NAB 2004: Get Big, Get Focused, And Think “IT”
By Robert Bell, World Teleport Association
The National Association of Broadcasters (NAB) conference is an unusual show for the satellite communications industry. Most attendees are focused on producing, broadcasting, managing content rights or, these days, how to keep from getting fined for airing something that could be considered obscene by the Federal Communications Commission (FCC). In the corner of the exhibition hall focused on satellites, hot areas included content contribution, storage, origination and distribution. However, billions of dollars in revenue depends on the quality and reliability of our services and products in the media-distribution chain.
During NAB 2004, News Corp [NWS] announced it was selling PanAmSat [SPOT] to Kohlberg Kravis Roberts, the merchant bank known best for its 1989 buyout of RJR Nabisco. The PanAmSat sale was one of a series of developments that highlight an important industry trend. It has been called consolidation, but there’s more to it than that. The real story is about how satellite communications services providers are responding to market pressures by either getting big or getting focused.
In the months before its sale to KKR, PanAmSat bought the assets of fiber carrier Sonic Telecom to add to its satellite fleet and teleport network. SES Americom recently acquired the assets of Verestar, the teleport and terrestrial network operator, from American Tower. Intelsat also has moved into terrestrial services with the purchase or construction of teleports and its strategic alliance with Level 3 [LVLT] for fiber connectivity. The company also bought Loral Skynet’s North American satellite fleet, and it is forging ahead with its congressionally mandated IPO (see related story, p. 1).
All three of the biggest global operators now are vertically integrated hybrid carriers. Those capabilities will make them powerful competitors in the wholesale end of the business, giving them unprecedented scale to open new markets. During a panel session we produced on “The Evolving DTH Business Model in the U.S. Market,” SES Americom Vice President Sergy Mummert discussed the company’s plan to bring the European “bouquet” model for DTH to the United States. Rather than being a sole-source gatekeeper that controls every part of the chain, the company will create a neutral platform on which DTH providers can deploy channels. SES Americom expects to support the creation of new forms of programming using the broadband capacity of the platform, from VOD using a DVR-equipped set-top box to IP-based entertainment.
Innovation on this level takes scale, which is the whole point of efforts by the big companies to become even bigger. Regional satellite operators, independent teleport companies and terrestrial-only fiber carriers all can expect to feel the heat.
The more nimble companies are responding by focusing in unprecedented ways. Getting focused means driving deeper into niches they already serve and finding new ones. At another session, Keven Cahoon, vice president of GlobeCast North America, described the company’s deployment of the CNN “On the Go” network. Partnering with Turner Broadcasting, GlobeCast sells a CNN feed to enterprises where customers typically have to wait to be served, ranging from doctors’ offices to banks. GlobeCast uses a DVR-equipped set-top box to give its clients control over commercial insertions. By switching on cue to content stored on the set-top box, a bank can substitute its own commercials or customer advisories for spots appearing in the original CNN feed. Because GlobeCast already has production and post-production facilities, it also creates opportunities for add-on sales to clients lacking their own video material.
What really grabbed my attention was the way in which “CNN On the Go” builds on GlobeCast’s existing infrastructure. Last year, I interviewed GlobeCast CEO Christian Pinon, and I learned how the company became one of the largest DTH players in the United States almost by accident. A couple of foreign broadcasters asked the company to help make channels available to citizens who had emigrated to America. To meet their needs, GlobeCast North America not only had to provide the usual teleport services but it also opened a call center supported by fulfillment and installation service. Today, GlobeCast’s WorldTV unit carries more than 100 channels of “ethnic” programming on a completely turnkey basis. And when GlobeCast launched its CNN service, it already had most of the capabilities in place, and it could extend them to a completely new market.
GlobeCast is not alone. Kingston inmedia, a hybrid teleport-fiber operator in the United Kingdom, displayed its sharp focus in a panel discussion, “How to Start a TV Channel.” According to John Dunlop, head of the company’s broadcast marketing, Kingston created a one-stop shop for the program producer seeking to offer content for and to launch new channels on DTH and cable, whether on BSkyB [BSY] or to new markets elsewhere, including Africa, the Middle East or the “Stans” of Eastern Europe. BT Broadcast Services has unveiled a fully digital content management system called BT Mediahive, according to Bill McNamara, its general manager for North America. Encompassing distribution to traditional media outlets, BT Mediahive extends to newer Internet and mobile markets. For example, it offers media content as screensavers or brief clips for display on mobile phones. It also can create a portfolio of Internet channels targeted at specific audiences or short-term events.
Victory Of The Nerds
The modern broadcasting, satellite communications and computer industries grew up together. Video people always have done things their own way, and they’ve built distribution networks exclusively for video content. Taking a different approach, IT people try to consolidate everything on a single network.
The message I took away from NAB was that, for better for worse, the IT people are winning.
PBS announced its new ACE digital system for automating the broadcast operations of member stations. PBS created ACE in partnership with eight leading companies, including Microsoft [MSFT], Intel [INTC], Omnibus and Broadview Software, with SES Americom providing the satellite connectivity. During “The Future of Broadcasting,” panelist Andre Mendes, chief technology integration officer for PBS, described the IT orientation he brought to developing an integrated system that will reduce local station costs while improving program delivery. A uniform software interface unites PBS with member stations that choose to participate, allowing video content to move in file transfer mode via satellite direct from PBS to member stations that can control play-to-air with much greater efficiency. Expected cost savings will free funding for more programs.
An IT-based, single-network, single-standard approach increasingly will become the norm in satellite communications. The trend will be driven by the end-to-end digitalization of television, the plummeting costs of storage and the advances in compression. Fred Fourcher, CEO of BitCentral, described how broadcasters typically have recorded content at the highest-possible quality. That tendency has resulted in enormous digital files due to concerns about degradation through repeated edits, encoding and decoding. In his view, those days are over. It now is possible to generate MPEG-2 right in the camera, and to move the files through post-production, distribution and broadcast without decoding them. To disbelievers, Fourcher points out MPEG-2 files already are an entertainment staple. A DVD is nothing but a set of linked MPEG-2 files being decoded and streamed to the television. BitCentral’s Mediapipe system uses this philosophy to simplify and streamline the jobs of content distribution, scheduling and broadcast control.
This is an exciting time to be in satellite communications for the media, whether you work in space segment, ground segment or technology. Take interactive TV. With DirecTV now owned by News Corp., NDS Americas President Dov Rubin predicted the interactive services BSkyB has deployed so successfully in the United Kingdom — from viewer feedback to gaming and shopping — will be available in the Unites States in, at the most, two years. If anything, the pace of innovation is likely to accelerate in the days ahead as the industry continues to respond to customer demands for “better, cheaper, faster” in everything we do. Moore’s Law no longer applies just to microchips. Increasingly, it is becoming the law of the land.
Robert Bell is executive director of both the Society of Satellite Professionals International and the World Teleport Association, which jointly produced 16 hours of satellite communications panel discussions in the Central Exhibition Hall at NAB 2004. He can be reached by e-mail at email@example.com or firstname.lastname@example.org.