BT STATE LOW-PRICE COMMODITY TRAFFIC “IS A CHALLENGE”

By | October 10, 2001 | Feature

By Chris Forrester

British Telecom’s (BT’s) Broadcast Services division say that while they remain confident about filling capacity on new satellites planned for launch, heavily discounted tariffs by some operators mean margins are being squeezed and – according to BT’s head of global commercial & sales Malcolm Campbell – “a very real challenge to the industry”. Speaking exclusively to Interspace, he added that this is “especially the case in ad hoc traffic, where it is already almost like a spot market”.

Campbell nevertheless remains optimistic about future demand for satellite capacity. In his view, “the niche channels have come on board creating demand for distribution, but also in many cases the need for extra contribution capacity. The other growth element for BT is sport, which has simply grown massively both on the contribution and distribution sides. The whole business of sports broadcasting is no longer about simply covering a match but now coverage takes in dedicated player cams, referee cams, multiple options for the viewer, all generating good business. It is the same with Grand Prix activity that can generate 50 or 60 different feeds to various locations around the world”.

Campbell also said that digital compression and improved statistical multiplexing of signals has made once wholly uneconomic services more viable. For example, a French company that exports programming to French overseas territories is currently supplied with a 72 MHz transponder aimed at the French Antilles that reaches a maximum of 300,000 people. It will soon be supplemented by another 72 MHz transponder targeting some 20,000 people in New Caledonia.

According to Campbell, “for New Caledonia, up until a few years ago we would have had to use two and maybe three hops to get signals there. Now we use fibre to Los Angeles and uplink it from there. Oddly enough, it is the combination of fibre and satellite that makes it an economic proposition. Hallmark, for example, decided to do things in reverse. They didn’t want to invest in playout (in Europe) so assemble their five channels in Denver, use fibre to New York and then onto London and up to the Hot Birds”.

Campbell also says there is growing interest in new sat-based services like Sat-DSL, MPEG-4 and IP. “Just look at people like Enfocast from Essex, broadcasting a mux of business channels using just 300 kb/s per service. Some of the channels we are talking to about using Eurobird are quite happy with 2Mb/s, and these days 3Mb/s is almost high quality. Look at the US, where some are still using analogue for contribution services. When we launched our US teleport we made a conscious decision to go digital and had to give people lots of trials and tests to convince them that digital works. The next revolution may not be so quick because the necessity isn’t so strong”.

BT’s Broadcast Services, which once had a strong position in terms of sales of Intelsat and Eutelsat capacity, now faces strong competition from the two recently privatised companies. Campbell nevertheless insists there has always been fierce rivalry in this area from operators like Globecast and others: “Remember, we are one of the biggest providers (of customers) to PanAmSat around the world and there’s no favouritism there! Maybe 10 years ago with PanAmSat we were fierce competitors, but later we sort of had a cold shower and decided this was not really the way to go. We got creative and we now have some four or five joint multiplex services with PAS where we provide the tower, fibre, sat- facilities and the mux, they throw in a transponder and we jointly market and share the revenues. On PAS-9, which is a great satellite linking Europe with the Americas, we have two muxes operational uplinking from Martlesham, near Ipswich (in the UK), we sell some of them and they sell some. We have some French channels on board and they look after the BBC and Deutsche Welle. At the end of the day we divide the revenue”.

With industry-wide questions being asked about PanAmSat’s future, Campbell said changes of ownership would not be a problem since “we generally have 10-year commitments from our customers that would be on-going. Indeed, the teleport at Martlesham has been built with PAS very much in mind, it being on the eastern side of the UK and initially targeting PAS-4. There is a big financial and emotional investment in PanAmSat, but getting back to Eutelsat, if we cannot win based on our own added value and creativity, then we deserve to lose out”.

Campbell suggests that far from being an optimist, he is a cautious player. Referring to Eutelsat’s early days, he says “Even before the very first ‘Hot Bird’ we had a Eutelsat F2 that sat half-empty for a long time. We were decidedly nervous about adding Hot Bird and I was one of the sceptics. But on the very first day that Eutelsat opened up its business for what is now Hot Bird 1, (Giuliano) Berretta (currently CEO at Eutelsat, but then commercial director) called me up and said ‘get the new orders in’, even though he’d already received two transponder orders from us and we had two more pending. But Giuliano said we risked missing out because the satellite was full almost on that first day, and it’s been the same ever since. Those two orders did miss out, although we added them to HB2 later. At that time, our view was that there was too much capacity up there. We have changed our minds since, and again with the digital revolution people could be forgiven for saying there’s plenty of capacity up there. But again we see considerable demand, and despite all the trebling and quadrupling of digital channels we are now looking at business cases for our own HB muxes and making an argument that presumed 75 per cent occupancy, but we are now at 95 per cent and over”.


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