Welcome to Satellite Get Personal, a bimonthly column on how the consumer affects — and is affected by — the satellite industry.
Why does this matter? Well, according to the Satellite Industries Association (SIA), in 2001 satellite industry revenues were $64.4 billion, of which $32.3 billion (or 50 percent) was generated by satellite services. Traditional fixed satellite services transponder leasing amounted to a bit less than a third of this total at $9.3 billion. In 2006, the total market was $106.1 billion, with overall services at $62.6 billion (59 percent), and the consumer portion of that amounting to almost 80 percent ($50.5 billion). SIA notes that satellite services was one of the two fastest growing industry sectors and the vast majority of this growth was in direct-to-home (DTH) satellite television. So consumer use of satellites is important — and more importantly, fun to observe.
The next question is, “What do I bring to the table?” I have been watching these issues unfold for the past 15 years as an analyst at Anser, Futron Corp. and, currently, Frost & Sullivan, and I have a strong background in the development of consumer technology.
Throughout the coming months, I will be discussing the growing importance of the satellite service portion of the satellite industry and considering various issues that propel, impede and obscure this growth. If you have a specific topic you think would be interesting, please send me an e-mail.
With the recent hoopla about the 50th anniversary of Sputnik, it is worth taking a look back at the roots of the satellite industry and considering how much things have changed and why.
First of all, physics has not changed. Satellites still behave in exactly the same way as Sputnik, transmission coverage from a given orbit remains the same and Arthur C. Clark’s vision of the utility of a geostationary satellite remains valid.
Since Clark’s 1945 introduction of the geostationary orbit concept, what has changed is the state of the terrestrial communications infrastructure. In 1956 (the year before Sputnik) TAT-1, the first transatlantic cable, was placed in service at a cost of about $40 million. TAT-1 could carry 36 simultaneous telephone calls, and in its first year of operation it carried nearly 3,000 calls. It was a major technological breakthrough and also a tempting target for alternate technologies.
TAT-1 was upgraded and improved when undersea copper cables were laid, but when the first geostationary communications satellite, Early Bird, was placed into commercial service in June 1965, its 240 voice circuits (or one TV channel) offered communications at almost one-tenth the cost of contemporary undersea cables. Clearly the economic case was easy to make and satellites proliferated.
In time, quasi-governmental organizations like Intelsat were joined in 1976 by commercial upstarts like RCA Americom (now SES Americom). In 1976, Americom began distributing a new move channel, HBO. The ability of communications satellites to compete with the terrestrial microwave links for video distribution was a major component in the decision to create Americom and in its continued success.
For the first time, the true strength of satellite communications was revealed. Point-to-multipoint video distribution was truly a satellite killer app and one that remains a very successful business to this day. It was fortunate that price was not the only advantage to satellite communications, because in 1988, TAT-8, the first fiber optic undersea cable was introduced. TAT-8 initially carried 40,000 simultaneous telephone calls, and with a construction cost of $335 million, the handwriting was on the wall for the use of satellites to carry telephone traffic.
If satellite-based telephone trunking was no longer viable, however, a whole new set of possibilities had opened up with the introduction of point-to-multipoint satellite architectures.
In the end, it was the efficiency of this approach that propelled the satellite industry into the consumer arena and opened the door for the increasing use of satellites to serve individual consumers. Come back in two months and I will discuss the development of DTH and how it changed the world.
