Eutelsat Targets North America

Heavy competition is not deterring Paris-based satellite operator Eutelsat from focusing its attention on North American customers that are seeking coverage outside their home region.

Ron Samuel, chief operating officer of Eutelsat Inc., the U.S. unit of Eutelsat, said customers in North America are expressing strong interest for satellite connections to other parts of the world. That situation contrasts with relatively tepid demand for new satellite services in less developed regions.

Samuel established Eutelsat’s office in Washington, D.C., roughly one year ago to give the satellite operator a direct presence in the North American market. His role includes building relationships with partners in North America, aiding in customer in the region and providing feedback to Eutelsat’s Paris-based management team about the U.S. business environment and needs.

Before taking responsibility for Eutelsat activities in North America, Samuel served part of his six years with the company in its Paris headquarters where he managed regional sales and commercial activities.

As the owner and operator of 20 satellites, Eutelsat’s thirst for growth remains unquenched as it strategically builds and launches new spacecraft designed to meet targeted marketplace needs. Eutelsat is one of the few satellite operators that expanded during the last couple of years at the same time demand for satellite capacity in many parts of the world declined. That strategy has aided the company in meeting the varied needs of its North American customers.

“We are growing organically by launching new satellites,” said Eutelsat CEO Giuliano Berretta. “Our satellites tend to cover wide areas and are therefore well-placed for responding to capacity demand for interconnecting developing and developed parts of the world. As a result, the weak economy’s downward pressure on pricing faced by operators in many regions of the world has left Eutelsat reasonably unscathed,” Berretta said.

“We haven’t been as impacted because we have positioned satellites to cover difficult-to-access areas where people need capacity,” Berretta said. “Virtually all of the satellites in our fleet offer coverage of the Middle East, where we believe demand for capacity should remain strong during the ongoing process of rebuilding Iraq. Our satellites are quite reasonably well loaded. When we order a new satellite, we look carefully at specific needs in the marketplace and our customers.”

Eutelsat’s satellites over the Eastern portion of the United States also can be supported by terrestrial capacity to give the company cross-country connectivity. The company’s capacity was used for a new satellite service earlier this year during a three-month demonstration by Connexion by Boeing (CBB), a business unit of Boeing [NYSE: BA] that is providing in-flight broadband Internet access for passengers flying between Europe and the United States. The demonstrations were followed by a CBB lease of capacity on Eutelsat’s SESAT satellite providing coverage over Europe and Asia for CBB’s commercial service due to start in 2004.

Pursuing Partnerships

Rather than build a teleport of its own in North America, Eutelsat has found it more cost-effective to partner with U.S. teleport operators for those services, Samuel said.

For example, Eutelsat and GlobeCast announced in April that they signed an agreement to jointly market the first Atlantic Bird 3 gateway at GlobeCast’s New York teleport on Staten Island. The platform uses capacity on Eutelsat’s new satellite that provides coverage from North America into Europe, North Africa and the Middle East. That platform also offers a transatlantic gateway for video broadcasting and IP content distribution, as well as enabling small antennas to be used for corporate network distribution, reception of television channels at cable head-ends, and satellite TV reception.

Eutelsat’s direct service to the United States was elevated a notch two years ago when the company obtained its first license from the Federal Communications Commission (FCC) to operate the Atlantic Bird 1 satellite. The company subsequently has launched and obtained licenses for its two other Atlantic Bird satellites that serve the U.S. market.

In addition, Eutelsat is trying to expand its role in serving the North America enterprise market. One example is a Sept. 29 agreement for Eutelsat’s SESAT satellite to be used to deliver integrated network services for CapRock Communications, a provider of satellite communications services to customers involved in oil drilling, shipping, as well as chemical, cruise line, natural resource production in extreme locations.

Eutelsat’s satellite fleet uses high-performance satellites that serve wide coverage areas. That strategy has allowed Eutelsat to keep its utilization rates above 80 percent for its “high-performance” satellites, Samuel said.

While other operators are seeing reduced pricing and utilization of their satellites, Eutelsat has developed high-value orbital slots and added capacity to meet specific marketplace needs.

Latin America also has attracted Eutelsat’s interest. As a 27 percent-owner of Spain’s national satellite operator Hispasat, Eutelsat has a footprint in the Latin American market. Hispasat will next year be launching the Amazonas satellite to the 61 degrees West orbital slot that will increase coverage of the Americas.

Another piece of Eutelsat’s expansion plan is to launch the 50-transponder W3A satellite in the first quarter of next year. That satellite would cover continental Europe and the Middle East, as well as Africa with a spot beam that would be connected to Europe.

The company also signed a contract in July for the construction of the Hot Bird 7A broadcast satellite, which was followed in September with the order for Hot Bird 8 – the largest satellite ever ordered by Eutelsat.

That order is a “very good sign” for the market, said Antoine Bouvier, chairman and CEO of EADS Astrium, a France-based satellite manufacturer.

“I have the highest respect for Eutelsat’s strategy,” Bouvier said. “It is not easy to present a business case for a high level of investment when the market is depressed.”

In addition to the original requirement to replace Hot Bird 7 that was destroyed in a launch failure last December, Hot Bird 7A’s mission has been expanded to include providing additional backup and replacement capacity at Eutelsat’s key satellite TV orbital slot at 13 degrees East.

Eutelsat launched its latest satellite, e-BIRD, on Sept. 27. That satellite, located at 33 degrees East, is the first Internet, multimedia satellite optimized to serve Europe and Turkey. Its configuration of multiple spot beams are aimed at particular regions.

–Paul Dykewicz

(Ron Samuel, Eutelsat, 33 1 53 98 40 34; Giuliano Berretta, Eutelsat, 33 1 5398 4862; Antoine Bouvier, EADS Astrium, 33 (0)5 62 19 6001)