10,000 transponders in use by 2003 -Euroconsult guardedly optimistic

Chris Bulloch Paris

The Paris-based space consultancy Euroconsult kicked off its two-day conference on Financing for Satellite Communications and Broadcasting (August 30-31) with overview presentations from its two leading gurus, founder and president Marc Giget, and chief analyst Stéphane Chenard.

Past performance

Giget concentrated on reviewing the past, notably the 20 years between 1980 and year-end 2000. This period saw the beginnings of what many have seen as the shift from direct broadcasting to Internet distribution, both backbone and data transport, as well as direct-access services for the user. But these more recent arrivals on the satcoms scene so far only occupy 294 standard 36MHz-equivalent transponders out of 2,434 transponders used for all ‘telecommunications’ purposes, versus 2,801 used for all types of ‘broadcast’ traffic. This category lumps together direct-to-user broadcasting, indirect (cable) service and contribution feeds of all types.

The growth of digital television seems unstoppable. Today (end-2000), some 8,276 satellite TV channels are being delivered worldwide, of which about half form part of 53 multi- channel pay TV ‘platforms’. Euroconsult classifies these into 12 thematic varieties, catering to specific interest groups, or 11 if one disregards pay-per-view as a thematic category. Subscribers totalled 40 million (though one regional breakdown chart indicated a global total of over 50 million). Turnover of these platforms is approximately $17 billion.

Losses, however, totalled $2.2 billion. Some commentators at the conference drew attention to the increasing problems of signal piracy, with one speaker, Robert Kaimowitz of SG Cowen Securities, claiming that this threatened the very future of the pay-TV industry. Euroconsult’s Giget claimed that only two broadcasters (Viasat and Canal Satellite) were ‘in the black’ at end-2000, with earnings before income taxes (EBIT) less expenses exceeding revenues by a small amount. Even BSkyB was marginally failing to break even at this point in time, as were DirecTV (-5 per cent) and Echostar (-15 per cent). By comparison, Italy’s Stream occupied a unique doghouse position with a negative EBITDA 0f -281 per cent.

Future prospects

The future view from Euroconsult was provided by Stéphane Chenard, who produced forecast figures out to 2010. Curiously enough, Chenard did not distinguish between the ‘telephony’ (presumably Voice) element of traditional telecoms, and data; we can only assume that the latter is subsumed into “Internet Trunking and Access”, since virtually all non-Voice traffic is now transmitted using IP protocols.

Chenard postulated that, by end-2010, telephony would still keep 8.7 per cent of the market from the fibre carriers, which in the meantime “will have squandered money on overbuilding a few routes”. But with increasing transponder efficiency and more compression, this will require progressively fewer transponders. “Internet Trunking and Access” (again bundled, though Chenard remarked that “Direct Access” would take off more slowly than many have anticipated) will be aided by the appearance of 12.6 million direct-access two-way dishes by 2010. Television – of all types – should show a net gain, though its spread will coincide with further increases in compression ratios. However, new channels “exploiting Internet content” should yield a net gain in transponder utilisation, to reach (on top of other traffic) about 7,200 transponders required by 2010.

The supply of C- and Ku-band transponders on broadcast satellites, counting only those now in orbit or in construction, should be adequate to meet projected demand only until 2003-4. This demand was put at some 7,500 transponders. But by 2003, the first satellites with Ka-band capacity should be available, if current plans hold: this necessities finding further financing. Given the large capacity of the almost unused Ka band, Chenard sees transponder supply peaking at over 10,000 standard transponders (equal to 10,000 x 36MHz = 360,000MHz or 360GHz) by 2003. This may bring temporary over-supply, possibly until 2009, thus forcing down transponder prices and yields.

Reverting once again to Marc Giget, it is interesting to compare three sets of revenue-projection figures he produced. The first two show a range of forecasts from (unspecified) “leading investment banks” for the year 2007, and made in the light of indicators available in 1998 and in the current year 2001; the third group of figures are Euroconsult’s own predictions for 2010, again dating from this year.