Giuliano Berretta, CEO, Eutelsat

Via Satellite: Will IPTV expansion hurt the satellite broadcasting business?

Berretta: I am very confident in the future of satellite broadcasting and in pay-TV via satellite. Just look at this statistic to show the cost efficiency of satellites from the client perspective: For a platform of 4 million subscribers, broadcasting channels from a premium video neighbourhood in DVB/MPEG-2, which is not the most advanced standard, the cost per subscriber per channel per month is less than a cent of a dollar. With MPEG-4 compression, the costs are by definition even lower. I think this is a pretty compelling figure in comparison to many other delivery platforms. As far as IPTV is concerned, the competition in Europe is playing out with cable operators in urban areas. IPTV is growing, with France representing Europe’s biggest market, but it is only expected to penetrate 8 percent of digital homes in Western Europe by 2010.

While IPTV brings the benefits of interactivity, there are issues on variable quality, patchy coverage and bandwidth limitations. It is inevitable there will be differences in quality of an IPTV service as the bitrate is not constant. TV services are not tolerant of a signal that will give you a variable bitrate depending on number of users. If other users use the same group of lines, the bitrate goes down. There is an even greater challenge for HD.

In an interactive environment, the business logic that we see and that broadcasters are understanding is to combine terrestrial and satellite technologies by using satellites for the forward link and the Internet for the return link. This enables them to leverage the unbeatable cost efficiency and bandwidth availability of satellite for content distribution.

Via Satellite: What are your capital expenditure plans?

Berretta: Our capital expenditure was recently raised from 770 million euros ($1 billion) to 980 million euros ($1.3 billion) for the next three years in order to accommodate Hot Bird 10 and the investment in the S-band payload on W2A. This is a solid plan of expansion which will fuel our future growth. We now have five satellites in construction, which will enable us from 2008 to bring fresh capacity to premium neighborhoods and to cascade existing in-orbit capacity to new locations. … This means that we launch new satellites to our established orbital locations to replace existing satellites, which are released to new positions. The launches in 2006 of Hot Bird 7A enabled us to release Hot Bird 4 (now called Atlantic Bird 4) to 7° West where it is co-positioned with the Nilesat satellites. The launch four months later of Hot Bird 8 released Hot Bird 3 (now Eurobird 10) to 9/10° East where it can broadcast content to homes equipped for dual-feed reception with the Hot Bird neighbourhood. We plan to continue this strategy of cascading satellites with future launches.

Via Satellite: How do you expect the satellite landscape to change throughout the next 12 months?

Berretta: I believe the next year will be a year of assimilation for the big acquisitions, organic growth for the rest, with some potential for consolidation among smaller operators. I think it will be a good year for satellite with continued recovery of the FSS sector in depressed regions and a win-win situation for operators and users elsewhere. There is still competition in areas such as the Far East and North America, but since Eutelsat is not a dominant player in either region we do not feel exposed to downward pressure on prices.

In terms of growth, there will be opportunities in new value-added applications and services particularly for broadband services in the transport arena on trains, in-flight, and maritime markets. This will enable us to pursue our strategy of maximizing revenue per transponder in parallel to attracting new services to our premium neighborhoods and cascading capacity out to our emerging premium positions.

Via Satellite: Will IPTV expansion hurt the satellite broadcasting business?

Via Satellite: What are your capital expenditure plans?

Via Satellite: How do you expect the satellite landscape to change throughout the next 12 months?

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