Intelsat CCO Samer Halawi: ‘Our Industry has Changed Significantly’
Intelsat is on the cusp of major changes as the company is working to exit financial restructuring and name its next CEO. Company executives have cast a picture of what that future might look like in a recent series of interviews with Via Satellite, featuring President of Intelsat General Communications David Micha and CEO Stephen Spengler.
Chief Commercial Officer Samer Halawi spoke to Via Satellite as well, about the commercial prospects for Intelsat. This interview was conducted before the surprise news last week that Spengler will retire once Intelsat emerges from Chapter 11 and has found its next CEO.
After the announcement, Via Satellite asked Halawi how Spengler’s retirement affects his outlook for the company’s future. He sees the future as bright, and did not comment on whether he would take on the role of CEO if the opportunity was presented. “The accomplishments we’ve made over the past few years put us in a great position going forward. The company has a robust strategy, and the market opportunity is exciting,” Halawi said.
VIA SATELLITE: How do you think the industry has changed in the last 18 months with the major disruptions from the pandemic?
Halawi: The whole world has changed, but our industry has changed significantly. We are progressing well on standards, 5G, interactivity, and hybrid services. Intelsat has been driving a lot of this through our work on 3GPP NTN standards, as well as virtualization and cloud services. In terms of standards, software-defined satellites will be a big improvement. Eventually, you will be able to order these satellites more economically and with much shorter timeframe to orbit.
In addition, the industry has had a wave of innovation and projects of different sizes, from startups to bigger projects. I have seen more investment in the industry than I have ever witnessed. There is more interest in the industry from young people than we have ever had, and I believe this is partly fuelled by investment and space tourism. All of this is good for the whole industry, and I think it is on a much better trajectory than it has ever been before.
VIA SATELLITE: Given the issues in aviation and maritime, are you optimistic we will see a quick recovery in these sectors, and demand for satellite-based connectivity will be high?
Halawi: I do, and we already are seeing this in commercial aviation. In the United States, commercial aviation has rebounded to almost the same levels as pre-COVID with the TSA reporting 1.8 million travelers in the air every day. The commercial shipping market has not been impacted. The cruise market has been impacted, but they have a lot of bookings in place and are getting ready to return.
Once everything is back to normal, the demand will not be back to normal. Travelers will demand ‘in-living-room’ connectivity wherever they are, be it on a plane or a ship. The demand for bandwidth has increased dramatically, and that will not abate so we are looking for ways to put enough bandwidth on routes. Customers are asking for new business models. To keep up with this demand, Intelsat is expanding its capabilities and building the world’s only multi-layer, multi-band, and multi-orbit ‘Network of Networks’ that is compatible with 5G and that will offer the best solutions to our customers.
VIA SATELLITE: Do you believe the ground segment players are keeping up with the ambition we are seeing from operators? Is Intelsat’s relationship with these players changing?
Halawi: The ground players are improving, but they are not yet there. Their technologies are largely still proprietary, and they still rely on hardware and getting servers and platforms in place. There is so much investment that goes into hardware, rather than the service behind it. What they need to do is take a leap of faith towards more common standards and one that brings us more into the mainstream telecoms world, rather than continuing to be a niche industry on the side. They need to move to a software-based, virtualized environment, with very little reliance on proprietary hardware.
In terms of user terminals, the struggle of volume versus cost continues. You need low costs to get the volumes, and you need the committed volumes to lower costs. Until we break this cycle, I think the markets are not going to increase by the same magnitude it would if the prices were better. We are getting there, however. The drive towards 5G could be the thing that drives us to get to standardization on the ground.
VIA SATELLITE: What is the number one technological innovation that you think could be a game changer for our industry?
Halawi: I think a real game changer is the unifying ‘Network of Networks’ we are putting together. This multi-layer, multi-band, multi-orbit construct will unify the global communications ecosystem. It will include an orchestration tool that will direct the right solution to the right customer. And it is based on an open architecture that not only brings the power of what Intelsat can bring to the market, but also what our partners offer as well. We are inviting partners to bring capabilities that can plug seamlessly into this unifying network, and we are leveraging our existing prominent customer base, our unparalleled global orbital and spectrum rights, fleet, scale and partnerships to build a network capable of supporting virtually any access technology and enabling the next generation of global mobility, IoT [Internet of Things] and 5G services. The resulting global 5G Network of Networks will be a first-of-its kind and support our customers’ ability to roam globally and stay connected with reliable, ubiquitous coverage across land, air and sea. Intelsat is leading with a unified approach to solving a customer problem, as opposed to a proprietary technology by one company.
VIA SATELLITE: Do you think we’ll see consolidation in the satellite operator sector as others have predicted?
Halawi: We have been talking about horizontal consolidation for several years, but with the scale that is needed to operate in tomorrow’s world, the time is right for it to happen now. I can see three to four major clusters of satellite operators developing over time, as opposed to just a multitude of companies. I also think there will be more activity in terms of vertical integration. With some verticals, you can’t serve in a vertically integrated fashion but, I think with some it will make more sense. The standards right now are facilitating this. As we merge towards common standards, those consolidations become easier to pull off.
VIA SATELLITE: With Telesat is building Lightspeed, Eutelsat acquiring a stake in OneWeb, SES moving forward with Medium-Earth Orbit (MEO) plans, what does the future hold for Intelsat in NGSO? Would Intelsat be one of the main players in one of these three to four clusters you mentioned?
Halawi: We are building a ‘Network of Networks’ that can provide multi-layers. So, if you are in GEO, you can give a lot of depth of coverage for different applications and through different types of satellites in GEO, depending on what the optimal use is for the application but, then adding an NGSO capability to the equation. Adding this NGSO capability is something we are actively working on. We believe that the NGSO is important. There is a value to it. Latency can be important and coverage in some geographies where GEO does not exist. These are important. But they are very difficult to deliver on their own.
So, the NGSO players that are new startups, their challenge is they are starting with no revenue base, no customer base. They have to get a return on their large investment very quickly and in a short period. They have to do this with a thin layer of capacity, that is not efficiently distributed. What we believe is that an NGSO capability is best offered when you already have an established GEO business, and then it becomes an upselling mechanism, and you are packaging and bundling GEO and NGSO capabilities. We believe that is the right formula.
We are making this network open and available to other partners to come and work with us, and then we can provide joint capabilities to customers.
VIA SATELLITE: Could Intelsat do something like Inmarsat now and build a small-scale LEO network, perhaps around 200 satellites to complement your existing network?
Halawi: I think Inmarsat has the right idea, but I don’t know whether they have firm plans in place to deliver on this. For us, we have multiple capabilities that go into this offering, plans in place for it and the first satellites on order. We have RFPs for many more satellites in the GEO space. On the NGSO side, we are looking at both partnering with other entities and/or building capabilities on our own. So, we are keeping it quite open. We don’t want to be proprietary, because we know you can scale more effectively when you partner with others.
VIA SATELLITE: What do you feel is the most important thing you’ve learned while leading a company that is going through so many changes and navigating the uncertain?
Halawi: Our team showed incredible flexibility, resiliency and agility in a stressful environment of unknowns. They quickly transitioned to a hybrid environment and did it effectively. Secondly, we all now understand how critical the virtualization and standardization of ground networks are to improve the ability and efficiency of deploying high-quality services in the future. COVID, alongside supply chain disruption, prohibited onsite upgrade and installation of equipment, but that is changing. The demand for connectivity will not lessen any time soon. Standardization and virtualization issues must be addressed to successfully support businesses in a situation like this in the future.
The Intelsat team is the foundation for our success, and with the right team, you can achieve great things. Despite challenges and disruptions, we progressed the C-band project, which is one of the largest ever in the satellite world. We purchased the largest IFC [In-Flight Connectivity] service provider and ordered the first two satellites for our next-generation software-defined satellites. We also developed the fundamental plans for our future ‘Network of Networks,’ which will include 5G capabilities, all the different GEO [Geostationary Orbit] layers and satellites we are introducing, some NGSO [Non-Geostationary Orbit] capability and an automated orchestration to manage all of that. At the same time, we have grown our maritime and government and mobility businesses. We have done all this while progressing the financial restructuring of the company and will come out of this with one of the industry’s strongest balance sheets.
VIA SATELLITE: What would you say has been the biggest news story in the industry over the last year or so? Equally, what would you say has been the most surprising story in the industry, something you didn’t see coming.
Halawi: I might have to give you an Intelsat story for both. As a technology junkie, I think the docking of Northrop Grumman’s MEV-2 and servicing of the Intelsat 10-02 while the satellite remained in its original orbit and without interrupting service for our customers and their end users was a technology feat I have never seen before in our industry. It was the first-ever in-orbit servicing of a live commercial satellite in Geostationary Orbit. I was lucky to be watching it happen in person. What those people do is truly mind-blowing, and I think we can lose sight sometimes of how difficult this industry is.
What was surprising to many people, but not to us, was our acquisition of Gogo while we were in financial restructuring. Many did not think we could pull off something like this, but it demonstrates the strength of our underlying business, as well as our vision and commitment towards emerging as a much stronger company with a stronger balance sheet. There is logic in having a vertically integrated approach in the IFC vertical, and Intelsat is now the only provider in commercial aviation with coverage redundancy, as well as and ability to guarantee no single point of failure while supporting hub-city capacity and room for growth.
VIA SATELLITE: What about a non-Intelsat story?
Halawi: The most surprising story is that billionaires have launched themselves into space before they tested their vehicles for a few years. That was a bit surprising to me.
VIA SATELLITE: So, are you tempted to fly to space?
Halawi: Absolutely. I am not interested in sub-orbital. When it becomes orbital, that is when I am going. I am also waiting to be able to afford this.