NSAB Scales Back Capacity, Plans New Revenue Streams

By | September 27, 2004 | Feature

Nordic Satellite (NSAB) is holding back on a decision about ordering its proposed SIRIUS 4 satellite, amid slow demand for capacity, and the carrier will capitalize on existing hardware for the next two years. CEO Lennart Hallkvist told Satellite News his company is prepared to move forward at some point, recently circulating a Request For Proposal (RFP) to satellite manufacturers.

SIRIUS is a Nordic Satellite’s system for radio, TV and multimedia services. Being a member of the SES GLOBAL family, the SIRIUS Satellite System is an important part of the world’s largest global network of satellite operators.

In 2003, NSAB’s net revenues were 20 percent less than they were in 2002, although the carrier did manage to reduce operating costs by 16 percent during that time. “At the end of 2003, we found that we were coming to the bottom of the market in terms of capacity requirements,” Hallkvist said. “It was beginning to turn upwards. This trend has continued but it hasn’t been as fast or to the extent we had hoped.”

The operator, which is a key provider of satellite capacity in the Nordic region, has had a tough few months, with economic conditions making it difficult for the operator to sell capacity. Things have been changing, and Hallkvist told us the future looks good. “I think we have passed the peak when it comes to overcapacity in terms of Europe and Scandinavia, which means over the next 12 months, we will see less price pressure than we have over the last two years,” he said.

Plans For Enhanced Services

NSAB may not be able to play as much of a role in digital terrestrial television (DTT) as it would have liked in the Nordic region. With DTT set to become more of an option in the Scandinavian market, Hallkvist hoped his company could help to enable DTT services to reach remote and rural areas. However, this may not be the case.

“Last year, we were hoping to see a situation that you have in the U.K., where the terrestrial network is built out to cover 70 percent to 80 percent of the population, with the rest covered by using satellite,” he said. “Unfortunately for the satellite operators, the decision in several countries in Scandinavia (Sweden, Finland, Norway) has been to extend the DTT network to cover the whole country. In practice, this means large investment costs.” What this means is that satellite carriers won’t be paid for providing programming; rather, they will collect only fees for transmitters in rural areas and backup solutions.

NSAB is also hoping to have more of an impact in the broadband market. During the next two to three years, it believes 10 percent of overall revenues will come from provision of broadband services. Its link-up with Modern Times Group (MTG) last year is further evidence of a more progressive strategy here.

“We have started to offer Internet services through service providers to residential households. One such service provider is the MTG, providing a high-speed Internet service, bundled and offered with TV to the existing Viasat customers,” Hallkvist said. “This has been a great success.”

He continued, “I said last year that 25 percent of the households in Scandinavia will not in the foreseeable future have any terrestrial broadband because of the geography and the costs of the problems of laying fiber, or from other terrestrial means. There is large potential, both for one-way satellite and, when prices come down, for two-way satellite.”

Hallkvist also expects high-definition TV (HDTV) to begin to make an impact in the Nordic region in the near future. “We know that the Swedish broadcasters as well as the other Scandinavian broadcasters are looking at what is happening in the U.K. (with proposed services beginning in 2006),” he said. “We see both public and commercial broadcasters gearing up for taking part in what we believe will be the launch of HDTV services (in Sweden) in the next 12 to 24 months.” In preparation for this, NSAB just inked a deal with Euro1080, which will see the HD channel HD1 broadcast in the Nordic and Baltic regions via SIRIUS starting next month.

Baltics Growth

With SIRIUS being the largest satellite service provider directly to the Baltic countries, strong growth expected from that region.

“Our satellites have very good coverage of the Baltic region, and we see that as our home market directly after Scandinavia,” Hallkvist said. “We have a subsidiary in Riga, Latvia, and we have also built a BSS uplink there with encryption equipment and we use it for direct-to-home (DTH) services together with Viasat. Viasat provides DTH services in the Baltic States, and we also use it for cable TV services.”

Contact Anna-Karin Modigh, Nordic Satellite, e-mail, anna-karin.modigh@nsab-sirius.com

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