Middle East End Users: Their Demands for Satellite
The Middle East is an attractive market for satellite. With a growing DTH market, potentially untapped demand for satellite broadband, as well airlines leading the way in terms of in-flight connectivity, the region has a lot to offer to the satellite industry.
Demands for satellite capacity are on the increase in the Middle East. With local players such as Arabsat, Nilesat, Yahsat, Es’hailSat competing alongside some of the global industry giants, it is a vibrant market.
Nawras – The Wireless Operator
Nawras has around two million customers in Oman and is the largest wireless operator in the country. The company has “considerable requirements” for satellite to meet backhaul needs, according to Wolfgang Wemhoff, CTO, Nawras. “The country has a lot of scattered, small communities as well as customers living in the main cities,” he says. “Currently Nawras has 50 MHz of spectrum rented on the NSS 6 satellite with a growth of more than 20 MHz over one year.”
Satellite will remain a key part of the company’s plans, particularly as more of the operator’s customer’s look to broadband. “Satellite is important in short to mid-term planning to cater for voice and basic Internet services for customers in difficult to reach locations, but as demand for broadband grows, the challenge of using satellite will increase especially as capacity requirements will grow exponentially,” says Wemhoff. “One case that may exist beside backhauling remote locations is to use satellite as a cost effective redundancy in international and national connectivity. In any case, we prefer to work with satellite operators who have set up a local hub and are able to offer the best technical solution.”
Wemhoff admits the increasing demand for data is causing a major strain on Nawras’s network considering spectrum scarcity and transport, both in backhauling and backbone limitations. The company is currently undergoing an extensive network turbocharging program to provide its customers with the services they want to use.
The first phase is complete and saw Nawras invest 60 million Omani Rials ($155.45 million) to upgrade all 2G sites to 3G+, add a second and third 3G+ carrier to increase capacity, and enhance both indoor and outdoor coverage. Earlier this year, the company introduced 4G services.
“Demand for satellite capacity will grow in line with the growth of demand for availability of basic services everywhere. This is expected to continue in the coming five years until broadband comes into the picture as a requirement everywhere. At that stage, satellite technology will have to offer alternative technologies to be competitive in both cost and quality,” says Wemhof. “Nawras has been using satellite technology for some years now. The demand will continue growing in the coming three to five years with the focus on more cost effective and even more viable solutions as the penetration of broadband services increases further.”
OSN – the DTH Operator
OSN is the leading DTH platform in the Middle Easter and North Africa region. It offers a wide range of services and approximately 26 HD channels with its services across many countries in the region. However, getting satellite capacity is becoming an issue. “There is a bit of a squeeze on capacity there at the moment. So, that is having some impact on our desired rollout of HD channels,” says Mark Billinge, CTO, OSN. “As soon as there is transponder capacity available, we will look to launch additional services. We operate today 10 transponders on 7 degrees west…. split between Nilesat 102 and Nilesat 201, and Eutelsat 7 West A.”
OSN bases its services on MPEG4 and is constantly looking to maximize the efficiency of the satellite capacity it uses. “We are using DVBS-2/8PSK modulation on all our transponders with the exception of the two new Pehla transponders; those are QPSK. We are maximizing the utilization of the capacity we have. We are always looking at taking advantage of encoder progression and codec efficiency,” Billinge says. “We are working with Harmonic at the moment in terms of an upgrade to the headend which will give us some more efficiency, which will allow us to add another HD channel per transponder. We are always looking to make the most of what we have. There won’t be fresh capacity to the region with the coverage that we desire until 2015 when Eutelsat’s launches a new satellite.”
OSN is pioneering services such as its on-demand content library and OSN Play, its multi-screen platform offering. While OTT may bring about some more competition, Billinge believes the pay-TV market is still ripe for more growth in the region. “The growth curve is steep and we believe it has the potential to continue for some time to come,” he says. “Saudi Arabia is perhaps the biggest growth market. Egypt also has huge market potential. North Africa also has huge potential if you can offer the right content there.”
du – The Telco
du, the telco based in the United Arab Emirates, is also a key user of satellite capacity in the Middle East region. In 2010, it signed a deal with Intelsat to jointly offer turnkey multi-channel per carrier (MCPC) television program distribution solutions on the Intelsat 10 satellite located at the 68.5 degrees east orbital slot. Ahmed AlMuhaideb, vice president, broadcasting & IPTV services for du, says the telco “has seen good growth” with this platform. The company expects satellite to be the main medium for TV distribution in the Middle East and the status quo to remain this way for the coming few years.
“Next to satellite, in terms of importance, are TV streaming through Internet, IPTV and OTT. The latter may see more growth in terms of subscribers. Still, IPTV and OTT service providers rely on satellite TV for program acquisition and distribution. Terrestrial TV technology has not generated much interest from broadcasters and the number of subscribers of DTT in the Gulf region is practically nil,” says AlMuhaideb.
Samacom, which is owned by du, is one of the largest teleports in the Middle East and is ranked in the top 10 globally in terms of teleports. This means du is a key satellite player in the Middle East. “du is the main satellite gateway for the majority of TV broadcasters in the Middle East. du also serves several enterprise clients through VSAT services from Samacom. There is a strong demand for du’s services across the UAE and du keeps expanding its footprint to meet this demand. Generally, wherever network is yet to reach, VSAT has provided a quick solution for connectivity,” says AlMuhaideb.
In terms of whether the company needs more satellite capacity going forward, AlMuhaideb adds, “Our demands for capacity will depend on the popularity of the satellite platform. More than likely, satellite platforms at 7 degrees west and 26 degrees east will continue to grow and the demand for capacity on these systems will remain robust. Newly launched systems on other orbital positions may face an uphill battle in market penetration.”
AlMuhaideb also believes that High Throughput Satellites (HTS) could ultimately play an important role in the region going forward. “Telecom operators are continuously expanding their network’s footprint and able to reach remote locations. HTS, however, may create a huge impact if the economic model works out for the end customers,” he adds.
HorizonSat – The Service Provider
HorizonSat was established in 2001 to provide satellite services as an effective means of transmitting and receiving data, such as, voice, files, IP-based applications and media content, as a more efficient way to terrestrial connectivity. According to Hisham Ansari, CCO, HorizonSat, the Middle East is not a dynamic market for satellite IP services anymore because of developed terrestrial networks.
“There are still certain services that can be provided via satellite such as POS and for the banking/ATM market. It is, however, a dynamic market for broadcasting. Now that we have many channels that are being converted from SD to HD and others looking at converting HD to 4K, there will be an increase in capacity demand,” Ansari says.
HorizonSat is working on complementing satellite and terrestrial technologies. It is in the process of implementing services where satellite and terrestrial service complement each other. “For example an existing national terrestrial network can be connected to another regional network by satellite and thus establishes a global network. For a wide regional connectivity satellites have an advantage of rapid deployment allowing for faster time to market for the terrestrial networks that are unable to reach their target customers or bridge their network topology to be able to offer their services,” Ansari says.
An HTS future in the Middle East could significantly benefit a company like HorizonSat. “The evolution of HTS with competitively priced CPE will have a significant impact on the Middle East market but is subject to regulatory hurdles that are yet to be reduced,” says Ansari. “We see high demand for broadband services as well as SNG services but, as you are aware, the Middle East is a highly regulated market and as such, right solutions are to be crafted.”
Ansari says that due to low Mbps prices, telecom operators are also looking at HTS to overcome network bottleneck issues, which was never the case in the past. He adds that the availability of excess capacity with low cost bandwidth is plowing the path for telecom operators to use HTS, which was not possible on conventional Ku- or C-band satellites.
The company has recently established a teleport in Munich, Germany which is a 100 percent subsidiary of HorizonSat. It sees growth markets in broadband through HTS, maritime, and contribution and distribution services. In terms of where the growth will come from, Ansari adds, “The satellite industry is currently undergoing changes in the types of capacity and services that are deployed over the Middle East. Whilst Ka-band satellites struggled over the last few years they are now starting to see increased demand. Broadcasting companies, telecom providers and ISP’s, are now looking at solutions on HTS in order to provide a complete, bundled solution.”
Rotana – The Broadcaster
Rotana, the Saudi-based broadcaster, works with Arabsat and Nilesat and its main coverage remains the MENA region. “Our FTA satellite coverage goes from South Africa, France, to Iran’s Eastern boarders. We cover it with redundancy with both Arabsat and Nilesat. Our signals are world-wide, but we send our signals through different means to the United States, Australia and the rest of the world,” says Naser Refaat, Rotana’s technical director. “We recently just signed off a new additional full transponder contract with Arabsat to start transmitting all Rotana HD channels via Arabsat BADR 5. Our HD Transmission shall start within coming month in MENA. All Rotana TV channels shall be available FTA in MENA in both formats, standard SD and HD. Rotana’s senior management are rapidly expanding the number of regional channels which caters to FTA and IPTV platforms.”
The broadcaster has “aggressive plans” in terms of expanding the numbers of channels it offers, and Refaat admits it will need more capacity. “We are looking to increase our satellite capacity to boost our SD/HD coverage globally. We might be acquiring additional transponders when needed,” he adds.
Like other end users in the region, the company is also looking into the possibilities of HTS, and what it might mean for a broadcaster like Rotana going forward. “Current HTS satellites support Ka-band and Ku-band is still under testing, Rotana might consider the same for distribution means but not in the short future; however, it will all depend on MENA market delivery reediness. We are looking into using HTS as part of our business propositions to the marketplace. Currently, we are delivering our content via third parties to different platforms and different OTT applications. Our long-term objective is to have all this done centrally by Rotana technical services,” Refaat says.
As many broadcasters, the company is looking into the possibility of moving to 4K. “At the moment, Rotana is looking to go native. So, all of our new acquired content is in HD. We are even considering to move to 4K (Ultra-HD). We are starting to convert all our negative films to Ultra-HD (4K) and 2K (HD) formats along with all other VOD formats,” he says. “We want to multi-purpose our content via different channels and delivery mediums are our core business. We are not going to switch off our SD transmission for the next three to five years at least, hence 98 percent of our viewers don’t own HD TV’s nor HD set top boxes in MENA. In Egypt for example, there are less than 7 percent of households are able view HD.”
However, while the broadcaster maybe considering a move to 4K, Refaat admits it will take time for this technology to really reach the Middle East. “In terms of 4K, our main concern is not production but delivery, transmission and distribution limitations. Satellite Ka-band is not yet popular and shall take some time, new technological compression must be introduced to save transmission costing to broadcasters like us. Consumer set top boxes and TV sets must be readily available with very competitive pricing that fits with MENA household average income and that is all essential before Rotana or others could consider its value added proposition and migrating its satellite transmission to Ultra-HD (4K). Therefore, and due to technology barriers currently and the cost impact, I don’t think it is feasible at all in the Middle East. So, I think we will continue with normal HD until a drastic change happens in Ultra-HD eco-technology in-terms of price,” he says.