SES Americom’s deal with EchoStar to provide satellite capacity on its AMC-15 satellite is a key first step in bringing a European wholesale model for direct-to-home (DTH) services across to the U.S. market. Kevin Smyth, senior vice president of residential satellite services at SES Americom, told Interspace: “Our agreement with EchoStar is the first deal in our new residential services initiative. It is the first time that a vertically integrated American DTH provider has leased primary capacity from a satellite provider. This is the first step towards a European model, where you have a very efficient, wholesale satellite provider from which most of the DTH providers lease their capacity.”

EchoStar is taking the entire payload of the AMC-15 satellite, which is planning to be launched in the third quarter of 2004 at the 105 degrees West orbital position. The satellite is a Ku/Ka-band hybrid satellite, which will feature twenty-four 36 MHz Ku-band transponders and twelve 125 MHz Ka-band spot beams. The deal is a significant one for EchoStar because it is planning to offer a combination of satellite TV programming bundled with satellite-delivered, high-speed Internet services. The fact that EchoStar is now planning to enter the Internet market is a key development, and it remains to be seen whether this bundling approach to services in the United States will have the desired impact.

While the deal may have “broader significance,” the revenues derived will make a very positive financial impact. Smyth comments: “This is a big deal from a financial point of view. It constitutes a fairly good increase in our backlog. It is a significant and long-term commitment.”

Now that the deal is done with EchoStar, Smyth believes it will be easier to do other deals for SES Americom’s Americom2Home platform. “Many tend to wait to see what others do. This deal substantiates the concept of using these particular frequencies for DTH services, it should help others see the potential of similar platforms. This is EchoStar outsourcing its satellite requirement rather than building and operating more spacecraft of its own.”

The deal is an important shot in the arm for SES, which recently gave fairly conservative forecasts for 2003. Despite this deal coming so soon after its results, it may not have been factored in to the forecasts. Smyth observes, “Being the conservatives that we are, we did not anticipate that when AMC-15 was launched, it would be fully booked. When we did the announcement about our year end results, we projected positive financial impact from Americom2Home to ramp-up over the next few years. With this agreement, we executed ahead of schedule.”

–Mark Holmes

(Contact: Monica Morgan, vice president corporate communications, SES Americom, e-mail: [email protected])