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Loral Re-Enters North American FSS Market

By | March 27, 2006

      With the expiration of its two-year no-compete deal with Intelsat, Loral Skynet is once again offering Fixed Satellite Services (FSS) services to customers in North America. "

      We have resumed offering basic space segment services to U.S. customers," Jon Kirchner, Loral Skynet’s vice president of global marketing and business development, said. "We’re able to do this over Telstar 12, Telstar 14/Estrela do Sul, and other third-party capacity that we have access to."

      For Loral Skynet, which completed its sale of its six North American satellites to Intelsat in 2004 – raising $1.1 billion to pay off the then-bankrupt company’s $959 million secured bank debt – the return to North American skies is a welcome homecoming. "Having the ability to once again offer our FSS services in North America is a major milestone in Skynet’s growth strategy," Skynet President Patrick Brant in a statement. "… Loral Skynet operates a global satellite fleet, now offering complete bandwidth services in every major geographic region. With the resumption of service in North America, Skynet’s portfolio of satellite services offers customers complete global communications services, from basic capacity leases to the latest in IP-powered hybrid satellite and terrestrial network services."

      Brant was on travel in India, and unavailable for direct comment.

      At the time when Loral Skynet announced its satellite sale to Intelsat, company executives were not mentioning that Telstar 12 and 14 would be used for future North America coverage. In fact, along with the company’s other satellite assets (then in orbit or scheduled for launch), what remained of Loral Skynet’s once-mighty satellite stable could cover "markets in South America, Europe and Asia that the company believes are currently underserved and have potential for growth," said the July 15, 2003 Loral Skynet news release that announced the Intelsat deal.

      Loral Space & Communications, the parent company of Loral Skynet, concluded its bankruptcy reorganization and emerged from Chapter 11 bankruptcy protectio in November, and today, the tune has changed. "Telstar 14/Estrela do Sul offers Ku-band capacity across North America and Telstar 12 offers Ku-band capacity to as far West as Denver," said Loral Skynet’s March 20 news release; along with four transponders leased on Satmex 6, "which is scheduled to begin service this summer." Then there’s Telstar 11N. When it enters service over the Atlantic Ocean in the second quarter of 2008, "it will cover about two-thirds of the United States, plus Central America, the Caribbean, all of Europe and Africa," said Kirchner.

      As far as Futron Corp. Technical Director Andrea Maleter is concerned, there is ample room for the reborn Loral Skynet to reenter the North American FSS market. However, she believes that Skynet’s major strength remains in its end-to-end networked solutions. "Skynet was offering end-to-end solutions when everyone else was only offering basic space segment," Maleter told Satellite News. "If they can reignite this market sector in North America, then they can carve a spot in the market; even with the limited amount of FSS space segment that they directly own."

      Speaking of FSS space segment, Maleter added that Loral Skynet’s Telstar 12 and Telstar 14 could be enough to make some bandwidth customers happy. "It could be a very good offering for those business clients who want regional coverage on the east coast," she said. "It could also be valuable for those government clients who don’t need full [continental United States] coverage."

      What may really make the difference for Loral Skynet is its reputation for strong customer service in North America, rather than the number of satellites it has operating overhead. "This company has a strong heritage in the North American FSS market, and they have retained many of the top managers and technical people that built it for them," Maleter said. "This makes a difference to North American customers who are looking for carriage."

      Loral Skynet is banking on its reputation to help revive its North American FSS business, said Kirchner. "In fact, we’ve had clients who have been waiting to use us for space segment once our no-compete agreement had expired and who are now saying they are glad to have us back," he said.

      As for the company’s future plans, now that it is free to become a North American FSS operator again? "We look at North America as a market where we can expand through acquisition and organic growth," replied Kirchner. "With only two video delivery players in the market today [Intelsat/Panamsat and SES Global/New Skies], we see room for Loral Skynet to grow with the right offerings. Meanwhile, we continue to thrive on the basis of our IP end-to-end data delivery services in this market."

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