Theresa Foley

Just as Europe led the way for the rest of the world in making GSM a global open standard for mobile telephony, European industry is now pioneering the path for DVB-RCS, an open standard for two-way satellite broadband. This technology, which could help jumpstart the satellite broadband industry, has become operational in Europe in the last year and is being rolled out experimentally elsewhere.

The number of DVB-RCS terminals currently deployed is modest, estimated at less than 1,000, mainly in Europe and Latin America. However, promoters envision a market of five million residential terminals, which would not evolve without the open standard.

DVB-RCS must achieve these numbers against the backdrop of a difficult global economy, the collapse of the telecom industry and an entrenched base of proprietary systems developed in part by one of the biggest players in the world of satellite networking, Hughes Network Systems.

The line up of pro-DVB-RCS forces got far stronger in April when Alcatel and Gilat joined long-time advocates SES Astra and Eutelsat. The two manufacturers made commitments to develop and promote the standard in their terminals, networks and customer bases. Alcatel’s decision to put its weight behind DVB-RCS is particularly notable due to the French industrial giant’s established leadership in the terrestrial broadband ADSL business. And Gilat reversed a long-time strategy of selling proprietary technology in its satellite networks.

Didier Verhulst, vice president of Alcatel Space’s Telecom Systems and Networks Division, admits that the proprietary systems have a strong position and as DVB-RCS plows ahead, market fragmentation could be a problem. Lowering the equipment price, a goal that has been elusive for satellite broadband so far, is key. To get to that five million user level, end users need to be presented with a terminal that costs no more than about $300 and has the plug-and-play ease that computer owners demand. Verhulst says a production cost of $500 for terminals is close at hand, and that a $200 subsidy would put the end user cost in range. “We are very close to these numbers already and the development with Gilat and consumer electronic manufacturers will reach that,” he says.

But the handful of terminal manufacturers making DVB-RCS equipment now, which includes EMS, Norsat and Raytheon, are not there yet. Christopher Baugh, principal analyst at Northern Sky Research, says the current list price is $2,000-$5,000 for a two-way terminal, an impossibility for any kind of mass market. Larger vendors like Gilat and Alcatel must get behind the standard if manufacturers will retool to support it, he says.

One of the biggest questions is how Hughes is going to respond to the Gilat move. HNS has about 500,000 dishes sold worldwide, including some 100,000 Direcway two-way terminals. The entire HNS base of installed clients, mainly high-end enterprise users, rely on the proprietary technology. Hughes is expected to market more proprietary dishes under the Spaceway label in a few years, assuming that sophisticated satellite system is launched as promised. Although the marketing strategy for Spaceway hasn’t been fully explained, the system could end up pitted head-to-head against DVB-RCS.

The best known DVB-RCS system currently is SES Astra’s BBI (Broadband Interactive) service. SES’s role in promoting DVB-RCS will expand by virtue of its new venture with Gilat and Alcatel called Satlynx, a broadband service that will start with the professional market and then move to residential customers. SES is transferring further development of the BBI ground system to Alcatel, and Alcatel will try to build more efficiency and better features into future versions of the product.

With Gilat, Alcatel will work to get a lower cost version of DVB-RCS into Gilat’s products for consumers. Getting these lower cost versions into the market should take about two years.

EMS is another hub and terminal manufacturer that has been a long-time advocate for DVB-RCS. Already EMS has supplied DVB-RCS equipment to customers in more than five countries, but the number of terminals deployed is small. Gilat’s conversion “was a huge win for the standard and its associated implementation,” says Don Osborne, senior vice president and general manager of EMS’s space and technology group. “We think HNS will get there eventually.”

Just how long it will take for DVB-RCS to be widely accepted is unknown, but it is likely to be a few years. Verhulst says satellite operators are interested but these days they are delaying broadband work. Since terrestrial wireless local loop technology has hit a market roadblock and is not being deployed much now, satellite broadband may have another opportunity with some customers in the short term.

The benefits are clear even if DVB-RCS is no sure bet. Competition to provide equipment will increase and prices will go down. More industrial sources will be involved and more investment will be available. The market will be larger and more basic and advanced equipment can be developed.

But, “assumptions beyond the idea that it will be accepted in Europe are much more shaky,” says Baugh. “With the market slumping so badly, sales down so much, you have to ask, ‘What’s the incremental benefit in the short term of switching to DVB-RCS?’ For now, it’s a high end solution.”

Theresa Foley is Via Satellite’s Senior Contributing Editor