Satellite Executives Cast Eyes Toward SATELLITE 2009
[Satellite News – 3-4-08] In the final panel of SATELLITE 2008, “Satellite SWOT: Challenges and Opportunities for Satellite Enabled Communications”, industry executives discussed a variety of issues as well as casting an eye in to the future on what might be some of the hot talking points at SATELLITE 2009.
The Feb. 28 panel encompassed several themes that ran through the show, such as the strong prospects for satellite broadband, access to finance to fund business plans and lessons from previous boom-or-bust eras in satellite communications.
In terms of satellite broadband, officials from Hughes, ViaSat and WildBlue Communications believe the future is bright. David Leonard, CEO, of WildBlue, said he expects the operator to continue its strong growth. “We have 300,000 customers in North America. Our business is a solid one. We are able to provide DSL equivalent services today. We want to expand our space segment. We see our subscriber numbers increasing strongly in the next five to 10 years. We will also expand internationally,” he said
Arunas Slekys, vice president and general manager, Russia and Newly Independent States for Hughes, said the company is equally bullish about the prospects for satellite broadband. “Broadband is exploding. We are seeing broadband grow in the consumer space. Satellite is becoming a core component of broadband,” he said. “We are already thinking of Spaceway-4 (to meet this growing demand). We are seeing satellite become part of the mainstream.”
Moorthy Hariharan, CTO, VSAT Networks Group for ViaSat, said, “We believe there is a sustainable business for consumer broadband.”
All of the executives agreed that while opportunities were perhaps never better for the industry, access to capital is likely to prove very tough over the next 12 months. “Capital is always available. It will gravitate towards least risk with highest return,” said Leonard. “It is a very turbulent capital market right now. An infrastructure business is by in its nature very capital intensive. You have to make sure that satellite business models are attractive. As the density declines, the cost of economics for a terrestrial networks fall off a cliff. You need hybrid architectures.”
Michael Polmar, vice president of sales for Lavell Systems, said getting access to funding may not be as difficult as it might be perceived right now. “Finding funding if you have a growth market may not be as difficult as you think,” he said. “There is a lot of private money on the sidelines. If the industry is healthy, you will find the money.”
Due to better overall financial management, Keith Volkert, CEO of SCI, said he did not expect the satellite industry to return to a period of boom or bust. “I don’t think we are going to have a boom or bust period. I see this as a positive period,” he said.
Slekys also believes it is unlikely that the satellite industry will see the wild business swings that have characterized some recent periods. “You are comparing us to the period of time when people were betting on smoke and mirrors [in the 1990s]. Our slowness of foot over the last few years could be an advantage,” he said. “We are nowhere near the numbers that satellite could be in the satellite broadband marketplace.”
With lessons hopefully absorbed from the past, the satellite industry will hope to make good on its investments to serve customers with the latest of video, mobile and broadband applications. One difference since the late 1990s is that a number of markets in Eastern Europe as well as Asia appear ready to see major uptake of satellite services.
Hariharan pointed to India as one market where there has been recent huge growth in the delivery of pay-TV services over satellite. Slekys said Eastern Europe, as well as markets like India, offered huge growth opportunities to a company like Hughes.
With attractive growth markets across the world and a seemingly insatiable demand for content driving the need for ever increasing amounts of bandwidth, the satellite industry certainly seems to be attracting a lot of interest. This was underlined by Robert McIntyre, CTO of the service provider group at Cisco. “Space segment has become so important to Cisco we have created a vertical to serve the space business,” he said. “We see Internet traffic rates growing 40 percent per year over the next five years. The best solutions are always hybrid solutions. You need a part satellite segment delivered with a terrestrial segment. The best way to do point-to-multipoint is still satellite.”
McIntyre highlighted the growth in the video market, which was making satellite an even more compelling solution. However, he warned that satellites had to keep up with demand in order to part of the networks of the future.
“We believe the network (of the future) needs to be IP converged,” said McIntyre. “If the satellite becomes (bandwidth) constrained, it won’t be part of the overall solution in the next five years. There is never going to be enough bandwidth. The network (of the future) will be IP based.”
One of the few troubling issues addressed by the panel was the difficulty attracting new engineering talent to the satellite industry, and this could become more of a major issue going forward.
Stuart Daughtridge, executive vice president, commercial division, Integral Systems, said, “We are competing with other industries for the best minds, but it is challenging.”
Denis Curtin, COO of Xtar commented, “Who is getting into engineering? I tried hard with my own family (to persuade them to go into engineering), but they decided not to.”
Volkert also painted a fairly bleak picture. “I think in terms of next-generation engineers, those satellite design engineers are aging. When I look at the age of our core engineering group, it is very hard to find to drive the satellite design industry,” he said. “We are still building launchers the way they looked a few years ago. There is going to be a problem here. Some of the satellite manufacturers need to address the problem of engineering talent.”