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September 2004

COVER STORY

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September 2004

CONTENTS TABLE OF

Click on the title to godirectly to the story

16/ Satellite Services to

the Fore

24/ Building EntrepreneurialEnterprises: Lessons fromAT&T and ENRON

22/ ArabSatRelaunch Imminent

3/ Note from the Editor

4/ Calendar of Events

5/ Industry News

9/ New Products and Services

11/ Executive Moves

14/ Featured Event: ISCe 2004: Going from

Strength to Strength

29/ Viewpoint: Satellite Services: From Supply

Push to Demand Pull

by Bruce Elbert

33/ Market Intelligience: Satellite Voice over IP: A

Market for New Links in Africa’s ICT Chain

(presented by the Global VSAT Forum)

36/ Stock Monitor/ Advertisers’ Index

19/ Narrowcasting:Capturing Audiencesfrom Space

FEATURES

Satellite service revenues isthe one bright spot in theindustry, having tripled since1996 . See how growth insatellite services can revive theother ailing sectors of theindusty, like manufacturingand launch services.

Dan Freyer shows how tocaptivate shoppers andemployees with satellite-delivered messages.

.

REGULAR DEPARTMENTS

By Virgil Labrador By Dan Freyer

Vol. 2 No. 5September 2004

By Chris Forrester

Middle East satelliteoperator ArabSat has madesome serious managementand structural changesahead of a relaunch of itsservices.

More than ever, sustainingsuccess in the marketplacerequires buildingentrepreneurial capabilities.Learn from the lessons ofAT&T and ENRON.

By Dr. Dean Robb

COVER STORY

REGIONALUPDATE

EXECUTIVESPOTLIGHT

31/Interview with ILC’sVice-President and COOMark Krikorian

27/PCM Thrives inHong Kong’s “Wild East”

By Chris Forrester

Atlanta, GA-based networkmanagement company ILChas been growing an averageof 40% in the last threeyears. We speak to its Vice-President and COO MarkKrikorian to uncover theirsecrets.

Satellite and broadcastservice provider PacificCentury Matrix (PCM) hasbeen overcoming some veryserious challenges in theHong Kong market.

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September 2004

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Cover Design by: Simon Payne

Published monthly bySatnews Publishers800 Siesta Way,Sonoma, CA 95476 USAPhone (707) 939-9306Fax (707) 939-9235E-mail: design@satnews.comWebsite: www.satmagazine.com

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Copyright © 2004Satnews PublishersAll rights reserved.

EDITORIALSilvano PaynePublisher

Virgil LabradorManaging Editorand Editor, North America

Chris ForresterEditor, Europe, Middle Eastand Africa

Bernardo SchneidermanEditor, Latin America

Peter I. GalaceEditor, Asia-Pacific

John Puetz, Bruce ElbertDan Freyer, Howard GreenfieldContributing Writers,The Americas

David Hartshorn, Martin JarroldContributing Writers, Europe

A Blessing or a Menace?

NOTE FROM THE EDITOR

It’s official, private investment firms have pulled off the trifecta—acquiring three of the largest satelliteoperators in the world in just the last few months.

By now everyone is familiar with the details. It allstarted with the purchase of the third largestoperator which pioneered the commercialization ofthe industry, PanAmSat, by the equity firm of

Kohlberg Kravis Roberts & Co. (KKR), The Carlyle Group andProvidence Equity Partners, Inc. last April for $4.5 Billion. That dealreceived regulatory approval and was finalized last month (afterdeducting $200 million from the price due to the Galaxy 10R failure).

This was followed by The Hague-based New Skies Satellites, theIntelsat spinoff, acquired by the Blackstone Group for almost $1Billion.

And finally the granddaddy of them all—Intelsat, was acquiredAugust 16 by Zeus Holdings Limited, a company formed by aconsortium of funds advised by Apax Partners, Apollo Management,Madison Dearborn Partners and Permira Advisers for $ 5 Billion.

Private equity firms now control all but one of the satellite operatorswith global coverage—leaving only Luxembourg-based SES Global(it is not for sale). If you count the acquisition of global maritimesatellite operator, Inmarsat at the end of last year by Apax andPermira, private investment firms have really got a corner on theglobal satellite business.

The jury is still out, however, on what effect the influx of privateequity firms will have on the industry. Initial reactions are verypositive. In a survey conducted by Futron Corp. of over 700 satelliteexecutives that attended the recent ISCe 2004, 88% said that anincrease in financial/ equity investment in the industry is a positivedevelopment.

Reactions are mixed, however, among industry watchers. Northern SkyResearch aptly headlined a recent release “Private Equity Firms:A Blessing or a Menace for the Satellite Industry?”

The New Skies and Intelsat deals are still subjected to regulatoryapproval. There are, however some telltale signs to the deals thatconsolidation is in the offing. Some analysts are pointing out thatApax and Permira figuring in both the Inmarsat and Intelsat dealsmay pose a conflict of interest.

So stay tuned. We will be following developments in this story veryclosely.

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CALENDAR OF EVENTS

September 9-14 Amsterdam, The Netherlands IBC 2004Tel. +44 (0)20 7611 7500Fax: +44 (0)20 7611 7530E-mail: registration@ibc.orgWeb: www.ibc.org

September 13-16 Houston, Texas, USA OffshoreCommunications 2004Inger Peterson Tel. +1-877-270-7102E-mail: ipeterson@offshoresource.comWeb: www.offshorecoms.com

September 14-15 (Seminar) September 14-17 (Exhibition)Tianjin, People’s Republic of China PTC Mid-Year Seminarand Exhibition 2004 Contact: Dolores FungTel.: +1.808.941.3789, ext.120Email: dolores@ptc.org Web: www.my2004.org

September 20-23 Venice Lido, Italy Broadband WorldForum EuropeTel. 1-312-559-4600 / Fax: +1-312-559-4111 E-mail: events@iec.org Web: www.iec.org/events/2004/bbwf/index.html

September 21-24 Buenos Aires, Argentina Expo Comm ArgentinaBeth Harrington Tel 301-493-5500 ext. 3312E-mail: harrington@ejkrause.com Web: www.ejkrause.com

September 28- 30 St. Pete Beach, Florida, USA SUIRGCONFERENCE 2004 Tel. and fax: +1-941-575-1277E-mail: bobames@suirg.org Web: www.suirg.org

September 30-October 2 Vicenza Fair, Italy SAT EXPO 2004Tel. +39-0444-543-133Fax: +39-0444-543-466E-mail: promospace@satexpo.it Web: www.satexpo.it/en/index.php

September 2004

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INDUSTRY NEWS

FCC OKs Sale of PanAmSat to EquityFirms; Price Cut by $200 MillionBecause of Galaxy Failure

The Federal Communi-cations Commissionhas approved the saleof PanAmSat toaffiliates of KohlbergKravis Roberts & Co.,L.P., The Carlyle Groupand Providence EquityPartners, Inc. The FCCapproval, obtained lastAugust 11, was thelast in a series ofregulatory approvalsneeded for thecompletion of thetransaction. DirecTV also said ithad cut the price onthe sale of in

PanAmSat to the three private equity firms by $200 million toapproximately $2.6 billion following the failure of a PanAmSatsatellite. The price reduction resolves the effect of the xenon ionpropulsion failure of Galaxy 10R PanAmSat satellite last August3. PanAmSat said the agreement does not affect the $23.50 pershare purchase price to be paid to the other PanAmSat share-holders.

“Now that we have received all necessary approvals, we arelooking forward to the ultimate completion of the deal nextweek,” said Joe Wright, president and CEO of PanAmSat. “Welook forward to a great future with our new owners.”

PanAmSat expects its shareholders to approve the transaction attheir annual meeting today, which will permit the parties to closethe merger with a subsidiary of the DirecTV Group on Wednes-day, August 18, and the purchase of stock from DirecTV Groupon Friday, August 20, assuming the satisfaction of other closingconditions.

“All the pieces are in place to close the transactions next week,”said Chase Carey, president and CEO of the DirecTV Group.“This transaction continues to be a good value for our share-holders and enables us to take one more step toward our goal offocusing resources and management time on our core DirecTVbusiness.”

Alexander Navab, a partner of Kohlberg Kravis Roberts & Co.L.P., said the equity sponsor partners continue to be excitedabout owning PanAmSat and that they are pleased with the rapidresolution of these issues.

Private Investors Buy Intelsatfor $5 Billion Intelsat, Ltd was sold last August 16 to a consortium of fourprivate investors for US$5 billion marking the completion of thecompany’s transformation to a private company. In a transaction unanimously approved by the company’s Boardof Directors, Intelsat signed a definitive agreement that providesfor the amalgamation under Bermuda law of Intelsat and asubsidiary of Zeus HoldingsLimited, a company formedby a consortium of privateequity groups: Apax Partners,Apollo Management,Madison Dearborn Partnersand Permira Advisers. The total value of thetransaction, includingapproximately $2 billion ofexisting debt, is approxi-mately $5 billion.Intelsat for most of its 40 years, it has been owned and governedby companies representing 145 governments around the world.It is mostly known for transmitting the world’s first satellitephone call, for carrying live international television broadcastsof the Olympics, and for transmitting the 1969 Apollo 11 moonlanding around the world.

If the deal wins regulatory and shareholder approval, Zeus willbe acquiring Intelsat, and Intelsat’s current shareholders will beentitled to receive $18.75 for each Intelsat share issued, accord-ing to an Intelsat news release. Intelsat expects to obtain allrequired approvals and closing to occur as early as the end of2004.

“This transaction comes at a time when Intelsat is successfullyexecuting on its strategies for market leadership in the fixedsatellite services sector. We believe that the acquisition ofIntelsat by this consortium of well-respected private equityinvestors represents the best opportunity for Intelsat to achieveits strategic goals,” said Intelsat, Ltd. Chief Executive OfficerConny Kullman.

The launch of DirecTV-5 on May7, 2002 aboard a Proton rocket.(ILS photo)

Intelsat Global ServiceCorp. Headquarters inWashington, DC

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INDUSTRY NEWS

Report Says Customer SatisfactionAmong Satellite SubscribersContinues to Top Cable

Overall customersatisfaction amongsatellite TV servicesubscribers outpaces thatof cable customers, assatellite penetrationcontinues to grow,according to the J.D.Power and Associates2004 Residential Cable/Satellite TV CustomerSatisfaction Study

released last month. Although cable subscriptions still dominate the industry, satellitemarket penetration continues a steady eight-year climb, withnearly one in four households now subscribing to satellite payTV. The study is based on responses from 8,668 U.S. householdswho evaluated their satellite or cable TV providers. Satellite received an overall customer satisfaction index score of723 (on a 1,000-point scale), compared to 659 for digital cable and621 for analog cable, with strong performance across all mea-sures of customer satisfaction. Despite this outcome, cablenarrowed the gap in overall satisfaction versus satellite, improv-ing at nearly twice the rate of satellite (3.1% vs. 1.6%). Both satellite providers included in the study received the twohighest customer satisfaction rankings among the 13 largestproviders of cable/satellite TV service. Dish Network regained itshighest ranking from 2000, receiving top ratings from customersin three of the six factors that drive overall satisfaction: billing,cost of service, and offerings and promotions.

EchoStar Adds 340,000 NewSubscribers; Decreases Net Incom$ 85 Million in 2nd Quarter

EchoStar Communications Corp. added 340,000 new subscribers for the quarter, increasing the company’s DishNetwork satellite television subscribers to 10.125 million as ofJune 30, 2004.

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INDUSTRY NEWS

In a statement, EchoStar said ithad total revenue of $1.78 billion forthe quarter ended June 30, 2004, a 26percent increase, compared to $1.41billion for the corresponding period in2003. It said net income totaled $85million for the quarter compared to netincome of $129 million during thecorresponding period in 2003. Basic

earnings per share was $0.18 for the quarter, compared to basicearnings per share of $0.27 last year. EchoStar also announced that its board of directors has autho-rized the repurchase of an aggregate of up to an additional $1billion of EchoStar’s Class A Common Stock.

XM Reports a Wider Loss But Adds418,449 Subs In Quarter XM Satellite Radio Holdings Inc. (NASDAQ:XMSR) has posteda wider net loss of $166.1 million for the second quarter com-pared to $161.9 million loss in the second quarter of last year. ButXM redeemed itself by reporting 2,100,352 subscribers, or anaddition of 418,449 for the quarter, more than double net sub-scriber additions of 209,178 subscribers in second quarter 2003. For second quarter 2004, XM reported quarterly revenue of $53.0million, nearly tripling the $18.3 million reported in the secondquarter 2003. Revenue for the second quarter 2004 also repre-sented a 23 percent increase compared to revenue of $43.0million reported in the first quarter 2004. XM reported an EBITDA loss of ($107.8) million for the secondquarter 2004, compared to ($95.8) million for the second quarter2003. On a per share basis, however, losses narrowed to 84 centsfrom $1.38. Because of the subscriber growth, XM increased its revenue andsubscriber forecast for the full year to $220 million and 3.1million, respectively. The company had previously forecast 2.8million subscribers by the end of the year. “With our programming, marketing and new product initiatives,we feel confident increasing our year-end 2004 subscriberguidance to 3.1 million,” said Hugh Panero, XM CEO andPresident.

The Proton launch vehicle roared from pad 39 at the BaikonurCosmodrome at 4:32 a.m. on August 5 (6:32 p.m. EDT, Aug. 4)carrying the Amazonas satellite for customers Hispasat andHispamar and manufacturer EADS Astrium. The rocket’s BreezeM upper stage placed the satellite into a transfer orbit 9 hoursand 11 minutes later.

The launch vehicle was built by Khrunichev State Research andProduction Space Center of Moscow, a partner in the ILS jointventure along with Lockheed Martin Corp. [NYSE:LMT]. Thiswas the third Proton launch of the year for ILS, and the seventhmission overall for the company in 2004.With 51 transponders, Amazonas satellite will provide a fullrange of telecommunications services to Brazil, North and SouthAmerica, and a transatlantic link for Europe. The Amazonas Latin American satellite will operate in geosta-tionary orbit, at the 61°W orbital position over the Amazonbasin, and will provide both fixed and broadcast communicationsservices through 32 simultaneous operational transponders inKu-band and 19 simultaneous operational transponders in C-band, over a 17.5-year mission lifetime. The services offered willinclude TV broadcasting, business services including VSAT anddata broadcasting.

Amazonas is the third Eurostar E3000 to be shipped to thelaunch pad in only four months. It fulfills Hispasat and Hispamartime to market expectations for Latin America.

Antoine Bouvier, CEO of EADS Astrium said Hispasat is a longstanding and important customer to EADS Astrium. “We havebuilt their first-generation satellites, an important milestone in thedevelopment of our Eurostar product line on the world market.Now we deliver their most powerful satellite on schedule to meettheir needs and support their expansion in Brazil and LatinAmerican market.”

ILS Proton Successfully LaunchesAmazonas Satellite

Northrop Grumman Awarded $1.04Billion For X-47B Unmanned CombatAir Systems Program

Northrop Grumman Corp. (NYSE: NOC) has been awarded acontract from the Defense Advanced Research Projects Agency(DARPA) to continue work on the X-47B portion of the JointUnmanned Combat Air Systems (J-UCAS) demonstrationprogram. Valued at up to $1.04 billion over five years for the

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INDUSTRY NEWS

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program’s operational assessment phase, the award includesinitial funding of $30 million.

The J-UCAS program is an effort by DARPA, the U.S. Air Forceand U.S. Navy to demonstrate the technical feasibility, militaryutility and operational value of networked, unmanned, air-combatsystems to suppress enemy air defenses, perform electronicattack, conduct intelligence, surveillance and reconnaissancemissions, and perform precision strike attacks. In this phase, Northrop Grumman will produce and flight-testthree X-47B unmanned demonstration vehicles with associatedmission-control stations and logistical support elements. Flightdemonstrations are expected to begin in 2007.

Northrop Grumman’s Integrated Systems sector leads a J-UCASteam that includes Lockheed Martin Corp., and Pratt & Whitney.Work will be performed at facilities in El Segundo, Palmdale andSan Diego, Calif., and East Hartford, Conn.

The three objectives of the J-UCAS operational assessmentprogram are to demonstrate the technical feasibility of develop-ing a family of network-centric J-UCAS systems — managed bya common operating system — for operation from land or anaircraft carrier; to assess the joint operational utility of the J-UCAS concept in the mission areas of suppressing enemy airdefenses, strike, electronic attack and penetrating surveillanceand reconnaissance; and to develop production system con-cepts for the Navy and Air Force.

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EXECUTIVE MOVES

Ball Aerospace & Technologies Corp.has named William F. Townsend as vicepresident and general manager of civilspace systems. Townsend is expectedto guide the company’s NASA andNOAA programs to successful delivery.Ball Aerospace currently has manymissions in various stages ofcompletion including Deep Impact,Cloudsat, CALIPSO, HiRISE, Kepler andthe optical subsystem for the JamesWebb Space Telescope.

David L. Taylor, president and CEO ofBall Aerospace & Technologies Corp.,said Townsend’s proven track record atsuccessfully executing complexprograms strengthens Ball Aerospace’sability to deliver outstanding spacesystems to our customers. “He will workto ensure that the spacecraft andinstruments we deliver to NASA andNOAA meet mission cost, schedule andquality requirements,” Taylor added.

Prior to joining Ball Aerospace,Townsend had a distinguished 40-yearcareer with NASA, most recently atGoddard Space Flight Center. AtGoddard, he shared responsibility forexecutive leadership and management ofthe Center and all its programs asDeputy Director. Prior to that position,Townsend served as Deputy AssociateAdministrator (Programs) for theNASA’s Office of Earth Science, wherehe directed earth science flightprograms. He was also acting AssociateAdministrator for the Earth ScienceEnterprise. He was responsible fornumerous successful programs duringhis NASA career, including the SeaSatRadar Altimeter and TOPEX/Poseidonmissions. In total, Townsend has beenassociated with 59 missions.

Ball Aerospace SelectsBill Townsend to LeadCivil Space Systems

Townsend’s accomplishments have beenrecognized with numerous awardsincluding the NASA Distinguished ServiceMedal, the Presidential Rank Award ofMeritorious Executive, the NASAExceptional Service Medal and the FrenchSpace Agency’s Bronze Medal. Townsendholds an electrical engineering degree withhonors from Virginia Polytechnic Institute.

Patrick K. Brant NamedPresident of Loral Skynet

Loral Space &Communicationsnamed Patrick K. Brant aspresident of subsidiaryLoral Skynetsucceeding Terry Hart.Brant, 53, takes thehelm at Loral Skynet asLoral prepares to file aplan of reorganization

that should allow it to emerge frombankruptcy before the end of the year. Loral Skynet owns and operates a fleet offour telecommunications satellites that, incombination with its established hybridVSAT/fiber global network infrastructure,provides secure, high-quality videobroadcasting, broadband datatransmission, Internet services and othervalue-added communications services tocommercial and government customers.

Brant served as an executive at LoralCyberstar from 1999 to 2003, ultimately asits president and CEO. He was a leadingparticipant in Cyberstar’s integration intoLoral Skynet in 2003. His strong sales,marketing and business developmentbackground includes senior managementpositions at satellite companies, includingOrbital Communications and AmericanMobile Satellite Corporation. He holds aBachelor of Science degree in Economicsfrom the University of Maryland.

PanAmSat PromotesMike Antonovich toExecutive VP of GlobalSales & Marketing

PanAmSat Corp. has promotedMike Antonovich to executivevice president of global sales andmarketing. In this role, Antonovich isexpected to aggressively lead thecompany’s global sales and marketingprogram which includes: programdistribution, broadcast contribution,telecommunications and networkingservices. “Over the past 15 years, Mike’s insightand expertise in the broadcast andsatellite industries have been critical inthe development of PanAmSat’s customerportfolio and service offerings. He hasbeen a key force in shaping the directionof the organization and helping it becomeone of the world’s leading satelliteoperators,” said PanAmSat CEO JimFrownfelter. Since joining PanAmSat in 1989 as amanager of broadcast services,Antonovich has served in a wide varietyof senior leadership positions including inNorth American sales, Pacific OceanRegion sales, global sales and mostrecently, assumed the responsibility ofleading the Company’s marketinginitiatives worldwide, serving as seniorvice president of global sales andmarketing.

Mike Antonovich

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Prior to his tenure with PanAmSat,Antonovich worked for Group W SatelliteCommunications and the ESPN sportsnetwork in a variety of production, post-production and operations positions. Hisexperience in the broadcast and satelliteindustries spans over 25 years.

Peter Chernin SignsNew Five-YearEmployment Pact

Simpsons, In Living Color and BeverlyHills 90210. From 1992 to 1996, he servedas Chief Executive Officer of Fox FilmedEntertainment, and oversaw suchblockbusters as Speed, IndependenceDay and Titanic.

Stratos Appoints RichHarris as Senior VicePresident and ChiefLegal Officer Stratos Global Corp. has appointed Rich Harris as Senior VicePresident and Chief Legal Officer,effective August 9, 2004. He will report toPresident and CEO, Jim Parm, and willoversee all corporate legal activities,including the provision of legal guidanceto Stratos’ senior management and staff,and participating in critical commercial,regulatory and acquisition activities.

A graduate of the University ofPennsylvania and Yale Law School, Harriscomes to Stratos from Worldwide RetailExchange, a joint business-to-businessventure where he served as GeneralCounsel. He also has an extensivebackground in international satellitecommunications gained with ComsatInternational, in Maryland, and KokuaCommunications, in London. “Rich’s familiarity with the satelliteindustry, including experience withinternational mergers and acquisitionsand legal negotiations involving majorsatellite operators and providers, as wellas his background in internationalregulatory and licensing issues, is exactlywhat we were looking for to fill thisimportant position as part of Stratos’senior management team,” Jim Parm,Stratos’ president and CEO said. Harris will be based in Stratos’ corporateheadquarters in Bethesda, MD.

EXECUTIVE MOVES

News Corp. has signed a new, five-yearemployment pact with Peter Chernin, thecompany’s President and Chief OperatingOfficer, since 1996.

Rupert Murdoch, Chairman and CEO saiddescribed Peter as a close and trustedcolleague for more than a decade addinghe is delighted that News Corp. willcontinue to have the benefit of hisdynamic qualities for many years to come.“He has done a superb job growing andoperating our core entertainmentbusinesses in an increasingly challengingglobal marketplace. Peter is respectedthroughout our company and the industryfor his intelligence, drive and leadership,”he said. Chernin joined News Corp. in 1989 andhas been President and COO for the pasteight years. He joined the company asPresident of Entertainment of the FoxBroadcasting Company, a position heheld for three years. Under his leadershipthe network launched such hits as The

Lockheed Martin BoardElects Robert J. Stevensas President and CEO

The LockheedMartin [NYSE:LMT] board ofdirectors haselected RobertJ. Stevens asPresident andCEO last weekreplacingVanceCoffman’s whoretired after 37years with thecompany,including

seven years as CEO. Coffman will serveas the board of director’s non-employeeChairman until April 2005. Stevensassumes his new duties as CEO whileretaining his position as President.

Stevens has held a variety of increasinglyresponsible executive positions includingCOO, CFO, and head of Strategic Plan-ning through a career that has includedexperience in program management,finance, manufacturing, and operations.

Stevens is a Fellow of the AmericanAstronautical Society, and an AssociateFellow of the American Institute ofAeronautics and Astronautics. He serveson the International Advisory Board ofthe British-American Business Council,and on the Executive Committee of theAerospace Industries Association. He is amember of the Council on ForeignRelations, and is Presiding Director of theMonsanto Company. During 2001 and2002, Mr. Stevens also served on Presi-dent Bush’s Commission to Examine theFuture of the United States AerospaceIndustry.

Robert J. Stevens,Lockheed MartinPresident and CEO

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NEW PRODUCTS

ILC to Demonstrate MaxView forBroadcast™ solutions at IBC

Network control software developer ILC will be demonstrating itsMaxView for Broadcast™ solutions at IBC 2004 stand 1.441.ILCwill be showing broadcasters how they can control the entirebroadcast facility, from station to uplink to transmitter site, withone system. MaxView for Broadcast™ solutions manageingest, studio, playout, transmitter, satellite and IT infrastruc-ture and environmentals to provide advanced control capabilitiessuch as scheduling, service auto-recovery, carrier monitoring,diversity site switching, transmitter remote control and troubleticketing. “At IBC, we will challenge conventional thinking by explaining tobroadcasters how they can integrate operations that they havetypically viewed as separate. MaxView for Broadcast™ solu-tions eliminate the common scenario in which each segment ofthe broadcast chain requires an additional software product,

This year’s IBC2004 exhibition to be held in Amsterdam from September 10-14 will, as in previous years, showcase the latest products and services for

the broadcasting and allied industries. Here are some of them:

training and maintenance ex-pense,” says ILC President andCEO Richard Graham. “MaxView is uniquely suited tothe trend of NOC (networkoperations center) consolidationand centralized control that manybroadcast facilities are undergo-ing, because it manages anyequipment type, regardless ofbrand or protocol,” explains ILCSenior Vice President MarkKrikorian. “For example, MaxVieweliminates the inefficient practiceof consulting separate manage-ment systems when service goesdown, instead helping operationsstaff to quickly isolate the causeof an outage and automaticallyrestore service.” MaxView for Broadcasterssolutions – including 2004 new

releases MaxView CMS™ carrier monitoring system andMaxView Chorus™ trouble ticketing system — will be ondisplay at ILC stand 1.441, where visitors can learn more aboutthis suite of graphical tools that enables point-and-click opera-tions, drag-and-drop user screen and automation scenariocreation, and rapid system expansion without programming.

Inmedia to Launch New RemotePlayout & Distribution Solution

Inmedia will launch its new Remote Playout & Distributionsolution at IBC 2004. This new service uses Inmedia developedtechnology to dramatically reduce playout and distribution costsand is particularly aimed at channels that want to distributeregionally tailored content. By making it cheaper and easier forthe channel owner to extend their services, this innovativesolution will ensure that Inmedia keeps its position as the UK’smost successful independent playout provider – with over 35channels and counting.

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NEW PRODUCTS

Targeted Television...

Inmedia’s Remote Playout and Distribution service opens upnew markets around the world. In one operation you can selectyour content, choose the appropriate audio track, add the correctsubtitles, upload, and schedule the remote playout of multipleTV channels almost anywhere. The efficiency savings andreduction in access costs to remote markets are dramatic.Starting from a centrally held pool of digital assets, programmingfor each remote TV channel is created and scheduled directlyfrom your desktop. Content is delivered in non-real time viasatellite multicast or the Internet to remote playout servers foronward local distribution to your precisely targeted audience. Soif you only have the rights to programming in certain regions,you can run schedules containing only the content you havepurchased.Inmedia’s Sales Director for Broadcast Services, Matthew Ivey,says: “The Remote Playout and Distribution service is a primeexample of Inmedia’s continuing drive to make running a TVchannel more affordable. This innovative new application willallow operators to target new customers in new markets and hashuge potential to get new TV channels onto platforms thatwould until now have been too expensive to access. Ourcalculations show that after a low start up cost, our remote

service makes it possible for a content owner to add an addi-tional TV territory for as little as £30K per annum, ideal if youwant to target ex-pats in the Algarve or Japanese businessmen inLondon.”Each Remote Playout & Distribution device can select thecorrect audio channels for the targeted audience, run individualschedules, insert audience specific subtitles and insert a graphicto help identify the channel. The Remote Playout and Distribu-tion device is located at a cable or satellite head-end.

TANDBERG Television Will LaunchFlexible, Open Cable VoD Platform

IBC 2004 will see the public debut of TANDBERG Television’sopen Video on Demand (VoD) platform. The platform has beendesigned to provide European cable operators with the freedomto choose best of breed technologies and to avoid proprietaryarchitectures with all the associated downsides of vendor lock-in, non-competitive pricing schedules and higher support costs.By combining zero compromise solutions from leading equip-ment vendors, cable companies can benefit from demonstrablylower cost of entry into the VoD space and reduced operationalexpenditure, as well as create a dynamic on demand environmentto support future growth and meet changing consumer needs.

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NEW PRODUCTS

At TANDBERG Television’s IBC stand (Hall 1:461) visitors willbe able to see the on demand content platform in operation,including live demos of the OpenStream™ digital servicesplatform from N2 Broadband. As an open, standards-basedsystem, OpenStream allows cable operators to easily deploy ondemand services using VoD servers, applications, billingsystems, and other system components of their choice.TANDBERG Television recently signed an exclusive agreementto market OpenStream throughout EMEA, as well as to work withN2 Broadband to provide Euro-centric solutions for the contenton demand marketplace.“In a financial environment of increasing constraints on capital,it is imperative that new technologies are available at the lowestpossible total cost of ownership. That is why we have developedour VoD platform to utilise open architectures, without sacrificingperformance, security, privacy, or freedom of choice,” says EricCooney, CEO of TANDBERG Television. “N2 Broadband’sOpenStream platform is the only standards based, completelyopen architecture solution for Video on Demand back officemanagement. Its open approach compliments our own commit-ment to non-proprietary architectures and combined withEntone’s VOD servers, we are providing the optimal solution forflexible, low-cost VOD deployment.”TANDBERG Television has worked with N2 Broadband tomodify OpenStream for the European market, including consider-ation for core network differences, multilingual support andconditional access, as well as geographical and cultural differ-

ences. TANDBERG Television’s position as the market-leadingcable head-end provider in Europe means the company bringsconsiderable in-depth experience of many of the practicalsolutions that have allowed Europe’s major cable companiessuch as Auna, KDG, and Telenet to deliver class-leading servicesin a highly competitive market.“As European cable operators start to roll-out VoD services, theyare in a position to benefit from the lessons learned in the USand to avoid the pitfalls of proprietary technology. By workingwith Europe’s leading cable technology provider, TANDBERGTelevision, we can rapidly extend the benefits of open systemsto the European market,” says Reggie Bradford, president andchief executive officer of N2 Broadband.

ND SATCOM Launchesnew SkyRAY Compact

ND Satcom is launching a new generation of aerodynamic SNGantenna solutions at IBC, stand 1.359. Fixed on the standard roofmounts of the vehicle the compact Jet Box like casing houses a1,5m high performance SNG antenna. Further more the system isdesigned to accommodate the state-of-the-art ND SatCom highpower 400W TWT amplifier or a redundant SSPA configuration.With this approach expensive modifications of the vehicle’s roofare no longer needed and in case of a vehicle’s breakdown, thesystem can be moved to another vehicle within a short period of

time and thereforeavoid long servicedowntimes.The design of thecarbon fibre casing,which acts as anintegral environmentalprotection duringtravel, has a heightabove roof of only55cm.The new SkyRAYCompact combinesthe need for apowerful uplink withthe smart dimensionsof a roof top box.

SM

ND SATCOM’s newSkyRAY Compact

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September 2004

FEATURED EVENT

ISCe 2004:Going from Strength to Strength

O nly on its third year, the ISCe 2004 Conference and Expo held in Long

Beach, California last June 1-3 was aresounding success. The event wasattended by over 1,000 participantsrepresenting a cross-section of thesatellite industry worldwide.

“We are very pleased with the progresswe have made and the quality of theevent," said the conference chairman, ArtParedes of Hannover Fairs, USA, theprincipal organizer of ISCe. “ISCeprovides an ideal venue to meet seniorexecutives in an intimate setting todiscuss business opportunities andnetworking," he added.

The three-day event had a conferenceand exhibition component organizedaround several fora such as Defense andSecurity, Global Navigation, Next-Generation Capabilities, US-AsiaBusiness, Satellite Entertainment/DBSand many others.

The event also included an industryleaders’ roundtable discussion featuringthe CEOs of SES Americom, ViaSat,Inmarsat, Iridium, and senior representativesfrom Thuraya and Loral discussing trendsin the industry and affirmed that the militaryuse of satellites will continue to grow in thefuture.

On the issue of whether recentdeployments of military satellites by thegovernment would reduce reliance on thecommercial satellites sector for services,the executives agreed that this would havelittle or no impact and in fact militarydemand for commercial satellite serviceswould continued to grow significantly.

With VSAT leader Hughes NetworkSystems up for sale, there was somediscussion of the future directions of theVSAT Market.

According to Dean Olmstead of SES,“The value proposition has to shift fromhardware to services.” He noted that SES

ISCe 2004 attracted a veryhigh quality of senior levelparticipants including thesepanelists in the CEORoundtable. Seated from leftto right, Dean Olmstead ofSES Americom, MarkDankberg of ViaSat,Michael Butler of Inmarsat,Carmen Lloyd of Iridium,Saeed Al Hamli of Thurayaand Arnold Friedman ofSpace Systems Loral.Standing, on the podium isthe moderator, WarrenFerster of Space News.

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September 2004

FEATURED EVENT

has pushed for and supported openstandards development, like DVB-RCS sothat hardware prices go down,interoperability goes up and consumerprice points move forward.

DVB-RCS is a standard for the physicalcommunications link layer, which usesDVB for the outbound carrier andmulticarrier TDMA as the inbound.

VSAT manufacturer ViaSat’s CEO, MarkDankberg, said “manufacturers will followcustomer demands” and added “Allsatellite operators are saying we want andopen standard for VSAT”

Olmstead offered a suggestion “that themilitary could, as a large buyer, forceVSAT manufacturers to become standardscompliant and interoperable in itsprocurement”

Dankberg agreed, and said “The biggestissue is open standards for encryptionsystems for the US military use of VSATsfor broadband communications.”

Satnews Managing editor, Virgil Labradorchaired a session on “Earthquakes, Firesand Floods: Satellites to the Rescue”focussing on the role of satellitetechnology in natural disasters. Thepanelists included Tom Bleier ofQuakefinder, Steve Vaughn of theCalifornia Department of Forestry and FireProtection, Rob Knabe of Brookstone

Equipment, and David Gray of LymanBrothers.

What’s in Store for 2005Organizers announced that the next ISCewill be held May 31-June 2, 2005 at theHyatt Regency Long Beach Hotel.Paredes said that they are paying closeattention to participants' feedback andwill make exciting changes in theprogram designed to increaseparticipants’ return on their investmentand provide additionalopportunities to developcommercial and governmentincluding military businessat the show.

Hannover Fairs alsoannounced that The CarmelGroup’s highly popularSatellite Entertainment andDBS conference “The FiveBurning Questions” will beheld concurrently for thefirst time at ISCe 2005.

There will also be newGovermental and DOD-Satellite RequirementsForum at ISCe 2005 aimed atleveraging near- and long-term business opportunitiesin the government andmilitary sectors, accordingto Paredes.

The ”Satellites andNatural Disasters” panelat ISCe featured from left,Steve Vaughn--California Department ofForestry and FireProtection, VirgilLabrador-SatMagazine,Tom Bleier--Quakefinder,David Gray--Lyman Bros.and Rob Knabe--BrookstoneEquipment.

Joachim Schafer, President of HannoverFairs USA, Inc.,, said “Hannover Fairs willcontinue in its efforts to support thesuccess of the satellite industry throughevents such as ISCe, which offers aunique forum for a productive informationexchange among key industrystakeholders, vendors and users alike.”

Sounds like a great plan. See you all atISCe 2005! SM

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September 2004

COVER STORY

The satellite industry may have reason to be more optimistic.At the recently-concluded ISCe 2004 show in Long Beach,

California, the Satellite Industry Association (SIA) released it’sannual “State of the Satellite Industry” report and the findingswere indeed very encouraging.

The study was conducted for the SIA by Futron Corporationwith the cooperation of the Global VSAT Forum (GVF) and theSatellite Broadcasting and Communications Association (SBCA).

For the eight year in a row since 1996, when the SIA and Futronbegan tracking the industry, world satellite revenues haveincreased every year at an average rate of 13 percent. In 2003,the world satellite industry grew a modest six percent (thehighest growth experienced was30% in 1997).

The most significant finding of the study, however, was thatrevenues from satellite services have continued to grow—increasing from 42% of total revenues in 1996 to over 60% in2003. This means that satellite services comprised the largestrevenue stream for the industry as a whole. In fact, the satelliteservices sector has more than tripled in size from 1996 to 2003.

There are some bad news, of course. Satellite manufacturing andlaunch segments continue to suffer huge losses and theprospect of recovery are dim for the near-term. But for anindustry plagued with overcapacity and falling transponderrates, the news that satellite services sector is growing is a

welcome relief. Transponder leasing after posting losses for twoconsecutive years, finally experience a turnaround in 2003,gaining a modest seven percent increase.

According to the study, Direct-to-Home (DTH) services aredriving the overall growth of the services sector. Satellite Radio,on the other hand, experienced a 400% revenue growth in 2003(although this still accounts for less than one percent of overallsatellite revenues).

By Virgil Labrador

Source: State of the Satellite Industry 2003, SIA/Futron.

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September 2004

COVER STORY

markets, standard definition digital channel and feed growth willcontinue to be the main demand driver for new capacity leases.The global number of standard definition digital channels andfeeds broadcast is anticipated to increase to over 17,500 in 2009,up from about 10,500 in 2003, according to the study.

So the signs are certainly pointing to the right direction. As thenewly- appointed executive director of the SIA David Cavossa

Source: State of the Satellite Industry 2003, SIA/Futron.

Participants of the recently-concluded ISCe 2004 expo sharedthe optimism about the future growth of the satellite industryin general and the services sector in particular. . In a trendssurvey conducted by Futron Corporation and ISCe organizer,Hannover Fairs USA, Inc. during the show, Sixty-ninepercent (69%) of respondents anticipate the strongestrevenue growth in satellite services, followed by groundequipment manufacturing (17%) and satellite manufacturing(10% of respondents).

The survey, in which 63% of ISCe delegates participated,revealed that he greatest revenue growth in satellite servicesis expected from broadband (39% of respondents), followedby direct-to-home television (22%), satellite radio (20%) andmobile (15%). Growth in VSAT networks and applications isseen as a primary growth area by 5% of survey respondents.

Driving the growth of the services sector is increasedgovernment and military spending. This trend is expected tocontinue for the next 3-5 years.

But the growth in services is coming from various sectors. Arecent report by the Communications Center revealed that useof occasional video services in North America grew by 51% inthe second quarter of 2004. Occasional use of transpondersare primarily used for satellite newsgathering,teleconferencing, sports and distance education. The reportalso said that while an oversupply of transponders still existsin North America, the inventory of unused or inactive C-bandtransponders decreased in the same quarter from 132 to 115,and unused or inactive Ku-band supply declined from 113 to86.

According to Northern Sky Research’ study GlobalAssessment of Satellite Demand, within the video services

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September 2004

COVER STORY

SM

said “the strong growth in consumer satellite service revenuesoffset losses in other sectors hindered by overcapacity.”

Capitalizing on the increasing consumer demand for satelliteservices, the Hong Kong-based operator, Asia SatelliteTelecommunications Holdings (AsiaSat) is reported to be planningit’s own DTH pay-TV service for the Hong Kong, Taiwan andMacau market. The move into DTH is aimed at boosting itstransponder utilization rate—which varies from 41% for itsAsiaSat 2 satellite, 74 percent for its AsiaSat 3S satellite and only18 percent for its newest satellite, AsiaSat 4. The DTH service isexpected to be launched by the end of the year.

The choice of Asia is obvious. Asia is experiencing phenomenalgrowth in consumer satellite services. The Cable and SatelliteBroadcasting Association of Asia (CASBAA) estimates that thereare currently 190 million multichannel households (defined asthose that receive satellite or cable services) in Asia.

The encouraging growth figures in satellite services from 2003seem to be continuing into 2004. If this holds up in the next fewyears, the industry will be on the full road to recovery.

As David Hartshorn, secretary general of the GVF, whichparticipated in the SIA/Futron study said: “while the satelliteindustry is still fighting it’s way out of the telecom downturn,companies from every major region and across each sector—are

Virgil Labrador is the Managing Editor ofSatMagazine and Editor of the Daily andWeekly editions of Satnews. He has workedfor the last 16 years in various capacities in the satelliteindustry, most recently as marketing director ofa full-serviceteleport in Singapore then owned by the US broadcastingcompany, CBS. He can be reached at virgil@satnews.com

reporting to us that business is improving…we project acontinuation of this promising trend.”

The growth in the satellite services and the ground equipmentsectors offset the losses in the satellite manufacturing andlaunch sectors, thus enabling the whole industry to post amodest growth rate in 2003. If this trend continues, eventuallythe increase in satellite services will lead to a revival of theailing manufacturing and launch sectors. It follows that themore transponders are utilized, the more satellites will need tobe ordered and launched.

And that’s good for the entire industry.

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September 2004

Narrowcasting: CapturingAudiences from space

FEATURES

CAPTIVATING SHOPPERS ANDEMPLOYEES WITH MESSAGESFROM OUTER SPACE

Even if it does take your content toouter space, as a “one-to-many”

medium, satellite is the best technologyavailable today for the simultaneousbroadcast distribution of TV and broad-band content to large numbers of loca-tions, be they corporate sites or stores.File-based IP delivery of content oversatellite enables a whole new range ofadvanced broadcast and multicastsolutions to global corporate and retailcommunications challenges, thanks to theprotocol’s video file store-and-forwardapplications.

BUSINESS TV – MEET ATYOUR DESKTOP

Traditional satellite-based businesstelevision (BTV) networks are migratingfrom proprietary or MPEG video transmis-sion to IP to enable desktop viewing,which extends the network to more endusers and creates new possibilities toview content live or on-demand. Anexample: thanks to a satellite IP-to-thedesktop solution from leading satelliteservice provider GlobeCast, more employ-ees of Square D, a unit of global electricalsupply manufacturer Schneider Electron-ics are plugged in to their company. Byupgrading Square D’s Business Televi-sion network to an IP-based platform,GlobeCast is helping Square D takecorporate training and communicationsbeyond conference rooms to individualworkers’ desktops.

As a result, more employees thanever before can catch or cache live video

Workflow of Captive Audience Retail Trial in UK

streams of important internal broadcasts.Square D’s employees, spread across 117sites around the US, will be able to easilyrecord and replay missed broadcastsbecause GlobeCast’s solution includes asophisticated video library cataloguingsystem to manage the storage and file-based transfer of video programs toemployee rooms and desktops. Square Dentrusted GlobeCast — its existingnetwork provider — with the job ofsupplying a complete network upgrade toIP. As is typical in the case of Enterprisecustomers, SquareD required everythingfrom site surveys, to hardware purchaseand site installation, to ongoing networkmonitoring and maintenance, nationwide

field support, and broadcast eventmanagement support including a help-desk.

CUSTOMIZING VIDEO NET-WORKS WITH IP TECHNOL-OGY

Companies have mainly usedbusiness television for internal trainingand marketing (new product launches,company announcements, etc.). But withthe advantages that IP technology brings,a broader range of enterprise applicationsare gaining a foothold — new serviceswhich are fully integrated in companyproduction, and marketing processes. For

By Dan Freyer

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September 2004

FEATURES

instance, IP file-based ad-insertion allowsretailers to create highly targeted CaptiveAudience Networks (CANs) throughdigital signage displays.

CAPTIVE AUDIENCE NET-WORKS

The U.S. retail industry spends over$5 billion annually on printed promotionalsignage and graphics alone according toCAP Ventures’ Norman McLeod, whosays “digital delivery of visual contentthrough a network of displays in an out-of-home setting that is centrally managedand controlled,” is the newest advertisingchannel. Springing up at shoppingmalls, airport lounges and retail outletsworldwide, Captive Audience Networksare set for huge growth according toindustry observers. Advertisers usescreen media delivered via satellite totarget consumers at the point of sale, thusproviding retailers an effective tool toincrease turnover and generate revenuethrough media sales.

What’s the case for CANs? Market-ers can create greater message impact byusing full-motion, full-color video andadding sound, and marketers can changevisual messaging faster, more easily, andless expensively compared with replacingprinted signage. What’s more, marketerscan change the message based on time ofday, day of week — even the weather, andprovide regional, local, and even site-specific versioning efficiently andinexpensively. The lead-time to launchnew in store promo campaigns can beslashed compared to physical delivery ofsigns or tapes.

In fact, a recent field study in the UKsponsored by GlobeCast and conductedby the media strategy firm How and Whyfound that shoppers responded toshopping area video screens programmedvia a satellite CAN and spent more as aresult. The study estimated that 1.5% liftin sales was generated as a result ofperceived improvements to the retailenvironment. That impact is significant inretail. It translates for large a UK shop-ping centre to an investment of around

£12 million in extra spaceor refurbishments inorder to achieve the samesales volume. GlobeCastprovided the technologyand transmissioncomponents for thestudy, including itscontent management andfile delivery systemcontrolled by a web-based network manage-ment and schedulingtool. This customerinterface ensured contentdelivery and schedulingacross the twenty-twoPanasonic plasma screennetwork.

CAPTIVATINGNEWS

IP file transfer technology integratedby GlobeCast on a full-time satellitenetwork in the US allows one customer todeliver its Captive Audience Network(CAN) programming as a live stream whilepushing customer-specific advertising tospecific sites on the network. Thecompany’s Captive Audience Networkprovides retailer and product marketerswith the opportunity to create newrevenue streams, improve consumers’shopping experiences, and promote newproducts and services while shorteningperceived waiting time.

The company needed a partner tobuild, install and manage a state-of-the-artsatellite-based network that could deliverIP-based live streams and files to thou-sands of retail locations across the US tolaunch its service for corporate publicdisplay sites, waiting rooms and otherpublic dwell spaces. It also wanted aflexible partner with the ability to providenetwork design, build out, and deploy-ment as a one-stop-shop using small 90cm type antennas, and who could helpthem sell or co-sell integration and site

Satellite-DeliveredDigital Signage ContentAtracts a UK Shopper

(Photo Courtesy ofGlobeCast).

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September 2004

FEATURES

Dan Freyer is Marketing Director in America for

GlobeCast, the world’s leading satellite services company,

operating a global network of satellite distribution

platforms for broadcast and advanced content delivery.

He is President of the Society of Satellite Professionals

International (SSPI), Southern California. He can be reached at

Daniel.freyer@globecastna.com. The views in this article are not necessarily

those of GlobeCast.

services. With thisGlobeCast-operatedCaptive Audience Network,a retail chain can receive acustomized version of thevideo network showingtailored content during adand other breaks. Thishelps to promote theretailers’ products andbrand around TV program-ming that draws viewers.Ads can be replaced acrossan entire retail chainnetwork, or addressable atindividual receive sites.Triggers in the IP streamcause the receiver harddrive to play retailer ads, sofor example, amanufacturer’s ad wouldplay in its distributors’ retailsites. GlobeCast’s Enter-prise Group is providing IP encoding,satellite transmission and receive siteinstallation and management.

SATELLITE’S ADVANTAGES

For organizations delivering full-motion video to more than a dozen sites— such as CANs, BTV and trainingnetworks — satellite IP solutions deliveradvantages over terrestrial webcastnetworking. Network availability is muchhigher and easier to track on satellite.Terrestrial webcast solutions, particularlyif over the public Internet, only providebest-effort delivery of packets at each

routing point on each route. Satelliteprovides dedicated bandwidth up to fullbroadcast quality video at an economicalprice, while affordable terrestrial solutionsare limited from 128 Kbps to 1.5 Mbpsdepending on the type of connectionavailable at a particular home, field officeor retail site and the amount of traffic onthe connection.

Keven Cahoon, VP of GlobeCast’sEnterprise Services Group in America putsit this way “If a trainee’s career dependson successful training, then Webcasting’s

jerky, grainy video, audio-drop-outs andframe-locks are not acceptable. If youwere the person requiring training to keepyour job certification and paycheck,would you want to rely on poor videoand intermittent audio of a Webcast? “.A similar point applies to CANs saysCahoon “If a retail outlet video clipdisplay of a new clothing line lackssufficient image clarity, consumer impulsebuying isn’t likely to result”.

EARTHLY REWARDS

To help them leverage the power ofsatellite and IP technology for theirbusiness, most companies need a satelliteservice and technology partner thatdelivers a total package of reliable,responsive service — from networkdesign, to site equipment installation andmaintenance, to network operation andsupport. But at the end of the day, it’s allabout getting the right content to thepeople that matter at the right time – evenif it beams through heaven’s gates andback to get to there. SM

Captive AudienceNetworks are Springing upin Public Viewing Places

(Photo Courtesy ofGlobeCast).

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September 2004

Riyadh, Saudi Arabia-basedArabSat has made some senior management

changes ahead of a major relaunch of its services. Thealterations are more than just cosmetic, although newlogos, brochures and boosted presence at upcomingtrade shows are deliberately designed to raiseArabSat’s profile dramatically. “We were too sleepy,”says Craig Moll, formerly of PanAmSat, and now ad-vising ArabSat’s senior management. “We have hadthe benefit of a thorough management consultant’sstudy, and this has given us a fresh baseline for thebusiness, and focus, so that we can stop the bleeding.”

ArabSat also has another pair of reasons to get itshouse in order: Two new satellites, from lead contrac-tor Astrium, ArabSat 4A and 4B, the first of whichcomes on stream in Q4/2005, and then Q1/2006. “Theupshot of these changes is a substantial restructuring,and others which will happen during September andOctober. New bodies have been hired, and the logic isto plan our marketing campaigns for the rest of thisyear and next.”

Moll says ArabSat’s brand recognition, while per-haps a little tarnished, still has great value in the widerMiddle East. “But the new look, and marketing effort,is but the first step, and we have to translate this into effort onfresh customer focus. We want to see a huge leap forward interms of our commercial appeal. The only way we can succeedin this to prove it via improved customer service and action.”

ArabSat has had its engineering problems in the past, notleast the near-catastrophic failure of its Alcatel-built ArabSat3A (at 26 deg East) back in late 2002. This prompted the com-pany to take an urgent lease on an older PAS craft, and later alarge portion of Eutelsat’s ‘old’ HotBird 5 (EuroBird 2) craft,now dubbed ArabSat 2D, at 26 deg East. There have even beenrumours that despite the upcoming pair of new satellites, thecompany is looking to secure additional fleet capacity. It’s alsolikely that once 4A has been deployed, ArabSat will free up asatellite to the currently unused 20 deg East slot. Moll says ex-isting customers will have the option to move up to the morepowerful 4A, “but at market rates” says Moll.

“Time to stop the bleeding”

Despite the growth of newcomer NileSat (also looking toadd a satellite) and the signals that encroach into the MiddleEast from players like Eutelsat, Turksat, AsiaSat and others,ArabSat remains the dominant player in its local market. “Wehave more customers, more eyeballs viewing us, and we are theonly full service company operating in the region. We have agood story to tell. We’re waking up; we know we are in a fight.We were born in a more gentle time as a means to share re-sources and costs amongst our member states. Today’s game isvery different and we need to respond to today’s conditions.”

ArabSat’s move is not a moment too soon. Eutelsat increas-ingly sees the Middle East and Africa as prime hunting groundfor new business. SES has long sought some sort of action in theregion, and has made no secret that it would like to acquire abird/slot in the neighbourhood, and should any part ofPanAmSat’s fleet end up being sold off piecemeal, SES might

A r a b S a t r e l a u n c h i m m i n e n t

FEATURES

By Chris Forrester

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September 2004

be in the market to pick up a craft. There’s also the possibilityof one or other of these players forming a joint-venture or somesort of cooperation agreement on a satellite. NileSat has beenlooking for such a scheme to help fund its NileSat 103 craft.ArabSat could also now be a willing player in a similar enter-prise.

FEATURES

SM

“We have had the benefit of a thoroughmanagement consultant’s study,and this has given us a fresh baselinefor the business...” --Craig Moll, ArabSat

London-based Chris Forrester, a well-known broadcastingjournalist is the Editor for Europe, Middle East and Africafor SATMAGAZINE. He reports on all aspects of theindustry with special emphasis on content, the businessof television and emerging technologies. He has a uniqueknowledge of the Middle East broadcasting scene, havinginterviewed at length the operational heads of each of themain channels and pay-TV platforms. He can be reachedat chrisforrester@compuserve.com

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September 2004

More than ever before, sustainingsuccess in today’s marketplace

demands that every company buildcapability for sustainable entrepreneur-ship. Yet this capability seems to beextremely elusive. Why? When studiedfrom the right perspective, some reallessons can be gained from looking intothe failures of AT&T and Enron. Enronsaw itself as an entrepreneurial enterprise,but it collapsed. AT&T is a very old,bureaucratic company that has beenstruggling - with little success - tobecome more entrepreneurial ever sincedivestiture of its local operating compa-nies in 1984.

Each company illustrates a verydifferent kind of problem. However, bothfailures can be understood using a simple‘model’ of societies and organizationsdeveloped by anthropologists andsociologists (shown below). The modelalso provides some critical insights intohow to create sustainable entrepreneurialenterprises.

The model is based on: 1) the degreeto which members of a society or organi-zation have a sense of group belongingand are interconnected; and 2) the degreeof diversity, individuality and expressionthat’s acceptable in that society.

The upper-left zone describessocieties and organizations with a highlevel of group belonging, but a lowtolerance for internal diversity, individual-ity or expressive freedom. Such groupsalways form into hierarchies with central-ized power and control, for the purpose ofperpetuating an embedded tradition and

Building Entrepreneurial Enterprises:Lessons from AT&T and EnronBy Dr. Dean Robb

protecting the status quo. In suchorganizations, every action and expres-sion must be considered carefully - theymust be “in synch” with prevailingexpectations and the culture. There islittle room for independent action orspontaneous expression. This is the zoneof “keeping up appearances” and the“stiff upper lip.”

Such organizations operate well instable or slowly changing environments,but operate poorly in dynamicallychanging environments. And, it is in theirvery nature to stifle the entrepreneurialspirit - they can’t help themselves!Entrepreneurship requires freedom to

explore, experiment and openly express. Itrequires internal diversity as a source oflearning, innovation and growth. And itrequires ongoing questioning of tradi-tions, strategies, values and everythingelse. All of these go deeply against thegrain of this kind of organization!

This zone describes AT&T to a tee.When divestiture (and the seeds ofderegulation) began in 1984, AT&T had avery long history, a deeply embeddedtradition, a steeply hierarchical, bureau-cratic organization, and a rigid mono-culture. Overcoming this legacy wouldhave required a revolutionary, charismaticand powerful CEO with a genuinely new

FEATURES

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September 2004

vision and the power to carry it out -someone like Jack Welch. Instead, AT&Tchose Bob Allen, a caretaker/managertype - a true son of the tradition - wholacked real leadership skills, a compellingvision or any sense of innovation. Allenled AT&T down the wrong path for quitea long time, and eventually into a real no-win situation, structurally. They’ve beenstuck there ever since.

Enron’s story is different because itfits more into the lower-right zone - thecomplete opposite of AT&T. In fact, ourwhole economy fits into this zone rightnow. In this zone, societies and organiza-tions are characterized by exaggeratedindividualism, low social cohesion,unpredictable changes in markets, andconstant organizational restructuring,downsizing and closings. The ruleschange constantly. Since there is lowgroup belonging, people are thrown backon their own individual wits and re-sources. Operating in this environment issomewhat like living in a chaotic jungle orswimming in a pack of sharks.

This zone breeds charismaticpersonalities, hucksters - and companies -that play opportunistic, short-termbusiness games with the environment.These individuals and companiesmanipulate and exploit emerging, short-term structural or market discontinuitiesto their own advantage. The model is oneof “thriving on chaos” or “day trading”on a huge scale. Enron is a case in point.Enron played this game, and played itwell, for a while.

But Enron collapsed. Its businesspractices practically guaranteed it.Continuously finding and successfullyexploiting short-term discontinuities andopportunities is extraordinarily difficult tosustain over any significant period oftime. This “business model” is fertileground for the growth of unethicalfinancial and accounting games neces-sary to paper over the inevitable misread-

ing of constantly changing environmental“rules.” If a company manages to gain aseries of big wins, hubris can easily takeroot and get out of control, like a gamblerwho has a string of big wins and beginsto think that he or she can’t lose. Inevita-bly they do lose, however, and if they betthe farm, they go down the tubes. Enronis a quintessential example of thisphenomenon.

“Thriving on chaos” is a myth. Canit be done for a short time? Yes, abso-lutely. Can it yield sustainable businessgrowth over the long-term? The odds areextremely poor.

In changing times, the most effectivestrategy for sustainable entrepreneurshipis to move into the upper-right corner ofthe model by building enterprises that are

FEATURES

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September 2004

Dr. Dean Robb is President of The Resilience Group. Forover a decade, he has been helping domestic and foreignbusiness leaders build high-performing, innovative,entrepreneurial enterprises. His expertise combines16 years of practical, real-world corporate experience with in-depth doctoralresearch in Human and Organizational Systems. He can be reached atdrobb@resiliencegroup.com or at (908) 757-4721.

highly inclusive, and embrace high levelsof diversity, individuality and expression.This zone is “primed” for high levels oforganizational experimentation, learning,creativity, innovation, change andgrowth. This zone breeds highly innova-tive, entrepreneurial organizations andenterprises that can grow relativelyrapidly, but not chaotically. Such enter-prises are capable of creating, andrecreating, internal order within a turbu-lent external environment. It is a zone ofrapid evolution, not revolution or chaos.

Here are two reasons why: Embrac-ing internal diversity and individualityovercomes the conformity and perpetua-tion of the status quo endemic to tradi-tional bureaucracies. The other reason ismore subtle: One of Enron’s key problemsis that its INTERNAL, social environmentmirrored the “pool of sharks” dynamic ofthe EXTERNAL environment. Just like theexternal market,

Enron’s internal world was one ofindividualistic opportunism and exploita-tion. This is a huge mistake. When theexternal environment is fragmented, theinternal social world of a sustainableentrepreneurial enterprise should becoordinated and act with an organic,focused unity.

That requires a high sense ofinternal belonging, interconnectednessand coherence.

Our ingrained belief is that it’simpossible or unrealistic to build organi-zations with BOTH high belonging ANDhigh diversity. This belief system devas-tates all possibilities for creating sustain-

able growth in turbulent times. It’s also adefense mechanism. The truth is that it ispossible to build highly inclusive/diverseworkplaces. If we are honest with our-selves, we will recognize that the realproblem is that many of us simply are notwilling to make the transformationalchanges needed to do it. We want to hangon to our old ways, but get differentresults. Somebody once told me that this isa working definition of insanity! If we canget past our resistance, the model providesinsight into the path forward.

Enterprises in the “EntrepreneurialZone” have low differentials in power andstatus between the “top” and the “bottom”of the organization. In other words, they arerelatively flat. Traditional command-and-control practices are replaced by anemerging “partnership” model based onadult-to-adult (peer) relationships.

Traditionally, organizational alignmentis gained through subtle (or not-so-subtle),coercive cultural pressures, and throughextrinsic, social rewards like power andstatus. The goal is behavioral compliance.These methods fit firmly into the “AT&Tzone” - and don’t work anymore. Inentrepreneurial enterprises, alignment isgained by building individual-level,authentic commitment. Each enterprisemember is managed uniquely by tappinginto individual, intrinsic motivations andstrengths, and leveraging those for

maximum enterprise advantage. Asopposed to the bureaucratic “cog in themachine” model, employees feel - and act- like valued enterprise members.

The entrepreneurial spirit is “acti-vated” by constructively harnessinginternal variety and differences as the rawfuel for continuous experimentation,innovation, learning and growth. Weinstinctively resist this because allowinginternal differences to surface can initiallyseem like a descent into chaos. However,while repressing differences might feelcomfortable and “safe”, it is actually adangerous strategy in a changing world.It yields only stagnation, loss of innova-tion, and potential extinction.

On the other side of perceived chaosis a vibrant, dynamic and diverse commu-nity of employees, each of whom isvalued as a unique individual andencouraged to contribute and create. Toget there, new leadership and manage-ment practices are required that fostersafety, trust, honesty, integrity, account-ability, mutuality and partnering.

This calls for a more sophisticatedlevel of leadership and managementcompetency, wisdom and maturity. This isthe real reason why creating diverse,inclusive enterprises is resisted. It’s hardwork, and it falls outside of the traditionalbusiness leadership “comfort zone.” Itcalls upon our leaders to significantly“ratchet up” their level of interpersonal,relational maturity. Knowing the “busi-ness side” alone is insufficient to buildsustainable enterprise entrepreneurship.The key to a future of sustainable growthlies in combining business acumen withcommunity-building skills. SM

FEATURES

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September 2004

REGIONAL UPDATE

Not so very long ago Hong Kong-based broadcast and satellite

services provider Pacific Century Matrix(PCM) was a highly challenged company.It suffered from some of the fall-out overlocal media-mogul Richard Li Tzar-kai’sbold plans to propel his Pacific CenturyCyberWorks (PCCW) telco into the thenbooming dot-com era. PCCW was backingthe ambitious Network of the World(NOW) concept (along with the latesports agent Mark MacCormack andLondon-based TWI), with PCM used forthe transmission and satellite-delivery ofthe planned bouquet of NOW channelsand broadband content. Those plans wereshelved, although NOW continues.Today, one television channel is on airwith licensed service into MainlandChina, and the NOW Broadband TVservice, delivered via PCCW’s extensiveDSL network, is taken by around 300,000subscribers within Hong Kong.

PCM thrives in Hong Kong’s“Wild East”

By Chris Forrester

Founded in1999 PCM wasinitially a 70/30joint venturebetween PacificCentury Groupand Germany’sDaimlerChryslerAerospace(DASA, whichlater became partof EADS). Basedon NOW’sprojections, PCMonce had bullishplans to launch itsown satellites.Those plans werescrubbed in 2002,

and under CEO Guenter Kring thebusiness refocused into more realisticsatellite-based broadcast and broadbandservices.

Scepticism about the likely turn-around of the company was abundant,admits Kring. With its new focus, PCMwas also seen by its shareholder EADS tobe outside its core business. Closuremight have been an option, but Kring

emphasizes it was Pacific Century whogave the company and his team thechance to manage the turn-around. Li’sprivately held group decided to take overEADS’ shares, making PCM a whollyowned subsidiary and paving the way torecovery. “We were given the chance, wepicked it up and I believe we delivered thefirst milestone by reaching breakeven.Now we are moving on and will deliverreturns,” says Kring.

Two years ago PCM had plushoffices in Hong Kong’s premier businessdistrict. Today operates out of perfectlyadequate premises on the Eastern side ofthe island, in industrial Chai Wan. Theimpressive dish farm facilities are on theroof, and business is good, despite whatKring freely describes as the toughest oftough times throughout the region.

“The region we mainly serve isjokingly called the ‘Wild East’. There areby and large no rules. But during the pasttwo difficult years we have achievedpositive cash-flow, and are beginning tosee growth again.” Expansion is now verymuch the order of the day, and part of thatsuccess is down to AsiaSat. “We have a

“Muslim TV is fed from London into Hong Kong via PCM’s VideoLinkproduct, which takes a live feed over a managed IP network direct into PCM’sHong Kong facility. “It lets us take our broadcast platform to our customer’sdoorsteps. The customer can be anywhere in the world. We connect at hisfacility and can handle live broadcast quality delivery up to 180 Mbps ofbandwidth, using our global managed network. It is simple, cost effective,and it works. “ Patrick Yeung, PCM’s SVP Sales and Business Develop-ment.

VideoLink Explained

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REGIONAL UPDATE

long-standing relationship with AsiaSat,which anyone who is serious aboutaccessing the Asia-Pacific market has touse. AsiaSat 3S (105.5 deg E) is theundoubted hot bird for the region. It’spowerful and has a great community ofsome 95m connected households throughcable and satellite. All the main channels,from suppliers like Star TV and Zee arepresent,” says Kring. “We also look atAsiaSat 2 (100.5) and SinoSat (110.5). Weare just now planning a new C-bandbroadcast platform on AsiaSat 2, completewith uplink directly from our Chai Wanfacility. Again a full transponder MCPCplatform, like the one we have on AsiaSat3S. It’s just the best a broadcaster can getaround here. SinoSat C-band we use forsatellite-based Internet access.”

Kring says AsiaSat 2 has excellentcoverage, and a good neighbourhood,almost as good as AsiaSat 3S. “Thebroadcast market is a premium profes-sional market, and 3S provides maximumvalue. But 3S was never going to beperfect for all customers. It’s marvellousfor international channels, and thosebroadcasters who recognise and can fullyutilize the premium value. That still leavesothers, which for whatever reason prefernot to pay or simply do not have thebudget for pole position but still wantreasonable coverage for a specific regionand superior service quality.”

“We have cases where clients lookat rather more budget-driven solutions,using ThaiCom perhaps. That’s notnecessarily our market. Others, like theIndus TV Network group of channels outof Pakistan, are perhaps borderline in thatthey want quality and maximum distribu-tion, but are not entirely able yet toexploit the full potential of AsiaSat 3S. It’sall very well for clients like Indus to be onthe hot bird, but they still have to getpeople on the ground to tie up cabledistribution deals to push the channelsinto the mass market, which they aredoing. We try to help in such cases.”

With PCM’s support, the Indus TVNetwork has grown from a single channel(Indus Vision) launched in 2000 to abouquet of services, now including IndusMusic, Indus News and lately Indus Plus.Another new channel is rumoured forlaunch within weeks.

Kring says broadcast services on itsAsiaSat 2 platform benefit from lowerprices. “The new full-transponderplatform offers tier 1 quality, at tier 2 pricelevels. We want to make the new platforma hot one, like the present one on 3S, onlyin a different customer segment. Our newVideoLink network seamlessly connectsbroadcasters worldwide with our satelliteplatforms, turnkey and real-time. That’show we can attract bouquets from abroad,like from Europe and from America.”

The AsiaSat 4 satellite (at 122 deg E)is also up and running. “AsiaSat 4 canabsolutely become a hot bird, but it’s notthere yet. It has an interesting coverage,but not yet the sort of neighbourhoodthat 2 and 3S has. Our focus at PCM isvery much on our own platforms on 3Sand the development of AsiaSat 2. A nextstep may be AsiaSat 4.”

PCM’s Internet and VoIP clients,Kring says politely, are not the mostprofitable parts of his business, “but theycontribute. We are happy to supply andsupport these businesses even though it

is a highly volatile sector. It generatescost contribution to our overheads.”Kring says that some 35% of PCM’srevenues come from non-broadcast IPbased activity.

One of PCM’s longest-standingclients is Bloomberg, and Kring says theyare typical of major broadcasters, whichwant a highly customised service. “Theyneed competitive prices, of course, but arate card is never going to suit a client likeBloomberg which frequently needs a raftof specialised services,” says Kring.“Presently we are taking the existingNTSC signal, turning it around andconverting it into PAL and uplinking itonto our 3S platform. They want the mostperfect pictures, and need a clean sharpimage with fluid motion of the scroll textinformation.”

PCM also has a close workingrelationship with GlobeCast, and throughthem has developed a rapport withMuslim TV out of London. “They were onAsiaSat 2, but they especially wanted toreach their viewers on the Fiji islands andthis meant a shift to 3S.” Muslim TV wasPCM’s launch customer for its VideoLinkmanaged network product. “We did aworld’s first, really long distance trans

“We have about two yearsof content-rich material inour archive, covering mov-ies, sport, animation andentertainment program-ming. We are going todevelop our networks withPCM, and through themtarget and build to the restof Asia.”

“The services PCM offerin their own back yardmake it easy for us towork together. We arecompetitors in some re-gards, but there’s alsoroom for us to work to-gether.”

Continued to page 35

Darby Sanchez, CEO GlobeCastAsia, Singapore

Ghazanfar Ali, CEO IndusVision, Karachi.

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September 2004

VIEWPOINT

Satellite Services - From SupplyPush to Demand PullBy Bruce Elbert

The SIA surveyquoted by Virgil Labradorshows the growth anddominance of DBS TVservices over othersegments of our industry.This is as much anoutgrowth of consumeracceptance as it is thesurplus transpondersupply at geostationaryorbit. Getting into the DBSbusiness now requiresinvestment measured inthe billions of US dollars,while the best slots andmarkets having been taken. Growth of the services segmentfrom here would seem to involve applications which either areemerging or yet to appear. So, how do we uncover theserequirements, from where will they come, and with whattechnology may we address them?

Stepping back, the Internet and Telecom boomemboldened many startups and existing operators to invest inrisky systems with money that seemed plentiful. Now that weapproach the middle of the first decade of the second millen-nium, satellite operators and service providers are much morerealistic and far less willing to bet on the come. Instead, we lookfor customers who have quantifiable requirements and thefinancial muscle to back them. I would expect that many largeorganizations in major industry segments outside of telecommu-nications and IT are evaluating new strategies to put them-selves ahead of competitors. Included here are members of thedefense segment who already consume large blocks of tran-sponders. They and their commercial counterparts are alwaysinterested in ways to gain control of spending and bettermanage their IT infrastructures.

In the past, satellite services were reserved for those whoalready understood them. Corporations and governmentagencies which lacked satellite expertise tended to rely on themajor carriers who, in turn, provided conventional voice and

data services over landlines.Thanks to the aforementioned DBSas well as satellite digital audioradio service (S-DARS), globalpositioning satellite (GPS) and thefamiliar but unnatural voice qualityof satellite mobile phones, most ofthe planners and managers ofbroad-based IT have a familiaritywith satellites. This is good newsfor the services side of the businessbecause we can look to the once-unfamiliar user for the new demandwe need.

Converting such latentdemand into profitable revenues is a challenge, representing thekind of “rain-making” common in the professional services/consulting field. What rain-makers understand is that it takes a lotof time and nurturing of relationships to produce the business.Good rain-makers have a quality that Joseph Conrad ascribed tohis fictional Lord Jim, which he called simply “the Ability”. Pleaseexcuse my abstraction here but I want to make the point thatcreating customers is possible, but comes with person-to-personnetworking as a life-long endeavor. For further reading, see theexcellent books by Harvey McKay on networking and DavidMaister on rain-making.

A good approach for uncovering service demand is to heedthe advice of an IT executive at Kodak, whose name I cannotrecall but who was a key figure in American industry’s firstmassive IT outsourcing project. He complained that traditionalvendors provided what fall into the category of “partial solu-tions”; yet what he wanted to see from these companies were“solutioneers” who would listen to needs and propose respon-sive systems and technology.

This all begs the question, “What do companies andgovernment agencies really need?” Often, they are no bettertoday at verbalizing or communicating what their needs are.Worse still, they may put up barriers to this communication thatprevent us from doing the necessary fact-finding that could result

President, Application Technology Strategy, Inc.

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September 2004

in a solution. Back we come to the role of the rain-maker with“the Ability” to break through barriers, learn what is needed, andmanage the “solutioneering” process.

Coming back to the “what” question in the first paragraphof this article, I have presented listings in past SatMagazinearticles of the systems and technologies that have been borne ofa decade of innovation. For example, MPEG broadcasting givesus the ability to distribute multimedia content to remote loca-tions, and TDMA the ability to return “solutioneer”. Justrecently, I received emails from technical staff on different sidesof the planet at solid organizations - with the simple question,“should I use a star network or a mesh network?” They alsowanted to know how to choose the right equipment to implementthe architecture.

This coincidence seems to me to be a symptom of theconfusion out there among potential users of satellite serviceswho know that satellite technology is an answer. However, they

VIEWPOINT

Bruce Elbert has over 30 years of experi-ence in satellite communications and is thePresident of Application Technology Strategy,Inc., which assists satellite operators, network

providers and users in the public and private sectors. He is anauthor and educator in these fields, having produced seven titles andconducted technical and business training around the world. During25 years with Hughes Electronics, he directed major technicalprojects and led business activities in the U.S. and overseas.

He is the author of The Satellite Communication ApplicationsHandbook, second edition (Artech House, 2004). Web site:www.applicationstrategy.com / Email:bruce@applicationstrategy.com

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lack the knowledge to compile their requirements sufficiently toconduct trade studies and proceed with implementation. As welearn how to communicate with these needy users, we gain “theAbility” to create the revenues needed for growth and profit.

SM

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September 2004

EXECUTIVE SPOTLIGHT

SatMagazine Managing Editor VirgilLabrador recently spoke with ILC’sSenior Vice-President and COO, MarkKrikorian. Atlanta, GA-based satellitenetwork monitoring and control companyILC has been quietly making waves init’s market sector—posting an averagegrowth rate of 40 percent in the last twoyears. Excerpts of the interview:

Q. Your company used to be knownas “Industrial Logic Corp.” can youbriefly explain for the benefit of ourreaders how you evolved from basicallyan industrial company to the morefocused networks services company thatyou are today?

A. ILC was originally founded as an

industrial automation company toimprove production for mailing envelopeplants. The objective was to monitorfactory equipment to stop productionproblems and eliminate raw material wastecaused by either equipment failures oroperator error. To address our customers’needs, we created graphical Windowsbased software and hardware that alsoworked as a general monitor and controlsystem. Most people new us as ILC, andsince we have not been in the industrialautomation market we made the namechange official.

Through contacts in the Atlanta area

we learned that our products had muchmore value in the satellite industry than inindustrial plants. Our configurablesoftware allowed us to demonstrate ourfirst prototype satellite earth stationmonitor and control system in less timethan the existing M&C producers coulddeploy their production version. Webegan selling our new software immedi-ately, and have maintained our philoso-phy of ease of use and configurabilityever since.

Q. To what do youattribute your success in thelast few years, growing at asuch a phenomenal rate?

A. We have increased our

market share and market size byshowing our customers how toimprove revenue and profits byusing MaxView. We designMaxView as a toolset that helpsour customers supply moreservices with optimum equip-ment and staff while simulta-neously improving reliability. Weaccomplish this because of thetwo concepts:

Everyone knows you can

only fix a problem if you know itexists. We were the onlycompany in our industry torecognize that a monitor andcontrol system fails if it cannotmonitor all devices in the network. Toaddress that issue, we created a driverdevelopment kit that we use to createdrivers for any type of equipment fasterthan any of our competitors. By doing so,MaxView eliminates the blind spots thatother products produce. MaxViewmonitors and controls networks morethoroughly than any other product.

We believe monitor and control is

just the beginning of what we do. Weutilize our products to detect and solve

network problems and to automatenetwork operation. Our customers wantthe freedom to define how to best useMaxView to do that. We have taken atools approach to empower our customersto set MaxView up themselves, customiz-ing the system to solve their problemsand improve their service. MaxView’sgraphical point-and-click operationenables them to adapt their systemswithout employing software engineers orcalling ILC.

ILC Revenues(Amounts in thousands)

Year 2003 2002 2001 2000

Revenue $9,339 6,574 3,608 4,384Percent increase(from previous year) 42% 82% -17%

Interview with ILC Senior VP & COO Mark Krikorian

Mark Krikorian

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September 2004

EXECUTIVE SPOTLIGHT

Q. What is your current marketshare? How do you differentiate yourselffrom your competitors?

A.ILC is the market leader in satellite

monitor and control. Of the overallnetwork control software market, wehave a market share of less than 1%.

1. The core difference between

other network management, monitorand control products and MaxViewis that MaxView interfaces to anytype of equipment or system,regardless of brand or technology.That is why customers are able toinstall, customize and expand theirnetwork control systems from ILC ata fraction of the cost and time theyanticipate.

2. MaxView builds on total

equipment control to give ourcustomers capabilities that farexceed traditional monitor andcontrol functionality, including:

• Network and facilities

management, monitoring andcontrol

• Automated fault manage-mentand auto-recovery

• Graphical and browser-basedremote control

• Historical and real-timereportgeneration

• Event booking, reservationandresource scheduling

• Trouble ticketing• Service provisioning• Alarm correlation Q. How much increase in your

market share are you projecting forsay, the next three years? How doyou plan to achieve that?

SM

A.We expect to increase our marketshare by 150% over the next three years.Our expected growth is largely tied to thegrowing trend of converging networks.As service providers merge their hybrid

networks, we are ready with a solutionthat helps them reduce their operatingexpenses by consolidating hybrid

Continued on page 35...

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September 2004

MARKET INTELLIGENCE

Across Africa there is an expandingawareness of satellite-based Internet

telephony, a growing realization amongthe telecommunications hungry popula-tion of the Continent that the “dollars andcents” of disposable income go furtherover Voice over Internet Protocol (VoIP).Moreover there are now clear signs thatVoIP services are now looked upon withgreater favor by a new generation of moreindependent telecoms regulators, indistinct contrast to their still recentpredecessors.

VoIP is a technology which canincrease the capacity of telephonenetworks by compressing and routingcalls for typically 50% of the cost oftraditional switched services, and it camein 2001-02 to be acknowledged as offering“carrier-grade” reliability.

As a growing number of govern-ments have recognized that VoIP – ratherthan being a by-pass mechanism whichpresents a major revenue threat to anincumbent telco – can help achieveessential economic and social develop-ment goals, this has helped to encourageand foster more enlightened regulatoryframeworks. Thus, VoIP has now beenlegaliszd to some extent even in some ofthe world’s most tightly regulatedtelecommunications markets, such asChina, India and South Africa.

In South Africa, according to a majornew report entitled “Open & ClosedSkies: Satellite Access in Africa”*, newlicensees are permitted to deliver VoIPfrom low-density areas, but these had yetto be implemented as of end-July 2004. Inmany other countries, VoIP is not clearly

Satellite Voice over IP: A Marketfor New Links in Africa’s ICT Chain

Figure 1: VoIP with a price-competitive edge.

addressed by regulation, which mayprohibit new providers of circuit-switchedbut not of packet-switched voice servicesbecause the latter had not been inventedor was not taken seriously when therelevant laws were written. At thebeginning of 2004, Mauritius took a leadand launched a number of legal, interna-tional VoIP services, and became the firstAfrican nation to take this major step andestablish a precedent for the Continentalmainland to follow.

The International Telecommunica-tion Union (ITU) estimates that interna-tional VoIP traffic accounted for 7.3% ofinternational outgoing minutes as far backas 2001; TeleGeography Inc. in 2002estimated that VoIP traffic would doubleduring the year, to 18 billion minutes.

The lower deployment cost ofpackettelephonelines makethese servicesespeciallyattractive, ascarriers faceincreasedcompetitionand the needto provideexpandedaccess toInformationand Communi-cationsTechnology(ICT) solu-tions. Internettelephony hasbeen asignificant

satellite application since 2000, whenclosed-user-group VSAT networks beganproviding telephone services, with theirother data traffic. Trunking via satelliteoffers natural advantages to VoIP incountries with limited backbone capacitywhere it is sold as a cut-price service, orused by new entrants as a way to quicklybegin providing services.

In Africa, VoIP also has importantimplications for expanded access toservices provided in cyber cafés. In aproprietors’ survey conducted for “Open& Closed Skies: Satellite Access inAfrica”1, 80% of those interviewed inNigeria reported that voice was a growth

Presented by the

Global VSAT Forum

By Martin Jarrold, Director, International Programs, GVF

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September 2004

MARKET INTELLIGENCE

area for internationalcalls. Call charges usingtraditional networks areperceived as tooexpensive, resulting inhigh demand for VoIP.For example, at a cybercafé it costs 20-30 Naira(US$0.16-0.23) perminute to call a fixed-linetelephone in the U.S.A.The cost of a local fixed-line call, by contrast, isestimated to be 35 Naira(US$0.26), see Figure 1.The downward pressurethis is exerting oninternational call rates ishelping to push theincumbent fixed andmobile PTOs to reducetheir rates as well, oftenby adopting the sametechnology. In April2004 mobile operator M-tel dropped its international call rates to50 Naira/minute (US$0.37).

According to one of the authors of areport on the Internet and VoIP servicesacross West Africa, grey markets ininternational VoIP calling have grown upalmost everywhere across the Continent.Also citing the example of cyber cafés,“African Internet Country MarketProfiles, Part 1: West Africa”2 , reportsthat these Internet entrepreneurs canoffer calls more cheaply than incumbenttelephone companies and still make aprofit. In most African countries the greymarket is estimated to be 10-20 per cent ofthe overall telecommunications market.However, in Nigeria – as reported byBalancing Act – the CEO of telephoneincumbent Nitel estimated that before heput in place cuts in international callingrates, 90 per cent of international callswere in the gray market.

For satellite operators, VoIP is still amarginal source of demand for capacity

but it can be bundled with other applica-tions such as distance learning and/orcan become a source of call-terminationrevenues.

NOTES

1“Open & Closed Skies: SatelliteAccess in Africa” will be launched at theACT 2004 Summit in Mauritius,September 7-10 2004. It was madepossible through support from theInternational Development ResearchCentre of Canada (IDRC). As part of itsprogram of assistance for developingcountries, IDRC has carried out a Pan-

Africa Satellite Survey and selectedcountry case studies that provide thebasis for this report. The reportsupports the Catalysing Access toICTs in Africa (CATIA) programme ofthe U.K. Department for InternationalDevelopment (DfID). It draws upon abroad base of experts and resourcesin the field of communications, bothin Africa and throughout the worldand was prepared by a draftinggroup led jointly by David Hartshornand Mike Jensen. Key contributionswere made by Geoff Daniell Commu-nications Consulting and StephenEsselaar of LinkCentre. The reportalso draws upon recent workconducted by the InternationalTelecommunication Union’s StudyQuestion 17-1: “Satellite regulationin developing countries”, the GVF’s“Satellite Policy & RegulatoryGuideline”, a World Bank-fundedreport conducted by DeTeConInternational for the African Virtual

University (AVU) on “Low Cost VSATTechnologies and Licensing Regimes”, aswell as legal expertise from Squire,Sanders & Dempsey and CoudertBrothers, and consulting by AccessPartnership, COMSYS, DeTeCon, DTTConsulting, Euroconsult and NorthernSky Research.

2 Balancing Act – “African InternetCountry Market Profiles, Part 1: WestAfrica”. Further details atwww.balancingact-africa.com

Martin Jarrold is the Director, International Programs ofthe Global VSAT Forum. He can be reached atmartin.jarrold@gvf.org For more information on the GVFgo to www.gvf.org

SM

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September 2004

portation of full-time live broadcast over amanaged private network, over 13,000miles and across four different networks.It’s exciting, and a great advantage forquality transport on budget friendlyterms” added Kring.

PCM is generally offering TVservices on a guaranteed bandwidthbasis, however a StatMux pool is also anoption. Kring admits there’s plenty ofprice-sensitive competition on his patch.“We step back if price expectations aresimply too foolish. And there have beensome foolish loss-making prices given byothers! I do not believe it is worth beingthat desperate. Our customers want goodprices, of course, and we try to do thebest we reasonably can. But what point isthere in selling a high value, high costMercedes for the price of a Toyota?”

Kring also points out that if you fallinto the trap of price-cutting, then wordquickly gets around. “Peter Jackson [CEOat AsiaSat] is the perfect example fordoing it right. When times were tough heresisted the downward slide in prices. Hissatellites have a great value and he hasmaintained that value, on the level, andtoday he is still in business with a high-price high-value platform. We might notwholly care for the prices, but where is hisbusiness and his service quality going tobe if he matches the $500,000 per tran-sponder costs that some rivals have beencharging?”

Downward price pressures remain,“but they’re at a more acceptable level,and more manageable today. There ismore demand so lower rates are compen-sated for by increased demand. Butcaution is also important because of the“no rule” rule, where countries don’trecognise signed contracts, and contractsare often unenforceable anyway, and thesame applies to debts.”

PCM thrives in HongKong’s “Wild East”

China is the region’s great hope, butKring says even here realism is important.“AsiaSat has a massive distribution intoChina, especially on AsiaSat 3S, and wehave high expectations. But billions ofdollars have gone into China, and we arewell past the period when everyone wasrushing blindly into China. Down the roadit will without any doubt be exceptional,but predicting any timeline for this futureis very difficult. Our China links throughPacific Century Group are naturallyuseful.”

PCM has strengthened its salesteam by appointing Sean Langston asDirector of Business Development, andanother prompt business win from the‘Living Asia’ channel, out of the Philip-pines, to be exclusively distributed on 3Sthis October. Others are in the pipeline.“Living Asia is but the tip of the iceberg,and will prove to be a case-study for theway to do things going forward. The goalis going to be for us to bring morechannels out of region into Asia. We’relooking at Europe, the US and greaterAsia, and we can be flexible where itmakes commercial sense, even to includeparticipation in management of thechannel’s distribution contracts withcable operators. A strong, successfulrelationship helps bind both partiestogether.”

Continued from page 28

SM

network operations under one controlenvironment. And our current productdevelopment plan includes new capabili-ties that further our objective of improv-ing our customers’ businesses.

Q. What are the driving forces in

your segment of the market ?

A. All our target markets (satellite,government, broadcast and telecom) aregetting pushed to manage larger, con-verged networks with fewer people. Atthe same time the trend toward largerconverged networks drives the need for

Interview with ILC’sMark KrikorianContinued from page 32

more comprehensive network control. Ourapproach is to supply one softwareplatform that works with all types ofnetworks and improves operationsefficiencies.

Specifically, we’ve seen a push

across government agencies towards“network-centric operations”, an Informa-tion Age type of warfare that reliesheavily on easily adapted, reliablenetworks. While many commercialvendors in the satellite industry recentlybegan targeting the government for saleswhen the Department of HomelandSecurity was created, ILC began formingrelationships with the government morethan four years ago. We did this throughvarious channels, including through thirdparty integrators with the necessarysecurity clearances. This has helped usgrow our contacts within this market andposition ourselves as a resource togovernment agencies as they research“future-proof” network control method-ologies.

Q. Where do you see the biggest

growth in your market?

A. We see the biggest growth in thetelecom market.

Q. What’s in store for ILC in thenext few years?

A. We foresee continued growth

with stronger market awareness, allowingus to continually improve productsthrough consistent investment in re-search and development. This will enableus to expand the breadth of our productoffering, always focusing on networkcontrol software to detect and solvenetwork problems and automate networkoperations. However, we will have somesurprises for our customers as we extendtheir sphere of control with tools thatthey may not expect a network controlsoftware company to package in itsproduct offering (like this year’s troubleticketing and carrier monitoring releases).

SM

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September 2004

STOCK MONITOR

APT SATELLITE HOLDINGS ATSANDREW CORP. ANDWASIASAT SATBALL AEROSPACE BLLBOEING BABRITISH SKY BROADCASTING BSYCALIFORNIA AMPLIFIER, INC. CAMPCOM DEV INTL CDV.TOCOMTECH TELECOMMUNICATIONS. CMTLDIRECTV GROUP DTVECHOSTAR DISHFREQUENCY ELECTRONICS INC. FEIGILAT SATELLITE NETWORKS GILTFGLOBECOMM SYSTEMS INC GCOMHARRIS CORPORATION HRSHONEYWELL SPACE SYSTEMS HONINTEGRAL SYSTEMS INC ISYSKVH INDUSTRIES INC KVHIL3 COMMUNICATIONS LLLLOCKHEED MARTIN LMTNEW SKIES SATELLITES NSKNEWS CORP NWSNORSAT INTERNATIONAL INC. NSATF.OBNTL NTLIORBITAL SCIENCES CORPORATION ORBPANAMSAT SPOTPASIFIK SATELIT NUSANTARA PSNRY.PKPEGASUS COMMUNICATIONS PGTVQUALCOMM, INC. QCOMRADYNE COMSTREAM RADNSCIENTIFIC-ATLANTA SFASIRIUS SATELLITE RADIO INC. SIRISES GLOBAL SDSFa.FTRIMBLE NAVIGATION TRMBVIASAT VSATXM SATELLITE RADIO XMSR

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SES GLOBAL 30www.ses-global.com

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1.42 1.32 - 3.5011.07 9.30 - 21.6717.75 14.31 - 22.8037.50 25.32 - 37.5952.39 33.66 - 52.8234.66 33.22 - 59.245.68 4.05 - 17.202.80 1.71 - 3.8018.02 14.93 - 39.5215.94 14.70 - 18.8130.68 26.95 - 41.0011.56 9.52 - 17.134.77 3.95 - 9.865.73 3.25 - 7.2948.95 33.23 - 51.1936.00 25.94 - 38.4617.43 15.35 - 22.127.80 6.61 - 34.72963.90 41.63 - 66.9054.27 43.10 - 55.487.80 5.20 - 8.1631.14 30.61 - 39.740.54 0.38 - 0.9554.24 39.99 - 73.8110.77 8.56 - 14.1923.45 13.80 - 26.010.09 0.00 - 0.0010.11 5.185 - 25.5037.99 20.08 - 38.857.06 3.15 - 13.42627.66 25.39 - 38.592.27 1.55 - 4.206.80 6.00 - 8.8527.11 13.4867 - 29.5020.05 15.30 - 28.9128.00 13.35 - 30.96