Satellite Executive Briefing Satellite Executive Briefing Satellite Executive Briefing Satellite Executive Briefing Satellite Executive Briefing September-October 2008 Contents Contents Contents Contents Contents by Bruce Elbert President, Application Technology Strategy, Inc. (Continued on page 3) Vol. 1 No.5 September-October 2008 The Financial Issue: The Financial Issue: The Financial Issue: The Financial Issue: The Financial Issue: Why Do FSS Oper y Do FSS Oper y Do FSS Oper y Do FSS Oper y Do FSS Operators tors tors tors tors Bor Bor Bor Bor Borrow So Much Mone w So Much Mone w So Much Mone w So Much Mone w So Much Money? y? y? y? y? Market Opportunities: Broadband at Sea: Opportunities in Maritime VSAT by Alan Gottlieb................................8 The Brazilian Satellite Market by B.H. Schneiderman..................10 Opinion: What Was Your Favorite Recession? by Robert Bell, Exe. Dir. ,WTA......12 Market Resources Now Deliver Your Message Faster and Furhter by Howard Greenfield...................14 Featured Event ISIS NYC 2008.............................17 Regular Sections From the Editor .............................2 Company Profile: Hannover Fairs USA, Inc......................................18 T he Fixed Satellite Service (FSS) satellite operator business is the most established of the satellite industry, with leaders like Intelsat and SES representing many billions of dollars of investment and revenue. In the past, these companies and their predecessors like Hughes Communications Galaxy and RCA American Communications exclusively relied on investor risk capital and internally ground funds. What has changed to make these companies behave more like debt- leveraged industries like wireless/cellular telephone and airlines? How We Got Here Based on the original approach from 1965, the operation of an FSS service is very technical and capital intensive. Once you figure out what kind of satellite you want (specifications, launch vehicle, operation approach and schedule), the two to three year construction cycle can begin. The spacecraft manufacturer and launch provider require progress payments such that at time of delivery, their costs are paid. In the past, the capital for the progress payments came from the corporate treasury; and one or two satellites were sufficient to get a new operator off the ground and able to derive first revenues (ignoring presales). However, satellite buyers needed to make those payments on a timely basis or be threatened with contract termination. I recall an instance in the mid-1970s when one operator in fact failed to make a critical progress payment and the satellite was subsequently sold to another buyer. The first INTELSAT satellites used C band for international point-to-point links. While this was an important application, the market was limited to telecom companies who also had major investments in undersea cables and terrestrial microwave systems. It was the development of domestic TV distribution in the US that caused FSS to blossom into a major growth sector. Without C band FSS, the cable TV business would never have become a billion dollar industry and public broadcasting would have remained local and uninteresting. The fourth and most profitable TV network in the US, Fox, needed C band to serve its new affiliates. In a similar vane, ESPN and CNN owe the success of their remotely-produced
by Bruce Elbert President, Application Technology Strategy, Inc.
(Continued on page 3)
Vol. 1 No.5 September-October 2008
The Financial Issue:The Financial Issue:The Financial Issue:The Financial Issue:The Financial Issue:WWWWWhhhhhy Do FSS Opery Do FSS Opery Do FSS Opery Do FSS Opery Do FSS OperaaaaatorstorstorstorstorsBorBorBorBorBorrrrrrooooow So Much Monew So Much Monew So Much Monew So Much Monew So Much Money?y?y?y?y?
Market Opportunities:
Broadband at Sea: Opportunities inMaritime VSATby Alan Gottlieb................................8
The Brazilian Satellite Marketby B.H. Schneiderman..................10
Opinion:
What Was Your Favorite Recession?by Robert Bell, Exe. Dir. ,WTA......12
Market Resources
Now Deliver Your Message Fasterand Furhterby Howard Greenfield...................14
Featured Event
ISIS NYC 2008.............................17
Regular Sections
From the Editor.............................2
Company Profile: Hannover FairsUSA, Inc......................................18
The Fixed Satellite Service (FSS)satellite operator business is themost established of the satellite
industry, with leaders like Intelsat and SESrepresenting many billions of dollars ofinvestment and revenue. In the past, thesecompanies and their predecessors likeHughes Communications Galaxy and RCAAmerican Communications exclusivelyrelied on investor risk capital and internallyground funds. What has changed to makethese companies behave more like debt-leveraged industries like wireless/cellulartelephone and airlines?
How We Got Here
Based on the original approach from 1965,the operation of an FSS service is verytechnical and capital intensive. Once youfigure out what kind of satellite you want(specifications, launch vehicle, operationapproach and schedule), the two to threeyear construction cycle can begin. Thespacecraft manufacturer and launchprovider require progress payments suchthat at time of delivery, their costs are paid.In the past, the capital for the progress
payments came from the corporatetreasury; and one or two satellites weresufficient to get a new operator off theground and able to derive first revenues(ignoring presales). However, satellitebuyers needed to make those payments ona timely basis or be threatened withcontract termination. I recall an instance inthe mid-1970s when one operator in factfailed to make a critical progress paymentand the satellite was subsequently sold toanother buyer.
The first INTELSAT satellites used C bandfor international point-to-point links. Whilethis was an important application, themarket was limited to telecom companieswho also had major investments inundersea cables and terrestrial microwavesystems. It was the development ofdomestic TV distribution in the US thatcaused FSS to blossom into a major growthsector. Without C band FSS, the cable TVbusiness would never have become abillion dollar industry and publicbroadcasting would have remained localand uninteresting. The fourth and mostprofitable TV network in the US, Fox,needed C band to serve its new affiliates.In a similar vane, ESPN and CNN owe thesuccess of their remotely-produced
Satellite Executive Briefing is publishedbimonthly by Synthesis Publications LLC
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Cover StoryFrom the Editor
As we went to press with this issue, the disconcerting news of the turmoilin the financial markets hit. The effects of the $700 Billion bankruptcy ofLehman Bros., the largest in US history and the bailout of American
Insurance Group (AIG) by the US government was felt in all the major stockmarkets in Europe and Asia. From this we can be certain of two things: wehaven’t seen the last or the worse of this crisis and it will have an impact on thesatellite industry. Like many companies, shares of satellite stocks fell significantlythe day after Lehman Bros. filed for bankruptcy.
The timing of our issue on the financial markets wasn’t by design.Although it has been known in the industry for quite some time thatthe financial markets has been tightening and some shakeout wasin the offing, I don’t think anyone was able to foresee the scopeand extent of this crisis. The satellite industry is just starting torecover from the downturn brought about the dot.com and telecombusts of a few years ago. The latest State of the Industry Reportby the Satellite Industry Association just released in June wasrelatively optimistic of the industry’s prospects after worldwide revenues toppedthe US$ 100 Billion mark in 2007. The entry of private equity firms investing insatellite companies was generally seen as an affirmation of the long-term viabilityof the industry.
In tough times, it’s imperative to be armed with reliable information and havethe ability to foresee what’s coming in order to make the right moves anddecisions. Be sure to be kept informed, not just of daily developments butlonger term prospects and analysis of the industry. In this regard, I highlyrecommend attending the ISCe Satellite Investment Symposium (ISISNYC’08) in New York next month. Now on its third year, it’s the only eventfocusing on the financial side of the business and feature key executives andleading Wall Street analysts. With everything that’s happening in the financialmarkets, this could be the most important show you attend this year.
programming to the availability of C bandFSS services and the earth stations that dotthe country.
These developments provided thefoundation for the two most successful FSSoperators in the US: RCA Americom andHughes Communications Galaxy. Bothorganizations were internal startups byspacecraft manufacturers that usedcustomer money to get their satelliteslaunched. The success of these operatorsis reflected in the fact that they are majorparts of today’s two largest FSS operators,SES and Intelsat, respectively. (Interestingly,Loral is the only combined spacecraftmanufacture and satellite operator left inexistence.)
The next major growth phase for FSS waswith Ku band in North America, WesternEurope and Japan. The first launches in 1980were a landmark, but the applications andrevenues were not yet there. It took ten yearsfor a base to emerge, represented by SatelliteNews Gathering (SNG), Very Small ApertureTerminals (VSATs) and the early form of
Direct to Home (DTH) television. Companieslike Hughes Network Systems, ViaSat andSpacenet put dozens of Ku bandtransponders to productive use, providingcorporate and government data networks.
Americom in the US and, more recently,NewSkies Satellites.
The same approach was taken in Japan formuch the same reason, resulting in theformation of Japan TelecommunicationsSatellite Corp, now known as SkyPerfectJSAT Corp. This company was backedfinancially by two leading Japanese tradingcompanies as well as their supportingbanks. This publicly-traded companymoved gracefully from being a purelydomestic provider to its ascendancy as theleading satellite operator in Asia. Theycreated a US subsidiary, JSATInternational, to enter into joint ventureswith PanAmSat and later Intelsat, providingKu band FSS capacity to the US on theHorizons 1 and Horizons 2 satellites.
Satellites and Rocket Science
The technical side of FSS satelliteoperation has changed at the detail level,but the fundamentals are the same. You paythe manufacturer and launch agency to put
APPLICATIONTECHNOLOGYSTRATEGY, INC.
Europe, on the other hand, made the high-level decision to dedicate C band to thetelecom companies and develop satellite Kuband in its stead. The Eutelsat system putKu band on top for TV distribution servicesand ultimately resulted in successfulbusinesses for the Astra satellites of SES.Today, SES garners billions of dollars ofrevenue as the focal point for Europeantelevision. SES emerged from Luxembourg,the small but media-savvy European countrythat adopted the US video-bird model. Withfinancial backing from the Luxembourggovernment and Luxembourg banks, SES gotits first satellites up and won the business ofRupert Murdock’s Sky service in the UK.Astra was and is the video neighborhood ofchoice, helping SES to become the mostfinancially-successful satellite operator in theworld. They had the internal capital to bulk-up the company through the acquisition of
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• Space and ground segment design• Program management• Satellite link and propagation engineering• Cost reduction and performance optimization• Selection of the best space and ground resources
Application Technology Strategy, Inc., (ATSI), is the satellite consulting firm founded by Bruce Elbert, leadingsatellite expert and consultant, technologist, educator and author of standard industry books.
• Systems engineering and design• Training and education• Contract and specification negotiation• Expert testimony• Advice to Investors• Research and interpretation of data
the satellite up; you put the satellite intooperation in a previously-coordinate orbitposition; and you sell transponder capacityto users, garnering revenues to cover yourinitial investment and the relatively low costof operating the satellite itself. However,once a satellite is put into service, its lifetimeis limited to the range of 15 to 20 years by anumber of factors. Principle among theseare the stationkeeping fuel on board(normally enough for 15 years) and thepower output of its solar panels andbatteries. Redundancy of other elements likeRF power amplifiers, motors and on-boarddigital electronics would normally allow thespacecraft to survive even longer, possiblyat reduced capacity.
Bigger is usually better when it comes tothe satellite operator as operatingefficiencies increase with the size of the fleet.For example, it may only require a doublingof technical staff to support a system of 20satellites as opposed to only four. Bigger isgenerally better for the satellite as well. Thelargest class of satellite sold by SS/Loral,Boeing, Lockheed-Martin and theEuropeans has about twice the capacity ofthe mid-size satellites that were common tenyears ago. The price of such a satellite isperhaps 50% greater, so there is an economic
benefit available to those who afford a totalprice tag of nearly $300 million. Greaterefficiency of investment and operation doestend to give bigger operators like SES andIntelsat a cost advantage relative to mediumsized operators like Loral Skynet/Telesat,Eutelsat and JSAT.
Small operators in Asia and the Middle Eastmay be at a cost disadvantage and thereforetend to rely of various forms of marketprotection in their domestic and regionalmarkets. These companies, and the biggercompanies as well, can reduce theinvestment per satellite by purchasing asmaller spacecraft that is targeted to aspecific requirement. Orbital Sciences andthe Europeans produce such models thatdeliver 24 transponders, a quantity onceconsidered adequate for a domestic market.
Launch vehicles represent probably thebiggest conundrum for operators. There areonly two US rockets left on the market: Atlasand Delta. However, both of these are amongthe most expensive as the manufacturer,United Launch Alliance, is focused on thegovernment business. That leavesArianespace with the only remainingwestern launch vehicle and they have donebrilliantly in recent past. Boeing Sea Launch
is still a good bet with the Ukrainian Zenitbooster and Russian Block DM final stage,while International Launch Services justannounced that the Russian provider of theProton rocket has taken over that venture(originally formed with Lockheed Martin).The upshot is that the FSS operator musttake a greater responsibility for choosingand managing the selection, production andoperation of the launcher.
The cost and challenge of satellite design,construction and launch is making ittougher for FSS operators to maintain anddevelop their businesses. The launch eventitself carries a historical risk of failure ofapproximately 5%, which is mitigatedthrough launch insurance and makingavailable a backup satellite either on theground or in orbit. Launch insurance ratesrange between 10 and 20% of the insuredvalue, depending on recent experience. Attimes, these premiums go “sky high” andmajor operators consider self insuring(customary for Intelsat and Echostar).Perhaps this is because they have the luxuryof more satellites operating in orbit.
Raising Necessary Capital
Organization and financial strategy have(Continued on page 6 )
evolved over the years and operators aremuch more sophisticated about theirownership structure and how they raisecapital. For example, a series of leveragedbuy-outs is what is behind the now-dominant Intelsat system. Intelsat’s debt ofaround $11billion, accumulated byacquisition of its rival PanAmSat andthe latest private acquisition bySerafina Holdings, Limited,will be serviced through itslatest annual revenue of $2.2billion and a backlog of $8.2billion. While these numbersmay not appear to balance, theprospects are that thecompany will claim asignificant part of overallindustry growth in comingyears.
Contrast Intelsat with it nowmain rival SES, which has avery low debt burden and isaligned with the Grand Duchyof Luxembourg. SES is theonly major global satelliteoperator that is not ownedwholly or partly by privateequity firms, relying insteadon a combination of publicstock and strategic Europeaninvestors.
One of the most effectivebeneficiaries of open capitalmarkets is Echostar, whichborrowed money and soldstock to amass a large fleet ofUS domestic Ku bandsatellites. To meet demand forDTH applications, Echostar has been usingFSS capacity in the US to expand theirservice offerings in HDTV and localchannels. The newly-formed EchostarHoldings is now making their excess FSScapacity available to the US market. As anew-comer they are at a decideddisadvantage relative to Intelsat and SESwith a backlog of the best customers.However, they have the benefit of excellentorbit positions for US service, which is
always a foundation for a successfulbusiness. Loral is positioned as an FSSoperator with the established internationalservice and it’s acquisition of TelesatCanada.
Source: Satellite Industry Association
In addition to mature Asian operators likeThaicom, Satelindo AsiaSat and Measat,there has been an influx of new satelliteoperators. Three are opportunisticbusinesses intent on making profits: AsiaBroadcast Satellite, Protostar and SAT-GE.With only one satellite each (ProtoStarordered a second from Boeing), one mightwonder how they can compete in this era of
multi-satellite operators. Long term, theywould seem to be acquisition targets.
We therefore identify two classes of FSSoperators: larger companies that leverageoff of a very strong and profitable domestic
or regional market to grow to aglobal presence and dominion;and smaller local operators that
exist on a single base and arelimited in market presence andreach. The former have hugedemands for capital and thusmust be friendly to thelargest players in theinvestment community.
New satellite operators canfollow the same strategy, asexemplified by the debtplacement of YahSat with 15banks for $1 billion. No onewould question the viabilityof a UAE company, backedby a royal family. Yet, thestructure of YahSat wouldseem to be more like otheroperators in the sense thatthe lender’s risk iscollateralized by the verysatellite that is beingpurchased.
Future Prospects for FSS
FSS operators will continueto enjoy a large market indeveloped andunderdeveloped regionsalike. This is because FSS
transponders are versatile, allowing theiruse to adapt to current and evolvingapplications. These satellites have a highoperating leverage because they cover awide area giving users access to bandwidthfrom almost anywhere and from any modeof transportation. Terrestrial fiber andwireless systems are limited in their accessand coverage to locations they alreadyserve.
Bruce Elbert has over 30 years of experience in satellitecommunications and is the President of Application TechnologyStrategy, Inc., which assists satellite operators, network providersand users in the public and private sectors. He is an author andeducator in these fields, having produced seven titles andconducted technical and business training around the world.During 25 years with Hughes Electronics, he directed majortechnical projects and led business activities in the U.S. andoverseas. He is the author of The Satellite CommunicationApplications Handbook, second edition (Artech House, 2004).
predictable and a reason for faith that well-positioned operators will survive and likelyprosper. On top of this, there have beenrecent application booms that appeared tocome from nowhere. Some of it dates backto the Internet bubble of the late 1990s,which served to put more satellites in thepipeline that have subsequently becamefilled through organic growth.
An outgrowth of September 11, 2001, andthe War on Terror has been the take up ofservice by the US military and its NATOallies. This filled much of the available Kuband capacity outside of North America andprovided a wind-fall for the major FSSoperators. The trend from this point is aconsolidation of resources within theDepartment of Defense to more efficientlyutilize commercial satellite resources. This,combined with the introduction of the newWBS satellites (one of which recentlyentered service), means that growth ofgovernment demand for FSS is probably overand reduction in such demand is a distinctpossibility.
With these pluses and minuses, growth-
minded FSS operators need to uncover anddevelop new markets for their capacity, andconstruct satellites which promote suchbusiness. An area of great interest is thebroad spectrum at Ka band. While Telesat,WildBlue and Hughes Networks Systemsalready operate Ka-band FSS satellites, itstill remains to be seen how SES and Intelsatdecide to move ahead in this underexploitedportion of the spectrum.
The broad range of solid uses and users ofFSS capacity provide for good revenues andlong-term stability. History tells us that new
applications appear to replace any loss frommovement to terrestrial alternatives like fiberand fixed wireless. FSS operators mustobtain their funds from the most attractivesources, including debt and equity. Therevenue streams are reliable and newapplications provide for growth (anddemand for more capital). As a result, theeconomics and dynamics of the FSSbusiness provides a special opportunity forstrategic and financial players who want tomake money in a future-proof business.
With everything that’s going on in the world’s financial markets,this could be the most important conference you attend this year...
Inmarsat’s new, Fleet Broadband services is facing never anticipatedcompetition. Its huge investment in its i4 satellite system and itsrevenue stream are being challenged by the proliferation of KuBand deep ocean coverage and new hybrid VSAT/L Band solutionsas well as by Iridium’s new OpenPort service. For those merchantshipping users that demand high capacity broadband, typicallylarge fleet owners, rising demand for fixed priced broadband ismaking Inmarsat’s “pay-by-the-byte” services unaffordable at highusage levels and price-challenged at low usage levels. OpenPortsmoffers volume based 128 Kbs service will be available at a costsignificantly lower than Inmarsat.
With fixed price broadband, large fleet owners and other bandwidthhungry users can consolidated routine tasks onshore reducingpersonnel at sea, PCs can be maintained remotely limiting the needto send personnel to the ship, weather data can be received anddownloaded into fuel optimization programs, documents can betransmitted ahead of ship arrival thereby saving down time in portand crew attrition can be reduced through the provision of websurfing, video and photo transmission, GSM services includingSMS, Telemedicine, and entertainment services – all applicationsthat would be cost prohibitive with “Pay-by-the-Byte” services –can be done with fixed price VSAT.
As demand for broadband in deep ocean routes rises, Inmarsat’sheaviest users can be expected to migrate to new Ku Band VSAT/L Band hybrid solutions.
Why a Hybrid VSAT/L Band Solution
Essentially, owners and operators of major commercial shippingfleets demand global coverage and low fixed cost broadband. SinceKu Band VSAT provides low cost fixed price coverage over only70% to 80% of the globe, a clever hybrid infrastructure has beendevised that combines VSAT with L Band backup. Essentially,VSAT and Inmarsat or Iridium are deployed together and datastreams are automatically switched between them. This novelsolution is facilitated by new, “least cost routing devices” thatautomatically select the lowest cost transmission alternativeavailable. In addition to routing, the devices often incorporate IPacceleration, store and forward, web caching and VPN capability.Employing the “store and forward” capability allows users to storelarge non-time critical files for later transmission over low cost Kuinfrastructure. One manufacturer even includes software that
restricts the download of web page graphics and/or http trafficduring periods when fixed price broadband is not available. Inaddition to switching, this infrastructure requires that the VSATantenna be re-pointed as the vessel “roams” across satellite beams.
ComtechEF Data’s Vipersat Division and iDirect have only recentlyintroduced this capability to market. Owners of Vipersat and iDirectHubs can add appropriate hardware aboard ship and software thatautomatically re-points a Seatel Antenna as the vessel moves underdifferent satellite beams. It is also possible to maintain the same IPaddress throughout the switching process.
Dramatic Cost Savings
In fleets today, most global shipping uses less than 200 Megabytesof data per/month. The limited usage is due largely to the fact thatexisting services such as Inmarsat are so expensive on a per bytebasis that usage is throttled.
Yet, when you talk to large fleet owners, they want to runapplications and services that would boost data usage into therange of Gigabytes per/month per/ship. Consider that a ship using1 Gigabyte per/month could easily spend $6,000 to $10,000 per/month (depending on pricing plan). Multiply this by a fleet of 50 to100 ships and the cost soars. Using a Hybrid Ku/VSAT system andassuming 20% Inmarsat or Iridium usage, monthly cost are cutroughly in half with saving increasing even more dramatically atlevels above 1 Gigabyte per/month.
The implications of this shift are clear: Inmarsat and other “Pay-by-the Byte” providers are likely to be confined to two applications: asprimary transmission on ships with limited data transmission needsand as back-up for VSAT. In the future, heavy users will increasinglygravitate towards a hybrid solution and the need to provide back-up will continue to diminish along major shipping routes as KuBand coverage of ocean routes increases further limiting the needfor L Band backup.
Market Opportunities
The rising demand for fixed priced broadband at sea will createopportunities for satellite operators, integrators and manufacturersof stabilized satellite antennas. In addition, widespread availabilityof fixed price broadband at sea will create a new market segment forthose providers capable of supplying broadband dependentsoftware applications and crew communication entertainment andtraining services.
Just as low, fixed cost broadband has become the norm in our homeand office environments, we can expect the same sort of services tobecome increasingly common in global merchant shipping markets.The recent spread of Ku Band, partially a result of Boeing’sabandoned Connexion service, is proving to be a significantcatalyst for change in maritime communications.
Hybrid VSAT/L Band infrastructure will by first adopted by largefleet owners in Northern Europe and can be expected to spread toGreek and Asian markets in the next two to three years. As more andmore vessel owners and operators experience the benefits of highspeed, fixed cost connectivity, broadband will become commonplaceat sea.
Alan Gottlieb is a distinguished consultant to the satellite andtelecommunications industry. His firm,Gottlieb International Group Inc.,specializes in market research, businessdevelopment and sales into internationaloil and gas and maritime markets. Hiscareers encompasses a diversetelecommunications background incellular infrastructure, handsets, mobilecommerce and satellite. He has servedas Vice President of Sales for Audiovox,
Director of Sales for Southeast Asia for COMSAT and AetherSystems, Corporate Market Research Manager for BakerInternational. Mr.. Gottlieb has been responsible for initiatingand managing successful market entries into Southeast Asiaand the South Pacific Markets and assisting satellite relatedcompanies with diversification into new market niches andgeographies. Major clients have included Intelsat, Inmarsat,Verestar, Globecomm Systems, Sonic Telecom, Frontiertechnology, and Thiss Technologies (Singapore). He is anative of Washington, D.C. and holds a Masters Degree inInternational Business from Thunderbird Graduate School anda B.A. from Stetson University. He has published numerousarticles in satellite trade publications and is a frequent speaker at Offshore Communications, ISCe, the Washington Satellite show and other industry events. He can be reached at +1-703-622-8520 .Web:www.gottliebinternationalgroup.com
Interview with Thuraya’s
Ebrahim K. EbrahimSatellite Markets and Research Editor-in-Chief Virgil Labradorand Asia-Pacific editor Peter I. Galace, spoke with Ebrahim K.Ebrahim, Thuraya’s Senior Manager, Corporate Communications,who appraised Satellite Markets & Research with the latestdevelopments in Thuraya and its upcoming foray into themaritime market. Excerpts:
Why is Thuraya entering the Maritime business?
The good thing about maritime is you don’t need to face thehurdles and challenges of the regulatory system. Because the seais there and open and you can start from day one. That’s why forthe Asia-Pacific region, maritime is our target. We started off withmaritime service a few months ago. The service, the terminal, theproduct is launched. It is provided by 7-10 experienced maritimeservice providers. Some of them have European internationalexperience but they also have operations in this region. Themomentum is so high. And we can tell about momentum becausethe response and feedback that we have been getting from ourcustomers are so strong and encouraging.
How many subscribers do you have for your maritime service?
We have had an initial experience that was not so successfulbecause we come from handheld terminal service but thatexperience allowed us to test the market and get feedback frompotential users. So we had maybe something in the range of 100sbefore; but for the second one, which we launched a couple ofmonths ago, it is too premature to talk about numbers. But we seethis product in the coming three years contributing or becomingone of our main revenue generators.
How will your maritime service be different from Inmarsat?
Segmentation. Inmarsat has been there, I think, for the last 25years, maybe more. They have different sizes of equipment. Wehave very a small, very friendly terminal. It is designed to fit thefishing industry, small to medium ferries for transportation truecalling. It has a wireless option where people can call and movearound on board. The price of the terminal, the price of the callsis so much more competitive compared to others and it is so user-friendly it also enables you to receive fax. It has a small GMPRSservices for data connection and of course it has voice service.We have this strong belief that voice will remain the king in alltelecom industry so it also has voice service.
For the full text of the interview go towww.satellitemarkets.com/asia-pacific.com
The largest country in South America,both in terms of size an population,Brazil is a growing market for satellite
services laden with opportunities.
Brazil encompasses a territory of 8,511,965sq km with a population estimated at 191million. Brazil is characterized by large andwell-developed agricultural, mining,manufacturing, and service sectors. Brazil’seconomy is the largest among LatinAmerican countries and is expanding itspresence in world markets. Havingweathered the financial turmoil of 2001-2003,capital inflows are regaining strength andthe currency has resumed appreciating.Following his second inauguration, thecurrent President of Brazil announced apackage of further economic reforms toreduce taxes and increase investment ininfrastructure.
The Brazilian satellite market has shown asteady growth for the last two years. Atotal of 40 geostationary satellites arelicencsed to poerate in Brazil in 2008.Among then 11 satellites are controlled byBrazilian s companies (Hispamar, TelesatBrasil and Star One) and the balance of 29is distributed among the 11 major globaloperators that have a license to provideservices in Brazil. (Eutelsat, Hispasat,Intelsat, Skynet, New Skies, , SatelitesMexicanos, SES Americon and TelesatCanada).
Among the local operators Star One is thelargest fleet operator in Brazil and the onethat started providing satellite C-Bandservices in the 60’s when Star One was asatellite department of Embratel (at that timea Long Distance Carrier owned by theBrazilian Government). Today Star One is apublic company majority owned byEmbratel (with Telmex Group i the majorshareholder). During 2005 Star One becamethe Satellite Branch of Telmex Group in Latin
America. Star One now is operating 5satellites. Star One C1 and C2 Ku-Bandsatellite entered into operation duringthe first half of 2008. The others twonew satellites are in development tobe launch with in 3-4 years time frame.
Star One besides providing satellitetransponder capacity in all marketsegments and turnkey solution(Broadcast, Government, Data,Internet and Trunking) is a broadbandInternet satellite service provider. Thesatellite broadband services targetsoho, enterprise and remote residentialusers. Star One provide this serviceswith a VSAT platform supplied by Gilatin Ku-Band with several thousandunits already deployed during the last6 years.
With the operation of Star One C1 andC2 during 2008 in Ku-Band frequenciesthe market in Brazil will have morecapacity available for broadband andbroadcast segments. AdditionallyEmbratel the controller of Star One isplanning to launch during the 4Q08 a newDTH services based in the Ku-Band C-2Satellite competing with Sky Brasil andTelefonica DTH current major operators ofDTH in Brazil.
Telesat Brasil (Former Loral Skynet do Brasil)was the second local authorized satelliteoperator in Brazil and got the license for aKu-Band satellite during the year 2000.Telesat Brasil launched the satellite Estrelado Sul early 2004 and the focus of the markethas been the TV Broadcast Regionalapplication and government and enterprisemarket broadband services. With only fouryears in operation Estrela do Sul satellitehas already 90 % of the capacity of thesatellite in use. The market initially was notreacting to Ku-band because the C-Bandlong based solution in the country was
massive both in Broadcast and Governmentapplications. After Telesat Brasil startingpromoting demos in Brazil the market reactto Ku-Band favoring applications forregional broadcaster, SNG contribution andlarge broadband vsat networks. Telesat isevaluating during the second half of 2008the expansion plan for the next satellite.
Hispamar was the third local authorizedsatellite operator in Brazil and got a licensefor a C & Ku band satellite that waslaunched during 2004 named Amazonas 1.Hispamar announced that has already 90%of the capacity in use after 3.5 years afterthe satellite became operational. Hispasat– Spanish Satellite Carrier (80%) and TelemarRegional Brazilian Telco (20%), ownsHispamar. The focus of Hispamar has beenin providing capacity for all the RegionalTelcos for the universal telephone services
and backbone for the Brazilian CellularCarriers. Additionally Hispamar has beenactive in the broadcast market and is one ofthe major providers of satellite capacity fordistance learning programs via satellite andDTH application with Telefonica DTH.During 2006 Hispamar expanded thecoverage of broadband services with theirown DVB-RCS platform in the north andnortheast region ofBrazil. Hispamar isplanning to launch anew satellite calledAmazonas 2 in thesame orbital positionduring mid year of2009 with 60transponders toprovide morecapacity in themarket in both Kuand C-Bandcovering both Braziland North America.
In addition tosatellite operators,the major players ofbroadband viasatellite arepositioning in the Brazil market with localhubs. Among the major companies areHughes Network Services, Telespazio,Comsat International, Global Crossing andEmbratel that are expanding their VSATsolution base with IP solution for video, dataand VOIP communications.
Among the major users of capacity in Brazilbeside the Long Distance Carriers, TelcoRegional Carriers and Cellular Carriers andBroadcast is the Government Projects tobreak the digital divide providing InternetServices
The Brazilian Government via the Ministryof Communications just announced duringthe month of August 2008 the new contractwith the consortium coordinated byEmbratel for the expansion of the GESACprogram with more 12,000 sites. The originalproject of GESAC that is running now with3,570 sites via satellite is going to be
expanded until the end of 2009 to 20,000 siteswith the inclusion of 10,000 Public Schoolsites. The remaining 8,000 sites that will bepart of the GSAC new expansion programfor 2009 will be released during the 4Q08 fornew provider in a public bid.
GESAC – Governo Electronico deAtendimento ao Cidadao ( E-Gov program
to provide digital inclusion and services tothe citizens of Brazil) was developed during2002. The program started with the intentionto provide Internet Services for the citizento interact with the Brazil Government Websites and provide Telecenters with theintention to educate the low incomepopulation to use computer and internet.During the first phase of the program GilatBrazil won in an open bid the contract toprovide services for 2 years andimplemented 2,000 sites.
British Telecom won the contract in an openbid to implement a total of 3,570 sites withthe replacement of the original 2,000 siteswith a new vsat platform with more internetcapacity using DVB-RCS technology.During the current phase Comsatimplemented the solution with ViaSattechnology. The 2008 expansion thatEmbratel will be starting implementing inthe fourth quarter of 2008 was bid with valuelower 35% of the original budget of the
Ministry of Communication because was areverse bid and at the end of bid fight theGovernment got the best deal when the twomain competitors (Embratel and BT) decidedto fight for the project.
The current 3,570 sites are divided nowbetween Army posts (354) including armyfrontier posts, public schools (2450), and
several other governmentsocial programs and nativecommunities.
GESAC has the potential ofusing more than 10transponders consideringthe existing program with3,000 sites are utilizing 4 Ku-transponders fromAmazonas ( Hispamar andEstrela do Sul TelesatBrasil). But with thedevelopment of new VSATtechnology the number oftransponder per vsat usersis growing with moreefficient modulationtechnology.
Additionally GESAC isimplementing Telemedicine applications insome pilot sites to help isolated communitiesto be served by doctors from the main citycenters hospitals and Distance Educationprogram using Multicast technology for thetelecenters and public schools that arealready connected in the network.
The main challenge of this program is toexpand the applications in Telehealth,Telemedicine and Distance Learning. TheBrazilian Government is planning to provideall public schools in rural and remote areaswith internet access and new applicationslike VOIP, Video IP and etc.
The GESAC program is a good example forother countries of how satellitecommunications could be used efficientlyin a large or small country to bridge the digitaldivide without depending on the localtelecom and ISP providers.
By “favorite,” I mean “least favorite,” the way the Millennialgeneration calls something “bad” when they really mean“good.” My favorite recession ran from 1989 to 1991. Fairly
mild in most of the United States, it was devastating in the NewYork metropolitan area where I live. It was…well, it was sufficientlyinteresting that I don’t really want to talk about it after all.
What I do what to talk about is the telecom recession in thelast year of the 20th Century and first years of the 21st. That wasanother doozy. The dot-coms became dot-bombs, global fibercarriers went bust, Wall Street fell apart (again), and TV advertisingwent into a tailspin as the economy contracted. The drop intelevision revenue resulted in lower spending on satellitetransmission. Between that, the plummeting price of fibertransmission, and the collapse of their hot new Internet customers,the satellite communications business was in a lot of pain for afew years.
That recession is fresh in my mind as we confront this year’scredit crisis, which has alreadydriven Germany intorecession (through no fault ofits own) and may well do thesame for most of Europe andthe United States. The firstthree quarters of 2008 havebeen pretty strong for thebusiness of customizedcommunications by satelliteand fiber. But when we arefinished counting the moneyfrom the Beijing Olympics and the race for the US Presidency, wewill find out whether the chickens are really coming home to roost.
A few facts give me hope that the impact of this recessionwill be mild. WTA recently surveyed teleport operators abouttheir businesses, market priorities and competitive concerns. Oneset of numbers caught my eye. When asked to indicate wheretheir revenue came from, teleport operators told us that, on average,31% came from TV/radio contribution and distribution, 23% frommanaged network services for enterprise, government and carriers,13% from mobile telephone backhaul, and 8% from non-broadcastcontent contribution. That’s almost 70% of revenue coming fromsectors outside broadcasting. In past recessions, the industry’sdependence on the cyclical TV business meant that when
What WWhat WWhat WWhat WWhat Was Yas Yas Yas Yas Your Four Four Four Four Faaaaavvvvvorite Rorite Rorite Rorite Rorite Recession?ecession?ecession?ecession?ecession?
“...though globalization causes peoplein the industrialized nations such fear,uncertainty and doubt, it will continueto benefit our business...”
broadcast sneezed, satellite caught a cold. That remains true ofsome companies in the business today but, in general, we’re betterdiversified than we were in 1999.
There are also growth factors in the video market that werenot present at the end of the last decade. Asked to look into thefuture two years, the operators were asked which applications wouldbe most important to their businesses. HDTV distribution was #1,with 76% calling it very important or important. IPTV and InternetTV were #2, with 71% ranking it high.
In 1999, the threat of terrorism had not yet sparked enormousspending by government on security and force projection. We willprobably see that wind down over the next decade but it remains astabilizing force in the near term.
And finally, though globalization causes people in theindustrialized nations such fear, uncertainty and doubt, it willcontinue to benefit our business. It seems unlikely that the AsianTigers will run out of steam in the next few years, or that fast-moving nations like Brazil will turn back to policies that underminetheir economic strength. Mobile telephony looks set to continueits skyrocketing growth in Africa. Satellite carriers can have a toughtime making money in developing nations due to competition fromnational carriers and many governments’ heavy regulatory hand.
But a geographically diverseportfolio of business is anothersupport for the health of themarket.
So, call me Pollyanna. Call meDr. Pangloss in Candide, forwhom everything was perfect inthis best of all possible worlds.While you’re at it, call me a taxi.But this recession doesn’t feellike it’s going to be one of myfavorites.
At least not yet.
Robert Bell is Executive Director ofthe World Teleport Association,which represents the world’s mostinnovative teleport operators,carriers and technology providers in20 nations. He can be reached [email protected]
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FFFFFasasasasaster and Fter and Fter and Fter and Fter and Furururururtherthertherthertherby Howard Greenfield
Cover StoryMarket Resources
HowardGreenfield is theEditor, Europe,Middle East andAfrica of SatelliteMarkets andResearch. He is astrategist,technologydeveloper, educatorand author. He co-wrote the bookIPTV & Internet Television (FocalPress, 2007). Howard Greenfield leadsGo Associates, global consultants thathelp companies innovate and bringtechnology to market. Howard has heldsenior management and consultingpositions with Sun Microsystems,Informix Software, British Telecom andApple Computer. He was the creatorand leader of Sun’s first Media Lab aftergraduate studies at Stanford University.In addition to front-line collaborativedevelopment ventures with Xerox PARC,Ericsson and the American FilmInstitute, he has held leadership roles instart-up companies and maturecorporations, three of which weresubsequently acquired by Ariba, IBMand Microsoft. He can be reached [email protected]
New Media Minute is a syndicatedservice produced by Go Associates(www.go-associates.com) For moreinformation on how to be able to usethis service in your publication go to:wwww.go-associates.com/new-mediaminute-subscribe
14
With an estimated 400 million social network users on the Web, Internetcommunities have broken the marketing process wide open. SurfMySpace, YouTube, or Facebook and you have a sense of the power of
people connecting online triggered by a new belonging and interactivity.
Websites are increasingly making media a native part of the mix. Check outwww.buzznet.com, a social media exchange where millions of users connect theirpeers as well as musicians and trendsetters through self-created content, videos,photos and journals.
Though marketers are typically not invited into these private online mixers they needto re-tool for social media and exploit viral marketing.
As marketing author Seth Godin puts it: “A marketer does something and then aconsumer tells five or ten people.” Itkeeps repeating on like a virus and “themarketer doesn’t have to do anythingelse.”
Combine the viral word-of-mouth powerwith the community inclusion of so-cial networks and you have a greatpower. Then add media (video, audio,image) – the rock star of data types –and you have the makings of a masscultural magnet.
The Point
All these new forms of media anduser-generated content are increasingly available to consumers and not goingaway any time soon.
Consider Social media as the new way to get your message out because:
A) Viral and sight-and-sound power of networked media and social groupsis a break-away industry trend.
B) The broadband media mix is becoming embedded in people’s desktophabits.
C) Such applications will flourish in the work day and personal lifestyle in2008–2010.
Third Annual ISCe Satellite Investment Symposiumto Provide Unique Insight into the $106 Billion
Satellite MarketWith the turmoil affecting the financial markets worlwide, aconference on the financial aspect of the satellite industryis a much needed. For this purpose, industry executives,analysts and portfolio investment managers will gather inNew York City this October 14th for the 3rd annual ISCeSatellite Investment Symposium (ISIS NYC ‘08) to sharetheir insights and predictions about the financial strengthand future growth of the satellite business.
Hannover Fairs USA, Inc., organizer of ISIS NYC ‘08 andthe annual ISCe satellite conference and exhibition, willpresent an engaging one-day program withfocused sessions and top-level speakers. ISISNYC ’08 will be heldTuesday, October 14,from 8 am to 5 pm at the3 West Club (located at51st and 5th Ave., near Rockefeller Center) and will befollowed immediately by the SSPI Future Leaders Dinner.
Topics to be discussed at ISIS NYC ’08 include:
• Mobile Satellite Devices: Will Wall Street Hit Pay Dirt by 2010? • Standard vs. Hybrid Satellites: Forecasting New Apps and Economic Models • Satellites and the Analog-to-Digital Transition: Show Me the Money! • Sports and News by Satellite: The Red and Black of Content Contribution and Distribution • From Satellite Radio Merger to EchoStar- DIRECTV? The Financial Report
Speakers include:James Ratcliffe, Vice President,Lehman Brothers; Mike Cook, Sr. Vice President,Hughes Network Systems, LLC; Robert Phelan, SeniorVice President, Technology Development, SES Americom;John Mattingly, Senior Vice President, Mobile SatelliteVentures; Mark Dankberg, President & CEO, ViaSat;Craig Moffett, Managing Director, Sanford Bernstein,
New York, NY; Harry Jessell, Editor-in-Chief,TVNewsday; Tom Watts, Managing Director, Telecomand Satellite Analyst, Cowen and Company, New York ;and Hoyt Davidson, Managing Partner, Near Earth LLC,among others.
“The ISIS NYC Conference has consistently drawn aknowledgeable and motivated group of speakers andattendees,” said Art Paredes, president & CEO ofHannover Fairs USA. “The targeted session topics andkeynote speakers that Jimmy Schaeffler, ISIS NYC
conference chairman,has organized providekey players withinsight into thedirection the satelliteand greater telecomindustries will betaking over the next
year and beyond,” Paredes added.
ISIS NYC has made its mark as the industry eventfocusing on the financial foundations of the commercial/consumer satellite business. The third-annual Symposiumwill again draw company executives, industry analysts andWall Street buy-side managers together to explore insightsand predictions about the financial strength and growthdrivers of the satellite industry.
Hannover Fairs USA Inc.’s ISIS partners include theSociety of Satellite Professionals International (SSPI), theSatellite Industry Association (SIA) and The CarmelGroup.
For more information on ISIS-NYC’08visit http://www.isis-nyc.com
For sponsorship and exhibit information,contact Rick Felperin at +1-301-515-7154
Hannover Fairs USA, Inc. is the U.S. subsidiary of Hannover, Germany’s Deutsche Messe AG, one of the world’slargest and most active tradeshow organizers. Our roster of events reflects the international scope of our parentcompany’s activities and includes several leading international tradeshows rated first in their industry, including CeBIT(information and communications technology), the HANNOVER MESSE (automation and manufacturing technology,energy, power transmission), INTERSCHUTZ/INTERPOLICE (disaster relief, fire and security) and many more.HFUSA also organizes multiple events dealing with various sectors of the satellite communications industry. TheInternational Satellite & Communications exchange (ISCe) in San Diego, Calif., brings together military/government andindustry decision-makers to discuss current and future issues/requirements. In addition, the Navy SATCOM UsersWorkshop @ ISCe (San Diego, Calif.) and DoD Commercial SATCOM Users Workshop (Washington, D.C.) are a part ofthe HFUSA portfolio of satellite industry conferences and tradeshows.
The ISCe Satellite Investment Symposium (ISIS NYC) in New York City is focused on satellite finance and in fostering anannual dialog between top satellite industry CEOs and the Wall Street community.
Hannover Fairs USA, Inc., in conjunction with our tradeshow programs, cooperates with different branches of thebusiness community - from start-up ventures and private trade development organizations to experienced exportersand the U.S. Department of Commerce - to help manufacturers introduce their products, technologies and services tothe global marketplace.We also support such tradeshow programs in countries other than Germany including: CeBIT Asia (Shanghai, China:information and communications technology), WIN (Turkey’s leading industrial fair) and various industrial fairs in India.For more information, please visit www.hfusa.comSome of the industry events organized by Hannover Fairs include the following:
CeBIT Eurasia BilisimInternational Trade Fair for Information Technology, Telecommunications, Software + Services7-12 October 2008Istanbul, Turkeywww.cebitbilisim.com
ISCe Satellite Investment Symposium (ISIS NYC)One day conference, which brings together satellite industry executives and members of the Wall Street community.14 October 2008New York, New Yorkwww.isis-nyc.com
CeBIT Broadcast, Cable + SatelliteInternational Trade Fair and Conference for Broadcast, Cable & Satellite for Turkey, South East Europe and the MiddleEast20-23 November 2008Istanbul, Turkeywww.cebit-bcs.com
