ATCi: The Teleport Operator Re-Invented

By Robert Bell

Times in the teleport sector are changing fast. So are the companies and their owners.

“There was a time when satellite carriers just leased transponders and teleport operators just uplinked signals,” says Gary Hatch, president and CEO of Antenna Technology Comm- unications Inc. (ATCi). “Today, you have to come to the table as a solutions provider. When the telecom recession hit, all CEOs had to look hard at their numbers and decide how to make a profit. If you’re a teleport operator, the only way to make a profit is to help your customer make money.”

Hatch, who also is a member of the World Teleport Association, operates a teleport in Chandler, Ariz., and he has Earth stations on the roof of the One Wilshire Boulevard POP in Los Angeles. The Chandler site was purchased in 2001, and construction began in 2002. The timing proved to be bad. There, in the thick of the satellite industry recession, the teleport would rise. But ATCi’s business is not about conventional uplinking. In fact, to call ATCi a teleport operator requires one to change the notion of what teleport operators do. On this score, Hatch is typical of today’s successful operators. Teleports now have become a platform for the delivery of comprehensive business solutions.

“I look at everything we’re involved with,” Hatch says, “and I ask: ‘Can we help this guy? Can we be more than just a vendor to him? Let’s figure out how to make his business plan work, because that’s how we’ll prosper.’ I deal a lot with the entertainment community. When it comes to distribution, they’re used to just going through brokers. We tell them that they can go direct to the market and get a lot more of the upside. That’s a message that gets their attention.”

ATCi started out as ATC, an engineering company doing integration for the broadcast market and for cable TV. Hatch himself was an early investor who decided in 1992 to buy some of ATCi’s technologies and to start a new business focusing on the transition from analog to digital. One of these technologies was Simulsat, a multi-beam antenna that can view as many as 35 satellites at once. That technology offers obvious advantages to a cable headend at a time when the number of channels is fast expanding. To date, according to Hatch, ATCi has installed Simulsat antennas in 2,000 cable headends, and it provides channel distribution to systems serving 40 million subscribers.

That installed base of equipment and service has become ATCi’s growth driver. “People wonder why there are 500 channels and nothing to watch,” he says. “There’s no innovation among the majors in this business. Producers are innovators, and they need a route into the marketplace. You can now launch a new channel for between $2 million and $3 million, which is just about one-third of what it cost a short while ago. And here we are with this massive open-distribution platform, which offers them big upside opportunities.”

ATCi has a 10-year track record of building cable channels for entrepreneurs, from the Sci-Fi network to ethnic, home-shopping, fashion and other niche channels. ATCi provides ingest, archiving, assembly of content and commercials into a program stream; encryption; conditional access; play out; uplinking; and transponder capacity. Where new channels incorporate a heavy data stream, ATCi also says it can provide fiber distribution, though satellite still brings 90 percent of the bandwidth to the headend.

Making Deals

These days, however, ATCi’s most important service to the customer has nothing to do with technology. “We’ve been there and done that in terms of sponsorship and advertising for new channels,” says Hatch, who estimates that he has been involved in one way or another with at least 120 new TV channels. “It’s fairly easy for us to refer producers we believe in to the revenue sources they need to complete their models. We also are able to take an equity position when that makes sense. My goal is to have the 10 channels we originate now rise to 20 channels next year, and to be involved at an equity level in 10 of them.”

At a time when many satellite professionals are wrestling with a stagnant market, Hatch is resolutely focused on growth. “Cable still has great potential,” he says. “It’s a great medium because you can nearly build a channel system by system. We find that you have to get a few million subscribers and then the advertising dollars start to roll in and the satellite TV providers have to notice you.”

Technology also will open up new possibilities. “IP markets are going to come forward in a big way. Every telco in the world is looking at video. When you’re switching video, MPEG-4 will become critical because it provides a much better algorithm. There will be a big transition with MPEG-4 that can create a lot of opportunity for teleport operators. Not only will telephone exchanges turn into the equivalent of headends, the higher compression also should give a strong push to broadband over satellite, which creates yet more opportunities.”

ATCi is aiming to be a teleport operator, a dealmaker and an investor. Its teleport facilities have become the infrastructure for pursuing an ambitious plan. “Before the year 2000, everybody in the satellite business just wanted to charge people for their services,” Hatch says. “Now we have to help make their business models work, and that’s a much more powerful position to be in.”

Robert Bell is executive director of the World Teleport Association. Contact him at [email protected].