Peter J. Brown

The transformation of teleports is ongoing and a variety of trends and market forces are impacting this vital sector of the global telecommunications industry. Is the curtain closing on smaller or so-called “Mom and Pop” teleports in the process?

My division is still a relatively small, Mom-and-Pop-like operation, and I feel that it gives me an advantage. When customers call, they are talking either to our teleport operations center or to me directly,” says Ed Deckert, director of teleport operations and special projects at the satellite services division of Crawford Communications in Atlanta.

“The big guys are only wanting to do big projects for big clients,” says Pier du Plessis, sales director at Biddinghuizen, the Netherlands-based Carrier to Carrier Telecom N.V. “As an independent teleport that started up in 1999, we pursued opportunities in the emerging markets of Africa, Eastern Europe, Russia and Southeast Asia. We have taken a prudent approach, and we have worked primarily with smaller operators in our target markets.

“By remaining small and adaptable, we can make changes quickly when we need to,” says du Plessis. “Our size allows us to track our performance closely, and having this ability to look at the full food chain is crucial, especially at a time when the international telecom market as a whole has experienced such rampant price erosion.”

Interested in picking up a few more assets in the form of ground segment? There are a number of indicators that point to the existence of a buyer’s market. Industry giant Verestar, for example, has stated in a financial statement released earlier this year that it has, among other things, “identified specific initiatives including reducing the number of teleports and related telecom infrastructure costs…”

With the recent shakeout involving a long list of IP content delivery ventures, the satellite industry awaits the next big play. What the future holds remains a mystery. And this uncertainty is compounded by the fact that terrestrial video distribution continues to make strong inroads from the standpoint of both technology and overall reliability. In the meantime, teleports have reacted by providing integrated satellite and fiber optic solutions, leveraging both technologies to meet changing customer demands.

“Teleports are the workhorse of the information transmission industry,” says Stephen Tom, president of MA-based Teleport Consulting Group International L.L.C. and chairman of the World Teleport Association (WTA). “Through the use of hybrid satellite and fiber optic networks, teleports are geared to accommodate the next set of high bandwidth applications that can take advantage of the extensive reach of these networks. In the meantime, teleports continue to perform as a fundamental part of the information infrastructure acting much as a utility.”

In the face of fiber and some satellite transponder overcapacity, teleport operators continue to work with vendors to improve the reliability, efficiency and functionality of network circuits. Tom detects a growing emphasis on network management techniques that enable the teleport operators to squeeze more profit out of revenues they already enjoy, primarily by injecting more automation into the mix.

“Everyone is either managing content as files today, or preparing to do so quite soon,” says Tom. “The emergence of digital content management companies like Pathfire or MediaPipe offer teleport operators the opportunity to supply the infrastructure to support this new application.

“Should the teleports play directly with the Pathfires, or should they seek out the growing number of Pathfire clients? Is the Pathfire model inherently fiber centric in the sense that the content flowing down the Pathfire pipe is all eventually heading to fiber anyway? These are questions that teleports must address,” Tom adds. “Everyone needs to address this phenomenon in the same way that they embraced DVB. They need to figure out how to take advantage of the new opportunity.”

Refocusing Business Initiatives

Consolidation in the U.S. ground segment market is ongoing, and while the smaller players may seem to be squarely on the hit list, they have tended to keep their cost structures and overhead in check, according to Tom. Under-performing assets are not a widespread problem for smaller teleports unlike their much larger rivals who, in many instances, are attempting to shed facilities on the ground as well as transponders in the sky.

“Many of the big guys are rethinking what exactly constitutes their core business,” says Tom. “However, the good news is that the teleport industry has not suffered the deep declines that many other segments of the telecommunications industry have experienced. By-and-large teleport operators did not speculate wildly during the ’90s.” While the industry growth rate has not been explosive, it has purred along in the high single digits, according to Tom.

In the wake of the broader telecom meltdown involving wired and wireless infrastructure on much of the U.S. East Coast on September 11, the satellite industry is taking a closer look at its existing approach to emergency response and infrastructure restoration, for both private and public sector clients alike. This is not a matter of an industry moving sideways to embrace an explosive demand for a new set of services, rather it represents a necessary revision of past procedures and practices.

“Everyone and their cousin is talking about satellite-based response in the aftermath of September 11,” says David Beering, president of Chicago-based Infinite Global Infrastructures. “We are concerned not only about the broader issue of interoperability, but the possibility that the apparent flood of federal funding for communications systems for the first responder, public health and emergency management sectors, could make matters worse.

“We see a need for strong oversight at the federal level. When it comes to coping with the surge in demand for uplinking services in crisis scenarios such as the one we experienced last September, we need a better pooling mechanism and tighter controls from the standpoint of traffic prioritization,” adds Beering. “At the same time, everyone knows that nobody wants to hold onto contracts for space segment or satellite capacity just in case something is going to happen.”

Therefore, the teleport industry has a number of priorities to deal with. Consolidation is a fact of life, and further cost cutting seems in order in light of the much discussed overcapacity that has become a drain on the telecom sector as a whole. Keeping the scale and scope of operations in balance is no easy task. Making sure that each antenna is humming day after day is not simple either. But knowing where the next growth opportunities lie remains the largest challenge of all.

Peter J. Brown is Via Satellite’s Senior Multimedia Editor. He lives on Mount Desert Island, ME.