Globecomm CEO David Hershberg Discusses Challenges and Evolution of his Company
[Via Satellite 11-15-13] With more than 54 years in the satellite industry, David Hershberg, Globecomm’s CEO, has attended numerous satellite conferences and has seen more than one company come and go. Since founding Globecomm in 1994 with the intention of bringing Internet access to developing countries, he has learned the importance of flexibility and diversification. By leading the company for almost two decades, Hershberg found what it takes to weather economic and political storms in a business that is acutely affected by such changes.
One of the first challenges that Globecomm faced was the encroachment of fiber optic. Though fiber takes time to establish, once in place it is a powerful competitor to satellite services. After four to five years, the company started noticing the effect of this encroachment in terms of reduced market share, to which it responded by diversifying its focus.
Globecomm has a presence in the enterprise, broadcast, cellular and maritime markets, which allows the company to stay strong overall. Though varied in markets, the company still uses a lot of its original skillset. “We’re in a lot of verticals but there is a lot of commonality,” said Hershberg during an interview with Via Satellite at Satcon 2013 in New York, N.Y. “There’s a convergence of all kinds of technologies. What we try to do is be in different areas so we are always able to get some business.”
No longer focusing as heavily on developing countries, Hershberg took the company to different markets in order to play on the strengths of satellite over fiber. This was the primary reason for entering maritime, “because you’re not going to run a fiber behind a ship,” he said humorously. “Maritime was something that fiber was not going to take away from us.”
What eventually became Globcomm Maritime started as a project to purchase two companies: Telarus Communications for $6.5 million, and Mach 6 for $5.9 million. By acquiring these two companies, Globecomm was able to establish itself in maritime as a subcontractor to Ericsson, which had placed two base systems on 400 ships. Then, Globecomm made an intuitive move to handle both sides of the maritime business and from there, grew there to cover more ships, providing both the terminals and service to its customers.
“We have the largest floating cellular network in the world because we’re on over 400 different ships. Our company is probably the only one in the world that has a vertical in the maritime business and the cellular business. We combined those two capabilities [because] having all that capability both on the service side and the manufacturing side; we think is really important to our business,” Hershberg said.
Another challenge the company faced was overcoming the Internet bubble in 2000. Before it burst, common advice was to obtain as much satellite capacity as possible. Globecomm did just that, and found itself in an uncomfortable position. “We purchased $150 million worth of end-of-life capacity, which as fiber came in we got less and less utilization out of. As a result, we were paying a lot of money for empty satellites,” said Hershberg. “We ended up cutting a deal with the satellite provider to get out of those contracts. After the bubble burst, a lot of companies in the Internet space went out of business. We were able to hold our own with some of the negotiations we were able to do to get out of those long-term commitments. That was a tough one.”
More recently, the 2008 recession and 2013’s U.S. sequester created new hurdles for the company. Government is a large fraction of Globecomm’s business, comprising about 60 percent overall. This includes the UN, NATO and other intergovernmental organizations (IGOs) along with ministries and agencies within countries. Still, fluctuations in the U.S. are felt most severely. Hershberg’s tactic remains the same as before: diversify.
“We’ve been able to book some good business in building broadcast centers and media centers, and our cellular business is doing well,” he said. “Today we have about 90 channels of video that we transmit, we have 3,500 ships we provide communications to, [and] we have 24 cellular companies we provide service.”
Globecomm’s maritime and cellular business has been growing in lieu of government contracts. In preparation for the U.S. withdraw from Afghanistan, Globecomm is focusing on acquiring more civilian business. “We have an ISP there that provides service to Karzai’s palace and [different] embassies. We just have to exploit the other areas that we’re good at,” Hershberg said. While challenges abound and will continue to surface, he is positive about the company’s future outlook and opportunities.