LAS VEGAS–A quick tour of the exhibit halls at this year’s National Association of Broadcasters annual trade show held last week, revealed that high-definition TV (HDTV) and IPTV (television over Internet Protocol connections) are the buzz words du jour in the broadcast industry and markets that the satellite industry is poised to play a significant role in going forward.

Of those two categories, the widespread displays involving HDTV should come as no surprise to any industry observer. HD already is predicted as the next big thing in broadcasting and the rollout of high-definition programming has already begun and will result in more capacity utilization. IPTV, on the other hand, is a market that is still developing and whether it will outpace direct-to-home (DTH) satellite television services as the video piece of the so-called “triple play” offerings by telecos and offer a competitive threat to both DTH and traditional cable remains to be seen. But if it is able to succeed, the Fixed Satellite Services industry should reap some benefits from this new offering.

Hybrid Networks

What is putting satellites in a solid position to compete both in the HD and IPTV markets is a growing trend toward using hybrid satellite/fiber networks for transmission of broadcast content, which opens up more points of presence and provides easier access for broadcasters to get their content distributed. The importance of these hybrid networks was a common theme that emerged in discussions Satellite News had with various industry officials.

“Last year, we announced the opening of what we called the GXS Media, our terrestrial media transport network,” said Jon Romm, president of Intelsat‘s Media and Entertainment Business Unit. “That was five points of presence in the United States of fiber connectivity to drive high-definition traffic from the front end all the way through the network. We had a successful year doing it. We just were not in enough locations.”

So to boost its hybrid network offering, Intelsat announced during the show that it teamed up with Broadwing Communications LLC and HTN Communications. “The service is up and operational,” Romm said. “We are excited about it. We recognize it gives us the ability to put the encoders in the production units to originate high-definition television services, which are not only going to push additional traffic through the fiber network, but also to continue through the satellite service.”

The hybrid offering also turned out to be a boost for Intelsat. “One of the things we saw last year was that we anticipated in the original business the majority of the revenue would be coming from the fiber side,” Romm said. “We underachieved on the fiber side but overachieved in the synergy related to the satellite capacity.”

“The hybrid satellite/fiber solutions have been very good for us,” added William McNamara, general manager of BT Media and Broadcast. “A couple of years ago, we had a bit of fiber between London and New York. That was about it. Today, our network stretches globally–Hong Kong through Los Angeles, into Denver, into DirecTV, into Echostar.”

Panamsat Corp. also has used fiber to help expand its broadcast business.

While hybrid networks are helping to boost satellite traffic, Intelsat and BT are targeting different markets, though a common theme of international connectivity runs through them.

For Intelsat, the tri-partnership established points of presence at 20 sports stadiums. “The reason we focused on sports first is because sports tends to come in four hour chunks, which is always attractive,” Romm said.

Also, sports broadcasts tend to come at times when the satellite network is being under-utilized, particularly with the growing trend of content being generated in the United States and being pushed out internationally.

“What we are finding is exactly what people are talking about, which is the sports rights holders and the actual leagues themselves, we are seeing their growth to the international marketplace,” Romm noted. “That growth is being driven by the ethnic diversity of players. The National Basketball Association recognizes the importance of having Yao Ming and wants to talk to China about it. Major League Baseball recognizes the amount of their constituents coming from Latin American or Asian locations. The National Hockey League is seeing more players coming from Eastern European locations.” This has led sports to be a significant driver of content over the hybrid networks.

McNamara also noted the growing trend of sending U.S.-generated content overseas. “A lot more move for international [broadcasting] in particular” is driving usage of the hybrid fiber/satellite solutions. “The combination of the hybrid fiber/satellite network also enabled folks like E! Entertainment and The Hallmark Channel to build one playout center to be able to distribute globally,” he said.

McNamara also pointed to the government as a user of the hybrid networks, as well as enterprise customers. “We also do government services where we provide hybrid fiber and satellite solutions from Fort x, y or z into Europe and into theaters of operation. We do a lot of streaming for [enterprises], including financial announcements and corporate training. We do Cisco IPTV.” McNamara noted that Cisco said it may have saved more than $130 million in training, travel and security expenses.

HDTV and IPTV

That high definition was on display in just about every corner of the Las Vegas Convention Center was no surprise. It is being predicted as a key driver for satellite capacity usage for years to come. This buzz fueled industry officials in talking up the promise of HD.

High definition in the next year to two years “is going to be huge,” Patrick Brant, president of Loral Skynet told Satellite News. And if it fulfills its promise, it could be a big boost to Loral Skynet as it prepares to reenter the U.S. broadcasting market, a market that it has been unable to compete in, thanks to a two year non-compete clause that was signed as part of the sale of certain space assets to Intelsat during Loral’s bankruptcy proceedings. That non-compete clause expires in March 2006. “We expect to be back in the [U.S.] broadcast market in less than a year from now,” he added, noting Loral Skynet plans to compete “aggressively” in this space.

Brian McGuirk, senior vice president of SES Americom‘s North American Media Services added that sales “have gone very well” for Americom’s HD Prime neighborhood. He noted that consumers are driving the growth in HD and programmers are reacting. “HD is a big deal.”

High definition also is playing a key role for European operator SES Astra, which generates 96 percent of its revenues from the broadcast market.

“Our main initiative is HDTV,” Alexander Oudendijk, senior vice president and chief communications officer at SES Astra said, noting the first HD channels will begin transmitting for Premiere, a DTH provider in Germany. Premiere will be launching a three-channel bouquet offering of HD programming later this year, Oudendijk noted. BSkyB in the United Kindom and Canal+ in Spain will be launching their HD offerings in 2006.

Talk about IPTV was more reserved, though it does present some opportunities if it does come to fruition.

Brant said that the verdict on IPTV “is still out,” but he added that if it does live up to its expectations, satellites will play “a significant role.”

–Gregory Twachtman