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Satellite Executive Of The Year 2000: And The Nominees Are…

By | February 10, 2001

      By Nick Mitsis

      The satellite industry emerged strong in 2000 after surviving two dismal years plagued with numerous launch failures and multibillion-dollar business catastrophes. In fact, monolithic business transactions, a rejuvenated launcher industry and accelerated momentum within the broadband marketplace will hallmark the commercial sector’s entrance into the 21st century.

      One of those significant developments came in March when the Asia Cellular Satellite (ACeS) system relayed its first telephone call via space. By the end of the month, more than 500 test calls were completed. ACeS then was off and running in preparation to begin serving paying customers by signing distributors and finalizing business its business plan.

      The Europeans, for their part, made major strides in the satellite market. Astrium, for example, solidified its place as a global contender. In June, the infant tri-national space company achieved one of its important milestones when it received its first order from Arianespace to provide 20 Ariane 5 vehicle equipment bays (VEBs). The contract was worth more than $140 million.

      But all satellite sector advancements in 2000 did not happen within the boardrooms of large corporations. The launcher industry received significant notoriety as companies set unprecedented records in launch frequency and payload delivery success. International Launch Services (ILS), for example, had its fullest manifest in the company’s history while maintaining a flawless record. Likewise new companies, such as Starband, emerged within the broadband marketplace as pioneers of this new satellite frontier.

      Each year, the editors of Via Satellite review the most important accomplishments made by leading satellite executives to decide the winner of our annual satellite executive award. Via Satellite’s Satellite Executive of the Year 2000 will be honored March 29 at the Satellite 2001 conference in Washington, DC. This year, the impressive results from a variety of individuals made the competition stiffer than usual. Below is our short list of top nominees. We hope you will be there when we announce the winner.

      Adi Rahman Adiwoso, President Director, Pasifik Satelit Nusantara/Asia Cellular Satellite

      While the global, mobile telephony industry struggles to materialize profits for its few remaining players, Pasifik Satelit Nusantara (PSN) became a brighter sector star during 2000. The Indonesian-based private satellite company focused on becoming a fully integrated provider of telecommunications products and services in Asia.

      In March, the first phone call using the Asia Cellular Satellite (ACeS) system traveled from point-to-point via space. By the end of that month, the company had completed more than 500 test calls. Adi Rahman Adiwoso, president director of ACeS and managing partner of Pasifik Satelit Nusantara, continued growing the company’s service and maintained market focus throughout 2000.

      In fact, since last spring, ACeS has been demonstrating its satellite capability, signing distributors, and planning to offer services for data and voice, as well as generally preparing to begin serving paying customers.

      “The most important achievement this year was bringing ACeS to an operational state, after going through technical and financial challenges,” Adiwoso says. “ACeS and PSN have been able to weather the storm and emerge as a stronger entity.”

      For Adiwoso, the most significant challenge that he continues to battle is producing a solution he says is needed to close the digital divide in Asia. “On our side of the world, many still consider a phone plug a luxury, while the Western world considers telephone connections as part of their daily life. I believe we are the most cost effective satellite system for the developing [Asia Pacific] region.”

      Adiwoso has succeeded by many standards within a struggling sector. We believe his dedication, business insight and realistic approach will prove to be the recipe for success sought by others within the mobile satellite sector.

      Mark Albrecht, President, International Launch Services

      From restructuring its operations and becoming more customer-focused, to introducing new products and services, McLean, VA-based International Launch Services (ILS) reestablished a leadership role in the business during 2000, validated by the $3 billion backlog it reached. At the helm, President Mark Albrecht streamlined his company not only to aggressively compete within the launcher community, but also to maintain a strong edge for the coming years.

      The joint venture of Lockheed Martin Commercial Launch Services and Lockheed Khrunichev Energia International closed out a record year with 14 launches and received more than $1 billion in additional orders, including 17 firm contracts. “In addition, we received 17 options for a mix of the full complement of ILS launch products including Proton, Proton M, Atlas 2AS, Atlas 3 and Atlas 5,” Albrecht says.

      However, an accelerated manifest was only one of the many agenda items company executives executed in 2000. Two of the most significant changes ILS underwent rest in a realignment of the internal organization to provide customers with dedicated account teams and the implementation of assured launch. Assured launch enables the client who signed a contract for either an Atlas or Proton vehicle launch to switch from the primary launch vehicle to the secondary one if there are any technical reasons requiring such a move in order to meet the schedule.

      With supply exceeding current demand, the launch industry is facing a downward pressure on launch pricing. Some, says Albrecht, are combating this with dual launch manifesting as the exclusive alternative. ILS on the other hand, decided to pursue mutual backup thereby maintaining competitive prices, Albrecht says. “Our customers can receive launch schedule assurance on either vehicle within one contractual agreement,” he elaborates.

      In addition, ILS rolled out new products in terms of hardware with the Atlas 3 vehicle and positioned itself to begin significant upgrades in the Proton launcher family. Some of those changes will include a digital guidance system from the current analog to an enhanced engine performance that will cap its ability at 107 percent. Whatever the upgrades may bring, Albrecht will continue to ensure ILS is in the forefront in the launcher community.

      Romain Bausch, Director General, Société Européenne des Satellites

      Even though its European competitor made significant strides, Société Européenne des Satellites (SES) kept operations running in high gear in 2000. The Luxembourg-based operator aggressively increased its strategic partnerships and expanded its infrastructure to maintain its own competitive edge within the broadband marketplace.

      Among its strategic partnerships, SES acquired a 50 percent stake in Nordic Satellite Company (NSAB) for $118 million. The July transaction gives SES an expanded geographic market in the Nordic regions and will play a pivotal role in the company’s rollout of its Astra-Net broadband services throughout Europe. Likewise, the company took on a 20 percent stake in Embratel Satellites in hopes of gaining market share in the Americas.

      Also in July, SES linked the coverage areas of Europe and Asia by opening a gateway in Cyprus. This event created a portal for broadcasters and multimedia providers to serve 75 percent of the world’s population in one pass. Customers wishing to reach Asia, Australia, the South Pacific and the Middle East can link signals from Astra satellites and Asiasat through this gateway.

      In addition, Romain Bausch, director general of SES, continued to expand his company’s business infrastructure by reaching an agreement with Deutsche Telekom AG on the use of a third orbital position for an Astra satellite at 23.5 degrees E. Under the contract terms, the German Telecommunications Company will use transponders on Astra 3A for continuing its cable feeds as well as offering additional broadband communications. The satellite is slated for a 2002 launch.

      While SES’s infrastructure grew, so did its constellation. In November, the company’s Astra 2B satellite entered active service bringing the total number of birds in-orbit for the European satellite broadcaster to 10. Astra 2B enables SES to activate up to 40 transponders in the BSS frequency range between 11.70 GHz and 12.50 GHz at 28.2 degrees E. Likewise the satellite’s steerable antenna provides the option to activate up to 16 transponders in the 12.50 GHz to 12.75 GHz range outside of Europe.

      Despite delays surrounding two-way Ka-band multimedia service, SES remains bullish on its commercial rollout of broadband interactive service this year. In anticipation of this rollout, Bausch says he is working with the regulatory authorities to enable blanket licensing to occur within the industry, similar to what transpired within the global system for mobile phone services.

      Likewise, SES takes a flexible approach with its pricing policy, offering fixed and variable tariffs as well as growth-driven schemes, in order to meet the varied needs of its customers. The company predicts that 33 to 50 percent of its revenue stream will flow from broadband services by 2005. Bausch’s accomplishments in 2000, we believe, demonstrate the ingenuity needed for success among fierce competition within the broadband sector.

      Giuliano Berretta, Director General, Eutelsat

      Eutelsat solidified itself in 2000 as a global satellite contender. Reaching numerous milestones, the Paris-based company expanded its footprint entering previously closed markets, became the second largest global satellite operator and won restructuring rights to privatize this past July.

      From the beginning, Eutelsat jolted the satellite industry when it won landing rights within the North American market. Following an agreement with Space Systems/Loral which granted Eutelsat access to four Telstar 12 transponders at 15 degrees W, the Federal Communications Commission gave three licenses in February to three operating companies to uplink from U.S. soil. Even though U.S. companies opposed Eutelsat’s entry, that did not stop the European juggernaut from launching its services for delivering U.S. consumer video and data broadcast platforms to Eastern and Western Europe.

      Eutelsat continued its westward expansion in September as it brought South America into its business operations. In an apparent attempt to rival SES’ purchase of 20 percent of the Embratel satellite division and its Brazilsat system, Eutelsat opened its first Latin American subsidiary, Eutelsat do Brasil Ltda.

      But Eutelsat did not stop there. Other new regions addressed were: sub-Saharan Africa and Russia now covered by the W4 and W1 satellites; and the Indian region which now is reached with Sesat.

      In addition to its expanded coverage area, Eutelsat increased its fleet, pushing ahead of rival Intelsat, making the company the second largest global satellite operator. With the launch and service entry of W1 last fall, Eutelsat’s orbiting hardware grew to 18 Ku-band birds. W1’s 28 Ku-band transponders provide Internet backbone connections, corporate networks including Intranets and Extranets, automatic file transfer, television program exchanges and distribution links.

      Eutelsat’s competitors, however, were not the only ones noticing its strategic growth this year. November brought forth the news that the European Commission approved Eutelsat’s proposed restructuring into a private company, including the IPO of 30 percent of its shares within two years of its privatization. In addition 12 European banks arranged a $484.3 million, multi-currency, revolving credit line in anticipation of the company’s privatization measures.

      In terms of traffic streams, Eutelsat also gained significant ground in 2000. More than 40 percent of its capacity is now used for business-to-business networks–both one-way and fully interactive–with the predominant growth coming for IP-based products and services.

      “Obviously, the market for broadband services by satellite is a key issue. We are working hand-in-hand with network, content and terminal providers to turn this into a total package,” Giuliano Berretta, director general of Eutelsat, says.

      To make Eutelsat’s privatization a reality, Berretta will continue his strategic business partnering while maintaining his company’s competitive edge. We believe his proven track record of managerial experience will keep Eutelsat pushing the industry envelope for years to come.

      Armand Carlier, Chief Executive Officer, Astrium

      European satellite manufacturers won nearly two out of every three commercial satellite contracts announced in 2000, and Europe’s infant aerospace company landed some of the most significant ones, beating out established industry giants. Astrium, a joint venture resulting from the merger of Matra Marconi Space and the space activities of Daimlerchrysler Aerospace, emerged onto the global satellite scene last May and proceeded to catch the attention of the established industry pillars. Nurturing the fledgling company is Armand Carlier, its CEO. Under his direction, Astrium caught the attention of Arianespace, Inmarsat and Eutelsat.

      Intelsat ordered two Intelsat 10 high-power communications satellites (one in January the second in June), to provide a variety of communication services. Albeit having different payloads, both satellites, Intelsat 10-01 and Intelsat 10-02, will have nearly identical power in the order of 8 kW. In May, Inmarsat awarded its fourth-generation satellite contract–for three satellites worth approximately $700 million–to Astrium. Beating out the other finalists, Hughes Space and Communications and Lockheed Martin Corp., the European newcomer will manufacture the satellite buses in its plant at Stevenage and the payloads in its Portsmouth plant in the United Kingdom. The integration and testing will be done at Toulouse, France. The satellites will have a total power of about 10.5 kW and a payload power of about 9kW.

      Astrium pointed out that its predecessors built three Marecs satellites, which were part of the original maritime satellite system and four Inmarsat 2 satellites and supplied the advanced payload for the five Inmarsat 3 spacecraft.

      In June and September, Arianespace awarded its European colleague two contracts worth $250 million to construct 20 Ariane 5 VEBs and 15 storable propellant upper stage EPS. Under these agreements, Astrium will produce the equipment during the next three years. They will be designed to help Arianespace reduce costs by more than 35 percent, boost launch performance and extend the rocket’s capability to lift multiple payloads. Three of the new equipment bays will extend the current series, 10 will provide a new ESC-A cryogenic upper stage and seven will be adapted to Ariane 5s multiple-orbits mission profile.

      In late June, the company nabbed Eutelsat’s Hot Bird 7 contract. Hot Bird 7 will be based on Astrium’s Eurostar 2000+ spacecraft, which is designed for direct broadcast service. It will carry 40 Ku-band, DBS transponders, with traveling wave tube amplifiers running at about 97 watts of power and two steerable antennas. The satellite will have a design life of 12.5 years and will be built in France and in the United Kingdom.

      As satellite manufacturing competition increases, we believe Carlier’s dedication, experience and industry foresight will keep Astrium at the global boardrooms signing contracts throughout the 21st Century.

      Yoel Gat, Chairman and CEO, Gilat Satellite Networks Ltd., Co-Chairman, Starband Communications Inc.

      When it comes to strategically positioning a company for successful industry growth, Gilat Satellite Networks Ltd. made great strides in 2000. The provider of telecommunications solutions based on very small aperture terminal (VSAT) satellite network technology expanded its presence with significant acquisitions and partnerships, and introduced new technology in hopes of differentiating itself within the industry.

      Perhaps the most dramatic of these developments was Gilat’s formation of Starband Communications Inc. in February, with joint venture partners Microsoft Corp., Echostar Communications Corp. and ING Furman Selz Investments. With its trial program to more than 5,000 consumers in the summer and its nationwide launch in November, Starband became the United States’ first consumer, two-way, high-speed satellite Internet service.

      StarBand is enabling the direct broadcast satellite (DBS) industry to compete directly with other consumer broadband alternatives such as cable modems and DSL–thus proving the feasibility of Internet-over-satellite technology on a mass-market scale. To ensure Starband maintains its competitive advantage, Gilat has invested heavily–through its July acquisition of Deterministic Networks Inc.– in patented software and quality-of-service technology, enabling traffic to be controlled by user, by application and by time of day.

      In its core business, Gilat and its subsidiaries blazed through 2000 with international market growth in Europe, Asia, North America and Latin America. Throughout the year, Gilat’s U.S. subsidiary, Spacenet Inc., continued to expand its customer base by signing agreements with leading companies such as The Goodyear Tire & Rubber Company, Friendly’s family restaurants, Bass Hotels & Resorts, and RMS Networks.

      In August, Gilat grew its market share in Asia by providing China’s first large-scale satellite rural telephony network. This contract provides the Xinjiang Uygur Autonomous Region Posts and Telecommunications Administration with 1,050 of Gilat’s DialAway VSAT terminals for use in public call offices in remote villages.

      In December, Gilat increased its presence in Latin America by providing Telmex with a fixed rural satellite telephony network for use in public call offices in almost 2,000 communities throughout Mexico’s national territory. This became the country’s first large-scale satellite rural telephony network.

      Building on its established global market share of 51 percent of interactive VSATs and 79 percent of rural telephony VSATs, Gilat also introduced new technology. Among the highlights are its IP-over-satellite software enhancements, hybrid Ku-/Ka-band satellite design and customized browser.

      With these innovations, Chairman and CEO Yoel Gat continues to solidify his company’s presence in the emerging Internet-over-satellite service sector. “Gilat is the world leader in satellite networking technology, mastering IP over satellite and providing the best user experience across all our target markets: enterprise, telephony, verticals and consumer,” he says.

      Gat adds, “In the enterprise market, Gilat is meeting the demand of progressive companies who are migrating to IP-based network environments, with VSAT networks that are optimized for broadband IP applications. We build IP-enabled rural telephony VSAT networks for our international customers that can support multiple telephone lines and high- speed Internet on a single platform.” From a pioneering standpoint, Gilat may become a company after which others model themselves, specifically as its Starband venture matures along with the broadband market.

      David Kagan, President/Chief Operating Officer, Verestar

      While some significant restructuring was witnessed within the satellite industry in 2000, an industry networks solutions provider re-named, re-branded and re-emerged as an international player among its competitors. Many would attest that such a drastic metamorphosis would be detrimental to any business plan, but this company made a successful transition. Now, ATC Teleports Inc. renamed Verestar in September, offers satellite, fiber, switching and value-added equipment purchasing, installation and integration. This metamorphosis grew it from five to 10 gateway facilities; gained it 300 employees; and transformed it from a satellite-only based business to becoming a full-solution provider.

      The company profile change came after an aggressive year of growth through acquisitions that spread Verestar beyond its Fairfax, VA, headquarters. “We needed a new name to visibly show the company’s expanded focus on international Internet markets. More than 80 percent of our revenues come from our international services,” says David Kagan, Verestar’s president and chief operating officer. “Access to the U.S. Internet backbone is critical in a world driven by information. It’s changed our business across the board. It doesn’t matter if it’s data, voice or video: that demand for more and more bandwidth to accommodate new applications is driving all these sectors,” he adds.

      Last spring, Verestar purchased General Telecom Inc. for approximately $30 million. The acquisition provided the company with independent voice switching capabilities and network management services at three U.S. voice communications gateways. The facilities at New York City (60 Hudson Street), Miami and Los Angeles, as well as an operations center at One World Trade Center, support the switching requirements of the international long-distance community.

      In June, Verestar completed the acquisition of U.S. Electrodynamics Inc. for approximately $60 million in cash and stock. The acquisition included 52 antennas and teleport facilities in Brewster, WA, Whitinsville, MA, and Kingman, AZ, for Internet, voice, data and video services. The new facilities strategically grew the company’s U.S. operator presence by bringing its total to more than 160 antennas at 10 teleport locations.

      In October, the company acquired Publicom Corp. a communications solutions provider that serves the Latin American and Caribbean region. This strategic addition gave Verestar the ability to offer its customers end-to-end solutions with remote-end equipment purchase and installation, maintenance and management.

      Whatever the coming years have in store for Verestar, Kagan’s ability to maneuver difficult and sometimes risky business deals for strategic growth may propel the company into a significant seat within the emerging multimedia marketplace.

      Nick Mitsis is Via Satellite’s Associate Editor.

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