Romain Bausch, CEO, SES

By | November 20, 2008 | Satellite News Feed, Telecom

Like its fixed satellite services counterparts, SES some very interesting growth strategies in play. The operator of the second largest communications satellite fleet has an IPTV offering in the United States with IP Prime, and subsidiary SES Astra has teamed with Eutelsat to serve the mobile services market in Europe under the Solaris Mobile joint venture.
    SES CEO Romain Bausch talks to Satellite Today about these opportunities as well as the general climate for operators.

Satellite Today: Do you see strong growth for SES?

Bausch: It depends on how you define strong growth. We have guided investors to 6 percent plus over the next two years. We believe this is realistic. However, in the current economic climate, there are exchange rate calculations to be taken into account.

Satellite Today: Has the growth in HD being slower than you anticipated?

Bausch: We predicted 18 months ago that there would be more 100 HD channels by the end of 2010. We are currently at 53 channels, so we are well on track to reach and exceed 100 channels in 2010. What is certainly better than expected is the penetration of HD-ready TVs. Some of our customers such as FTA broadcasters are now using larger amounts of bandwidth because these large flat screens require better picture quality. The key factor for us will be the launch of HD in the German market, where so far, the public broadcasters have delayed the launch of HD channels. Currently, you only have four HD channels in this market, two from Premiere, Arte and Anixe. HD in Germany is still very early days, and I am hopeful by 2010 you will a much larger range of HD channels in the German market.

Satellite Today: Will we see an acceleration in the launch of HD channels?

Bausch: If you look at BSkyB, they are planning to have 30 HD channels by the end of the year, so there will be a significant ramp-up here. You have others such as ITV also going HD. You will see sudden increases in different markets. The United Kingdom could be first, followed by the French market and then hopefully the German market in the 2010 timeframe. I would not be surprised if HD in Germany will happen at the same time the analog to digital conversion is in full swing. There could be 30 to 40 channels of Germany in HD in Germany by 2010. It is clear that once one of the public broadcasters in Germany decides to go HD, this will give momentum to private broadcasters to also go HD. The Swiss and Austrian public broadcasters have already gone HD. Depending on the role News Corp. will play within Premiere, you could also see a more aggressive HD strategy there.

Satellite Today: Does the success for satellite broadband in the U.S. market have an impact on your plans?

Bausch: Firstly, it is a demonstration that residential broadband by satellite is accepted in the market. For us, in the United States, in the future, it may offer outsourcing opportunities. We can provide the infrastructure to one or several large customers and provide the satellite capacity for their services. However, if there is a market for these services in the United States this does not necessarily mean that there is also a market in Europe. My assessment of the situation is that even with the rollout of terrestrial broadband there will be some 10 percent of unserved homes in the European market, and there will be another 10 percent of underserved homes in the European market. They may get some ADSL, but it will not be sufficient for their needs. So for some 20 percent of the population, we see the opportunity to offer satellite solutions.
    You also have to consider the fact that telcos are entering into the TV market. Broadband providers could easily reach out beyond their terrestrial infrastructure by going on satellite. They are limited by the technical reach of terrestrial infrastructure. However, their marketing campaigns and the content rights they hold are nationwide. Because it is not yet clear how this will be rolled by the telcos, we have not taken the decision yet to acquire a dedicated Ka-band satellite. We have rolled out Astra2Connect, but firstly, we want to see what the market acceptance will be. We want to see what the telcos strategy will be in terms of rolling out broadband and TV before we do an investment. The beauty and the problem of the satellite is that it lasts for 15 years, so you better do the right investment and the right design initially.

Satellite Today: France Telecom and Portugal Telecom have looked to DTH, and  BSkyB has acquired telecoms infrastructure. Will we see more of this?

Bausch: France Telecom has announced service for other markets such as Spain, the United Kingdom, Poland, etc. It is interesting you mentioned both BSkyB and Orange, companies from the media world and the telecoms world. That is the interesting thing. There is a demand for satellite infrastructure that did not exist before. It exists because new players are coming into the TV space and new players are entering broadband. I believe we will see demand for satellite infrastructure from bigger companies, both in the TV and telecoms space.

Satellite Today: Is it conceivable that Deutsche Telekom will look to do something more on satellite in terms of TV?

Bausch: Yes, definitely. For telcos, the main investments before they move to satellite will be done. The acquisition of rights as well as the marketing investments will be done. It is the low hanging fruit. Satellite operators are offering a complementary infrastructure for them.

Satellite Today: When can we expect to see the first deal between SES and a major telco in this area?

Bausch: I would say this will happen when we announce a Ka-band satellite. In the next 12 months, we will decide on a Ka-band satellite.

Satellite Today: In Japan, Toshiba announced that Mobile Broadcasting Corp. will cease operations, and Tu Media is seeing flat growth in Korea. Has the mobile TV growth opportunity been overstated by the satellite players?

Bausch: The examples you have indicated have certainly not met expectations. When translating this into our activities in the mobile TV field, I would highlight two differences. Firstly, we are focusing on the infrastructure. Our vision for Solaris is not to become a mobile TV service provider. Instead we will offer satellite infrastructure and some ground components to mobile service providers. Solaris is also not exclusively focusing on mobile TV. It can provide more to mobile devices. It can provide mobile radio and mobile data communications services, safety and security services. So the success of Solaris will not only be down to the take-up and success of mobile TV. There will be six spot beams on the satellite covering the United Kingdom and Ireland, France, Spain, Italy, Poland and the German speaking countries. We can offer in any of these markets up to nine TV channels outside the coverage of the terrestrial mobile infrastructure It is also important to realize that Solaris will use the S-band, the adjacent band to UMTS, and so obviously you can receive mobile TV from Solaris but also all your UMTS communications on mobile devices. And there is no need to have any additional towers. You can use the existing towers and upgrade the transmitters in order to have the frequencies aligned, so it is a very efficient solution based on an intelligent combination between satellite and terrestrial intended to optimize the capacity.

Satellite Today: Are there other growth opportunities worth mentioning?

Bausch: I think the very important one is the combination of satellite and terrestrial infrastructure for broadcasting. The second one is HDTV. But I would not stop with HDTV. The Sonys and Panasonics say that Ultra HD will be commercially available five years from now, offering a picture quality that allows an almost three dimensional quality. This will require our customers to simulcast content. They will have to take twice the capacity to serve different areas of the market. In ultra HD, the transmission of one channel will require two satellite transponders, and we would expect the first ultra HD channel on our satellites in five to six years time.

Satellite Today: We are seeing different trends of watching content, particularly among the younger generation. Does that have any medium- to long-term implications for satellite players?

Bausch: I see this as being a trend, but that does not mean that TV, the way it is traditionally consummated, will disappear. I think it will take some of the growth away from traditional broadcasting. Long term, the importance of the hybrid function combining terrestrial DSL and satellite will become more relevant because the volume of content delivered point-to-point and the content delivered point-to-multipoint will multiply. For satellite operators, this is not a threat. What we have to do right now is promote hybrid solutions. It would be a big mistake to try to promote today a satellite-only solution.

Can’t get enough of Romain Bausch? See him at SATELLITE 2009’s Opening General Session The Big Four: Setting the Pace for Expansion on March 25 at the Walter E. Washington Convention Center in Washington D.C.  Admission to the Opening General Session is included with your free Exhibit Hall Only Registration.

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