoTropic Networks Inc. is a privately held teleport operator based in Lake Geneva, Wisc., which focuses on the delivery of interactive data solutions. Unlike broadcast applications, which are predominantly simplex, data applications run the gamut from Voice over IP to Web browsing to GSM cell phone trunking to videoconferencing. IsoTropic, a Host Network Operator (HNO) that supports Virtual Networks Operators (VNO) that resell service, operates five antennas, ranging in size from 6.1 meters to 9.5 meters and uses Direct and SCPC platforms to deliver data services.
Hank Zbierski, IsoTropic’s director general, says labor makes up roughly 32 percent of costs and satellite capacity comes in a close second at 30 percent. Maintenance costs appeared to be similar to other teleports averaging in the 2-percent range. “Although we don’t do business directly with the end user, we are ultimately responsible for them. We have empathy for our customers’ customer. As such, the cost of labor is our single largest cost. We don’t believe in voice mail. Our clients speak to a technician, and the tech stays on the call until the problem is resolved. This level of service skews our costs, but that level of service is what we are known for,” he says. Zbierski also notes that his energy costs have swelled from less than $1,000 a month to several thousand dollars a month, citing seasonal peak energy bills that come from heating large antennas during Wisconsin winters.
Depending on the business focus of the teleport, cost drivers vary with labor sometimes supplanting satellite capacity as the single largest line item. It is important to note that other costs can vary greatly depending on the location of the teleport. Differences in regulations and controls, as well as taxes, vary by region and country.
Virtual Teleports
An interesting facet that has developed over the last decade is the birth of the virtual teleport. No longer must one own and operate your own facility. Instead, operators can hire a teleport in a distant land to provide the needed services. Renting services on a monthly basis has lowered the barrier of entry for teleport operators into new markets that previously were out of reach. “In the past, you needed to dedicate a million dollar VSAT hub to a single satellite, which made expansion costly. Now you can get an iDirect hub which will support five different IF connections,” says Simon Bull, senior consultant, Comsys. “Hughes has also recently added multiple-IF capability with their HX platform and offer a 2IF capability as a standard product. This flexibility has made it easier for network operators to cover distant regions. If you don’t cover a geographic region yourself, you can easily make arrangements with another teleport in a different country to utilize their uplink,” he says. “This flexibility has led to some interesting discussion going on amongst service providers. Some feel they must own their entire infrastructure, while some believe they should own strategic assets and compliment them with contracted teleport services. There are some operators that wish to own nothing, contracting out their entire operations support to different teleports around the world. The debate ultimately revolves around operational control versus flexibility and the costs behind each strategy.
Cost Cutting Success
With personnel costs ranking either first or second, network automation initiatives were at the top of the list of teleports seeking to cut costs “We have invested somewhere between $1.5 million to $2 million in automation technology and another $2 million to $5 million in tapeless broadcast technologies,” says Daniel Farinella, TIBA’s CTO. “Our new automated systems have yielded a savings of 10 percent in head count.”
Kirchner concurs. “We are constantly looking at automation to see if we can improve efficiencies. Managing services, booking services, trouble shooting, fault isolation. When you consider three shifts per day and two shifts per week to get 7-by-24 coverage, the discussion between headcount versus automation is always in play,” he says. “How can we do things faster? We are always looking to be more efficient. We ask ourselves: Do the automation tools we are evaluating allow us to do more value-added work so we can stay focused on value for our customers?”
“By nature, teleport operators are the ones who make all the different systems work together,” WTA president Robert Bell says. “They are the ones who make all the different systems work together. With the shift to IP, all the machines now speak the same language. This has allowed for huge increases in productivity, helping to drive down major cost factors like space segment and personnel, but networks have increased dramatically in complexity and will continue to do so. This means that higher skilled workers are needed to keep everything running.”
Although teleports operators vary in size, regional focus and business model, the top two cost drivers are space segment and labor costs, followed by infrastructure and real estate. Although the results of the interviews are anecdotal, the cost factors revealed are reasonable and not out of line. Combined, space segment and personnel make up at least 60 percent of ongoing costs of operating a teleport — a good target for anyone looking to drive down costs.
Greg Berlocher has been active in the satellite industry for twenty five years and is the President of Transcendent Global Networks LLC.
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