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WORLDWIDE SATELLITE MAGAZINENovember 2003
http://www.ses-global.com/


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CONTENTS TABLE OF Click on the title to go

directly to the story

COVER STORY

9/ Whats New in

Satellite Applications16/ The Energy IndustryTurns to High-Tech VSATs

By John Puetz

13/ The Future for VSAT Networks

By Stuart P. Browne

3 / Note from the Editor

4 / Calendar of Events

5/ Industry News

7 / Executive Moves

22/ Advertisers Index

26/ Financial Snapshot: Intelsat

29/ Market Intelligence:

Turning Around the Telecom

Downturn (by the Global VSAT Forum)

REGULAR

Industry consultantBruce Elbert shows howto successfullyimplement a viablesatellite application. fromstart to finish

11/Europes First HDTVChannel Imminent

FEATURES

Despite the gloomydownturn in thesatellite industry thereare quite a number of innovative satelliteapplications that showgreat promise.

Euro1080, Europes first pair of HDTV channels arescheduled to go live onJanuary 1, 2004.

23 / Interview withTiscalis SVP MarioMariani

Stuart Browne examinesthe future of VSATnetworks and the issueshindering its development..

DEPARTMENTS

SatMagazinecorrespondent HowardGreenfield spoke toMario Mariani, SVP of European broadbandservices provider,Tiscali, who providedhis views on thedriving forces in themarket.

EXECUTIVE

SPOTLIGHT

20/Making Your IdeaHappen--Creating aViable Satellite

Application

By Bruce Elbert

The competitive energyexploration and productionindustry is looking toleverage VSAT technology.

VIEWPOINT

By Virgil Labrador By Chris Forrester

NOVEMBER 2003

18/BT BroadcastServices: HighMargins Starting

to FlowBy Chris Forrester

BTBS strategy to torapidly shift from thecommoditized end of the spectrum to a business based onvalue-added services is paying off.

31/ Featured Event:

PTC 2004


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Satnews Publishers is theleading provider of informationon the worldwide satelliteindustry. Fore more informa-tion, go to www.satnews.com.

Published monthly bySatnews Publishers800 Siesta Way,Sonoma, CA 95476 USAPhone (707) 939-9306Fax (707) 939-9235E-mail: [email protected]: www.satmagazine.com

Baden WoodfordAfrica

Advertising Sales:Jill Durfee([email protected])

Joyce Schneider ([email protected])

Copyright 2003Satnews PublishersAll rights reserved.

EDITORIAL

Silvano PaynePublisher

Virgil Labrador Managing Editor and Editor, The Americas

Chris Forrester Editor, Europe, Middle Eastand Africa

Stuart P. BrowneEditor, Asia-Pacific

Contributing Writers:

John Puetz, Bruce ElbertDan Freyer, Howard GreenfieldThe Americas

Peter Marshall, Roger StanyardEurope

Theres been quite a dramatic shift from C-band to

Ku-band capacity amongst the worlds satellite

NOTE FROM THE EDITOR, Europe, Middle Eastand Africa

Dr amatic Shift to Ku

operators, says a recent report from Futron. During the period 2000-2003, Futrons analysts say C-band capacity hasgrown by just 9%, while Ku-band has grown 20% during thelast three years. Ka-band capacity has fallen dramatically(down 29%). In 2003, growth occurred in the data and video

application areas, while telephony fell by about half. The growth in the datamarket is due to the significant increase in global Internet traffic from bothresidential and corporate users. Growth in capacity used for videoapplications can be attributed to the need to accommodate more bandwidth-intense HDTV, as well as an increasing need for bandwidth to accommodatelocal-into-local service by DTH providers, says Futron.

Frequency Trends 2000-2003 (source: Futron Corp).However, oneof Futronscharts ismost telling,and whilehighlightingthe rise or fallof specificsatellite

applications(telephonydown 45.1%,video up9.2%, data up6.6%) over the past threeyears, it alsoshows thatavailablecapacity inthe market

has risen aworrying52.1% and that measured in 36MHz equivalents, this translates into thenumber of available transponders having grown from 2012 in 2000 to 3063today (out of 7307 total). In other words while the total number of C, Ku,and Ka-band transponders worldwide grew by 13% during the period.However, the number of unutilized transponders grew by 52%. In 2003, North America and Europe together still used more than 50% of the globalcapacity. Asias share increased slightlyfrom 27% to 29%.


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CALENDAR OF EVENTS

NOVEMBER

November 3-5 New York, N.Y., U.S.A. Satellite Application Technology Conference & Expo (SATCON)Contact: Michael Driscoll Tel: 203-319-1727 ext. 204 / Fax: 203-254-0126E-mail: [email protected] Web: www.satconexpo.com

November 24-25 London Marriot Grosvenor Square, London, UK, Global Military Satellite CommunicationsContact: Jamison Nesbitt

E-mail:

[email protected]

December 2-5 Anaheim, California The Western ShowContact: c/o Dobson & Associates, Ltd. Phone: (202) 463-7905 Fax: (202) 467-6944Email: [email protected] Web: http://www.broadbandplus.org/

January 11-14 Honolulu, Hawaii PTC 2004Tel: +1-808-941-3789 ext. 120 Fax: +1-808-944.4874E-mail: [email protected] Web: www.ptc.org

January 18-20 Las Vegas, NV NATPE

Tel: +1-310-453-4440 Fax: +1-310-453-5258E-mail: [email protected] Web: www.natpe.org

DECEMBER

JANUARY 2004

Mark Your Calendar for ISCe 2004:

June 1 -4, Long Beach, CA, USA (Note new dates) ISCe is the premier annual conference and expo highlightingdual-use satellite-based services, applications and innovative technologies for the commercial, civil and militaryindustries. For more information, please visit www.isce.com


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INDUSTRY NEWS

SpaceX Signs First Launch Customer

Space Exploration Technologies Corporation (SpaceX) todayannounced that the Office of the Secretary of Defense, throughthe Office of Force Transformation (OFT) , has purchased the first flight of the Falcon orbital launch vehicle. The launch willtake place in early 2004 from the SpaceX launch complex atVandenberg Air Force Base in California.

TacSat-1, the satellitemanifested, is being builtand integrated by the US Naval ResearchLaboratory for OFT. Itwill be used for enterprise wide data and task

communication for tactical and operational commanders throughthe Department of Defenses SIPNET.

Although developed entirely with private funding, Falcon will bethe first launch vehicle consistent with the Department of Defense goal of an operationally responsive launch capability.At $6 million per launch, Falcon represents a breakthrough in thecost of access to space and is designed to achieve a higher reliability than vehicles currently available.

Apax, Permira Wins Inmarsat Bid

British private equity firms Apax Partners Worldwide LLP andPermira Advisers, Ltd. have clinched the deal to acquire satelliteoperator Inmarsat Ventures plc. Their cash offer of $1.54 billionwon the support of Inmarsats board and major stockholders.

Inmarsat was established in 1979 as a not-for-profitintergovernmental organization to provide satellitecommunications for shipping and air traffic. It is now mainlyowned by former telecom monopolies in Europe. These include NorwaysTelenor ASA , the largest shareholder, with nearly 15%,BritainsBT Group plc , with 7.9%, and Netherlands-basedXantic BV (5.9%), plusFrance Telecom SA (5.1%) and

GermanysDeutsche Telekom AG (4.3%). JapansKDDI Corp.owns another 7.6%. and U.S. aerospace company LockheedMartin Corp. owns 14%.

Apax and Permira beat a New York-based consortium of ApolloManagement LP and Soros Private Equity Partners. The dealcame after a year-long auction after Inmarsat unsuccessfullyattempted an IPO five times.

TestFiringof FalconRocket

(spaceXphoto)
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_____________ INDUSTRY NEWS

CASBAA and CLSA Issue First

Report on Cable & Satellite TV

Piracy in the Asia-Pacific Region

The first independent assessment ofthe financial impact of pay-TV

piracy in the Asia Pacific Regiondemonstrates the increasingseriousness of the issue for AsiaPacific broadcasters, pay-TV systemoperators, regulators and investors.

The new data - covering cable andsatellite TV piracy in all its forms -was issued today by the Cable andSatellite Broadcasting Associationof Asia (CASBAA) and CLSA AsiaPacific Markets (CLSA), and

predicts US$874 million in netrevenues lost in 2003.

The independent study, conducted by CLSA Asia Pacific Markets incollaboration with CASBAA and itsmember organizations, highlightsthe impact of unlicensed operatorsand pirate cable subscribers onregional economies including thoseof Hong Kong, India, Indonesia,Philippines, Taiwan and Thailand.

The aggregated (or gross revenue )losses across all sectors of the AsiaPacific pay-TV industry, from

platform operators to independentsuppliers of programming, areestimated to total US$1.29 billionfor 2003. The cost of piracy iscurrently increasing at a CAGR inexcess of 10%. SM


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COVER STORY

Whats New in Satellite ApplicationsBy Virgil Labrador

A top satellite executive who keynoted recently amajor conference proclaimed that the days of

He that will not apply new remedies must expect new evils; for time is the greatest innovator. -Francis Bacon

elphisKYFi

thome Kit

searching for the next killer app is over and thatshould focus on their core businesses and stick tothe tried and true.

Sound advice. He was just echoing perhaps thesame conclusion that those who are still in the indus-try have reached after losing their shirts in many aventures that promised to be the next killer app.These days you hardly ever hear killer appany more. However, while a back to the basicsapproach might sound like good business sense,difficult times require innovation and some out of the box thinking. Here are just a few hot satellite

applications that I see drivingthe industry in the next few

years :

Satellite Radio

One of the hottest productsin the market today, U.S.consumers have adopted

satellite radio faster than local radio, television,satellite TV, CD players, MP3 players, or digitalvideo recorders, surpassed only by DVDs in rate of adoption (see figure 1) . The largest satellite radiooperator in the U.S., XM Satellite has reached one

million subscribers milestone in less time than cabletelevision or online subscription services - two of the nations most successful subscriber businesses.Its competitor, Sirius Radio, lags behind at 150,000subscribers, but is growing at a astoundingquarterly rate of 42 percent.

XM and Sirius provide over a hundred channels of CD-quality programming seamlessly even whentraveling coast to coast. Both XM and Sirius havesigned contracts with major auto manufacturers

making them standard equipment in some luxury cars andanalysts predict it will be standard in all cars eventually.They also have a portable version which can be used athome or office. So hot is this product The Carmel Group is projecting that satellite radio will have a whopping 25 millionsubscribers by the end of 2007.

Wi-Fi

WiFi technology is low cost, widely deployed and a provides vital wireless internet connections anywhere.Operating much like cell phones which require cell sites (inWi-fis case theyre callled hot spots) to receive andtransmit signals , WiFi access technology can be enhance bya satellite backbone link enabling satellite service providersto provide low-cost broadband service to virtually anywherein the world. A recent report by Northern Sky Researchestimate that over 1,000 satellite-based hot spots alreadydeployed and the market projected to reach more than 95,000hot spots in the next five years.

With satellite-based access services only experiencingmodest growth, it is clear that alternative models such assatellite-WiFi will become increasingly important to satellitecompanies, according to Christopher Baugh, president of Northern Sky Research and author of the report. Themarriage of satellite backbone and WiFi access enables


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efficient broadband access to anylocation in the world. This newmodel also enables new broadbandapplications, such as Internet totrains and In-flight Internet, which

have not been effectively provisioned over existinginfrastructure. While hurdles suchas WiFi coverage limitations, short-term ROI and competing broadbandwireless standards do exist, the lowcost and easy plug-and-play natureof WiFi technology make it toocompelling for satellite companies to pass up today, said Baugh.

HDTV

Driven by an FCC mandate tocomplete the transition to DigitalTelevision (DTV) by 2007, HDTV(High Definition TV) is gainingground with the proliferation of High-Definition TV sets. Anextimated 1.5 million U.S.households now have DTV sets,which is expected to grow to 46.8

by 2007 million homes according to theYankee Group. Some analysts liken

the transition to digital andultimately HDTV as natural a

progression as the transition from black and white to color TV. Seizingthis opportunity, cable provider Cablevision launched its ownsatellite in July dubbed Rainbow 1,and subsequently launched on it a24-chanel HDTV satellite servicecalled VOOM. Cablevision promised to increase this HDTV bouquet delivered via satellite to 39channels by April 2004.

Not to be undone, satellite operator,PanAmSat launched a Galaxy 13/Horizons 1 satellite in September which the intent of creating adedicated HDTV neighborhood.The satellite is now carrying severalHD channels. Meanwhile,European operator SES ASTRA willlaunch from its 19.2 East orbital position on January 1, 2004 Europesfirst two HDTV channels operated byBelgian production companyAlfacam (see article in this issueEuropean HD ChannelsImminent, p. 11 ).

In-Flight Internet Connections

Two companies, Connexion byBoeing and Seattle-based TenzingCommunications are spearheadingthe drive to make In-Flight Internetconnectivity standard airline fareglobally. Boeing has the slightadvantage having signedagreements with several airlines inEurope and Asia andhas laid thegroundwork for their global network .Their service is expected to launchin 2004. The Connexion by Boeingsystem not only will provide e-mailand web access but access tocorporate internets and networks all while in a transcontinental flight.Tenzing has also signed airlineagreements and successful trialsand just recently also is looking intothe maritime market such as cruiseships with a successful trial withcruise company LindbladExpeditions. Northern Sky

Research estimates that Internet toairline service revenues at $1.4

COVER STORY

S M

In addition to managing editor of SATMAGAZINE , VirgilLabrador is the editor of the subscription daily service, Satnews Dai ly andthe free weekly website, Satnews Onl ine . He has worked in variouscapacities in the satellite industry for the last 13 years, most recently asmarketing director of the Asia Broadcast Centre in Singapore--a full-service teleport. He holds a masters degree in communicationsmanagement from the Unviersity of Southern California. He can be reachedat [email protected]

billion in 2007 and at $4.0 billion incumulative 2001-2007 revenues.

Telemedicine

Perhaps the underachievingapplication, which is not exactly newis Telemedicine via satellite.Introduced almost since the advent

of satellite technology with the SITE project in India in early 70s,telemedicine has not beencommercially tappedas a major market.The satellite applications arenumerousfrom videoconferencingto remote diagnosis and recentlyeven a mobile satellite-equipped vandeveloped by the European SpaceAgency (which has the potential to be as ubiquitous as satellite newstrucks ). With the healthcare industryconstantly growing in terms of size,complexity and sophisticationandwith its penchant for high-technologythis sector is perhapsmost ripe for myriadapplications usingsatellitetechnology.

OMTVellitetem

blevision

to )

ESA

TelemeVan(ESAphoto


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FEATURES

Europes First HD Channels Imminent

By Chris Forrester

G abriel Fehervari is CEO of AlfaCam, the Belgian basedoutside broadcast specialists whoare backing the launch of Euro1080,Europes first pair of HDTVchannels that go live on January 12004. Ferhervari says there has beena dramatic change in the number of HD broadcasts that his OB vans arecapturing and transmitting to broadcasters in the US and Japan,and now increasingly Australia,he added. He says that AlfaCamnow has 6 new HD-equipped OBtrucks complete with a total of 60HD cameras and 20 super slo-moHD cameras and AlfaCam iscapturing around 8-10 events amonth.

AlfaCam are already contracted to be covering 14 athletics events inHD at the upcoming AthensOlympic Games, and have recentlycaptured a slew of pop concertsincluding events featuring BruceSpringsteen, the Rolling Stones andElton John stadium-events in HD.Bringing the content to air is easy,says Fehervari. Financing the planis harder! He recognises that onJanuary 1 there will be only a few

hundred receivers in place but bythe end of 2004 he says he isconfident that the total audience will be around 100,000 homes, andgrowing to a target 4m homes by theend of 2008 and possibly manymore.

One channel (Main) goes via SESAstras 1H bird to viewers homes.

The other (Event) will go directinto digitally-equipped cinemas andsmall public venues. Main will kick off on January 1 with the traditionalVienna New Years Day concert plus

around 4 hours of other transmissions, building day-by-dayto a full transmission schedule of sports, concerts and possibly

movies. Music and sports will provide the backbone of planned liveevents, and Fehervari says theyalready have 3-4 months of materialin hand ready for transmission.

HD set-top boxes will start appearingin electrical stores towards the end

of the year priced at around EUR500-550, dependent on local taxes, frommanufacturers like Thomson, Pioneer and Panasonic. It is also understoodthat talks are taking place withHumax. A smart card will be includedin every box, valued at EUR100which will be Euro1080s total fee for the service. While not quite sayingthere would be no further fee in perpetuity Fehervari says by 2006there are good prospects for ad-

revenues to start flowing to what will be a well-heeled Plasma-readyaudience. Main; and Eventchannels would be fully encrypted,

AlfaCam CEO Gabriel Fehervani

Wi th the launch of Europes fir st ful l-f ledged HDTV off er,SES Astra i s once again charti ng new, promising waters.

H DT V i s alr eady a reality in countr ies such as the US or Japan,but E ur o1080 on Astra 19.2East represents Europes first foray into a new exci ting TV viewing experience poised to be the next

TV evoluti on: M ore and more Eur opean consumers are

purchasin g fl at-screen displays, and prices for L CD and plasma screens are expected to come down signi f icantl y over the next few years. As a consequence, viewers are aski ng f or D VD -l ike

viewin g experi ences when watching broadcast TV. An d satell i tes are ideally sui ted to manage the bandwidth r equi rements of H DT V transmissions. SES Astra wil l contri bute to kick start Eur opean H DTV wi th a variety of in iti atives li ke the satell ite

distri bution of Eur o1080.

--Ferdinand Kayser, President/CEO of SES Astra


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London-based Chris Forrester, a well-known broadcasting

journalist is the Editor for Europe, Middle East and Africa for SATMAGAZINE. He reports on all aspects of the industry withspecial emphasis on content, the business of television andemerging technologies. He has a unique knowledge of theMiddle East broadcasting scene, having interviewed at lengththe operational heads of each of the main channels and pay-TV platforms. He can be reached [email protected]

FEATURES

and additionallythe cinema servicewould bewatermarked asan additionalsecurity for rightsholders. The set-top boxes werehighly-specifiedand would becapable of automaticallyhandling all thenormal digitaland HDtransmissionstandards, fromstandarddefinition,through 720p to 1080 interlaced and progressive signals.

The Event channel for cinemas willoperate on a revenue-sharing model.Fehervari explained that with atheoretical EUR10 admission, heexpected E4.5 to go the cinema,about E2 to rights holders, aroundE1.5 to go in tax and the remainingE2 to be Euro1080s profit. He saidthere are 27,000 conventionalscreens in Europe and their modesttarget was to have around 100 of them equipped by January, 400 byMay/June and about 700 by Jan2005. He said only some 80European cinemas were todayequipped for any sort of d-cinemaactivity. Germany is already takingthe lead in equipping d-cinemas, hesaid, with about 40 equipped, plusaround 12 in Belgium. He expectedFrance to have at least 50 housesequipped by next June. Typicalinvestment was around EUR120,000,he said. He said nothing was beingleft to chance, either by Euro1080 or

A Euro1080 crew in action

the cinema owners, and eachcontract explored and covered indetail each parties plans, andmanaged to take 20 pages to explain

each others obligations. Fehervarisaid the contract guaranteed around100 events a year for d-cinemas.

While the Event HD channelshould start showing an immediateReturn On Investment, heacknowledged that the Mainchannels would lose money at first,and take around 18 months to getinto break-even.


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FEATURES

P eering into crystal balls to predict futuretrends and developments has always been

...The futur e cer tainly looks bright f or V SAT...What I see in the next f ive years wil l be conti nuing technological breaktroughs in both the space and gr oun d segment..

The Future of VSAT Networks

by Stuart P. Browne

a dicey endeavor. Futurists like Alvin Toffler in his book the Third Wave aptly predicted much of whathas come to pass in technology in the last tenyears. However he and others missed foretelling the biggest development in technology since theadvent of Radio in the early 1920s, the widedeployment of the Internet and the rapidunprecedented access toknowledge data bases that wealready take for granted. When Iremember working on my mastersthesis at the University of Colorado back in 1975, the smell of the musty book stacks in the EngineeringDepartment Library come to mindand the old Dewey Decimal Systemfor finding books and referencematerials. Today my kids are on theInternet browsing through Googleand other search engines whenthey work on their papers. I myself often get lost incyberspace as I link from resource to resource gee! How did I end up on a page dedicated to UFOSightings? So as I look at the murky images in mycrystal ball, Im more imaging rather than predictingwhat VSAT network systems will be like in say, thenext five years. To gander at the future to predicttrends, looking back over the last fifteen years iscertainly helpful so lets take a quick walk downmemory lane.

VSAT networks first appeared in the early 1980swhen Equatorial Communications, a start-uplaunched by Ed Parker and Dean Mack in awarehouse near Palo Alto, initiated the first use of really small dish antennas for receive-only (RO)applications. Data distributors like wire serviceswere quick to jump to using the technology toeconomically distribute information to thousands of RO VSATs dumping their cumbersome and costly

multi-drop private telco lines. Maybe they should have become known then as wireless services? By 1986, two-way VSAT systems appeared from Equatorial, NEC andMACOM Link-A-Bit all using C-band satellite capacity andeither CDMA or TDM/TDMA channel access techniques.These were all data only network systems designed tosupport transactional data communications and supported

primarily bisync and X.25 packet data standards. By theend of the 1980s Comstream, Fairchild Data, and EF Data

began manufacturing SingleChannel Per Carrier (SCPC)modems using advanced forwarderror correction (FEC)techniques. Companies like SSETechnologies, Titan and NJRC brought out low-power radiofrequency terminals (RFTs) firstfor C-band frequencies and thenfor Ku-band. Bent Pipe SCPCnetworks were widely used withTDM multiplexers to createMultiple Carrier Per Channel

(MCPC) systems that also carried voice with data. Muxcompanies like General Data Comm (GDC) and PCSI sawtheir products become married to MCPC VSATs.

While all of this commercial activity was going onterrestrially, VSATs were clearly benefiting from theadvances celestially in communication satellitetechnology. The satellite companies produced andlaunched larger payloads into orbit with larger antennaarrays and higher powered transponders producing better EIRPs and concentrated beam patterns (spots).All of these improvements in space enabled VSATs touse smaller dish sizes and lower power transmitters.GAsFet technology also gave the industry lower costLow Noise Amplifiers (LNAs) that were quite stable. The1990s saw the rapid development of more powerfulsatellites and more VSAT network products fromHughes Network Systems (HNS), Scientific-Atlanta (S/A), Gilat and STM. The trend by 1995 was to moveup the band from C to Ku to obtain greater bandwidth


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FEATURES

and smaller terminal sizes.Bandwidth on demand using SCPCdemand assignment technologies

transport of TCP/IP and provideQoS over the satellite and end toend in the network. One of the

iDirect design goals is to make theVSAT terminal appear as justanother IP terminal on an enterprisecloud to the CIO. The companyhas realized that TCP/IP network ubiquity is here to stay (at least for the next ten years) and VSATs must

accommodate it.

The future certainly looks bright for VSAT. Companies like HNS andShinawtra are well along with their high power broadband satellite plans to create beam switching platforms using Ku and Ka-bands.The problem of rain fade at Ku and

Ka-bands is being mitigated byonboard beam switching and more power from the bird. On the ground,VSATs equipped with automaticuplink power control (UPC) anddynamic FEC may now useconventional Ku-band satellitetransponders much to the sameeffect as the more expensive andcomplicated beam switching birds.The ongoing industry argumentsabout whether to put more

intelligence and switching capabilityon the bird versus at the groundterminal continue. Cisco hasactually experimented with putting arouter in space on a LEO launched by Surrey in the UK, whileTeleDesic and ICO, the systemsthat were to have the ultimateintelligence in space, have bothgone moribund. So as usual the roadto prosperity is littered with the

ruins of great inventions. One thingthats for sure, is that broadband,multi-point VSAT networks that

enable end-to-end QoS and network security are in demand. Perhaps oneof the most interesting trendsnoticeable has been the move awayfrom terrestrial frame relay (FR)network by enterprise networkstowards using VSAT. What VSAT

can enabletoday is amoremanageableand highly

secure platformfor the

network operator who is fightingconstant intrusions and DNSattacks.

What I see in the next five years will be continuing technological break throughs in both the space segmentand ground segment. What Id liketo see in the near future would be

flat panel array antennas for two-way VSAT become affordable.Making VSAT unobtrusive and easyto align to a satellite is still an issue.Id like to see the satellite industryagree on an implementable air linkstandard (already DVB-RCS is beingchallenged by DOCSIS) and mostimportantly, governments need to permit the transportability of VSAT

were implemented and used indeveloping countries to deploy longdistance telephone services.

By 1998, the Internet bubble was infull expansion and so was alwaysconnected broadband networks.DSL andcablemodemtechnologyquickly

becamesoughtafter asusers demanded a better connectionexperience as they browsed theWeb. In an attempt to capture a portion of this consumer market,satellite communications technologyusing VSATs were employed to provide Internet services using bothSCPC and TDM/TDMAtechnologies. HNS created Direct PC

and Gilat StarBand to apply VSATtechnology for the first time on aconsumer level. ViaSat, amanufacture primarily gearedtowards government satcomnetworks, and EMS Technologies,entered the market by developingKa-band terminals for companieslike ISky (now called WildBlue). Inthose days the sky did indeedseem like the limitand then in 2000the meltdown on Wall Street started

for the Internet which was rapidlyfollowed by the melt down of thetelecom sector and the washout of many technology companies. One of companies to emerge from theblow-out has been iDirectTechnologies, a company that Iwork for. During the Internet goldrush, iDirect recognized that VSATnetworks needed to be architectedto provide the most efficient

iDirects Swift Deploy TerminalSolution


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equipment and transmissionsacross national boarders, much likeINMARSAT can today. Gettingdiverse interests to agree totechnical standards and to makegovernments to open skies areclearly the two greatest hurdlesfacing the VSAT industry as weapproach 2005. Gazing deep into mycrystal ball, we may see orbitingantenna farms with huge antennasand HPAs being serviced byastronauts based at the ISS. Thiskind of satellite monster wouldenable cheap, handheldbroadband satellite terminalssupporting voice, data and video

Hawaii based - Stu Browne has more than 28 years insatellite communications as a network engineer, planner and developer. Hehas been involved with VSAT networks since the early 1980s and has

worked in Alaska, Europe, Africa, the Middle East and across Asiadeveloping telephony, transactional data and broadband solutions fortelcos, governments and enterprises. He is the Editor-Asia-Pacific of SatMagazine and is currently the Vice President and Managing Director,Asia-Pacific Region for iDirect Technologies Inc., a US manufacturer of broadband VSAT network systems headquartered in Reston, Virgina. Hecan be reached at: [email protected]

communications from our wrist or inthe form of a wearable VSAT. If this makes you laugh just look back at the size of cell phones in the early90s. I think we may even have a better laugh when we think back tothe good old days of 2003 when a

S M

.9 meter VSAT antenna and a 1 wattradio were considered very small!

technology.

FEATURES
http://www.kavera.com/


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FEATURES

O

The Competitive Energy Services Industry

Turns to High-tech VSATsby John Puetz

ne energy services companyrecently turned its entire

business model, for deploying itsgeological expertise and explorationservices, upside down. Before itdeployed its satellite-based

broadband wide area network (WAN) across the Americas, WestAfrica and Europe, its experts wentto where the geological data andaction was often spending half of their time in non-productive travel,getting to exploration sites at sea or in hard-to-reach land locations manyhours or even days after departure.Once on site, they would analyzelarge amounts of data captured inreal-time using specialized

computing applications, and makedrilling or process recommendationson the spot, yielding immediateimproved results.

The energy exploration and production industry is a veryeconomically competitive businesslose a few days of production or miss the criticaldecision point during a drilling project can mean a loss of millions or

hundreds of millions in revenues.After deploying their broadbandVSAT satellite network, the data nowcomes to the experts, turning the process on its head. The high-volume real-time data is brought tothe regionally located experts andeven to the client, who can nowcollaborate on the project much more

effectively. Furthermore, theseexperts can even supportoperations at several sitesconcurrently. The results?Increased productivity, better decision-making, larger servicerevenues, and happier customersand employees. And when localconditions warrant, expert on-call

help is just a videoconference or atelephone call away for the drillcrews.

By integrating broadband capacitywith smart IP routing capabilitycompanies are now successfullydeploying broadband VSAT-basedWANs that bring together their LANs, which are thousands of

miles apart at speeds of 2Mb per second or more.

Several of the most attractive benefits of VSATs are their costindependence of distance,exceptional reach, wirelessanywhere-to-anywhere connectionsand high reliability banks, stock exchanges, retail chains,governments and multinationalenterprises across the globe haveused VSATs for years. Because their newly founded bandwidth-on-demand intelligence keeps efficiencyhigh and operating costs low, VSATsare finding even broader adaptationin markets like disaster recovery and business continuity.

Full-mesh connections allow vessels and rigs to communicatedirectly with one another


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FEATURES

Oil and gas companies havetraditionally used a variety of wireless platforms to talk, fax, e-mail and transfer their all importantdata to and from their remoteoffices, staging areas, well sites,off-shore rigs and yes, even ships.These platforms include: Inmarsat,Iridium, Globalstar, microwave, HFradios and VSATs. Of these,VSATs provide the highest datacapacities with the longest reach five thousand miles or more.

But in the end, the solution chosenis often based on economics. JohnMiller, Director Satellite Networksfor Cable & Wireless recently saidthat, Theres been a definite long-term uptrend in increasing datarates for the oil and gas sector.This is a result of the greater useof networked IT and the drivingeconomics of getting well loggingdata back to base for almost real-time analysis by the experts. And if one is going to use their Inmarsatterminal for more than about anhour a day, you should probably be looking at VSATs. Thats thetrade-off we generally see. Andwhen you use their 64Kbps dataservice you very rapidly reach thattrade-off point where VSATs havethe price advantage.

Ron Wagnon, Director of Sales atCapRock Services agrees, Themain driver in the oil & gasindustry moving towards

broadband VSAT is economics. Dataneeds are going higher and higher asrigs need to send data back to shorefor processing. Data costs onInmarsat are getting way too high because the data throughput is solow. And VSATs are fairly mobile andare ideal for drilling rig operationsthat move from location to location.

CapRock has expanded its globalservice operations considerably in2003 as a direct result of the increaseddemand for broadband VSATservices.

John Puetz is president of MasterWorks Communications(www.mwc.cc ), a business andtechnical consulting services

firm specializing in satellitecommunications. He can bereached at +1.760.723-8897 orby email at [email protected].

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http://www.satnews.com/products/satfinder.htm


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FEATURES

BT Broadcast Services:

High Margins Starting to FlowBy Chris Forrester

B ritish Telecom BroadcastServices (BTBS) has sold 7 of its SatNet automatic self-seekinguplink units to Sky Italia for itsSkyTG24 all-news channel. Mark Smith, BTBSs CEO, told us that itwill open a Middle East-based hubfor SatNet clients next month, andAsia will join the network in the NewYear. SatNet is basically a self-pointantenna that locks on to the satellite.The customer buys an uplink devicethat can fit onto the roof of a car, or the top of a van. Customers then buyour software kit which comes alongwith a usage deal. It might be 100hours, or 1000 hours, just like aSIMcard. It auto-seeks onto our capacity wherever you are in the

world. SkyItalia have taken theservice, and their journalists plugtheir camera in and moments later they are on the air. No intervention,no complex booking, no wastingtime. We handed over the keys of the first truck at IBC. The

agreement, hopefully in its firststage, is over 5 years and worthseveral million Euros. What SkyItalia want to do is create an Italiannews channel (SkyTG24), verymuch on the CNN model, with breaking news coming in from allover Italy, and I see this is aground-breaking contract.

Smith says the deal representsanother stage in BTBS plan to rapidly shift from the commoditisedend of the spectrum to a business

based on value-added services.Our revenue growth is higher thanany of our competitors, and in thesecorporate areas we are growing byalmost 100% a year. The issue wehave overall is that while it is toughin terrestrial and broadcast,although revenues are growing atnearer 8-9-10%, but what we havemanaged to do is balance the higher yield areas against the poorly performing sectors, and to such anextent that these new solutions businesses are beginning to produce really tangible results. Wehave weathered the storm, and seehigh-margins start to flow.

Three years ago the business badly needed to change from sellingcommodity bits and pieces to people, says Smith. At IBC you

BT Handover of the first Satnet unitby Mark Smith (right) to GraemeThomson of Sky Italia (left)

Media Reel from BTBS, snapilly finding archive material


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FEATURES

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could see the progress made, andhow we have focussed on ingest,storage, re-purposing, play-out anddelivery. Before we were justdelivery merchants, and that was allvery well, but we had to build extralayers on that core service, with usconcentrating on all the key stages between acquisition and delivery.Thats at one level, but just beneathis storage, plus ingest, re-purposeas well as delivery. The CarltonmediaReel product is oneapplication that uses all of theseelements. What our customers arerealising is that theyve got thiscontent, and they are asking howthey can re-purpose it and then playit to a mobile phone, the WiFi, or PDA. At IBC we demonstratedcontent going to all these devices,especially the 2.5G phones thatmore and more people own. Themodel is for an outfit like Sky Newsto supply content into the cellular operator so that the businessmancan buy say 500 minutes of callswhich might include for a small extra payment an option which deliverslive breaking news every 30minutes. The content already exists,so when the broadcaster ingests tous and we play it out to Vodafone or 02 at 40kb/s, we then strike a three-way revenue share model with the broadcaster and cellular operator,and this taps us in to hundreds of thousands of business users for whom those few extra Pounds or Euros is small change for keyinformation.

BTBSs mediaREEL, is animpressive piece of storage softwarethat taps into BTs digital contentmanagement system (DCMS).London-based broadcaster CarltonCommunications is already usingthe system, as is news organisation

APTN. BTBS has created a tape-less distribution environment for Carlton and its clients allowingusers to remotely choose, clip andclassify content and post it ontoMediaREEL. Programme makersthen log onto the website, previewthe material available and then order the perfect content for delivery viaFTP (file transfer protocol) or tape.Revenue from the service will beshared 50/50 between BTBS andCarlton. Smith says thedevelopment costs on mediaREELwere significant, and have takenthree years to perfect.

Smith said BTBS recognised the part that fibre inevitably now playedin any global system of connectivity, and BT was noexception. For next year we see amajor expansion into Asia. We havehired staff, with more to come. Wehave rolled the network out to circlethe globe with fibre, building or establishing partner teleportsthroughout Asia, giving us theability to uplink or downlink frommore locations. Well have fibrefrom Los Angeles to Tokyo andHong Kong, and this is alreadyoperational. The next year is biggeographic push. But also theresdigital-cinema. We will build asecond DCMS digital control

centre, probably in Los Angeles. Wethink there will be film-owners usingus. Los Angeles has been busy,allowing us to invest in a fourthantenna on the roof of the facility.We are transmitting 72 channelsfrom it. The only thing that hasntquite happened is in terms of media producers using our floor space tolocate their operations. That hasntquite happened, but one of the problems is that we stole theOccasional Use dish because wewere so busy with permanentservices. PAS loaned us a dish, for which we paid of course, just Northof our facility. Now that we have the4th antenna live, we have the OUdish back in service.

After Asia, BTBSs next geographicarea of expansion is Latin America.The expansion region where weknow we are weak is centred onMiami, and catering for the Latinomarkets. We are talking now to ateleport partner and looking at howwe might make an acquisition, and build into that region, says Smith.

We wil l buil d a second DCM S digital control center, probably in Los Angeles -BTBS CEO M ar k Smith


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VIEWPOINT

Making Your Idea Happen--

Creating a Viable Satellite ApplicationBy Bruce ElbertPresident, Application Technology Strategy, Inc.

and preparation. In satellite communications, the rightidea properly implemented can create a new business,or even change an industry. DIRECTVs digital DTHsystem, Wal-Marts VSAT network and InmarsatsRegional BGAN are examples of innovative ideas thatgained prominence in our industry.

The Satellite Applications TechnologyConference (SATCON Expo) in NewYork this November is a platform for exploring options for industrial-strength uses of space technology brought to earth. In our panel on TheCost of Benefits, we explore how onetakes an idea and makes sense of it.Operations Research methodologies of

the 1960s delved into a variety of measures at ends of this dichotomy.The simplest approach is to compute the total cost of a particular endeavor, measured according to capital andoperating expenses. This is then divided by somemeasure of effectiveness of the solution communications capacity obtained or number of userssatisfied. The cost/effectiveness became the sine quanon for making major investment decisions ingovernment circles. Today, the favorite in these andmany industrial circles is total cost of ownership(TCO). While no one would argue the value of knowing

the TCO, it still is virtually impossible to accurately predict in this complex world of technology, inflationand business uncertainty. Nevertheless, we must doeverything we can to get our arms around the cost.

Moving to the denominator, benefit is even moredifficult to asses than cost. What, precisely, are wetrying to achieve with the new satellite application?Many expensive systems have turned from a field of dreams to a scorched landscape (at least for the originalinvestors, who bought the benefit vision and paid most

A powerful idea is a valuable thing making ithappen requires a great deal of planningof the costs). Turning again to the US military, a policy of fly before you buy seemed to address the uncertainty of committing to a particular program before the benefitscould be measured in actual service. This works for acommercial, off the shelf (COTS) system like a fullyequipped Hum V containing the latest in quad-bandsatellite communications technology. Therefore, anyonewho delves into a new technology platform would be well

advised to run pilot tests. Acompletely new development likethe original DIRECTV system isanother matter you basically betthe farm on the team you pick to runthe show. Such successes require

planning, teamwork and intelligenceat all levels. There must also be agood mix of technical brilliance,marketing prowess, and businesssavvy. We suggest six guidelineslater in this article.

Apart from cost/benefit, we need to address the variety of risks faced by the application. These fall into the followingareas:

technical inability of the system to meet itsspecifications

schedule the impact of late delivery of theservice, pushing revenues out and allowingcompetitors to gain ground

cost the problem of the overrun

market something all telecommunication andinformation services face

One of the tools we find effective is the old B-schoolSWOT analysis--e.g. strengths, weaknesses, opportunitiesand threats. Taking cost/benefit to the next level, SWOTforces us to look at the more critical dimensions thatamplify the risks that are always there. If you have moneyand time, you can accomplish almost anything. Leadingyour own SWOT team can categorize and possiblyanticipate the drivers.

...Done right, a powerfu l satell ite appli cation can put a company in f ront of its competi tion and even change an industry f orever...


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Most organizations with a taste for satellite technology dont have (or want to tie up) the resources of aDIRECTV or Inmarsat. Rather, theymust understand the cost/benefitimplications of putting somesignificant part of their business upin space. We offer the following sixstep process for the new user or network developer:

1. What is the strategic objective inusing satellite communications?This key question involves twoaspects (a) how the features of a broad area satellite service are tieduniquely to the application needs,and (b) the direct benefits to the business or mission that derive fromthis. Service to cities on anationwide fiber loop is probablynot that attractive, but reachingships and airplanes over the oceansis something only satellite canaccomplish.

2. What kind of satellite isappropriate? While there are manysatellites to choose from, selectionof the most appropriate one iscentral to meeting the missionobjectives cited above. A thoroughanalysis with a simple link budgettool like SatMaster Pro providesconfidence in the rolling out thenetwork to all locations.

3. What are the interfaces andapplications to be supported? Thisrequires a lot of homework and canlast a month to a year depending onthe maturity of the user applicationor device. It will be difficult to getmarketers and users to verbalize andquantify their desires, and interfacesare often ill-defined in the beginning. Effort in this area will benefit the cost, to turn a phrase.

4. Who will evaluate the technologyand economics? The timeline of activities from idea formation toimplementation demands differentskills at each phase. The perfect organization does not andwill never exist. What youll need todo is establish a core team of technical, business and operationfolks who understand theorganization and its mission. Fromthere, resources must be addedalong the way, includingconsultants, vendors, contract staff and legal practitioners.

5. What are the selection criteria?Many a new system is conceived byone group and implemented byanother. Through the process of

outsourcing all or part of theapplication, many barriers alongwith risks may be reduced. Selectionof the right technology andsuppliers should be based oncriteria that are important to theorganization. The previous four steps provide the basis of compilingsuch criteria in tabular form. Create acommittee of stake holders to avoid

bias in the selection and improve buy-in by all involved.

6. How will this network beoperated? This is not a trivial matter to be left for later. You have as manyoptions here as with selection of application developers andimplementers of the network. Theoperation phase may actually be the

Inmarsats Regional BGAN mobile IP router using satellite links is anexample of an innovative application of satellite technology. (source: Inmarsat)

VIEWPOINT


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VIEWPOINT

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Bruce Elbert has over 30 years of experience in satellite communicationsand is the President of Application Technology Strategy, Inc., which as-sists satellite operators, network providers and users in the public andprivate sectors. He is an author and educator in these fields, having pro-duced seven titles and conducted technical and business training aroundthe world. During 25 years with Hughes Electronics, he directed majortechnical projects and led business activities in the U.S. and overseas. Website: www.applicationstrategy.com Email: [email protected]

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(Click on the page no. to go directly to the ad; click on the url address to go to website)

objective of your principle supplier (e.g., if its a teleport operator andnetwork service provider).Done right, a powerful satelliteapplication can put a company infront of its competition and evenchange an industry forever. Wal-Mart probably did this with their innovative use of a star VSATnetwork emanating from their headquarters in Bentonville,Arkansas. Like American Airlinesand its Saber reservation system,Wal-Mart pushed other retailers toincorporate VSATs into their telecommunications and businessmanagement strategies. The power of the two-way VSAT to deliver near-broadband interactive serviceto any location is the foundation of new services to remote locations.

Another innovation in satellitecommunications is the data broadcasting network, somethingthat has been with us for a couple of decades. What is different today isthe marriage of the Internet with the point-to-multipoint feature of GEOto create a content distributionnetwork (CDN) with good cost/ benefit properties. From the cost point of view, the hardware,software and necessary satellitecapacity are affordable and in factcompare very well to traditionalapproaches like bicycling tapes andCD-ROMs and file delivery over broadband Internet connections.Strong benefits like centralizedmanagement with local control of display and ease of expansion andupgrade provide what I think could be part of a killer app for satellite.Several suppliers offer CDNtechnology and network solutions,such as SkyStream Networks andGilat Spacenet.

Satellite communications isnt ascomplicated as it was even ten yearsago. If you can configure a Ciscoenterprise router, you can manage asatellite network. Satelliteinfrastructure is straight forwardonce you understand its logic andnature. The US government is thelargest single user, followed by the

television networks andinternational telecommunicationscompanies. Corporate users arelimited, but those who have adoptedit tend to stick with it for goodreason. The only thing better than agood application idea is making ithappen via a solid plan.
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EXECUTIVE SPOTLIGHTTiscalis New Satellite Services: Whats Up?Interview with Tiscalis Senior VP, Mario Mariani

iscali was created in 1998 inthe wake of Italys telecomT

Mario Mariani

deregulation as a regional phonecompany. It has since greatlyexpanded as an ISP after enteringthe stock market and raisingcapital to consolidate other ISPssuch as Netherlands World OnlineInternational and Frances LibertySurf pan-European services. It nowhas over 7 million customers, half a million of them broadband users.

Mario Mariani joined Tiscali fiveyears ago and now heads up thecompanys global businessdirection. Prior to that he hadworked in various mediacommunications R&D rolesincluding Video OnLine, Italysfirst national ISP, which was lateracquired by Telecom Italia. It is forthis reason we expected someinteresting answers to ourquestions about Tiscalis view onthe future of satellite broadband.We learned that there have beenmany twists and turns along theway, with much more innovation tocome. Though the future poses itschallenges for satellite, huge nichemarkets remain attractive businessopportunities, not unlike, forinstance, the powerful place AppleComputer holds in the world of personal computers. Mariani spoketo SatMagazine correspondentHoward Greenfield, excerpts:

HG (Howard Greenfield): What hasbeen your experience introducing a

pan-European satellite broadband service?

MM (Mario Mariani): Tiscali hasintroduced satellite based Internetaccess products back in 2001. As agroup we have a pan-Europeanstrategy, operating in 14 Europeancountries , thats why we have beendelivering satellite offerings in mostof our main markets. This year, wehave added hybrid services to our traditional 2-way services to targetmore aggressively residentialcustomers and, in general, to deliver broadband in areas where terrestrialtechnologies are not available.

HG: What are the driving application forces?

MM: Our approach is simple: todeliver a broadband experience toresidential and business customersout of reach of ADSL and cable. Inthis sense, we feel that anyapplication that is enhanced by ahigh speed, always on connectionis in principle appropriate for our services. However, we also have tocope with a technology, satellitetransmission, that has a fewcharacteristics that may limit somespecific usage. For example wediscourage real time applicationssuch as gaming or teleconferencingover the internet.

HG: What strategies work, and what can the rest of the world learn

from Tiscalis experiences?

MM: We use two differentmarketing approaches that arecomplementary to each other. The

first one is to benefit from thecommunication and promotion wehave from our traditional ADSL products proposing an alternativesatellite product whenever ADSL isnot available; this allows us todeliver broadband everywhere in thecountries where we are present. Thesecond approach is to target theniche markets created by the unevencoverage of ADSL and Cable withspecific initiatives and agreements;this commercial policy has led tosuccessful achievements in ruralareas and with specific verticaltargets.

HG: What percentage of Tiscali service offerings is terrestrial-based, and what percent satellite-based?

MM: Satellite represents a small partof our business, addressing only aniche of the total market. The service


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is still more expensive than a similar ADSL service and has sometechnology barrier in the awarenessof the customers that are just now beginning to disappear in the caseof ADSL due to masscommunication. However, we believe there is a market for theseservices today and in the future; infact, despite the increasing coverageof terrestrial technology, there is a physiological percentage of the population in each country that islikely not to be ever covered.

HG: What is the most promising area of Satellite applications for the future?

MM: We see a lot of potential in theapplications that allow to exploit thetechnology in the best way. Wehave a few interesting projects of developing specific applicationssuch as video broadcasting andmulticasting, e-learning, scheduleddownloading etc. The real challengeis to translate these interesting possibilities with a service offeringthat matches the requirement of themarket.

HG: Can you cite some exciting examples of how consumer and corporate customers currently usethese services?

MM: I can quotetwo differentexamples: the first one is the case of one of our Business Customersconnecting their partners with our Small Business 2-way access product to deliver a distance-learning application package. Therequirement here is to have a broadband connection availableeverywhere and that can berelocated as the servicerequirements need to connect new

sites or to move existingsites.

The second one is a trialwe are carrying out inFrance, exploiting acombined solution withsatellite connection andWi-Fi; the combinationof the two technologiesallows here to connectresidential customerswithin a rural communityto, once again, overcomethe digital dividelimitations.

HG: What are the most compelling new satelliteapplications & servicesTiscali offers now and inthe next 12 months?

MM: Although our vision is to provide High Speed Internet accessas a complementary service toterrestrial broadband technologies,we intend to exploit the satellitetechnology for its best features. Wetherefore do not want to create toomuch differentiation with respect toour other broadband services but, atthe same time, we are planning todeliver more value addedapplications to our satelliteresidential and business customers.We are think ing about e-learning,events streaming, business TV ,scheduled content download, etc.

We are in the midst of a naturalevolution of the Internet movingfrom an access only demand to amarket place where customers arerequiring more and more valueadded services. We have a generalstrategy to enrich our offer with acomplete set of services rangingfrom security to media services, from

An ad in Tiscalis slick campaignto woo Europeans to broadband

messaging to content applications.Satellite services will follow the

same evolution.HG: What are the biggest technical and commercial challenges to robust, satellite

services that can compete with ADSL and what must the industryas a whole (not just Tiscali) do to

provide better value for the satellitecustomers?

MM: I do not see competition

between Satellite and ADSL because they are addressed todifferent and separated geographicarea, the former being attractive onlyin the areas where ADSL is notavailable.

Satellite is an expensive media wherethe economy of scale that allowedthe retail prices of terrestrial accessservices could not balance the costs


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November 2003

typical of the technology. Commercially, we sharewith other industry players, like for examplesatellite bandwidth owners and customer terminals manufacturers, the challenge todecrease prices to partially fill the gap with thecheaper terrestrial services. With the sameobjective, to deliver a possibly homogeneous broadband access, geographically independent,we must work to increase the performances of satellite services.

HG: Describe some examples or lessonsthat Tiscali has learned along the way in providing

satellite to the market?

MM: From a marketing point of view, a strategythat has led to very good results has been to gofor agreements with regional based associationsand influence group. This has allowed to targetsuccessfully rural and niche areas.

From a technical point of view, we learned not tocreate false performance expectations to our customers; we intend to communicate the ideathat Satellite is somewhat similar to ADSL andother broadband technologies but has somelimitations, especially related to latency, that arespecific and proper of satellite transmission.

HG: Will satellite broadband ever be able tocompete with terrestrial in price and

performance?

MM: No, I believe there are some technicalcharacteristics within satellite technology that willnot allow the conditions that allow the economyof scale typical of terrestrial technologies. At thesame time, once again, satellite does not competewith terrestrial technologies and will be attractiveonly in the areas where it is the only technologyavailable.

HG: Are there different customer requirements for satellite broadband in the different parts of the European market?

MM: As a European company, we handle marketdifferences in our everyday business. I would saythat there are probably not specific satellite

requirements but we do have different, in general, broadbandrequirements. For example, we have the Nordic customersthat are usually heavier users than the average and aretherefore more performances demanding. On the other handwe have our eastern market, Czech Republic that is just nowstarting with terrestrial broadband services and is thereforemore keen on alternative satellite access services.

EXECUTIVE SPOTLIGHT

Howard Greenfield is principal of GoAssociates Consulting Partners (www.go-associates.com), aleading consultancy that develops and implements high-techproduct marketing and business development strategies.He has held leadership roles in Fortune 1000 and some of Silicon Valleys top companies including SunMicrosystems, Informix Software, General Foods/Kraft,University of California, Apple Computer and was VP,Product Marketing at Obvious Technology and Softface,Inc.. Mr. Greenfield is a frequent contributor to leadingindustry publications, and serves on the board of BlueVoice,a non-profit organization dedicated to ocean life and habitat. He was educated at the University of California, andStanford University, where he received a Masters Degree inInteractive Technology. Howard can be contacted [email protected].

2003 All Rights ReservedHoward Greenfield

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FINANCIAL SNAPSHOTIntelsat Wins Lorals North American AssetsBy Chris Forrester

A s expected, Intelsat has wonthe bidding auction for the

Intelsat numbers (Q3 to Sept 30)

2003 2002

Revenue $237.2m $246.6mNet income $ 48.4m $ 82.4m

Data: company report

bulk of Lorals satellite fleet and will pay $1.2 Billion to pick up theassets, a considered a strategicvictory for the business. Back inJuly Intelsat bid for (then) six USorbiting satellites to Intelsat for $1

Billion in cash but a recent offer from EchoStar somewhat trumpedIntelsats bid by a higher bid,forcing Intelsat to up its payment byaround $100m. The sale process isnow scheduled to conclude speedilyonce formal approval is given to thedeal.

EchoStar said they weredisappointed by the outcome, andat one stage seemingly were

considering pressing their offer of $1.85 billion for the entire company.They were already offering $200m to buy a near-completed DirecTVsatellite from Lorals liquidator.Those decisions were reversed Oct23 with Echostar deciding tocompletely pull out of the contestfollowing criticism from the bankruptcy court judge who hadchastised EchoStar for trying to tieup DirecTVs 7S satellite currently

nearing completion by Loral.DirecTVs 7S is due for launch in the New Year and needed by DirecTV toexpand its local satellite service from64 markets to around 100.

On the financial front Intelsatreported a set of Q3 numbers onOctober 21 that again reflected thehighly competitive downward pressure on prices. Q3 earnings

decreased to $48.4m, from $82.4m inthe same period last year. Telecomsrevenues overall were also stressed,falling 4% to $237.2m (from $246.6m)which Intelsat said reflected the flatconditions within the sector.Operating expenses were up 23%, at$165.8m (from $134.9m). On theupside, CEO Conny Kullman pointed out: With the capitalexpense associated with our fleetrenewal program nearly complete,our year-to-date free cash flow fromoperations of $284 million is eighttimes that of the same period in2002. Intelsats backlog atSeptember 30, 2003, representingexpected future cash payments to bereceived from customers under contract, was $3.7bn, as comparedto $3.8bn in backlog at June 30,2003. We continue to project thatour revenue decline in 2003 will beof smaller proportions than thatexperienced in the prior year, saidIntelsat CFO Joe Corbett.

Meanwhile, Intelsat and Orbit DataSystems (ODSL) said Oct 21 theywould launch a two-way, satellite- based broadband Internet access

service to be available directly toconsumers and small office/homeoffice users in the Mid-East. In amulti-year agreement, Intelsat will provide the integrated, end-to-end

network connectivity, while ODSLwill be responsible for sales,marketing and retail distribution of the service in the Middle Eastregion. In preparation for servicelaunch, the Intelsat-providedgateway required for ODSLs servicehas been installed in Perth,Australia, and is operating a betaservice. Service will commence later.

SM

Intelsat CEO Conny Kullman


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MARKET INTELLIGENCEPresented by the Global VSAT Forum

Turning Around the Telecom Downturn

T elecom executives are moresparing these days in their use

By David HartshornSecretary-General, GVF

of terms like revolution, explosivegrowth and killer application, aterminology trend that was re-enforced earlier this month during theInternational TelecommunicationUnion (ITU) conference & exhibition,

Telecom World 2003, which shrank by30-40%, compared with theorganisations global event a fewyears ago.

Even so, few to none of the participants which included 911exhibitors, 375 CEOs, 148 governmentofficials and tens of thousandsvisitors - seemed surprised. After all,double-digit declines in event-relatednumbers have become the industry

norm, and trade-press headlinescontinue to bear bad business news.

But there were surprises. Accordingto Birth of Broadband, an ITU reportissued during the event, last year,while the industry was in the throesof economic downturn, the number of worldwide broadband subscribers

grew 72 percent to approximately 63million. The Republic of Korea led theway in broadband penetration, with

approximately 21 broadbandsubscribers for every 100 inhabitants.Hong Kong (China) ranked second inthe world with nearly 15 per 100, andCanada ranked third with just over 11 per 100. Home users are driving thevast majority of broadband demandin all markets.Today, approximately one in every10 Internet subscribers worldwide,

or just over 5 percent of the totalinstalled base of fixed linesworldwide, has a dedicated broadband connection. However,many more people share high-speedInternet access through a local areanetwork (LAN) at work or at school.In the Republic of Korea, which isapproximately three years ahead of the global average in convertingInternet users to broadband, broadband subscribers represent 94 percent of total Internetsubscribers.

South Korea isnt an isolated case.By year-end 2002, broadbandservices were commercially availablein approximately 82 out of 200economies worldwide, said Dr. TimKelly, Head of the ITU Strategy andPolicy Unit, which prepared thereport. Many of these economieshave reported impressive growth in broadband subscriber numbersduring the past four years, and insome markets broadband is expectedto become one of the fastest growingconsumer communications services.

0

1

2

3

4

5

6

CPU 100/sq km VSAT Solar

US$

Comparison of Breakeven Costs

This chart shows the effect on break-even costs assuming: Use of US$300.00 VoIP terminal; ppopulation density of 100 people per square km.;VSAT-based backhaul; photo-voltaic solar cells and battery array.

Source: ITU Trends in Telecommunications Reform 2003.


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S M

The above noted COMSYS and ITU

reports, entitled The VSATReport and Birth of Broadbandrespectively are available forpurchase at http://www.comsys.co.uk and http://www.itu.int/indicators

For more on the Global VSATForum information callTel. +44-1727-884-627 Fax +44-1727-884-839 or E-mail:[email protected] Web:

www.gvf.org

The vast majority of broadbandusers today are and for the shortterm shall remain - in the developedworld. For example, in the UnitedStates, broadband is predicted toreach the 25 percent penetrationmark more quickly than either PCs or mobile telephones have in the past.(In the United States, statisticsissued by the FederalCommunications Commissionindicate that 16% of U.S. zip codesdid not report any high-speedsubscribers as of July 2002,including 50% of zip codes insparsely populated areas.)

As for the developing world, lower-cost services may enable somecountries to use broadbandtechnology to leapfrog ahead of traditional wireline infrastructure.Instead of waiting for wirelineservices, which can be costly todeploy, they can potentially use broadband to develop an integratedvoice, data and video network.

Does increasing broadband demandhave any relevance for satellitecommunications? Compare the ITUnumbers above with those of COMSYS, a U.K.-based consultingfirm. In the companys 2003 editionof The VSAT Report, the number of VSAT sites in service grew by27% between 2001 and 2002, but thelions share of this business derivedfrom the enterprise markets, wherethe number of VSAT networks grew by 12% and broadband accessservices increased by 40%. Pure

enterprise orders jumped by morethan 35% in 2002, with enterpriseand broadband sales of 90,000 and30,000 units, respectively.

Is this to say broadband via satelliteisnt a consumer play? So far, truesatellite Internet consumer service isa U.S. phenomena. As has beenwidely reported, StarBand grewquickly in 2001, but progress washalted by its Chapter 11 filing.Hughes DirecWay service has not been actively marketed, yet hadmanaged to connect 165,000 subs by March 2003. Further, theCOMSYS report predicts that therewill be at least 250,000 Internetaccess VSAT subs in the U.S. byyear-end 2003.

For the developing world,meanwhile, the ITU cites satelliteservices as a key link in theconnectivity chain. In Trends inTelecommunications Reform 2003,the ITU features a case study onBhutan, where wireless broadbandtechnologies are now used to provide basic voice telephoneaccess, connecting villages that previously were out of range of traditional telephone service. Theinternational link is provided viasatellite.

Similarly, in India the SustainableAccess in Rural India (SARI) projecthas examined the self-sustainabilityof rural Internet communications,including the use of VSAT for backhaul. The research shows that

adding a VSAT-based backhaulincreases daily break-even costs byonly US$0.37 (see chart).

Examples such as these will figurewell in the agenda of the ITUsWorld Summit on the InformationSociety (WSIS), which will take place in December in Geneva, wherehigh-ranking leaders from the publicand private sectors will gather to jointly develop solutions that will bridge the Digital Divide as wellas turn around the telecomdownturn.

See you there!


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November 2003

FEATURED EVENT

national non-profit, non-governmental membershiporganization with global membership

that was founded in Honolulu in1980 to bring together all those whohave an interest intelecommunications in the vastPacific Hemisphere.* It serves thedigital information age through amajor annual conference, regionalseminars, a respected quarterlymagazine and a variety of other activities.

PTCs annual Pacific

Telecommunications Conference inJanuary has become one of the mostimportant regular events held inHawaii. Its impact extends far beyond the participants who attend,as it serves to focus the attention of the major providers, operators,manufacturers and users of information-age services in thePacific on Hawaii as the geographiccenter and natural meeting place of the region.

The Council attracts virtually all providers and major users of telecommunications and informationsystems and services, as well asmanufacturers, policy-makers,regulators, technologists, lawyers,scientists, academics and otherswho share an interest in thedevelopment and beneficial use of telecommunications in the region.

The Council prides itself on being a

people-centered organization. The personal contacts formed throughthe Council in the amicable andinformal environment of the annualconference and seminars are a primary benefit of membership.Important business and academicrelationships are established. In pastyears, hundreds of millions of dollars worth of contracts resultedfrom meetings and contacts duringPTCs annual conference.

In many ways, PTC is unique in theICTworld. It serves as a focal pointand a meeting place to iron outotherwise intractable problems andto transact business. In short, PTCis the place to be in the worlds mostdynamic growth region intelecommunications. (Visitwww.ptc.org. )

PTC04 New Ti mes New Strategies: I CT Rising f rom th e Ashes

PTCs 26th annual conference willopen in Honolulu on Sunday,January 11th at the Hilton HawaiianVillage in the heart of Waikiki. Thefour-day event offers unparalledopportunities to exhibitors andattendees.

Submarine C ables

Submarine cable systems provideHawaiis lifelines to the world. Partly because of Hawaiis location as alanding and transit place for major trans-Pacific cables, PTCs annualconference features special sessionson submarine cables and systems.The SubOptic Executive Committeehas organized a high-level sessionon Wednesday morning, 14 January,

PTC04 New Times New Strategies: I CT Rising from the Ashes Honolulu, Hawaii, January 11-14, 2004

T he Pacific TelecommunicationsCouncil (PTC) is an inter-

By Richard Nickelson

Hilton Hawaiian Village


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that will examine funding andmanaging internationalinfrastructure for the industry.

Satellite Communications

The Global VSAT Forum hasorganized an all-day Asia-PacificSatellite Communications Summitthat will highlight the opening of theconference on Sunday, 11 January.Luncheon panels on Monday andTuesday will examine the commercialsatellite launch services industryand the private sectors role inmilitary satellite communication

requirements in the Pacific,respectively. Concurrent-session panels will deal with an analysis of the new reality of the satelliteindustry and satellites as the backbone of the intelligentcommunity in Asia. Tuesdayafternoon will feature a high-levelsatellite CEO roundtable organized by the Satellite Industry Association and PBI Media, LLC.

Other Topics

The conference will include alltopics of current interest in theinformation and communicationtechnology (ICT) industries. The

ITU Regional Office for Asia and the Pacific is organizing a sessionthat will include participants fromthe highly successful ITU Youth

Forum . Workshops and panels willfocus on a number of country,

regional or global issues and meansfor financing needed developments.Alternative sessions will includetopic tables, round tables, panelsand workshops. Education,including distance learning, will betreated in concurrent sessions and pre-conference associated meetingsof regional distance-educationorganizations on Saturday 10

Regional Associations (FORA)roundtable on Sunday afternoon, 11January, will focus on the role of theInternet in the management of regional organizations and how to bridge the digital divide.

Exhibits and Other Activities

PTCs annual conference exhibits of new technology, products andservices for the region will be openfrom Sunday morning until Tuesdaynoon. The conference attractsnumerous peripheral activitiessponsored by PTC members and

exhibitors. There are also pre- and post-conference workshops andother activities sponsored by relatedorganizations, as well as PTCexecutive and committee meeting.Social activities, including thetraditional lagoon-side openingreception and the closing receptionare always well attended.

Featured Speakers

Featured high-level speakers at

plenary and super sessions include:MICHAEL BINDER, AssistantDeputy Minister Spectrum,Information Technologies andTelecommunications, IndustryCanada,Canada ; FRED BRIGGS,

President, Operations andTechnology, MCI,USA; MICHIOFUJISAKI, Member of the Boardand CTO, Fujitsu Limited &President, Fujitsu LaboratoriesLimited, Japan ; AMBASSADOR DAVID GROSS, U.S. Coordinator,International Communications andInformation Policy, U.S. Departmentof State , USA; SALMA JALIFE,Chair of APEC-TEL and Senior Consultant to theTelecommunications Authority,

Mexico ; JOHN LEGERE, CEO,Global Crossing,USA; OLOFLUNDBERG,UK ; TADASHIONODERA, President, KDDICORPORATION, Japan ; VIRGILIOPEA, Undersecretary for ICT,

Philippines ; TADAO SAITO,Professor, Chuo University andHonorary Professor, TokyoUniversity, Japan ; NOAHSAMARA, Chairman and CEO,WorldSpace Corporation,USA;KENNETH TOMLINSON, Board of Directors, Corporation for PublicBroadcasting,USA.

The Pacific Hemisphere includesAsia, Oceania and the Americas.

FEATURED EVENT

Richard Nickelson received BEE and MSEE degrees inelectrical engineering from the Georgia Institute of Technology and has 40 years of experience ininternational telecommunications. Starting in 1963, he

participated in a series of pioneering satellitecommunication experiments with the U.S. Army SatelliteCommunications Agency. From 1967 to 1971 he was on the staff of theMassachusetts Institute of Technology Lincoln Laboratory and contributedto major experiments in digital mobile communications by satellite. He heldseveral senior positions with the International Telecommunication Union(ITU), Geneva, Switzerland, from 1971 until 1995 He returned to his nativeUnited States in 1995, where he is currently Senior Advisor at the PacificTelecommunications Council in Honolulu and has also been Editor of thePacific Telecommunications Review since 1995. (Seehttp://www.ptc.org/

vsat-nov2ss

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