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Cover Story: Broadcasting In Europe: Changing The Landscape

By | December 1, 2002

      By Nick Mitsis

      Europe, home to the largest satellite operator in the world, continues to experience some growth within the DTH arena, and industry executives continue to monitor this development. Interactive content, however, is also expanding, and many satellite companies are increasing their play for such data streaming. From content providers to suppliers of digital compression technology, industry professionals are analyzing the latest broadcasting developments in Europe.

      And the European broadcasting landscape is changing. The degree and type of content transmission within the European marketplace is evolving to not only incorporate television programming, but broadband connectivity via satellite straight to the consumer and enterprise markets. Take, for example, SES-Astra’s open DVB IP platform, enabling IP-based data delivery to users’ desktops throughout its European market segments. Astra’s multimedia file transfer services allow DSL via satellite to be bundled with high-quality streams, offering content for residential home users.

      “An interesting development is the increased use of satellite capacity for interactive applications by digital TV platform operators,” says Romain Bausch, president and CEO of SES Global. “BskyB, our flagship U.K. customer, is currently already using roughly 25 percent of its contracted Astra transponder capacity for interactive services. The same is bound to happen in other linguistic markets like France, Spain, Italy and so on.”

      Looking forward, SES Global is targeting several other applications beyond DTH services to grow within Europe. “We intend to use [SES-Americom’s] significant experience in the provision of cable packages, occasional use and governmental services to develop similar service off of Astra in Europe,” Bausch adds.

      Despite last year’s mammoth introduction of SES Global into the European and global satellite community, SES has felt the pains of the economic downturn, including in its Astra business arm. “Shrinking advertising markets have at best delayed, and at worst shelved, plans for new service offerings by commercial free-to-air broadcasters, and the ongoing consolidation in the European pay TV sector imply that it will be hard to meet last year’s turnover,” Bausch says.

      Intelsat Ltd. recently launched its Globalconnex package offering in Europe. Even though the main platform is a portfolio of bundled services that combines Intelsat’s global satellite fleet with terrestrial capabilities–including teleport services, fiber and points of presence to deliver voice, data, Internet and video content to its customers–the system in Europe will primarily be used for occasional use for sports and entertainment events, says Harry Mahon, vice president of worldwide sales for video services. “We are primarily moving content out of Europe. Soon, we hope to incorporate inter-European content movement to our stable of offerings.”

      Eutelsat, another European satellite player, is fine-tuning its market presence a bit by increasing its comprehensive package offerings to its client base in hopes of adding revenue during these challenging economic times. “For Europe, one of the requirements to business success is having distributors in key markets, and we currently have that,” says Olivier Milliés-Lacroix, director of commercial sales and product coordination.

      Eutelsat has also increased its coverage levels to better serve its clients and more effectively compete with the other global satellite operators. “With the acquisition of the Atlantic Bird 3 satellite and the launch of Atlantic Bird 1, Eutelsat completed its objective to develop a neighborhood of satellites–its Atlantic Gate. This puts the company in a strong position for offering content distributors a one-stop-shop from the Americas into Europe and as far as central Asia,” says Giuliano Berretta, CEO of Eutelsat. “In addition, the Atlantic Bird 3 satellite brings C-band capacity to our system for the first time and is contributing to increasing our coverage over Africa and the interconnectivity of content from Africa into Europe and visa versa.”

      In the broadcasting arena, Eutelsat has maintained some business partnerships in pay-TV, notably following Canal Plus’s decision to maintain its relationship with Eutelsat’s Hot Bird satellites following the merger of its operations in Poland with UPC’s Wijza TV package. The company also reinforced its prime location for consumer broadcasting at 13 degrees E with the launch of Hot Bird 6, which brings the company its first commercial Ka-band payload as well as new onboard multiplexing facilities.

      Currently, Eutelsat’s European caché is attracting some foreign suitors. Both Panamsat Corp. and Intelsat Ltd. are eyeing the Paris-based company, with published reports from the Wall Street Journal indicating that Intelsat alone is offering $3-4 billion for the acquisition.

      Even if this consolidation ball begins to gain momentum, it will have to maneuver through European antitrust hurdles. If Intelsat wins, together with Eutelsat, the new company would have more than 47 percent of the European market–exceeding the threshold of 40 percent that the European Community is comfortable with. If Panamsat wins, the new union would control around 37 percent, still frighteningly close to the 40 percent cap–not to mention the ripple effect on other regional operators and content providers.

      If Eutelsat is acquired by one of the two U.S. satellite service providers, Michael Gordon, head of business development for Hispasat, is quick to point out that a business change within Hispasat is likely to occur, but overall, the Spanish satellite operator will remain a strong transatlantic player. Eutelsat currently owns roughly 30 percent of Hispasat. “If the merger occurs, then Hispasat will have to increase its value added focus in its key regions. On a larger scale, this consolidation may cause smaller operators to focus on regional markets leaving the global operators to focus on the world.”

      Regardless, Hispasat is realizing the marketing boom of European broadcasting content and is expanding its business portfolio in hopes of increasing its profits. For example, the video business for Spain and Portugal runs roughly four million multi-channels homes–Hispasat serves three million homes of that market and would like to gain more, according to company officials. “In addition, there are at least one million Latin residents of Spain, so there is a strong market niche in Spain/Portugal for Latin American channels sent to Europe from that region,” adds Gordon.

      Dan Goldberg, CEO of New Skies Satellites N.V., is mostly focusing his company for profit growth outside of the European marketplace. “New Skies does not have a big play in Europe. The market is saturated and commanded by Eutelsat and SES activity. Most of our interests lie in Asia,” he says. “We do see, however, a change in the market right now. ISPs, resellers, carriers, etc. are shifting focus to survive.”

      Likewise, Goldberg is noticing the effect European regulations are having on business ventures. “The regulators are tightening a hold on the European satellite initiatives and that is putting a strain on the business.” Currently, the European Union (EU) member states are tasked to change their existing telecoms laws into electronic communications laws. Required by the EU’s package of new electronic communications directives, the new proposals will govern almost all aspects of the industry under a new and broader definition, as noted in last month’s Regulatory Review column. Gerry Oberst, chairman of the Satellite Action Plan Regulatory Group and a lawyer in Brussels, took the long term view, saying, “throughout the last ten years there has been substantial progress in the European regulatory environment. “The new EU directives open a promise of further deregulation, at least for licensing, that should help operators and service providers alike.” Such changes to existing regulatory obstacles may, in turn, ease doing business in Europe.

      European Ground Segment Advancements

      Regardless, satellite business activities continue, despite the red tape that sometimes hinders profits. More importantly, such advancements materializing in new product launches, strategic partnerships and marketshare growth are not merely left to the operators of on-orbit assets. The German company T-Systems, a division of Deutsche Telekom Group, also is in the midst of developing a more interactive, turnkey solution for broadcasters in Europe. The company is working to better its broadcast package by offering a complete suite of products that include studio facilities for content preparation to standard telecom services. “We are able to offer everything from end to end solutions, including broadcasting, IT and telecommunications,” says Bernd Furstos, head of marketing solutions. “We are now working with other countries in expanding our business throughout the EU.”

      Ground service providers and equipment manufacturers are also expanding within Europe, as broadcasters’ requirements increase for more applications. ND Satcom, a provider of satellite networks and ground stations, recently launched an enhanced VSAT platform for broadcasters to meet their growing needs. “European broadcasters like VSAT solutions,” says Karl Classen, ND Satcom’s CEO. “The satellite market this year in Europe is flat at best. Partnerships are key for client solutions these days.”

      The company’s SkyWAN IDU 5000 product is a unified broadband platform supporting voice, video and data applications from 2.4 kbs up to 8.75 Mbs per site and allows high speed, hub-less communication between remote sites. That means that any station can be reached via a single satellite hop connection. Now ND Satcom is focusing on increasing its media arena play in several vertical markets.

      Globecast, a global operator of direct broadcast satellite platforms, is witnessing an increase of foreign programming coming into Europe. “Public broadcasters in the Middle East as well as programmers from the United States are moving more content to Europe,” says Christian Pinon, chairman and CEO of Globecast. “In Europe, Key DTH birds for Globecast include Hot Bird, Euro Bird and Atlantic Bird 3.”

      In addition, industry equipment manufacturers who in the past have not commanded a major play within Europe are increasing their presence. Take, for example, the recent strategic alliance between Scopus Network Technologies and German-based Betaresearch GmbH, a software component manufacturer for digital headends. This partnership now offers television broadcasters an end-to-end platform to support pay TV applications. “Scopus is aiming to grow its small and medium size cable headend environment in Europe,” says Ovadia Cohen, vice president of marketing for Scopus. “We have opened an office in Frankfurt to address the needs of the German-speaking market and with the Betacube partnership, we are aiming to offer an integrated, flexible platform for European cable operators.”

      Moving Onward And Upward

      Perhaps more so than any developed region, Europe continues to challenge business initiatives as it vies for a strong presence within the global satellite arena. The current efforts of the EU to reorganize its regulations, the pending continuance of further consolidation and the somewhat stagnant global economic climate all pose various degrees of difficulty for those seeking euro profit. In the meantime, technological innovations and a stronger personalized approach to business relations may prove to be the strongest keys for success.

      Nick Mitsis is Via Satellite’s editor.

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