[Satellite News 03-04-11] SES World Skies recently commissioned the SES 8 satellite to bring more capacity to DTH markets in Asia as part of its plan to expand its presence in emerging markets in Latin America and Africa. The company also remains dedicated to developed markets in North America, where achieving consistent and sustainable growth is much more difficult.
    SES World Skies CEO Robert Bednarek spoke with Satellite News about an even greater challenge for the company — obtaining the capacity required to meet demands. While Bednarek said the company is thrilled by its ability to branch out its success, he admits that capacity constraints can transform success into a double-edge sword.

Satellite News: Can you assess SES World Skies’ performance in 2010 and how your company is positioned for 2011?

Bednarek: It has been a good year for SES World Skies. We saw a lot of new activity with the capacity we launched on NSS-12 and acquired on ProtoStar. Both satellites are doing well and filling up quickly, however, our fundamental constraint continues to be lack of capacity in critical areas.
We have an ambitious launch schedule in 2011, which will give us the capability in 2012 to address what seems to be an insatiable demand for capacity in emerging markets in Latin America, Africa, India and Southeast Asia. There is demand popping up in various geographic pockets for various applications. This diversity is a very encouraging. Some applications are Internet-related and some are mobile-related. There are also numerous DTH platforms starting to show up in the emerging markets.

Satellite News: What’s driving the recent surge in DTH platforms in emerging markets?

Bednarek: From a technology and cost standpoint, it’s relatively easy to start your own DTH platform with two to three transponders and see how it grows from there. It is no more expensive than building a new terrestrial TV station from scratch. Entrepreneurs can be in the multichannel video market fairly quickly in some of the most interesting markets. The key ingredients are the downstream distribution. That’s why we have seen a lot of mobile operators in emerging markets doing quite well. They have a lot of money and want to have another consumer product, so they are turning increasingly to DTH television as an upsell to their mobile business. That is an encouraging trend and we have been able to capitalize on some of this trend around the world. 

Satellite News: Have capacity constraints had an impact on sales growth?

Bednarek: The clear answer is yes. We have been capacity constrained in a number of markets — particularly in Latin America — as well as some parts of Asia and Africa. The demand is there and it is sustainable. That is why we are committed to continuing to replace and expand our fleet.

Satellite News: You had a good relationship with DishTV in India, and they recently signed a deal with AsiaSat. Is that an example of losing a deal because of a lack of capacity?

Bednarek: Yes, but you will see us adding significant capacity to existing orbital slots and expanding our capabilities into other orbital slots. The aim is to always have a growth path for our customers.

Satellite News: How much capacity are you adding during the next year?

Bednarek: We will be adding about a third more capacity to our fleet over the next years, and I think it is a reasonable conclusion to suggest that we will start to really be able to take advantage of this new capacity in 2012 because some of the planned launches are later in the year. We won’t have a full 12 months of utilization, but the new launches are going up with a fairly high backlog and we are not doubtful of the market at all.

Satellite News: What makes the Latin America region an attractive market for SES World Skies?

Bednarek: Latin America has a great combination of video and data applications and a lot of interest in rural inter-connection and rural Internet for education purposes sponsored by various governments. There are pretty strong and established programmes there for Ku-band. We anticipate the continued growth of that type of application. There is also a robust cable market that is beginning to digitize. As we have seen in North America, the digitization will entice the need for more capacity and more programming. The traditional role of satellites in cable networks will remain alive and well. It won’t be just U.S. broadcasters expanding to South America. Programmers in the region will also look for more presence.

Satellite News: Do you think there could be an oversupply situation with so many new satellites going up to serve Latin America?

Bednarek: No. I think Latin America has to be viewed as a number of different regions. There is Brazil. Then there is the Spanish-speaking region in the Northern Cone. You have Spanish-speaking markets in the Southern Cone as well. All of those markets are thriving, and they need capacity. A lot of people tend to focus just on Brazil. I don’t think there is going to be an excess of pan-regional capacity. There certainly isn’t enough Ku-band capacity as the market stands now. That is where the main focus will be. There won’t be a lot more C-band, but a lot more Ku-band is needed for DTH and traditional FSS applications.

Satellite News: How does this plan compliment your part-ownership of O3b Networks, which is targeting the backhaul markets in emerging regions?

Bednarek: The thing I like best about O3b is that you can move bandwidth around once you have launched. The main problem we have with our fleet is that we have bandwidth shortages on one side and we have excess bandwidth in other places. When you build satellites, you have to guess where the market demand will be 10 years from now. The ability of O3b to move bandwidth from a cold market to a hot market and moving it around in Africa, for example, is I think one of the key under-recognized features.
People focus on Ka-band, but the costs per bit are going to be lower on the O3b system than it will be on a traditional FSS system. The flexibility is just phenomenal. The traditional C- and Ku-band satellites will continue to support large wide area networks, but I think O3b is well set-up to provide high capacity circuits on a roaming basis. O3b is a system where you can steer a couple of extra gigabits or hundreds of megabits to a particular geography by simply typing on a terminal in a control center.

Satellite News:  You’ve been critical of Ka-band solutions in the past. Has your stance shifted with those platforms coming closer to launch?

Bednarek: No. I still believe that there is nothing revolutionary about Ka-band. The main thing about Ka-band is that it allows you to use very small spot beams and, therefore, have high frequency re-use on a single satellite, but you need very small beams to accomplish this re-use. It is like Wi-Fi in the sky – lots of different nodes serving different markets. We still think we can emulate much of that capability with traditional C- and Ku-band capacity. We are not persuaded that we should put a big expensive satellite up in the sky and dedicate it to these small spot beams. O3b is in part our answer to that because we like the ability to move capacity around over having these fixed spot beams.