Cover Story: The Teleport Business: Changing The Fundamentals
Digitally-compressed television (DTV) and Internet traffic: together, these two forces are fundamentally reshaping the teleport business. Thankfully, these changes are for the better, as far as teleport operators are concerned. As they adapt to new technologies–becoming as expert in networking as they already are in two-way RF transmissions–the world’s teleport operators are expanding opportunities and their chances to make money.
Of course, change comes with a cost. In the case of teleports, the price is giving up their traditional "satellite-centric" approach to business, and replacing it with a hybrid satellite-terrestrial platform that always puts customers first. "We don’t define ourselves as a teleport company, and haven’t for the past five years," explains David Liddle, Verestar’s vice president of global sales. "Instead, we’re a company that delivers transmission solutions for our customers, in the best, most cost-effective manner possible. For some customers, it’s not as important how we deliver their signals, as long as we deliver them efficiently."
Liddle’s attitude is shared by other major teleport operators such as Globecast. These days, "what’s at stake is the service to the final customer," says Globecast CEO Robert Pinon in the World Teleport Association’s (WTA) Spring 2003 edition of Uplink, "and that the customer doesn’t care how it works. He’s just looking for something efficient and reliable."
Changing The Teleport Business
In the past, teleport operators uplinked one-way video and two-way voice/data, and that was about it. Moreover, they did the uplinks much like an old-fashioned telephone operator connected calls. The teleports provided the path between the sender and the recipient and let them take care of the rest.
Then things started to change, radically. It began in the 1980s with "digitally-compressed television, which has had a huge impact on the teleport industry," says WTA Executive Director Robert Bell. "Initially, digital compression allowed customers to squeeze more channels into fewer transponders, something that appeared to be bad news for our industry. However, broadcasters subsequently responded to digital compression by adding many, many more TV channels to their lineups, which has actually driven sales volume up. Meanwhile, the move to High Definition Television (HDTV) could be a major opportunity, because the configuration of the average 36 MHz transponder is a much better match for the bandwidth requirements of compressed HDTV than a fiber DS-3, on top of satellite’s inherent one-to-many cost advantage."
"Digitization means we need a lot more customers to fill a transponder," says Bill McNamara, general manager of BT Broadcast Services in the Americas. "However, the rapid digitization of content has reduced the barriers to market entry to a whole new cache of customers. Those customers whose business cases could not support the cost of an entire transponder to carry an analog signal for distribution now find that a 4 Mbs channel on any one of many of our platforms–such as Telstar 5, Hot Bird, or Eurobird–are easily affordable."
In the 1990s, the Internet hit the mainstream, and the teleport business began to change once more as IP data took to the airwaves. According to the WTA’s Teleports Benchmarks 2002 Report, Internet/IP traffic as a share of global teleport revenues rose from three percent in 1998 to 16 percent in 2002. Three percent to 16 percent, is a 533 percent increase in five years.
"Despite the exploding of the dot.com bomb, IP trunking is still the fastest growing sector of the teleport business," says Bell. "Even teleport operators that concentrate on broadcast video are seeing new opportunities in IP broadcast for store-and-forward and other applications. It’s happening already with local TV stations. Many receive low-res video files from the network via satellite for use in their local news broadcasts. They use the low-res files for shot selection and then request high-res versions for download via satellite. The result is much more efficient use of the bandwidth."
Taken as a whole, "The emergence of digital TV and the Internet as new transmission pathways for distribution [have] increased the volume and variety of content exponentially," says Vince Matherne, Crawford Communications’ director of sales and business development for satellite. "In turn, the entire thought process of the business–from operations through sales–has had to evolve, and continues to morph. Shared platforms, niche markets, last-mile opportunities, legacy system migrations, mixed-use platforms and protocol compatibility are all ideas and issues that are continually being addressed through all facets of the business cycle."
"We have reinvented ourselves a few times to meet the shifting demands of the market," says Verestar’s Liddle. "Doubtless we will continue to do so in the years ahead, as more opportunities arise."
Changing Teleport Technology
The explosion of DTV and IP-based business has pushed teleports to radically upgrade and extend their earth station technology. For example, Telenor Satellite Services’ North American teleport in Southbury, CT, signed on 27 years ago as an Inmarsat station, one whose major goal was to provide reliable narrowband voice/data communications to ships 24/7. That was then, this is now. In response to customer demands, Southbury now handles all kinds of data traffic and is even moving into video. In order to do so, "We have added Voice over IP telephony and SS7 switching for on-demand IP traffic," says Guy White, Southbury’s station manager. "We have also linked Southbury by DS-3 fiber to Telenor’s other teleports in Norway and Santa Paula, CA. This network allows us to share the load between our teleports and to take advantage of favorable landline rates."
Likewise, to meet the DTV/IP demands of its clients, "Crawford created diversified transmission platforms tailored to digital video and IP distribution," Matherne says. "For DTV, Crawford offers its Cablestar statistically multiplexed platform (Motorola Digi-Cipher 2 with Pure Pixel technology) on Galaxy 11 for MCPC [Multiple Channels Per Carrier] cable headend distribution. Additionally, we have DVB carriers that carry MPEG-2 muxed video channels with embedded IP streams on multiple Ku-band carriers. Crawford even receives video input for its many network origination clients through IP-video transport."
Crawford’s tale of radical technological advancement is echoed by Verestar. To meet customers’ needs, "We have purchased multiple MPEG-2 encoders," Liddle says. "We have also upgraded our fiber facilities in New York and Europe to support DTV/IP service, added digital switching in New York, London and Washington, and are now offering Internet/IP, DTH and DTV contribution feeds over Telstar 12.
"We are even testing IP/ASI [Internet Protocol/Asynchronous Serial Interface] interfaces," he adds. "These will allow us to carry video over our existing IP infrastructure, boosting our service capabilities without increasing our operating/capital costs."
For its part, BT Broadcast Services has "been primarily digital since we opened our first U.S. facility in Washington, DC, some six years ago," McNamara says. "For instance, we have installed all digital video switches in an effort to keep our customers’ signals in the digital realm from origination to its end destination. Meanwhile, the Internet traffic we carry is primarily video-based multimedia content. To deal with this, we have implemented ‘ingestion/repurposing’ facilities in Washington, DC, Los Angeles as well as London. At these sites we repurpose (re-encode) MPEG-2/DVB signals to Windows Media Player, as well as add required interactivity (e.g. Q&A, chat, PowerPoint slides, monitoring) to the streams emanating from our facilities."
Impact On Equipment Purchases
Serving DTV and IP has affected how teleport operators run their plants today. But it is also influencing their equipment purchases for the future, in ways vendors need to know about. So here is what the teleports are looking for when they shop. For instance, when BT’s McNamara is looking for new equipment, he is looking for products that meet three standards: simplicity, efficiency and flexibility. "Our station utilizes a mix of old and new, broadcast and consumer grade equipment," he explains. "So any new equipment or system must be able to bridge the gaps between old and new technologies and standards. Network systems need to be simple to control and configure for different applications. Television service equipment must have the ability to be quickly and critically monitored at input and outbound signals."
For Crawford, "New systems must be able to handle the legacy requirements of our older equipment and be able to maintain open architecture that welcomes interoperability with the latest protocols," says Matherne. "The equipment we’re looking for is scalable and modular, with built-in redundancy and allows for upgrades into new and innovative configurations. There are too many standards and specifications to list, but equipment that has the capability of handling the latest MPEG and Hi-Def video standards, 8PSK and 16 QAMM modulation schemes, Turbo-coding, 802.16 and 802.11b wireless standards will be required."
"We want our modulators to be capable of 8PSK service," says Verestar’s Liddle. "We want everything we buy to be digital, all the way down the line. Meanwhile, we’re also interested in MPEG-4, Windows Streaming Media and equipment that integrates DTV with IP."
"We’ve been able to open up a lot of floor space in our teleports thanks to newer equipment which requires far fewer racks," adds Telenor’s White. "We want to use this space profitably by adding new services, which requires new equipment. Whatever we buy, we want it to go easy on power consumption, to offer good frequency accuracy–we’ve always been a stickler for that–to be backed by a solid guarantee and to have a good track record elsewhere. After all, as a ‘Light and Safety at Sea’ Inmarsat station of 27 years’ standing, we just won’t tolerate outages."
In response, vendors such as Mentat and ND Satcom are offering products specifically designed to meet these hefty teleport demands.
For instance, "We are seeing substantial demand for our IP networking products such as the SkyX Gateway," says Kay Guyer, Mentat’s president and CEO. "Teleports are coming to us looking for products that ease the TCP/IP bottlenecks over satellites. Thanks to our proprietary connection-splitting, protocol-translation system, they’re able to get more data through the same satellite pipe." Currently, Mentat’s SkyX Gateway can deliver data at optimized speeds up to 45 Mbs. However, mindful of the world’s insatiable appetite for bandwidth, "We are now working on a 155 Mbs version of SkyX," Guyer says.
ND Satcom is seeing the same demands from its uplinking clients. To meet these needs, the company’s SkyWAN broadband VSAT product–usable in both fixed and mobile environments- -is able to send data bursts at speeds hitting 8.75 Mbs per VSAT site. Moreover, SkyWAN assigns bandwidth dynamically to network users: if one earth station needs the lion’s share of spectrum for a minute and the others do not, it gets it.
"Media companies and broadcasters operating multiple sites for contribution of large video and media content are facing challenges," says Karl Classen, CEO of ND Satcom. "SkyWAN is an affordable, effective solution for contribution and distribution of any video/data content, whether live or on demand."
Challenges Of Offering DTV and IP Service
Beyond the sheer engineering issues of DTV and IP, teleports are grappling with other challenges as they adapt to this change. First and foremost is complexity. In the old days, providing satellite links was as basic as connecting a telephone call. Today, not only do customers want real time access to all kinds of multimedia services, but they also want to mix-and-match them on the fly. "Giving them everything they want when they want it is very complex," says Telenor’s White
As both a teleport operator and a system integrator building turnkey teleport solutions, ATCi understands the challenges and complexities of bringing digitally-compressed video, voice and Internet traffic to its customer base. "New compression technologies have come a long way toward making satellite based digital TV/IP traffic offerings more attractive to our customers. Aside from the continuous challenge of being able to offer these services into niche markets at price points that will allow us to compete with fiber, a priority for us is to provide improved communications with customers in an effort to maintain optimal signal quality between a variety of check- points," says ATCi’s CEO, Gary Hatch.
Having the knowledge to manage a variety of facilities is something that Ascent Media Services works hard at. The primary issue in operating multiple teleports that provide digital uplink capabilities is maintaining the appropriate infrastructure and knowledge across the different facilities, and avoiding unnecessary silos, interoperability challenges, redundant infrastructure and additional integration work, says Matt Armstrong, Ascent Media Network Services’ senior vice president of global sales and marketing. To cope with these issues, Ascent Media Network Services provides a centralized customer service and operations capability to mitigate these concerns. Another critical issue for digital teleport operators is proximity to origination services and access to strong digital neighborhoods, Armstrong adds.
In reference to employees, "Finding qualified people is one of the top 12 business challenges reported by our members," says the WTA’s Robert Bell. The problem is that today’s teleports need engineers who are both RF experts and IT network gurus. The trouble is, in the real world, people are either radioheads or geeks exclusively, but rarely both.
So what to do? According toWhite, Telenor has had the best success training its RF people in networking, rather than the other way around. "Strangely, I’ve found that RF guys have a relatively easy time learning networking skills, but networking guys have a really hard time grasping RF technology," he says. "I don’t know why, but that’s been our experience."
The third challenge is competition. With the rest of the global satellite industry facing hard times, it is not surprising that other companies are eyeing the teleports’ greener pastures. One such example is Intelsat, which has purchased teleport facilities in a bid to sell directly to customers.
Not surprisingly, "Most teleport operators see this decision by some of the satellite operators as an encroachment into their market and feel that their vendors are attempting to take their business/clients from them," Matherne says. "To a degree, this is true. However, even though Crawford purchases satellite capacity from most of the major operators, Crawford’s business is not based on the margins of reselling satellite capacity. Hence, Crawford is not encumbered by satellite operators acquiring or building their own teleport facilities."
For his part, BT’s McNamara is more concerned by terrestrial competition. "The pressure on the teleport sector comes from fiber and the almost absurd pricing currently available in the transmission sector," he tells says. "As for satellite operators offering one stop-shopping, we enjoy a very positive and mutually beneficial relationship with both Panamsat–who’ve been offering one stop shopping for some time–and Intelsat. Rather than cutting into each other’s business, we have found that we provide each other with additional sales channels and opportunities that any one of us would not be able to service on a standalone basis."
Outlook Good For Teleports
The fact that other companies want "in" on the teleport business underlines what a good business it is. Admittedly, teleports haven’t been bulletproof when it comes to the current economic malaise. Still, when compared to the rest of communications world, the teleport industry has fared well, thanks to DTV and Internet/IP traffic.
As for the future? With DTV and IP traffic continuing to grow with no end in sight, one has to be cautiously bullish about the teleport industry’s prospects. All the right elements exist for this sector to experience continued economic success.
James Careless is senior contributing editor to Via Satellite.