Canadian Roundup: Satellites Prosper In The Great White North
by James Careless
Wedged between the United States and the rest of the world, Canada is a country caught in the middle. On one hand, it has unparalleled access to the U.S. market. On the other, Canada’s companies are overshadowed by the powerful U.S. competitors they seek to best.
Nowhere is this paradox better illustrated than in the Canadian satellite industry. On the positive side, the country ranks as the most connected nation in the world. It has to be: with only 30 million people and the largest national landmass on the planet, satellites are vital to tying Canada together. However, on the down side, Canada’s satellite firms are no match for monoliths like Boeing and Lockheed Martin. In fact, the country doesn’t even manufacture complete satellite systems. Instead, shaded in the shadow of its giant U.S. neighbor, Canada’s satellite industry has prospered by finding niches in the international market, and filling them.
“Canada essentially acts as a subcontractor to the major global primes in the spacecraft segment,” says Jack Rigley, vice president of satellite communications for the federal government’s Communications Research Center. “However, on the ground side of the business, EMS Technologies (in fixed multimedia) and Skywave and Vistar (makers of mobile satcom L-band terminals) do act as prime contractors in their own right.”
An Industry Bedrock
Without a doubt, one of the bedrocks of the Canadian satellite industry is Telesat Canada. Founded in 1969 as Canada’s sole satellite service provider–in a country this sparsely populated and far-flung, monopolies are often the only way to make a profit–Telesat remains the backbone of the country’s satellite system. In fact, its Anik E series of satellites that provide the vast majority of Canada’s television links and most of Northern Canada’s telephone connections, as well as Internet and private business networks across Canada.
Currently, Telesat is working the kinks out of its new Anik F1 Boeing 702 satellite, which will replace Anik E2 at 107.3 degrees W. Already in orbit, it was expected to enter commercial service soon after we went to press, according to Telesat President and CEO Larry Boisvert. “Anik F1 has taken a significant amount of time to reach its final orbit, due to its unprecedented weight,” he explains. This bulk is due not just to the satellite’s full complement of C- and Ku-band transponders, but also because it is powerful enough to cover the Americas.
Such hemispheric coverage is new to Telesat Canada. Previously, its satellites had only stuck to the “Great White North” (a Canadian euphemism for this country). However, rulings by the World Trade Organization (WTO) have effectively opened up the U.S. and Mexican markets to Canada. Today, as this country’s sole major satellite provider, Telesat Canada is poised to take the United States by storm.
Ironically, it won’t be until Anik F1 is in service that the real competition will begin. Due to damage caused by a solar storm a few years ago, fewer than half of Anik E1’s transponders are in service. This means “we have not had a lot of extra capacity to offer to non-Canadian customers,” says Boisvert. Once we get F1 into service, move E2 into E1’s previous orbital slot, and tilt E1 at 118.7 degrees W, we’ll be able to start serving the U.S. and Mexican markets.”
Next in line is Anik F2, Telesat’s first triple-band C-, Ku-, and Ka-band bird. When sent into orbit in early 2003, F2 will provide Telesat with 56 transponders for North American C-/Ku- band services and 45 North American Ka- spotbeams providing 2-3 gigabits of multimedia capacity,” Boisvert says.
But isn’t he concerned that the same WTO access that allows Canada to tap the U.S. market–10 times the size of Canada’s–could also overwhelm his company? Well yes, answers Boisvert. “Telesat is well aware that the competition might like to put it out of action, but we’ve already tested our strength in the U.S. market and successfully won a large VSAT (very small aperture terminal) maintenance contract with Ford US.”
In fact, “there’s no lack of entities interested in owning Telesat,” Boisvert says. However, given the firm is 100 percent owned by Bell Canada Enterprises (BCE), Canada’s incumbent telephone company currently on a vertical consolidation spree, he doesn’t expect to see a “For Sale” sign appearing on his office door any time soon.
Playing The Field
Thanks to its acquisition of Spar Aerospace–maker of the Space Shuttle’s manipulator arm–and CAL Corp., Atlanta-based EMS Technologies has emerged as one of Canada’s major satellite players. Today, this wireless and satellite communications solutions provider is keeping both of its Canadian divisions busy. In fact, except for the name change, it’s very much life as usual at these two companies.
At the former CAL Corp. in Ottawa, the emphasis is on developing products for the aviation, search-and-rescue, and land mobile markets. For instance, “we are developing a new Inmarsat terminal which will provide two-way satellite connectivity to aircraft,” says Neil Mackay, former CAL president and now EMS’ vice president and general manager of satellite communications. “We’ve also got a joint venture going with Honeywell to develop DBS antennas for corporate aircraft, and are already the exclusive provider of aeronautical MSAT terminals for Motient in the United States and Telesat in Canada.”
Meanwhile, at the former Spar headquarters in Quebec, “we’ve become substantially larger since the EMS takeover,” says Don Osborne, senior vice president of EMS Space and Technologies Group Montreal. These days, the company is developing high power Inmarsat 5 antennas for Astrium. As well, Osborne’s division is building a number of Ka-band and broadband antenna systems. It also continues to work on the electronics and mechanisms used in the shuttle and space station manipulator arms under contract to McDonnell Detweiler. This firm became the prime contractor on these systems after purchasing Spar’s robotics division.
For both companies, becoming part of U.S.-owned EMS Technologies has proven to be a blessing. “It’s now easier to sell to the American market,” says Osborne. “Yet we still have the profile of being a Canadian company,” adds Mackay. This is an advantage, since Canada has a good reputation in the global satellite market.
Selling Wares To The World
Ottawa-based International Datacasting (IDC) may call Canada home, but most of this company’s revenue comes from international clients. In fact, “75 to 80 percent of our business comes from outside Canada,” says Ron Clifton, IDC’s president and CEO. “There’s just not much of a market for the products we make within the country.” Fortunately, with a sales office in Atlanta and partners worldwide, IDC is well placed to offer its wares to the world.
IDC’s speciality is IP-based satellite datacasting “Superflex” products, like its latest “Superflex” board that can receive data at speeds exceeding 50 Mbps. It’s also big in distance learning and multimedia distribution systems. “One of our critical applications is caching and streaming content over asymmetric networks,” says Clifton, “where you’ve got broadband delivery by satellite and return either by lower-speed VSAT or terrestrial connections.”
For IDC, the world’s headlong rush into broadband connectivity couldn’t come soon enough. That’s because its products are geared to this marketplace.
Two years ago the company found most of its business “with early adopters, who often took six months to complete their purchases,” says Clifton. Today, this has changed: not only are mainstream companies getting into broadband over satellite, but they’re also buying IDC products “sight unseen.” As a result, “the company has been reporting record growth and profitability and is well-financed after receiving a new round of investment earlier this past year (2000),” he observes.
The only fly in IDC’s ointment? Because it’s headquartered in Ottawa–home of Nortel Networks, Alcatel, and JDS Uniphase–good help is hard to find. “It’s difficult to find top-notch engineering and sales people in this city,” Clifton says. “There’s so much competition for talent, that we find manpower to be our biggest challenge.”
The year 2000 was a good one for Montreal’s Advantech Advanced Microwave Technologies. Known for its solid state power amplifiers (SSPAs), Advantech was selected as one of Canada’s 50 Best Managed Private Companies by a jury drawn from Arthur Anderson Consulting, Canadian academics, and the editor-in-chief of Canada’s Financial Post newspaper.
“One of the principal criteria of selection for the 50 Best is the profitable growth which Advantech achieved,” says Ed Kevork, Advantech’s vice president of business development. In the case of Advantech, this translates to “92 percent increase in sales over our most recent fiscal year.”
“One of the main drivers for this growth is the fact that people are more and more replacing tubes with SSPAs, and we are combining different technologies to provide higher transmission powers,” Kevork says. “As a result, we can now deliver up to three kilowatts on C-band SSPAs, and one kilowatt on Ku-band SSPAs.”
“The satcom market has experienced much activity in the past year,” he adds. There were a lot of mergers and acquisitions. All these changes in the market environment are creating discontinuities and thus opportunities.”
With opportunities like these, Advantech has good reason to be bullish about 2001.
Direct To Canada
Owned by Bell Canada Enterprises (BCE), Canada’s telecommunications/broadcasting heavyweight, Bell ExpressVu is one of Canada’s two direct-to-home (DTH) satellite companies. Since its launch in September 1997, Bell ExpressVu has had a good run. So far it’s up to 700,000 subscribers, and is now broadcasting from Nimiq, Canada’s only DBS satellite.
This success was by no means ensured when ExpressVu came online less than four years ago. At the time, hundreds of thousands of Canadians were known to be illegally receiving U.S. DBS carriers like DirecTV through the so-called “grey market”.
However, both Bell ExpressVu and its cable TV-run competitor Star Choice have more than held their own against the grey market, says David McLennan, Bell ExpressVu’s president and COO. “There is still U.S. programming available through the grey market that isn’t available here,” he admits. However, the wide range of channels and PPV services that can be found on Canadian DTH, plus the hassles of paying for U.S. DBS illegally, means that most new customers are going the legal route. This trend is helped by low equipment and sign- up costs–lower than $U.S. 65 after rebates–and occasional “amnesties” where pirates can switch without penalty.
Having already tapped much of Canada’s remote and rural market, Bell ExpressVu’s sights are on the urban areas covered by Canada’s cable TV industry. It is a formidable competitor: with eight million Canadians already signed up, Canada has the second highest cable TV penetration rate in the world, after Belgium, according to the Canadian Cable Television Association.
To woo cable TV customers, Bell ExpressVu has launched an aggressive TV advertising campaign. It features well-known Canadian comic Mike Bullard pulling in a cable TV drive- through restaurant: one where a bored female voice says “welcome to Cableland; you watch what we serve.”
Bell ExpressVu’s point is that DTH offers more choice and better value than cable TV. That’s a message Canadians are receptive to, thanks to years of limited cable TV packages and ongoing rate hikes. Given this, McLennan’s prediction that Bell ExpressVu’s subscriber base will hit “900,000 by the end of this year, and a million next year” doesn’t seem too far-fetched.
Does this mean that Canada’s DTH industry is strong enough to endure wide-open competition with U.S. DBS carriers? Well, no, they’re still too powerful, thanks to the Americans’ bigger subscriber bases and fatter pocketbooks. This said, McLennan can foresee “some form of facilities reciprocity” occurring between U.S. and Canadian DTH providers. “It would be good for the industry,” he says: “It would allow all of us to manage our space segment more efficiently at the facilities level.”
Meanwhile, Bell ExpressVu’s sights are also set on the growing high-speed Internet market. That’s why it has applied for and received a license to launch a Ka-band satellite. It’s due to launch in the next few years.
Made To Order
CPI Canada is eyeing 2001 both with excitement and trepidation. Excitement, in that CPI’s Satcom amplifier manufacturing division is moving from Palo Alto, CA, to join CPI Canada in Georgetown, Ontario. Trepidation, in that CPI Canada/CPI Satcom president Joe Caldarelli is wondering how well the world economy is going to hold up.
“The move to Canada will give us access to a stable skilled workforce, working in a well-established facility,” says Caldarelli. “The problem with Silicon Valley, where our R&D department remains, is that there’s so much competition for talent. This makes it difficult to maintain our workforce levels, and it also pushes our costs up.”
As for the souring global economy? So far CPII hasn’t seen its sales suffer. In fact, they’ve done better than in the late ’90s, when the satellite industry as a whole was slow.
“With new satellites being launched, there’s an increasing demand for our high power amplifiers; especially the fourth generation Klystron Gen 5,” Caldarelli says. “Combined with growing demand for data transmission by satellite, our prospects look good even in the face of uncertain economic times.
Hammering Home Dth
Owned by Shaw Communications, one of Canada’s largest cable TV MSOs, Star Choice Communications is the country’s second-largest DTH provider.
Like Bell ExpressVu, Star Choice has made impressive inroads since being launched two years ago. In fact, “in our second year we basically doubled our subscriber base,” says Bruce Barr, Star Choice’s senior vice president of residential services. “We’re now in excess of 500,000 people signed up.”
When asked about the grey market, Barr says it’s no longer a “significant factor” in Canada. He attributes this change to three things. “First, our program to ‘repatriate’ grey and black market dishes has been extremely successful,” says Barr. “That’s because the range of programming we offer is so extensive, that the advantages offered by grey market dishes have become marginal.”
“Second, with the Canadian dollar only worth about 65 cents U.S., grey market subscribers are paying huge premiums for their service,” he adds. “Third, there’s just the whole inconvenience of bypassing the U.S. carriers’ security measures, and coping with grey market systems when they fail. For most people, it’s just not worth it.”
As for future growth? Again, like Bell ExpressVu, Star Choice is targeting urban cable TV subscribers. Never mind that many of them are signed up with Shaw Communications, Star Choice’s sister company. For Bruce Barr, all cable TV customers are fair game.
“There’s no question that satellite TV offers a more complete choice at a lower cost, and delivers higher quality across the spectrum,” he declares. “These are the things we keep hammering home.”
Finally, Star Choice is also planning its entry into the high speed Internet market. Having won a Ka-band satellite license in late 2000 along with Bell ExpressVu, Star Choice intends to launch in a few years’ time.
On The Inside With ODUs
Vancouver-based Norsat International can’t wait for the onset of widespread Ka-band communications.
Unfortunately, things have so far gone too slow for the liking of Robert H. Bucher, Norsat’s president and CEO. “Right now there’s only two Ka-band operators in the world, and they’re not fully commercial,” Bucher says. One of these is Europe’s Astra-BBI project, for which Norsat is a preferred supplier of outdoor units (ODUs). The other is Korea Telecom’s satellite broadband network, which is still in the experimental phase.
This said, Norsat has managed to profit from both nascent Ka-band ventures.
For instance, a Norsat hybrid Ka-/Ku-band prototype ODU was featured as part of the Astra-BBI demo at the International Broadcasting Convention (IBC) in Amsterdam last September. Meanwhile, the company has also shipped 12 ODUs to Korea Telecom, to be used in testing its new Ka-band Internet access service.
When both these services go commercial–Astra-BBI will be the first, sometime later this year–Norsat stands to sell millions of ODUs. In the meantime, agreements like the recent Norsat-China deal for a Spectraworks DVB (Digital Video Broadcasting) Data Hub, a DVB Return Link Subsystem (RLSS), and one-way and two-way Ku-band satellite broadband terminals, are a big help.
Boundless Band Coverage
Two thousand and one should be a “great year”: that’s the prediction of Casey Cameron, marketing manager for Amplix Inc. Based in Montreal, Amplix makes DSP-controlled predistortion linearizers that double the usable power of TWTAs and klystrons used in the uplink stations around the world. Its experience covers the L-, S-, C-, X-, Ku-, and Ka- bands for the satellite and wireless communications industry.
“It’s going to be great both for us and the entire satellite industry due to the growth of digital transmissions,” Cameron explains. “We’re going to see major increases in digital transmissions worldwide, especially in developing regions.”
Ironically, Casey sees this expansion as also posing 2001’s biggest challenge for Amplix. “The toughest part will be serving international clients as well as North American ones, and to build strong, long-lasting relationships with them as we do.”
Still, this task, and that of keeping up-to-date in general, doesn’t faze Amplix. In fact, “these are pretty fun challenges,” says Cameron. “I’m looking forward to them.”
The Business Of Broadband
Headquartered across the river from Ottawa, Hull, Quebec-based Spacebridge makes semiconductors for the OEM broadband wireless market. “Our products are building blocks for broadband access devices,” explains Stephen Goodman, Spacebridge’s vice president of business development.
Like Norsat, Spacebridge has found itself in a development mode the past few years: in this instance, for the dream of broadband wireless access to become reality. According to Goodman, it’s finally happening. For instance, “we have just signed a U.S.$16 million contract with a Belgian company, and have numerous others in the imminent pipeline” he says.
These contracts end three years of anticipation at Spacebridge, which was founded in 1997 specifically to supply the broadband niche. Now that business is taking off, the firm finds itself faced with other challenges, including finding enough qualified staff. That’s because the high-tech market around Ottawa is extremely hot: with this region being home to Nortel Networks, JDS Uniphase, Alcatel, and dozens of other high-tech communications companies.
Still, Goodman himself isn’t as concerned about staff as he is about the roll-out of wireless broadband. In particular, he worries that well-publicized failures like Iridium (which have nothing to do with broadband services) could slow the roll-out of broadband wireless in general.
“As well, I think that today’s satellite service operators will need to ramp-up on understanding how to implement communications networks,” Goodman says. “For them, the learning curve could be steep.”
A Hot-Bed Of Satellite Activity
It’s clear from the above snapshots that Canada is home to a diverse, globally focussed satellite industry. It’s also clear that Canada both relies on the U.S. market for sales, yet feels threatened by it as well.
As for the future? Expect the Canadian satellite industry to seek new niches in the international marketplace. In particular, keep an eye on the Ka-band. v
James Careless is a contributing writer to Via Satellite.