The One Way Data Satellite Market Weathering The Storm

by James Careless

From formidable to fine: that’s the news in the one-way data satellite market, depending on whom you talk to. So who’s saying what? Here’s a rundown of what some of the industry’s top companies have to say.

The Future Looks Bright

Many satellite equipment firms are worried about the economic slowdown, but Taiwan-based manufacturer Apex Communications isn’t one of them.

The reason? “The dot-com phenomenon was largely a North American issue,” explains Don Lee, Apexcom’s vice president of business development. “As a large part of our satellite business is centered in Asia, the crash has not affected us at all to any significant extent.

“In Asia we are offering a number of data distribution services supported by data communications over satellite,” he continues. “A couple of examples are our English language training system and real-time stock exchange data broadcast, both operating in China, Taiwan and the Philippines. We also use data over satellite for distribution from the production site to FM stations in the major cities, and distribution from there to the end users via FM subcarrier, and digital radio in the future.”

This said, Apexcom is hedging its bets by serving the two-way market, as well as the one-way. Right now its flagship two-way product is the ACS2400 multimedia broadband VSAT system.

Designed specifically to deliver IP over satellite, the ACS2400 supports high speed and wideband multimedia transmissions. This makes it well-suited for a wide range of applications, such as digital audio and video broadcasting, data, videoconferencing, IP telephony, distance education, and broadband Internet access.

All things considered, Apexcom remains optimistic about the future of the one-way data industry. “Our primary interest was, and remains, data over satellite for well-defined niche market applications,” says Lee.

Brisk Business

Infolibria is ideally poised to capitalize on one-way data satellite broadcast and Internet accesses. The reason? This Waltham, MA-based company makes streaming media data storage products like MediaMall and DynaCache: products that can be used to receive one-way data satellite and then serve it out on demand to users on a Local Area Network (LAN).

In terms of actual sales, Infolibria sells its products to companies like SES Americom, Panamsat, and Lockheed Martin. They, in turn, integrate Infolibria’s solutions into their one-way data offerings, and sell them to end users.

So how is the market meltdown affecting Infolibria? “We’ve kind of seen a little bit of a meltdown in consumer-oriented services,” says Kevin Lewis, Infolibria’s vice president of customer advocacy. “In response, we’ve seen a lot of our customers focus on managed solutions for the enterprise market.”

In addition, “a lot of our customers’ customers are looking at IP as a way of enhancing their internal communications and overall productivity,” he adds. For Infolibria, this means that business remains brisk, despite the economy.

Perhaps this explains why Infolibria recently secured $41 million in new funding, with money coming from companies such as GE Capital, Mitsubishi, and Mellon Ventures.

“Infolibria has been able to attract and retain a strong base of customers and partners, including AT&T, EMC, Lockheed Martin, and Mitsubishi,” explains Paul Cohn, a partner with Mellon Ventures. “We are confident that they will lead the way for streaming media adoption in the carrier and enterprise market.”

Not bad, given the current state of the venture capital market. Not bad, indeed.

What Recession?

If there’s a recession on, then International Datacasting Corp. doesn’t seem to have heard about it. In fact, when it comes to orders for data satellite products, “we’ve got one of the biggest backlogs we’ve ever had,” says Ron Clifton, IDC’s president and CEO.

A case in point: IDC just announced new orders for U.S.$1.5 million, including a new sale to the Canadian Broadcasting Corp. (CBC). CBC has ordered 12 FlexRoute digital audio uplinks, to continue the conversion of CBC Radio’s national distribution system from analog to digital. As well, the U.S. company Sky Online has ordered a SuperFlex system to support their growing IP networking business in South America. IDC has also received orders for FlexRoute equipment from Korea’s Dong-in Satellite Network, and for SuperFlex DVB/IP satellite receivers from Norway’s Telenor.

However, Clifton will admit a general slowdown in the data satellite market. “The economic situation is making people more cautious with their money,” he observes. “They’re still buying, but they’re doing it somewhat slower than they did before.”

So why is IDC doing well in these troubled times? Well, it doesn’t hurt that the company has staked its life on IP-based datacasting systems. To put it mildly, IP is the hottest standard on the market today. Even in tough markets, IP still sells. IDC is also benefiting from the world’s continuing migration to digital technology. As long as there are analog satellite customers out there, the company still has a fresh crop of clients to harvest.

The bottom line: for IDC, these are still good times. Everyone else in the satellite equipment market should be so lucky, and so well-positioned.

Opportunities For Growth

Kencast isn’t fazed by the economic downturn or the push for Internet services by two-way satellite. That’s because Kencast chairman and CEO William Steele sees opportunities for growth in a different way.

The reason? First, Kencast’s Fazzt digital delivery system provides two-way Internet service by hybrid networks, using terrestrial Internet lines for access, query and request while delivery is done by satellite.

Second, the secret is in the caching, says Steele. Much content is delivered by Fazzt via satellite from content sources to increasingly large local caches at cable headends, telco central offices, and ISPs. Thus, local users with two-way wire access (DSL, cable or telco plant) to the local cache can interact with it to retrieve the content they want.

“What this means is training videos, streaming files, and everything else can be immediately on hand for users, via two-way hybrid Internet, either from distantly located content or from a local cache,” says Steele. “Except for rural and undeveloped areas without wire infrastructure, this is the most efficient way to provide two-way Internet service and the more commonly employed approach.”

Hybrid Internet systems often use Fazzt to deliver by satellite in the Ku-band and plan to do so in the Ka-band. While Fazzt is particularly adept at recovery from rain attenuation signal loss in the Ku-band, it is even more valuable in the Ka-band where rain attenuation is more of a problem.

To date, Fazzt is being used on over 500 systems worldwide, by everyone from the U.S. Air Force to movie and hotel data distribution. And sales are continuing, Steele says. “So far we haven’t suffered from the recession,” he says. “Sales are growing as fast as they were, and we’re still profitable and doing well.”

Doing It For Less

When it comes to one-way data broadcasting, Microspace Communications Corp. is definitely a player. In fact, Microspace has a satellite broadcasting network with over 300,000 business related satellite downlinks in 35 countries.

Central to Microspace’s success is Velocity. Building on the company’s initial 64 kbps FM2 data service, Velocity provides users with MPEG 2/DVB video and high-speed data transmissions via satellite. All they need are 36-inch receive-only antennas and MPEG 2 digital satellite receivers, both bought from third-party vendors. Microspace does the rest.

Initially launched on one GE 1 transponder, “Velocity is now operating via three full-time transponders,” says Joe Amor, Microspace’s vice president and general manager. “Two are on GE 1, while the third is on Telstar 4.” Compared to FM2 , Velocity delivers an awesome 8 to 10 Mbps of bandwidth per user. That’s more than enough for business video or large file transfers from one site to many, simultaneously.

So how’s business? Still growing, answers Amor. “We continue to add more capacity to keep up with customer demand. Despite what some people are saying, one-way satellite broadcasts are still alive and well.”

One big opportunity, as far as Amor is concerned, is one-way emulating two-way traffic. This is done by broadcasting files via satellite to a company’s entire range of sites simultaneously, then letting users access those files on an on-demand, as needed basis.

From their standpoint, they’re getting all the benefits of more expensive two-way service. However, that’s not how it appears to the company’s accounting system.

Central to this concept is the incredible decline in the cost of server storage. “In 1993, a 1 GB drive was $3,500,” says Amor. “Today, you can get 30 GB for $129.”

As a result, Joe Amor is optimistic about one-way data’s future. “Although we can’t do everything two-way can, we can do most of it,” he says. “And for less money.”

Keeping The Faith

For the past 30 years, Telesat has pioneered one-way satellite communications in Canada, both data, voice, and television. Today, it serves North America with its fleet of Anik and Nimiq C-/Ku-band satellites.

Yet ask Telesat president and CEO Larry Boisvert about one-way data broadcasting, and he replies that “it’s a very small market these days. Instead, the future, and Telesat’s opportunities, lie in the two-way sector.”

Boisvert’s already put Telesat’s money where his mouth is on this score. For instance, the company sold its one-way DirecPC business to Bell ExpressVu–the Canadian DBS company–last year. “They’re selling a consumer product already,” he explains, “so it makes sense for them to bundle DirecPC with it.”

As well, Telesat is focusing heavily on the two-way VSAT market. “To date we have the Big Three automakers–Ford, GM, and DaimlerChrysler–as Canadian customers,” says Boisvert. “We also won the Fordstar contract away from Hughes. This means that we’re providing maintenance to 5,500 Ford sites across North America.” In the Ka-band space, Telesat has increased its stake in Wildblue’s Internet-by-satellite venture, and expects to see a lot of businesses migrate from Ku-band to Ka-band. “We continue to get demands from our clients which can’t be addressed by a Ku-band footprint,” says Boisvert. “To give them what they want, we need to increase our stake in Ka-band.”

To address this demand, Telesat recently competed for, and won, the 118.7 degrees W orbital slot from the Canadian government. It hopes to launch a C-/Ku-band satellite with a small Ka-band payload into this location by 2003.

“Anik F3 will provide a variety of new services, including one-way broadcast, one-way streaming, and one-way caching services,” says Boisvert. “It will also accommodate a number of the new two-way broadband services that are being planned.”

In other words, Telesat does have faith in two-way, but intends to keep its stake in one-way as well. Just in case.

Developing Alternatives

Like others in the satellite industry, equipment manufacturer Tripoint Global is feeling the pain of the current recession.

“The one-way data market is flat, quite frankly,” says John Sciberras. Tripoint Global’s vice president of marketing. “Obviously, economic conditions are causing companies to rethink their communications plans, and when they get into these economic decisions, they start looking for alternatives that cost less than satellites, if they can find them.”

From a sales standpoint, this means that “it’s just tough out there,” adds Sciberras. “There’s just no other way to say it.”

However, this doesn’t mean that Tripoint Global is wringing its hands in fear. Instead, the company is trying to work with the market by developing one-way alternatives to two- way traffic.

For instance, it makes no sense for a national corporation to install two-way point-to-point sites, when a one-way one-to-many broadcast approach can do the job for less.

The key to making this work is “store and forward” technology, Sciberras says. For instance, a company can download corporate Intranet data–including videos and other materials–to all of its servers. Once there, the data can be accessed locally on demand, just as if the user was on a live two-way link to headquarters.

As for those situations where two-way is a must? Combine terrestrial return paths–including wireless–with satellite to optimize performance with cost, says Sciberras. “I truly think things will have to integrate, because the cost basis won’t allow you not to.”

Still A Ways To Go

Despite the wide range of opinions on one-way data’s future, there seems to be enough good ideas out there to ensure that this medium stays alive and well for years to come.

This isn’t to say that two-way applications won’t cut it in this market; they will. Nevertheless, at the same time, the ability of companies like Kencast and Microspace to emulate two-way service with one-way will open new markets for this established technology.

So don’t count one-way data by satellite out yet; its days are far from numbered.

James Careless is a contributing writer to Via Satellite.