Intelsat CEO Examines International IPTV Opportunity

By | April 24, 2006 | Broadcasting, Feature, Telecom

Intelsat has high hopes for its new satellite-based, open-architecture content delivery and management service, which the company unveiled April 12.

Intelsat is targeting telcos who wish to enter the Internet Protocol (IP) TV market and cable operators in the United States who wish to improve their video offerings to customers with the service, dubbed Ampiage. It aims to cost-effectively package the acquisition, aggregation, encoding, encapsulation and encryption of licensed TV programming from content providers.

"What Ampiage is doing is aggregating content and secondly building a superheadend that will serve a number of customer sets," Intelsat CEO Dave McGlade said. "From the cable TV standpoint, it allows cable operators to upgrade from MPEG-2 to MPEG-4. It allows them to implement HD, standard channel lineups and also look at niche and international programming in the United States where they have not done this as much historically.

"With regard to the other customer set, Ampiage is really a gamestarter for the telcos, especially the tier two, tier three telcos. What they are looking to do is bundle offerings with a video entertainment package along with their voice and broadband services without incurring a significant upgrade cost. This gives telcos a vehicle to have interactivity, VoD and have a high-quality channel line-up with HD and SD so that they are in a position to compete with the triple play offerings that the cable operators have been successfully offering for a few years."

In an interview with Satellite News, International Editor Mark Holmes, McGlade discussed the significance of this new service launch, as well as the operator’s international ambitions.

Satellite News: Is this likely to be a solution to attract smaller telcos rather than tier one telcos?

McGlade: We are focusing on tier two and tier three telcos. Their economics do not allow for a big investment at the headends that they have to put in their local systems. What we are doing is creating a [capital expenditure] avoidance opportunity for them. It is also a better quality, more advanced and broader offering than they could do on their own. These are remote systems so they need satellite distribution to get there.

Satellite News: How difficult will it be to make an impact in the IPTV market?

McGlade: I don’t think this will be a difficult market for us to be successful, because we have such a strong background in all the areas that are critical here. We understand what our customers need. We are really at a crossroads in terms of convergence now. What that means for us is that we are in a position to serve all the telcos, media companies or other operators as they look to offer services that haven’t been traditional services that they normally provide for the customers. We will make sure we can serve all video, voice and data needs for all the customer sets. This is an incremental opportunity based on things we have already done with satellite news gathering, events, hybrid solutions with fiber and satellite. So I think this is the next stage for us. We feel very comfortable on a technical stage we can do that. It is a natural extension of our core strengths and capabilities.

Satellite News: How does this differ from SES Americom’s IP Prime solution?

McGlade: What differentiates us from SES? Certainly, it is the flexibility of what we have, the quality and redundancy. We are very much believers in open standards and interoperability. That is at the forefront of all of our decision making. It is upgradeable. I think all those things will help us differentiate in the marketplace. If you look at the heritage of our company, not only do we have the video background, but we also have an in-depth background with telcos around the world for more than 40 years. No one can really match us in that, and understanding the needs of those customers differentiates us from everyone else.

Satellite News: What other markets are you targeting with this offering?

McGlade: Ampiage can play in mobile broadcast opportunities. That is one area where we have very flexible solutions that allow various customer sets to take advantage of that. So you might have seen a deal we did with Qualcomm for Mediaflow. This was really our first foray into the broadcasting of content to mobile devices. And who knows going forward? This is an evolving industry, and maybe video portals may be able to use our capability. We are leveraging the C-band capacity we have to offer Ampiage and it is a natural extension of our core strengths and capabilities.

Satellite News: What are your hopes in terms of gaining customers for Ampiage?

McGlade: What we have already done is sign a reseller agreement with Broadstream Communications. So, that was really our first customer on a wholesale basis. We have a number of discussions going on with other companies which we can’t announce yet. We are actually at the point now where we are testing the service with the customer. We look to have full commercial rollout this summer. In a year from now, I hope we will have a number of customers to talk about. We are working very hard and diligently at bringing on customers, which are ready. We want to make sure we have the quality there that they expect from us and continue setting a gold standard in the satellite industry.

Satellite News: Would you look to export the idea internationally if it proves to be a success in North America?

McGlade: There are few companies around the world, and certainly no company in our sector, that is more international than we are. We feel very well placed anywhere in the world to take advantage of that. We are going to see areas that have good DSL speeds. You look at Hong Kong, Korea, Taiwan and Japan. Eleven of those countries are well- positioned to have a very good, competitive IPTV offering. We are going to be in a position as we look at our customer set and our distribution partners around the world to see where we can play to offer this kind of service. We are having talks, but it is in its early days. We really want to concentrate on North America first. But, we are keeping an eye out everywhere in the world where we operate.

Satellite News: What are the other major opportunities for Intelsat outside of North America?

McGlade: We are seeing good growth in Africa and the Middle East. We have seen solid orders come out of Europe. North America has been strong, especially with Ku-band capacity. Latin America and Asia have been tough. Ultimately, I think the long-term prospects are very good in Asia. China, India and Russia are big markets with big growth potential. We would love to have them completely open so we could offer services more effectively.

Satellite News: What kinds of solutions are you looking to bring to international markets?

McGlade: I think mobility will be key. Mobile solutions for devices, for cars, trains, planes, boats, etc. will be key. All those areas will continue to grow and wherever we need point-to-multipoint or multicast capability, that is our natural strength and as content goes into these devices where they have got larger screens and colour and they can handle the throughput for that. I think we are well-positioned to augment the capacity we are seeing which is needed just to keep up with the growth in cellular.

If we look at something like cellular backhaul, something we have been doing for several years now, we have seen great growth in that, especially in Africa, Latin America and Asia, where they extend into areas that do not have strong terrestrial capabilities and low teledensity. We are well-positioned to help these cellular systems by giving them the backhaul they need. So, I think mobility is a key area of growth for us. You have to look at business line by business line.

Satellite News: Guy Lafarge, the CEO of CanalSat said that 20 percent of their new subscribers were coming via IPTV, rather than DTH. What implications does this have for FSS operators?

McGlade: That is very interesting. I think it is all positive for us. As they grow, we can potentially help them grow. That is encouraging news. We have some very important European customers and we are doing a lot in Eastern Europe which is great, including on the DTH side.

Satellite News: In Europe, we have seen BSkyB acquire Easynet, Do you expect to see more DTH players looking to acquire telecoms infrastructure?

McGlade: I think there is a situation where if a DTH player wants to compete effectively against the terrestrial companies, especially the cable companies offering triple play, and even quadruple play, they have to expand their offerings. They have to look at [Voice over Internet Protocol] and broadband. They have got to come up with creative ways to do it, and they have got to have alliances and own assets. I think that is a natural evolution. The consolidation in the overall industry is going to continue to occur and gain momentum. If you can’t play in all those areas, it is a bad position for any company to be in. As an FSS player, I love that we are so well diversified in the government, networks and services, telecoms and media sectors. All this helps us to offer what customers need around the world and gives us a better position as markets evolve and change and customers grow and contract. I think that is an area that makes perfect sense for DTH players.

Satellite News: How do you view the international HD opportunity for Intelsat?

McGlade: We have had very good momentum with HD, and we have seen it really with sports and events first, especially with respect to contribution of content. That is expanding into other channels. When we look at our revenues, about one-third of the sports content we carry now is HD. This is from a contributions standpoint. From a distribution standpoint, we are going to see more and more. We have seen momentum so far in North America but I think it is starting to gain some momentum in Europe and after that, it will around the world. When we see the Beijing Olympics coming up in a couple of years, I think that will really catapult HD in a way we haven’t seen before.

Contact, Jodi Katz, Intelsat, e-mail, Jodi.katz@intelsat.com

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