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PanAmSat Catches HDTV Wave

By | September 29, 2003

      Wilton, Conn.-based PanAmSat [Nasdaq: SPOT] is building a neighborhood of in-orbit satellite capacity to provide potentially lucrative high-definition television (HDTV) services.

      The first step is the planned launch of the Galaxy XIII/Horizons I satellite scheduled for Sept. 30. The new satellite would start PanAmSat on a path of creating the first HDTV satellite neighborhood over North America.

      If successful, PanAmSat would be able to enhance the value of the satellite and the orbital slot. A major advantage to having HDTV programming grouped together in a single neighborhood is that one downlink antenna can receive all the programming at the satellite’s 127 degrees West orbital slot, said Bridget Neville, PanAmSat’s senior vice president of engineering and operations.

      HDTV can be offered on virtually any satellite, but an HDTV neighborhood could not be duplicated easily by a rival operator. In addition, the timing appears right for PanAmSat to take the plunge to develop a base of programming customers that want to distribute their new HDTV content, Neville said.

      “This has gone well beyond a market test. HDTV technology has been available for years. The cost of HDTV sets and production equipment is starting to come down enough to make HD much more cost effective. The viewing experience is just far and away better than anything you would see with analog or even digital,” she said.

      Galaxy XIII/Horizons I will be the first spacecraft in PanAmSat’s fleet to have a portion of its transponder capacity co-owned. The company is involved in a joint venture with Japan’s JSAT to provide new IP-based content distribution networks via satellite. A portion of the satellite, featuring 24 Ku-band transponders, would be operated by the joint venture and known as Horizons I.

      “We have never before offered Ku-band from the 127 West location,” Neville said. The portion of the satellite that PanAmSat alone would use features 24 C-band transponders that would be tapped to offer HDTV and other services.

      Thus far, Galaxy XIII/Horizons I’s roster of customers would include E!, Starz Encore, HBO, Turner, HDNet and Charter Communications. The Galaxy XIII/Horizons I satellite would be more than 50 percent leased when it begins commercial service, since C-band customers from the in-orbit Galaxy IX satellite would migrate to the new bird. The Galaxy IX then would be relocated to 74 degrees West and operated as an in-orbit backup for all the Galaxy satellites, Neville said.

      PanAmSat’s decision to cultivate an HDTV neighborhood in the sky would limit the number of programs it can send, compared to standard digital television (SDTV), but provide the company with a beachhead in a growing niche market.

      The bandwidth-hogging nature of HDTV transmissions only allows the distribution of one channel or possibly two channels per transponder, without affecting signal quality. In contrast, eight to 12 SDTV channels can be carried per transponder.

      The least efficient use of bandwidth occurs with the delivery of analog signals. Only one analog channel can be carried per transponder, Neville said.

      Ed Habib, a Derwood, Md.-based satellite communications engineer, said that “it’s a great idea that PanAmSat is creating a high-definition neighborhood to accelerate the usage of HDTV.” In addition, MPEG compression would allow more high-definition TV channels per transponder, he said.

      HDTV is a strong growth opportunity because it offers enhanced signal quality and a superior viewing experience, Neville added. “Content providers are starting to move more aggressively into making HD content available. Having a higher power, better performing satellite is critical to the growth of making HD content available to viewers,” she added.

      D.K. Sachdev, a satellite engineer who heads the SpaceTel Consultancy in Vienna, Va., said, “PanAmSat’s emphasis on HDTV services via the new satellite, Galaxy XIII, is in line with a recent industry-wide trend.”

      Plans to offer HDTV services are in the works by such satellite operators as newcomer Cablevision Systems [NYSE: CVC] and well-established firm SES Americom. Galaxy XIII’s replacement of the older Galaxy IX, an HS 376 C-band only satellite, will give PanAmSat enhanced C-band capabilities to better match HDTV needs, as well as a new Ku- band payload, Horizon 1, for IP-based services, Sachdev said.

      “After decades of developments and several false starts, HDTV appears finally to be getting ready for a genuine take off,” Sachdev said. “The driving factors include [Federal Communications Commission]-mandated deadlines for terrestrial broadcasters, increasing content availability and TV sets prices gradually coming within the range of high-end mass market products. Satellites stand to gain from this trend both in terms of greater bandwidth needs for cable-head program distribution, as well as the highest quality HDTV services via direct broadcast satellites.”

      It may be too early to draw conclusions about HDTV’s likely impact but it could provide a “new impetus” in the resurgence of the satellite manufacturing industry, Sachdev said.

      The Galaxy XIII is a Boeing [NYSE: BA] 601 HP satellite, the sixth Boeing spacecraft that PanAmSat has purchased and launched since 1998. The other satellites in the group and their locations are: Galaxy IR, 133 degrees West; Galaxy IX, 127 degrees West; Galaxy V, 125 degrees West; Galaxy XR, 123 degrees West; and Galaxy IIIC, 95 degrees West; and Galaxy XI, 91 degrees West.

      Sea Launch stepped up preparations last week to launch the satellite from a sea-based platform on the equator. The Odyssey Launch Platform and the Sea Launch Commander vessel embarked on their journey to the equator last week to conduct the mission. Liftoff is scheduled for Sept. 30.

      –Paul Dykewicz

      (Philip Robertson, PanAmSat, 203/210-8392; Ed Habib, Ed Habib Consulting, 301/417 0243; D.K. Sachdev, SpaceTel Consultancy, 703/757-5880; Paula Korn, Sea Launch, 562/499.4729)

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