[Satellite News 03-20-12] Despite continued economic turmoil around the world last year, particularly in debt-plagued Europe, the satellite industry remains financially healthy and is well-positioned to handle the challenges that loom on the horizon, the chief executives of Intelsat, Eutelsat, Telesat and SES reported during the SATELLITE 2012 opening general session, “The Big Four: At the Center of the Satellite Universe.”
Fresh off a busy year filled with fleet upgrades and defined by strong results, the world’s top satellite operators are confident that the coming years will bring continued good fortune to their sector of the global telecommunications industry.
“We are showing how resilient the satellite industry is” in difficult times, said Romain Bausch, president and CEO of Luxembourg-based SES.
Bauch said SES expects to be able to continue benefiting from its traditional strength as a provider of satellite capacity for direct-to-home services during the year ahead, with strong consumer demand for satellite TV — especially in emerging markets such as India — helping to mitigate developments that could hurt its business. These challenges to SES’ business include the impending switch-off of analog TV services in Germany as the country moves exclusively to digital technology, which is more bandwidth-efficient.
Eutelsat, meanwhile, is working aggressively to increase its presence in the hot Latin American market, said Michel de Rosen, the company’s chief executive officer. The Paris-based operator depends on the Western Europe market and less-developed emerging markets in Central and Eastern Europe, the Middle East and Africa, but wants to diversify its operations more, de Rosen said.
“We’ve always identified Latin America as one of the most interesting continents in terms of growth,” he said, but the company has been looking for a way to enter the market directly. Eutelsat recently won access to an orbital slot serving the region through a Brazilian government auction.
Washington-based Intelsat is also tapping the Latin American market, where it already has a presence, said CEO David McGlade. He noted that entering a new market can be difficult because the customer base is likely to already have relationships with existing suppliers, and expressed confidence that Intelsat’s well-established global operations will enable the company to make the most of growth opportunities even as it deals with changes in the marketplace that threaten its business.
Among these changes is the pullout of the United States from Iraq, which has altered the U.S. military’s needs for bandwidth to serve combat operations. Similarly, budget pressures are changing the way military officials procure satellite capacity, creating potential opportunities for private operators, McGlade said.
As an example of how Intelsat is positioning itself to benefit from changes in the government and military sectors, McGlade pointed to Intelsat’s deal with the Australian government to host a UHF payload on the Intelsat 22 satellite. This kind of hosted-payload arrangement stands can help government customers save money, give them access to an assured timetable for the deployment of transponder capacity and bring commercial operators new sources of revenue, he said. “This shows how government customers can save money” by changing the way they do things.
Dan Goldberg, CEO of Ottawa, Canada-based Telesat, said working with government customers to design, construct and launch satellites with joint military-commercial payloads can be tricky. Governments generally demand that these projects adhere to their timeframes, which may differ from what works best from a business point of view, he said.
De Rosen said challenges to the satellite industry posed by the slowdown in hostilities around the world and reductions in troop deployments are mitigated to an extent by the increased use of satellite-driven unmanned aerial vehicles, also known as drones, for military operations. “There are less feet on the ground, but more eyes in the sky,” he said.
Another wildcard affecting satellite companies is the recently concluded World Radiocommunication Conference (WRC), hosted by the International Telecommunication Union (ITU) in Geneva.
Bausch said the satellite industry needs to be mindful of efforts at the WRC by developing nations to change the system under which orbital slots are allocated. These discussions have not yet lead to any changes to the rules at the conference, but could in the future, demonstrating how changes in the global economic and political landscape can affect the satellite industry.
According to de Rosen, frequency interference, which is sometimes intentional, is positing a challenge for the satellite industry, and the ITU needs to step up its efforts to deal with this issue. “We must continue our efforts to make sure there is better regulation and better sensitivity to that important problem,” he said.
McGlade added that the industry needs to deploy technology to deal with problems, particularly when governments cannot come up with effective solutions. “The regulatory process is often glacial rather than [providing] the quick remedies that we need.
He urged people to join industry efforts to combine resources and provide government agencies with information that can help officials monitor operations in space and deal with problems. Intelsat has trained hundreds of its employees and those of its customers to fight interference, and is working with the Global VSAT Forum on the issue as well, McGlade said.
Another challenge for satellite operators is the improving ability of the Internet to transmit high-quality video, according to McGlade. On one hand, this poses a threat to operators, because if viewers can access TV channels directly, they may have less need for traditional services such as satellite television. But conversely, increased use of the Internet can spur demand for satellite connections in less-developed parts of the world, where ground-based infrastructure is less prevalent.
Goldberg said satellite technology is at a disadvantage because it does not provide an easy way for individual users to send data, but he said he is confident the industry can overcome this obstacle. “At the end of the day, I think demand for bandwidth is going to be so strong that the great struggle will be how to get to everybody,” he said. “I’m convinced satellites will continue to have a role on distributing content. The return path [issue] will get solved.”