FSS CEOs Discuss New Market Opportunities

[Satellite News – 2-26-08] While fixed satellite services operators remain intent on expanding their core video markets, opportunities for new services dominated the conversation at SATELLITE 2008’s opening general session, “Expanding Market Growth and Driving Applications.”
    One of the discussions focused on the potential for providing broadband services and particularly the role of dedicated Ka-band satellites. All FSS operators are looking to play a more prominent role in this market, but there were disagreements in terms of the best way to monetize the opportunity.
    Eutelsat ordered a dedicated Ka-band satellite in January, making a clear statement of intent in terms of satellite broadband. “We have the courage to start a Ka-band project, the biggest we have ever tackled,” said CEO Giuliano Berretta said.
    Eutelsat’s approach is in marked contrast to SES, which does not see the need to operate a dedicated Ka-band satellite in order to take advantage of this market, said CEO Romain Bausch, who emphasized the service over the technology used to deliver the service. “We are speaking about a niche market,” he said. “We see a good response on the market. We will decide later whether to invest in a dedicated Ka-band satellite. There is nothing magic about Ka-band.”
    David McGlade, CEO of Intelsat, said satellite broadband will only work in markets where certain dynamics are favorable. “I think in some countries satellite over broadband will not take off,” he said. “When you look at large geographies, large underserved communities, there will be a demand for those services. The strength of satellite communications is point-to-multipoint. There are all kinds of things we can do that terrestrial providers that do.”
    While there is a risk in investing in Ka-band satellites, Telesat CEO Dan Goldberg sees the investment paying off in the end. “Even if you are not competing with terrestrial, you need to go to this technology,” he said. However, Goldberg warned that if satellite operators were not successful in attracting broadband subscribers this could present problems. “These are highly specialized satellites,” he said. “You have much greater limitations with the satellites if satellite broadband does not work.”
    The operators also see high-definition services ready to become a strong growth driver for revenues. “HD is driving growth in all of the segments,” said Bausch. “[Europe] may be a little behind [North America], but is still a strong opportunity for us.”
    While industry consolidation has left the four operators on the panel as the unquestioned largest in the industry, the CEOs seemed to agree that consolidation is not over. While there was no agreement on which steps may be next, it is unlikely that FSS operators will look to acquire mobile satellite services (MSS) operators to boost their mobile strategies. “You couldn’t get synergies you need with MSS operators,” McGlade said. Bausch agreed, but said, “There could be commercial cooperation with FSS and MSS players.”
    While all the CEOs believe the industry is in good shape, companies must avoid making the same mistakes that led to the wild market swings of the late 1990s. “I fear that our industry could get into a boom-and-bust cycle,” said Goldberg. “We do need to be careful that we don’t repeat the excesses of the late 1990s. There are a lot of smaller operators whose business plans who are not as well conceived as ours,” he said.