Although U.S. satellite operators have bitten the bullet and gone ahead with the development of large Ka-band satellite systems, Europeans operators are merely dipping their toes in the higher frequency band while ordering Ku-band satellites optimised for the delivery of IP services.

Stellat, a 70/30 joint venture between France Telecom and EuropeStar, will launch Stellat 5 from Kourou in late June. Stellat 5 will replace the aging Telecom 2C satellite at 5 degrees West longitude. According to Xavier Pignede, marketing director at Stellat, “Our approach with Stellat 5 is all about minimising risk. We did consider a Ka-band satellite. However, we came to the conclusion that Ka-band is more expensive than Ku-band when you take into account cost of operations and terminals. Instead, we decided to opt for a high- power Ku-band satellite … that enables the use of small two-way antennae. We believe that there is a big marketing advantage to having a small dish.”

Pignede added, “However, the real advantage of Stellat 5 compared to our competitors is that we offer much better coverage. In addition to providing unparalleled coverage of Europe and the Middle East, the 5 degrees West slot allows Stellat 5 to reach five continents with a single uplink and provide connectivities linking the U.S. with Asia or the U.S. with Africa. This will help our customers to optimise their bandwidth. To be profitable, a service provider has to manage peak hour traffic. Our wide coverage means that our customers can utilise the time difference between different geographical markets and reallocate bandwidth during successive peak hours. Our costs are roughly the same as our competitors but the market is much larger which minimises the business risk. So service providers can market their services in many more countries.”

Eutelsat is due to launch e-Bird, a satellite that will also be optimised for broadband access. E-Bird is a small Boeing 376 HP model to be located at 25.5 degrees East and will be launched in the autumn of this year.

Ka-band spot beam satellites offer significant advantages: firstly, higher capacity (around 7 Gbps compared to 1.0-1.5 Gbps for a Ku-band satellite), which reduces the cost of bandwidth significantly. This means that an operator could support a larger number of smaller-sized terminals, which provides economies of scale. And higher G/T, which means that the terminals can be less powerful. According to Steve Cable, vice president of broadband at ViaSat in California, “Right now, consumers pay around $70-$80 per month for two-way services using broadcast satellites and the market is limited. With IP-optimised Ku-band satellites, that price could come down to around $50 and the business would start to become financially viable. With a Ka-band spot beam satellite that price might come down to $35 or lower. Spot beam satellites are necessary to get consumer price points that are competitive with terrestrial technologies. You cannot do that using broadcast satellites.”

Paul McGee, vice president of marketing at New Skies Satellites, believes that “low cost Internet for consumers is a road to nowhere unless the service has a large component of broadcast or multicasting. In Asia, where we do most of our new Internet business, the cost of ADSL has dropped dramatically. For instance, in Taiwan it is $15 per month. We see two-way services as a corporate activity where the cost of bandwidth is not the most important factor in the buying decision.”

Cable disagrees that Ka-band is more expensive than Ku-band and that the technology is risky. “The cost of doing a Ku- or Ka-band terminal is the same, providing you have volumes of more than 50,000 terminals per year. Ka-band technology has been around for some time and has been used by the military. So the technology risk is limited. For a consumer application, a bent pipe solution would be adequate, as users do not need direct interconnectivity. This reduces the cost of the satellite. On the other hand, for enterprise applications, where companies need to connect terminals directly, a processed payload would provide desirable features.”

The most likely scenario, according to Cable, is that the majority of operators will rollout scalable two-way services in Ku-band to prepare the ground for the rollout of spot beam Ka-band satellites. At the moment, the commercial risk of launching an all Ka-band spot beam satellite outweighs its superior bandwidth economics. Nobody knows when or indeed whether a sizeable market for two-way services will materialise. For a Ka-band satellite operator, a delay of two to three years in market take-up could be disastrous, particularly as it is unlikely that the satellite could be used for anything else. In contrast, a Ku-band satellite optimised for IP could still be used for other applications, including broadcasting. In the case of Stellat, all the TV programming from Telecom 2C will be transferred to Stellat 5. “About 40 percent of our capacity has already been leased and the majority of that is due to Telecom 2C traffic. This means that the project is already at break-even point,” said Pignede.

Meanwhile, European operators continue to launch small Ka-band payloads on conventional Ku-band satellites to test the market. For instance, SES’ Astra 1-K, due to be launched this month, will have two Ka-band transponders to complement the two already in-orbit on Astra 1H. Also in June, Eutelsat will launch 4 Skyplex Ka-band transponders on Hot Bird 6. In October, New Skies Satellites will launch NSS-6, which has 10 Ka-band transponders, and will cover Asia. “The Ka-band payload distinguishes NSS-6 and gives our customers more options. We encourage corporations with business in Asia to try it out. In due course, we will be replacing our NSS-806 satellite at 20.5 degrees West which is able to serve Europe, and we will consider putting a Ka-band payload on that too, depending on how our experience with NSS-6 goes,” said McGee.

–Gareth Owen