- SES Americom-New Skies to be renamed
- Capacity demand remains strong
President/CEO Bednarek says there’s close attention to the new name: “Americom-New Skies is awkward and a bit of a mouthful and we are looking for something that conveys our message to the customer more clearly and simply. Having said that, both Americom and New Skies are very strong brand names with a great deal of equity in the market and they both stand for something, even though it’s quite different. For example, Americom has a 30-year history of service, reliable, in orbit excellence in the U.S. New Skies and its more recent history has been focused on breaking into new markets, putting capacity where it can challenge Intelsat competitively and so it is fair to say that it is at a different stage of its lifecycle. The challenge for us is how we might combine one name that suits both businesses. I can tell you the creative houses have come up with a lot of ideas.”
Bednarek brings us up to date with the latest plans, saying: “We like to refer to it as a combination of the two companies. We have to be careful because, for a variety of regulatory and taxation reasons, we need to keep and will maintain the two legal entities. It is not unusual when a business like ourselves has to operate in multiple jurisdictions, but as to the combination, we have made a lot of progress since we announced the news in June. We were planning for about three months ahead of [the announcement]. We now have a combined management team in place and the same on sales and the various support functions. From a top-level overview, our customers have not seen any change that causes them issues related to the combination so it really has been quite seamless from an external point of view. What we are now doing is focusing on making sure the combined systems are operating properly together with back office support and you will shortly be hearing more from us on what the theme, or plan, is as far as the entity itself is concerned going forward.”
He adds the combination of New Skies and Americom is very customer-centric. “We try very much to address what our customers need and how we deliver that service. Then, we work with customers to see what else they need and especially what their capacity requirements are in the international domain. I can say that internationally it is a very strong market today. In the U.S., the capacity need is also there, but there’s also a growing need for other services, and support services in particular, as well as just capacity. We are finished now with the combination itself, although we accept it will take another few months to make sure that everything is running like clockwork.”
It wasn’t so very long ago — but not under the present ownership — that New Skies Satellite was being directly criticized for alleged discounting and rate-cutting on transponder lease rentals. A need to establish itself during a period of industry-wide overcapacity didn’t help the company’s position. Those days are well behind it, and today the company has a very full order book and plans that extend well beyond the launch of NSS-9.
But what about the economic downturn? “I wouldn’t say we are immunized but it is fair to say that we have not seen much of the effects of the downturn. I would say in the international domain, demand remains strong, helped by our diverse set of customers around the world and, to date, none of these customers seems to be having any issues. Their core customers remain strong and it seems the need for telecom connectivity continues to grow as markets evolve and develop. And while the credit markets and so forth are challenging the world right now, you certainly do not see a cessation of economic development. India is still growing, China is still growing, Africa is seeing a huge amount of investment being made and they’re all key markets for us at New Skies.
“It is probably fair to say that in the media market we are seeing something of a slow down in new channel development. In more robust times, you would see people launching new channels with new content, aggregating content for channels, and this might be slowing. However, on the other hand, the progress into HDTV in all of our developing markets is very strong indeed and the continued roll up of HDTV in the U.S. is exciting.
“The dynamic here in the U.S. is that households have increasing access to a larger portfolio of HD channels on their multi-channel systems, whether cable or DTH. The game in the U.S. is more about market share. There isn’t a new audience but it is in driving your viewer to HDTV and away from the other operator that the thrust is. The way this is being achieved is through quality. Cable, DTH and telco operators are in a race for more quality programming. The programming line-up itself is more or less the same between the platforms so the only way an operator can differentiate his line-up from the opposition is through quality. One operator might argue that he has more HDTV, while his technology rival might argue that he has better quality HDTV.”
Asked how much difference HDTV was making around the world, Bednarek said demand was strong. “HDTV is alive and very strong in the U.S. We had a couple of folks out at the Consumer Electronics Show in Las Vegas and their message back to us is that 3D looks important and that some high-end displays have the potential to generate 3D and there seems to be a lot of consumer and broadcaster interest in 3D. From our point of view, it is perfectly understandable that they would be interested, given that it will again allow operator A to differentiate his service from operator B.
“I accept there will be a small percentage of the population for whom 3D is important at first, but I see no reason why that number shouldn’t grow over time, especially as screen costs come down in price. If the broadcasters, especially the guys covering sports, can add 3D functionality without much cost, then I can see it becoming popular. I expect progress to be made in the Pay-TV community initially and while we might ask today as to how they might monetize their services, you only have to rewind back a few years and the exact same questions were being asked regarding HDTV and look what happened in that area!”
NSS-9 is a key addition to the fleet. Built by Orbital Sciences, it will be positioned at 183 degrees East, and carries 44 active C-band transponders and features three beams that can interconnect on a transponder-by-transponder basis: A global beam providing coverage of the entire earth visible from the satellite; plus a West Hemi beam (covering Australia, Indonesia, the Philippines, Japan, China, Korea, and the Pacific Islands); and an East Hemi beam (providing coverage and connectivity to the U.S., Hawaii, and Polynesia).
Bednarek says it will be “great” to have NSS-9 on station, especially following on from the Sea Launch catastrophe and NSS-8 on January 30, 2007. “This is, essentially, the first satellite that New Skies has built and launched under SES’s ownership and will be the first addition to the New Skies fleet for some time after the unfortunate problems with NSS-8. February 12th is the launch date for NSS-9 and after its orbital check-up, it will be located over the Pacific Ocean region where our current NSS-5 is located. Once NSS-9 is on station, NSS-5 is then free to support any number of other missions.”
“NSS-5 is a very flexible craft with C- and Ku-band capacity on board. Our plans are quite flexible and our initial intent is to see it located temporarily at a couple of locations including an Indian Ocean location and will be used as a standby/back up ahead of the NSS-12 launch, in the event that we have any problem with the satellite and its target position of 57 degrees East and it can offer supplementary service to our existing satellite. Then, once we get NSS-12 launched and behind us, our baseline intention now is to make it available for the Africa/Mid-East and AOR coverage. We see a strong demand coming out of this position, and covering that region. NSS-12 is due for launch during Q3 this year and I can tell you is pretty close to already being sold out with Africa/Middle East capacity. There are some DTH clients, but it’s mostly telecom clients that have taken capacity, including government applications. VSAT is also playing a part. The DTH platforms are taking 2-3 transponders, so it’s a wonderful spread of clients,” adds Bednarek.
“The problems for any satellite operator in serving its client base through a period of economic downturn are that, despite the economic problems being global, the reality of the situation is that not all parts of the planet are in the same position. We all know that the credit crisis affects businesses in basic ways and covers their own ability to raise funds or extend their credit lines. But in some parts of the world, it is a fact that the project is not necessarily debt-financed in any way, and certainly not by Western credit markets. Some of our clients, while still being perfectly prudent, do not have to go to the market to raise money. Growth might slow down but I do not see any sign of a reversal in international satellite capacity. The growth rate may change somewhat but we all know there is no substitute for satellite capacity in some of these markets,” said Bednarek.
Also on New Skies’ launch manifest is NSS-14, one of a pair (with NSS-12) dramatically ordered with Space Systems/Loral and designed to be ‘fast tracked’ with a high commonality of parts and components. NSS-14’s mission is somewhat different to NSS-12 in that she will also carry an Ion propulsion system, and extra C and Ku-band capacity (72 Ku-band on NSS-14 compared with 48 on NSS-12). The end result of all this activity is a net gain of more than 200 transponders to the New Skies fleet — and the flexibility to start experimenting with new locations from replaced craft.
However, while this is all good news — and there’s more to come — last year there was a glitch in the expansion plans for SES Americom when it cut its IP-Prime service from the USA. “Our decision to drop the IP-Prime service reflects the challenges inherent in any IPTV rollout,” explained Bednarek. “The particular market that we were serving by satellite was known in the U.S. as ‘Tier 3 and Tier 4 operators’, the smaller telcos. IPTV in the U.S. is alive and very well indeed. AT&T and Verizon have a couple of million subs and fast expansion and are showing themselves as real competitors to DTH and cable. But these are big players with billions of dollars at stake and firmly backing their products’ rollout. What we were trying to do is to foster a service and make it easier for smaller telcos in much smaller markets. Our thoughts were that if we build the head-end and assemble the programming, it would be a major help to these smaller operators.
“It worked insofar as we won a few very nice contracts. However, the real issue was that from the time the service touched the ground to deployment to a meaningful number of homes in these smaller markets, such became a major undertaking. There were software issues, there were technical compatibility issues on the ground and in small markets trying to compete with limited funds against some very heavyweight rivals.
“Moreover, the cable incumbent or the DTH incumbent who were direct rivals had been in business for 20 or so years, with deep pockets. Life was very difficult. The telcos were coming in with their new product offering and with little or no video experience and suddenly competing with cable or satellite — this was a tough environment. Anxieties became evident as to how long it might take to build a meaningful market share to justify the continued operation of the service. It is entirely a timing question and we realized it is going to take years. My sense is that we were just a little early in the market and in tying up that much space segment for that length of time, all while we waited for the market to develop — this was a major issue for us. This is not an indictment on the IPTV sector at all, it is the speed at which IPTV will be deployed at small telcos in the US., that’s what this was all about.”
Bednarek remains optimistic about Africa in general, notwithstanding the bankruptcy of GTV (see separate story, and not a New Skies customer). “Africa is a great market across all applications. The most obvious one is in the telecom sector and all forms of telecoms applications but increasingly in broadcast and DTH. You have some legacy terrestrial broadcasters which might be state- or to a smaller extent privately owned. The bottom line is that it is much less expensive to put a digital bouquet up on satellite than to replicate a similar service terrestrially.
“The region will inevitably be geographically diverse and challenging enough in those regards and satellite more than fits the bill. I think we will see a growing uptake in satellite-based television services, which might be Pay-TV but equally could be free-to-air. It might be state transmission or it might be private transmission. It is simply the right technology for the market today. The operators do not have competition in the form of cable, and telco-based IPTV is not likely to be a strong competitor. We can ask whether services will be pan-African in nature or regional or country-specific and the answer could be all of the above.”
About the author
London-based Chris Forrester is a well-known entertainment and broadcasting journalist. He reports on all aspects of the TV industry with special emphasis on content, the business of film, television and emerging technologies. This includes interactive multi-media and the growing importance of web-streamed and digitized content over all delivery platforms including cable, satellite and digital terrestrial TV as well as cellular and 3G mobile. Chris has been investigating, researching and reporting on the so-called ‘broadband explosion’ for 25 years.