Satellite News: What levels of customer take-up are you expecting in the first years of operation?
Berretta: The launch of Tooway on Hot Bird 6 and Eurobird 3 gives us an important platform to roll out the service and to develop the brand. With the launch of Ka-Sat in mid-2010, consumer broadband services will obviously ramp up, and we expect to generate average annual revenues of around 100 million euros beyond fiscal year 2011-2012.
Satellite News: Is there a back-up plan for the satellite if the satellite broadband business does not materialize?
Berretta: Our objective is to create an in-orbit and ground infrastructure which will primarily serve the consumer broadband market with more than 1 million subscribers, but we certainly envisage other video applications following the example of the North American market where Ka is increasingly serving the markets for local TV, HD (high definition) contribution and professional video networks. Ka-Sat’s architecture, with up to 900 megabits per second of capacity per spot beam shared between forward and return links, may also herald future applications that require very high bitrates such as HD cinema and 3-D television. We also believe that the 250-kilometer footprint of the spot beams opens opportunities for local and regional broadcasting, which is still an underdeveloped market in Europe. There is a big difference for small broadcasters between leasing capacity with pan-continental coverage which may require encrypting for copyright reasons and using focused bandwidth closely aligned with your target market.
Satellite News: Is there a concern that your revenue growth seems to be reliant on your performance in video services?
Berretta: Our financial and operational performance for this first half-year underscore the exceptional attraction of our satellite neighborhoods and our ability to capitalize on digital broadcasting and broadband services, which are the two most dynamic activities in the fixed satellite services sector. We are very pleased with the performance of video and have proactively allocated capacity to video, which gives us high visibility on revenues and further anchors our key satellite neighborhoods. Video activity for our last half-year accounted for 74.4 percent of revenues, mainly driven by a strong dynamic in Russia, the Middle East and Africa. I believe there will be a second wave of video in the future which will be driven by HDTV and which will certainly benefit from the emergence of Blu-Ray as the accepted HD DVD standard. Today, we are broadcasting 31 HDTV channels in Europe. We were prudent about the take-up of HDTV, largely because of the transition process from MPEG-2 to MPEG-4. The higher compression rate of MPEG-4 naturally makes it the preferred choice for broadcasters. The obstacle is the installed base of set-top boxes. In the course of this year we think that HD take-up will accelerate, including in emerging markets. This HD growth is well timed for us because we have opened a new video neighborhood at 9 degrees East which can be twinned with the Hot Bird neighborhood for [direct-to-home] reception with dual-feed antennas. This extra capacity in the vicinity of the Hot Bird position will enable us to absorb more video customers who can benefit from an attractive pricing structure on Eurobird 9 and still reach the Hot Bird audience with off-the-shelf consumer equipment.