The Global Teleport Market: DTH Services are Booming View from

Satellite ExSatellite ExSatellite ExSatellite ExSatellite Executive Briefecutive Briefecutive Briefecutive Briefecutive Briefinginginginging November 1-15, 2009 1

by B.H. SchneidermanEvery year, the World TeleportAssociation surveys teleport

operators and publishes a Top TeleportOperators ranking based on revenue. In abusiness that tends to look skyward, it’s away of drawing attention to the hard-working folks on the ground who are anessential part of the space network.

Our 2009 Top Operator rankings will bepublished November 9. But before that, wewill publish a report based on what teleportoperators told us at the end of 2008.

What will you learn inside the covers ofInside the Top Operators of 2008? Well, ifyou’re expecting a centerfold – or to beequitable about it, one of those “HottestFiremen of 2008” calendars – you aredoomed to disappointment. But if you’relooking for insights into how satellite servicecompanies have been doing business, itmakes interesting reading. The annual Insidethe Top Operators report describes whatoperators told us about changes in theirrevenues, pricing, services and areas ofoperation in the most recent complete fiscalyear. What it lacks in breadth – covering asit does only the largest and fastest-growing

Cont Cont Cont Cont Contentsentsentsentsents (Continued on page 4)

Vol. 2 No. 15 November 1-15, 2009

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From the EditorExecutive View: Jonathan Crawford CEO, The SpaceConnectionMarket TrendsFeatured Event: PTC 2010Vital StatisticsSatellite Markets 25 Index

3

14 9131516

by Robert BellExecutive Director,World Teleport Association

Latin America has a vibrant Direct-to-Home (DTH) market withservices recently launched or

rolling out in several countries in the nextfew months. The largest and most matureDTH market in the region is that ofBrazil, which has the largest populationand most extensive land area in SouthAmerica.

DTH Market Trends in Brazil

There are currently four major playersin the Brazilian DTH market. The mostdominant is SKY, which was formed withthe merger of SKY Brasil and DirecTV,with 87% market share. The Spanishcompany Telefonica DTH launchedservices last year and two new operatorshave joined the fray with VIA Embratel(owned by Telmex that also controlsNET, the largest cable TV operator) andOI-DTH, also owned by a fixed andwireless phone company.

Alexandre Annenberg, President of theBrazilian TelecommunicationsAsso-ciation, said that “Pay-TV service inBrazil is still being developed and there

is room for improvement. The sector’scompanies will keep on investing inimprovements, such as high definition andother technologies, while trying to raise thequality of their services for their clients,”Annenberg stated.

According to the Brazilian NationalTelecommunications Agency, as of January2009, the total number of Pay-TV users inBrazil reached 6.37 million, whichaccounted for a 0.8% increase as comparedto December 2008. Of that number, cableTV holds 60 % share of the market (a 2%decrease as compared with 2008); DTH is33 % and MMDS is 6.0 % (from 4% theyear before).

The Brazilian Pay TV Association and thePay TV Companies Union estimates that

(Continued on page 8)

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Vol. 2 No. 5 April 1-15, 2009

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Contributing Editors:

North America: Bruce Elbert, Dan Freyer,Robert Bell, Elisabeth Tweedie,Lou Zacharilla, Tom WattsLatin America: B. H. SchneidermanEurope: Martin Jarrold, Roxana DunnetteAsia: Tom van der Heyden

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SATCON Show in New York Showcase theResiliency of the Satellite Industry

© 2009 No part of this publication may bereprinted or reproduced without prior writtenconsent from the publisher.

It was exactly a year before n New York when a series of eventsrocked the financial sector that led to the deepest recession in

50 years. One year later last month, SATCON 2009 in NewYork City was perhaps the only major trade show this year thatdid not experience a decline in attendance, posting a modestgain of 3%. In comparison, the IBC in Amsterdam had almost

20 percent decline in attendance while the NAB suffered almost 30% by someaccounts. In comparison the mood at SATCON was decidedly upbeat and there’sa lot of reason for optimism.

The SATCON conference chair, the respected consultant Susan Irwin said thatSATCON affirmed the resiliency of the satellite industry amid challenging eco-nomic times. While, admittedly there have been serious cutbacks in staff andfinancing is harder to come by, the satelliteindustry has weathered the crisis better thanothers, she said. Irwin summed it up nicely:“Our industry is no complacent. The satel-lite industry is operating more efficientlythan before, while meeting the demands ofconsumers, enterprises and government cus-tomers--responding to natural disasters, con-necting the unconnected and supporting thelatest technologies to deliver HD, broadbandand mobile services.”

SATCON, which is one component of thelarger Content Communications World Expo(CCW) which also include HD World andIP Media Expos, highlighted the usual HDand 3D technologies. This year, theSATCON covered more military and government communications issues, whichresulted in a 28% increase in attendance from that sector. Compressed into twoaction-packed days, SATCON is like New York City itself--vibrant, dynamicand yes, resilient.

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From the Editor

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Viewvideosof asummaryof thehighlightsof theSATCON 2009 in New YorkCity with Conference ChairSusan Irwin and otherinterveews with keyexecutives at:www.satellitemarkets.com/media/videolist.php

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DTH Services in Latin America...from page 1

Cover Story

(

Pay-TV subscriber base grew 19% in2008 and will close the year with 6.2million subscribers. In comparison, 2.6million broadband Internet users wererecorded by end of 2008, whichrepresented a 48% increase as comparedto December 2007. The Brazilian Pay-TV industry’s revenues reached US$1.238 Billion over the first quarter of2009, which accounted for a 27%increase as compared to the same period2008.

SKY launched during the middle of2009 High Definition (HD) pro-gramming. Net Servicios is preparingthe launch of its low cost HD set topbox (STB) without Digital VideoRecorder (DVR) while TVA/Telefónicais launching an STB with recordingfunctionality. According to a studyconducted by Ericsson, Brazilian users’demand of new services is much morediscriminating than in other LatinAmerican countries. For example, 94%those surveyed were interested in seeingtheir digital photographs on TV, while93% expressed interest in the capacityof blocking specific TV channels toprotect their children.

OI-DTH a new comer in the Brazil DTHbusiness has recorded an average dailyaddition of 1.5 thousand subscribers toits recently launched service pay TV viasatellite that started July 2009. Theperformance is above expectations andthe company is expecting 400 sales perday, said the director of finance andinvestor relations of OI-DTH, AlexZornig.

The OI-DTH began offering the servicein São Gonçalo and BaixadaFluminense, in Rio de Janeiro State,with a focus on class C income families.Minas Gerais State will be the next stateto have the service available.

The OI-DTH will be included in apackage of quadruple play voice,broadband and mobile offered by OITelecom Carrier as part of the overallstrategy starting 2010, said Zornig.

The Brazilian operator Embratel signedup over 100.000 DTH subscribers afteronly eight months of operations. On theother hand, according to independent

market analysts, Embratel, Oi andTelefónica increased their market share asa result of Sky’s declining market share.According to the National Tele-communications Agency, Sky’s marketshare decreased from 87.2% to 80.24%.It is worth mentioning that the central andsouthern Brazilian CLEC, GVT will launchjoint services with Sky. Sky announcedduring the first week of August that it will

The newest addition to the Latin American satellite market is theSpanish operator Hispasat’s Amazonas-2 satellite (whose coveragemap is pictured above) which was launched October 1st this year.Amazonas-2 is the largest and most powerful satellite covering thePan-American region to date and will be able to supply a wide varietyof advanced telecommunications services, such as Direct to HomeTV (DTH), broadband, deployment of corporate networks, fixed andmobile telephony, teleeducation and telemedicine, among others,according to Ruben Levcovitz, Director of International Sales of theHispasat subsidiary, Hispamar which operates the satellite.


Cover Story

“...Pay-TV service is still being developed butthere is room for improvement. The sector’scompanies will keep on investing inimprovement, such as high definition and othertechnologies, while trying to improve thequality of their services for their clients...”

-Alexandre Annenberg, President, BrazilianTelecommunications Association

start offering joint services to theirclients with GVT.

Both companies announced annualsavings of up to US$ 274.00 persubscriber thanks to discounts.According to GVT, at present, half ofits clients are planning to get Pay-TVservices.

New clients or current ones subscribedto GVT’s Unique 600 or Smart Maxxpackages statring at 10 Mbps speed,will be able to get the three-servicespackage at a US$10.00 monthlydiscount to be applied in GVT’s invoiceand an additional US$10.00 discountto be applied in Sky’s invoice, for a 12months period.

Likewise, the service installation willbe free. Alcides Troller Pinto, GVT’sMarketing and Sales VP, stated that“this partnership accounts for the firststep that might generate new jointmeasures in a future. This partnershipaddresses both organizations’ strategicobjectives aimed at providing theirclients with an advancedcommunication services offer. GVT andSky are innovating companies, withhigh quality products and a high levelclient service,” Troller Pinto stated.

The operator DTHi (former AstralSat),which had an agreement to offer tripleplay services jointly with Telefónica in

Brazil, decided to becomeindependent and launcheda new business modelaimed at replacing forfree satellite antennas fortheir own DTH systemwith decoders that willenable users to view thecurrent 40 free TVchannels with the optionto add 16 Pay TVchannels, either under apre-paid or post-paid

model, for only U$S 7 on a weekly basisor U$S 20 on a monthly basis.

Between the 55% to the 60% of Embratel’ssubscribers are new Pay-TV clients whohad not contracted any other DTH servicebefore. At present, the Brazilian DTHmarket counts a total of 2.09 millionsubscribers.

DTH in Peru

Telefónica’s affiliate in Peru launched apre-paid DTH service and expects to reach50.000 users before year end. SinceNovember 2008, the company has beenoffering the same service in Venezuela,where 50.000 subscribers have signed up.Initially, the service will be available inLima and later, it will be expanded tointerior provinces.

Telefónica’s executives expalined that theidea was to replicate IPTV or cablecombined DTH offerings in other LatinAmerican countries. In order to have accessto the service, the client has to acquire anantenna and a set-top-box sold at theelectronic retail chains Carsa, Electra andLa Curacao. They are specificallytargetting the low-income sectors.

The service is offered at a US$ 8.14monthly fee; likewise, it can be obtainedat a US$ 2.28 weekly fee. “Clients whoacquire their satellite kit will have accessto open channels with the best availablequality and a pre-paid programming

package at no cost for a whole monthso that they can enjoy the advantagesof this new service,” said GonzaloCarriquiry Fry, Telefónica’s Pay-TVCommercial Manager.

DTH in Chile

Visiontel is the new 70-channel DTHservice from Chile to Latin America.It is currently in trial stage. The launchwould be expected for the comingweeks or months, before the end of2009, although no definite date hasbeen announced. The head of theproject is Konrad Burchadt, who wasthe brain behind the internationalexpansion of Entel Chile during the1990s, and subsequently was Vice-President of VTR MSO in 2006. TheDVB-S2 platform integrator would beArgentine company NetworkBroadcast.

The first stage of the project will befocused in Southern Cone countries(Chile, Bolivia, Paraguay, Argentina,Uruguay). They are planning a secondstage expansion to all Latin America.Most of the management team workedwith Burchadt in Entel Chile (LuisAhumada, Rafael Cristi and FranciscoUbilla). But Visiontel also includesMarcelo Salinas, who was in chargeof installations in DTH operator ZapTV (now Telmex TV), the first Chileancompetitor against DirecTV. ErikaTapia, former VTR Telefónica andFernando Pavez, who headed thesatellite division of Chileaninternational carrier Entel from 1974until 2006, are both part of the team.

Visiontel will be the fourth DTHoperator in Chile, following DirecTV,Telmex and Telefonica. The ChileanPay-TV market reached 1.5 millionsubscribers by end 2008, and DTH had40 % market share. Market analystforecast estimate that half of Pay-TVhouseholds will be reached by satellite


between 2010 and 2011. Chile will bethe first key Latin America marketwhere DTH will surpass the numberof cable subscribers.

DTH in Mexico

The Mexican Federal CompetitionCommission (FCC) determined thatthe participation of CarlosSlim’s company as Dish’billing company (thealliance among MVS,EchoStar and Telmex)does not assume any typeof concentration ormonopoly behavior. Theresolution resulted from aclaim submitted by theNational CableTe l e c o m m u n i c a t i o n sIndustry Chamber againstTelmex.

The Mexican FCC’sanswer points out thatthere were no signsshowing that Telmex orDish producedconcentration, merger, acquisition orany other type of act and urged cableoperators to submit evidence if Telmexbreached the Federal EconomicCompetition Law.

Dish’ positive results, whichaccounted for 530.000 subscribers,will encourage Telmex to acquireMVS. According to the weeklymagazine, the acquisition is apossibility that would becomeeffective if Telmex were authorized tooffer video services.

Dish, Telmex, Echostar and MVSpartnership that offers DTH servicesin Mexico, recorded 530.000subscribers in the 10 cities the serviceis offered, including Distrito Federal,Guadalajara, Monterrey, Cuernavaca,

Toluca and Puebla. “This (the service)sets a historical Pay-TV record in ourcountry”, the company pointed out in apress release. Its DTH service will belaunched in 10 new cities within thenext weeks.

“Dish Mexico has encouraged healthyand strong competition, thus forcing

other companies to lower prices and tooffer new options, which accounts fora benefit for Mexican consumers,” Dishstated. BBVA Bancomer forecasted thatDish’ growth would impact negativelyon Grupo Televisa’s telecom-munications and video segment’ssecond quarte figures.

DTH in Venezuela

According to Jesse Chacón, Minister ofScience, Technology and IntermediateIndustries, the Venezuelan Cantv willstart offering DTH December 2009.ZTE and Ericsson were said to beinterested in being granted the project.Whether the selection will be carriedout through bidding or close process hasnot been defined.

The state-owned company will offer about30 channels (12 channels will be assignedto national signal broadcasting and 18channels would be assigned to internationalsignals). At the beginning, the service willbe launched in the South area of the countryfor 5.000 subscribers and HD inclusion hasnot been planed yet. As a result of thisinitiative, Cantv will compete with

DirecTV and Movistar.

A 29% Pay-TV penetration isestimated in the country, whichaccounts for almost 2 millionusers. Cantv’s satellite offer willbe completed with an IPTV offerwhose platform end-to-endintegrator will be ZTE.

DTH in Nicaragua

América Móvil’s affiliate inNicaragua, Claro TV, will offerpre-paid DTH services. Thecompany is planning to provideset top boxes which will requirecards to activate. The cards areloaded with money to pay for the

service and can be topped-up. “Thesatellite TV service will amount to U$S1.50 on a daily basis, and will benefit allNicaraguans located all across the nationalterritory,”,the operator’s General Manager,Roberto Sanson stated. At present, thecompany offers three types of paid TVservices: Claro TV Básico, Digital ySatelital.

Recently the executive announced thatAmérica Móvil had concentrated its fixedand mobile telephony, Internet and Pay-TVoperations in Nicaragua under Claro brand:it is made up of the main Pay-TV operatorof the country, Estaciones Terrenas deSatélites (Estesa), the Nicaraguan Tele-communications Company (Enitel), and theInternet providers Cablenet and Turbonett.

Sanson stated that in the last four years,the company has invested U$S 420 millions

Cover Story


and that in 2009 about U$S 80 million would be investedto complete the network’s’ expansion. In 2004, AméricaMóvil acquired Enitel’s total shares. At present, thecompany has an extensive network of fiber optic, 3Gand broadband in over 100 municipalities of the country.

Slower Growth for Telefónica Pay-TV Service

This year’s second quarter results show that Telefónicahas slowed down its growth of Pay TV subscribers inLatin America. By end-June, the company recorded 1.68million subscribers in Brazil, Chile, Peru, Colombia andVenezuela. Only 64,000 subscribers were added in thesecond quarter as compared to the 75,000 subscribersadded over the first quarter. Growth stagnated inColombia, while Brazil and Peru recorded decreases insubscriber growth.

In Brazil, 12,000 subscribers were added, half theprevious quarter, thus reaching 514,000 subscribers. InChile, the company managed to reverse such trend. Thecompany had closed March 2009 recording lesssubscribers than those recorded as of December 2008,but, in the second quarter of 2009, 4,000 subscribers weregained for a total of 267,000 subscribers. Peru showssustained growth: 26,000 subscribers were recorded inthe first quarter ‘09 and 22.000 in the second quarter‘09, thus reaching 703,000 subscribers.

The company slipped up in Colombia. 2,000 subscriberswere lost in the second quarter thus falling to 144,000subscribers. On the other hand, in Venezuela, greatergrowth was recorded. By end-2008, only 8,000subscribers have signed up for the service. In March2009, 23.000 subscribers were gained and June closedwith over 50,000 subscribers.

Conclusion

Northern Sky Research is relatively optimistic that 2009should be a reasonably successful year for DTH services.Recent and soon-to-occur satellite launches are allsatellites with substantial pre-launch contracts, often forvideo distribution or DTH services, will contribute togrowth in the coming year. This certainly is true for theLatin American market.

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Chapters include: A Brief History of theSatellite Communications Industry; Over-view of the Satellite Communications In-dustry; The Basics of Satellite Communi-cations; The Space Segment; The GroundSegment; Satellite Services; VSATs; Sat-ellites and the Internet; The Future of Sat-ellite Communications.

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B.H. Schneiderman is the contributing editor forLatin America of Satellite Markets and Researchand is a consultant to satellite and telecom-munication companies. He can be reached at:[email protected]

http://www.satellitemarkets.com/node/34


Opinion

The Global Teleport Market...from page 1

Robert Bell is Executive Director of the World TeleportAssociation, which represents the world’s most innovativeteleport operators, carriers and technology providers in 20nations. He can be reached at [email protected].

operators – it makes up for in depth,because it reveals what the businessesof the best in the business look like“under the hood” and reveals thefundamental shifts going on within theseindustry-leading companies.

The 2007-2008 period was good to theTop Operators. The rankings includedifferent companies in different years,but more than 20 companies havesubmitted data consistently forthree years running, whichprovides a clear “snapshot” of theteleport sector. With $8.5 billionin revenue, these companies rackedup combined revenue growth of42% from 2006 to 2008.

More Value, Less Fiber

In recent years, many leadingteleport operators have talkedabout diversifying their businessesout of satellite to fiber transmission.More than one large operator stoppedusing the word “teleport” at all inmarketing materials in favor of “accesspoints” or “nodes” – the language offiber rather than satellite carriers. Itseemed as though satellite transmissionwas going out of favor fast, driven bythe much lower price point of fiber forpoint-to-point transmission.

Except it wasn’t. Our data shows thatthe Top Operators increased thepercentage of revenue coming fromwithin their own walls – that is, fromteleport, value-added and other servicesthey provide – and decreased thepercentage of revenue earned fromtransmission. Surprisingly, it was theshare of fiber revenues that plummetedthe most (more than 70% from 2005 to2008), while the share of satelliterevenues declined only about 20%.

What was going on? In my view, theTop Operators were accomplishing their

fundamental business mission: tocontinually increase the value to thecustomer of every megabit theytransmitted. The 2005-2008 results showa continued diversification out of beingjust a “pipe” for the transmission ofvideo, data and voice, into services thatemploy their own resources to generaterevenue. And satellite turned out to be

the best transmission technology for thepurpose.

Pricing data from the survey backs upthe story. From 2005 to 2008, teleportoperators were successful at graduallyincreasing the prices they charged forteleport and value-added services. Notas successful, though, as their partnersin space segment, for whom a tightcapacity market pushed prices sharplyhigher.

Specialization vs. Diversification

Another set of numbers shows howteleport operators balance the twin goalsof specialization and diversification.

Specialization in one or two servicesbrings benefits to teleport operators,including in-depth knowledge ofcustomer needs, the ability to invest intechnology appropriate to those needs,and a high degree of expertise. The TopOperators survey asked respondents toidentify services on which they earnedat least 50% of revenues. One-third of

respondents cited broadcastvideo, while 27% identifiedenterprise networking and 13%cited enterprise video. Mobilityapplications – not includingmobile backhaul – have alreadyrisen from effectively zero a fewyears ago to be the dominantrevenue source for 7% of the TopOperators.

But specialization also carriesthe risk of having too manyfinancial eggs in one basket.When asked to identify service

from which their companies generated atleast 25% of revenues, respondents putenterprise networking at the top of thelist, followed by broadcast video, civiliangovernment applications, Internetbackbone and VoIP and militarygovernment applications. Bydiversifying into multiple markets,operators hedge against the majordynamics that continue to transform themarkets they serve.

For more insights from Inside the TopOperators of 2008, visitwww.worldteleport.org. The report isavailable free to WTA members and forsale to everyone else.


Opinion Market Trends

Asian PAsian PAsian PAsian PAsian Paaaaayyyyy-----TTTTTV SubscriberV SubscriberV SubscriberV SubscriberV Subscribers More than thes More than thes More than thes More than thes More than theRRRRResesesesest of the Wt of the Wt of the Wt of the Wt of the World Combined-Corld Combined-Corld Combined-Corld Combined-Corld Combined-CASBAAASBAAASBAAASBAAASBAA

The Asia-Pacific region has 326 million Pay-TV subscribers-a 26 mil. increase from last year

The Cable & Satellite BroadcastingAssociation of Asia (CASBAA)revealed at their annual

conference held in Hong KongNovember 3rd, new data for subscriptionTV penetration across the Asia Pacific,noting that the region now has 326million pay-TV in 2009, up 26 millionhomes from last year.

According to CASBAAestimates, subscription televisionin Asia Pacific now reaches morehomes than the rest of the world(ROW) combined. Digital pay-TV subscription households nowaccount for over 115 millionhomes.

China and India havespearheaded much of the growth,accounting for 90% of all Asianpay-TV subscribers in 2009.

India now has 19 million digital pay-TVhouseholds, while China represents 69million digital video connections.Overall Asian digital penetration standsat 35% across 14 markets.

“These are very encouraging figures,”said Simon Twiston Davies, the CEO ofCASBAA. “Much of the digital promiseof the last five years is now beingdelivered.”

Other good news released by CASBAAduring its annual Convention in HongKong is the emergence of 18 new pay-TV operators across the region the in past18 months. The new entrants include:Hikari TV (Japan); Korea Telecom andSK Telecom (Korea); Cignal (PLDT), G-Sat (Global Destiny), PLDT/Smart(MyTV) (Philippines); Aora-TV and

Okevision (Indonesia); Top Up TV(Next Step Co.) (Thailand); VSTV(VTV/Canal Overseas), VTC (HDchannels), HTV (Ho Chi Minh TV), FPTTelecom and VNPT (Vietnam NationalPosts & Telecom) (Vietnam); Telecom

Malaysia (Malaysia); Reliance,Videocon and Bharti Reliance (India).

Meanwhile, CASBAA’s annual pay-TVpiracy survey of 15 Asia Pacific marketsconducted in association with StandardChartered Bank reflects the regionalgrowth but also generating an updatedestimate of US$1.94 billion in annualrevenue losses to the industry.

“This estimate uses highly conservativeassumptions; actual totals are likely tobe much higher,” said Lee Beasley,Director of Media & Entertainment,Origination & Client Coverage atStandard Chartered Bank. Last year’sCASBAA piracy survey produced anestimate of US$1.75 billion in annualpay-TV revenue leakage in Asia.

Evolving factors in the past 12 monthsinclude the strong growth in thelegitimate pay-TV market which,inevitably, has meant more piracy; asnew content is made available in moreAsian languages, the stimulus to piracyincreases. “Pay-TV is becoming moreattractive,” said Twiston Davies, “but that

means more people want tosteal.”

As new markets open,previously hidden pockets ofpiracy have become apparentas in Indonesia, for instance,where the local industry andgovernment have paidincreasing attention to pay-TVsignal theft in the last year.“Likewise, Vietnam is goingthrough the same process,” saidBeasley.

At the same time, in someplaces piracy has declined as investmentin digital technology make signals moredifficult to steal. Thus, piracy numbersin Hong Kong and Manila have declinedas cable operators have deployed newdigital transmission systems.

Tax specialists atPricewaterhouseCoopers participated inthe analytical exercise, and came to theconclusion that the revenue leakage fromthe legitimate pay-TV industry costregional governments at least US$247million in uncollected taxes.

The biggest revenue losers were thegovernments in Thailand (US$76million), Pakistan (US$56 million) andthe Philippines (US$39 million).


Market Trends

KKKKKu-Band In-flight Satellite Connectivityu-Band In-flight Satellite Connectivityu-Band In-flight Satellite Connectivityu-Band In-flight Satellite Connectivityu-Band In-flight Satellite Connectivity:::::

Are WAre WAre WAre WAre We There Ye There Ye There Ye There Ye There Yet?et?et?et?et?

When discussing the Ku-band commercial airlinebroadband access market, the image that comesto mind is that of a famous animation movie where

a donkey travels to a faraway land constantly asking the ogredriving the carriage: “Are we there yet?” Today, the answerwould be, “Just aboutthere,” to which thedonkey’s reply wouldbe, “Ahhh! Finally.”

This is also the feelingof the market, afteralmost three years oftravelling since the firstKu-band broadbandInternet service in thesky, Connexion-by-Boeing (CbB), wasshut-down.

Germany’s Lufthansaairline announced in mid-October that it is revving up theengines and readying for take-off with its broadband servicewith the help of in-flight entertainment specialist PanasonicAviation Corporation (ex-Matsushita) with guess what?, theold CbB antennas still on the roof of many of its passengeraircraft! Lufthansa will eventually outfit the airplanes withthe EMS Technologies’ Aura systems (which are a variant ofStarling’s Ku-band Mi-Jet system) to the tune of $60 millionon about 120 airframes. But for the time being and to minimizeinitial capital investment, they are launching the service on 70airplanes that have the old hardware still glued to the back ofits wide-bodies.

What does all this mean for the whole commercial passengerairline market?

For starters, it means happy ex-CbB customers will long for a(long) flight on Lufthansa. Truly appreciated when it was

available, CbB was dismissed for its cost, not its quality.Second, it is an opportunity for the company to differentiateitself in the highly competitive regular airline market bysigning-up new clients to the megabits per second (Mbps)connectivity service while at cruising altitude. But more

importantly for the wholesector, it means that otherairlines will surely follow(twitter?) the new servicewhile it is flying not justmedium-haul but especiallylong oceanic routes to learnif its worthwhile picking upone of these new systems fora couple of hundredthousand dollars each.

The re-launch will also helpget key questions answeredfor the service such as: Is

there a real need for passengers to log-on to the Internet whileon a red-eye from North America to Europe or Asia? At whattime and over which regions will users try to connect? Is a flatfee for the flight or a per hour metered service better? Willusers get annoyed by the latency inherent to the satellite? Theseand many other parameters still need to be completelyunderstood from an operational point-of-view and will refinefuture customers’ models.

In this market, we may first see a play developing mostly overocean regions and for long hauls, which can assure continuityof service once over open waters. But the three to four hourflights on continental routes could also be very lucrative forsatellite as equipment prices have dropped considerably, andweight is less than ever before; consider Starling’s MIJET is110 lb, while CbB was reported to weight 600 lb and can befitted on top of planes in hours rather than days or weeks.What remains to be seen is the price of service that airlineswill charge compared to the ill-fated $30 per flight passengerspaid for CbB.

by NSR


Market Trends

There is already a certain level of confidence in the patternsthat users will follow, but the actual day-to-day operations ofthe system will reveal the newest trends in passengercommunications habits, be it in business or economy class.

And new habits there will be. As much as today’s kids travelby car while looking at a screen and not the scenery, some airpassengers have stopped looking out the window at vastexpanses of land or sea to look at a screen. Part of thisreasoning is due to the fact since the CbB days, things havechanged, and the use of broadband access is no longer theprivy of laptop owners. Many people forget that user habitshave changed thanks to the tremendous success of new formfactors in mobile connectivity with the advent of notebooks,personal digital assistants (PDAs), Smartphones (and otheriPhone-like devices). And the killer applications sustainingall these devices, namely e mail and short message system(SMS) as well as a multitude of short-sentences narrowbandcommunications tools, have exploded in the land ofmultimedia applications. To add more fuel to the capacityconstraint debate, video is all the rage in mobility

applications, and it is easier than ever to shoot videos andupload them. How much longer will there be a resistanceto deny passengers what they are getting on the ground?

All in all, the buzz around Ku-band for commercial passengeraircraft has never been so high since the demise of Connexion-by-Boeing, but competition from other systems is also at an all-timehigh. Broadband services, although still a very emergent market,promise to beat narrowband revenues in the mid- to long-term dueto passenger thirst for laptop connectivity at DSL and above speeds.If the timing of the Lufthansa deal is an indication, airlines have astronger desire than ever to offer more services to their clients whilein-flight, and it could signal the arrival of Ku-band at its destination.

Information for this article was extracted from the NSR reportentitled: Mobile Satellite Services, 5th Edition

http://www.thespaceconnection.com

Satellite ExSatellite ExSatellite ExSatellite ExSatellite Executive Briefecutive Briefecutive Briefecutive Briefecutive Briefinginginginging November 1-15, 200912 PLEASE VISIT WWW.PTC.ORG/PTC10 TO REGISTER FOR PTC’10.

Embracing the Cloud:

Enabling Connectivity and Innovation17 – 20 January 2010 Hilton Hawaiian Village® Beach Resort & Spa Honolulu, Hawaii USA www.ptc.org/ptc10

A fundamental shift is occurring in the telecommunications and ICT industries. Ever more applications and services are moving from dedicated networks and end-user devices to servers on the Internet. No facet of either the telecom or ICT industries will remain untouched by this transformation.

PTC’10 will highlight the impacts of the rapid evolution of cloud computing for communications carriers, capacity providers, providers of undersea cables and satellite services, application developers, media and content providers, and end users.

For more information please visit www.ptc.org/ptc10.

CONFIRMED FEATURED PARTICIPANTS INCLUDE

ANDREW KWOK, SVP, International Business, Hutchison Global Communications Ltd, Hong Kong SAR China

DIARMID MASSEY, VP, Carrier Services — Global Markets, Cable & Wireless Worldwide, Singapore

CHRISTIAN MICHAUD, SVP, Product Marketing and Business Development, Tata Communications, Canada

KATHRYN MORRISSEY, EVP, AT&T, USA

ELI NOAM, Professor, Economics and Finance, Columbia Business School, USA

RAJ PATEL, VP, Infrastructure and Operations Strategy, Yahoo!, Inc., USA

ROBERT PEPPER, VP, Global Technology Policy, Cisco, USA

EDWARD ROGERS, President, Cable & Telecom, Rogers Communications, Canada

SHIGEO TANI, Director-General for International Affairs, Global ICT Strategy Bureau, Ministry of Internal Affairs and Communications (MIC), Japan

RODRIGUE ULLENS, CEO, Voxbone, Belgium

JIDONG ZHAO, SVP, China Unicom, People’s Republic of China

HELMUT ANGST, Chairman of the Board of Directors, Deutsche Telekom North America, Germany

SHAI BERGER, Co-Founder and CEO, Fonolo, USA

SUREEL CHOKSI, CMO, Level 3, USA

PETER COFFEE, Director of Platform Research, Salesforce.com, USA

JEANNIE DIEFENDERFER, SVP, Global Engineering and Planning, Verizon Business, USA

SCOTT FORBES, VP, Technology Ventures, GE, USA

MALIN FRENNING, SVP, TeliaSonara and President, TeliaSonara International Carrier, Sweden

VIJAY GILL, Senior Manager, Engineering and Architecture, Google, USA

FRANK FAWZI, CEO and Chairman of the Board, IntelePeer, USA

OFER GNEEZY, CEO and President, iBasis, USA

TREN GRIFFIN, Strategist, Advanced Strategies & Policies, Microsoft, USA

MIKE HILL, VP, Enterprise Initiatives, IBM, USA

MIKE JAMES, Director of Systems Engineering, MetaSwitch, USA

MATTHIAS KURTH, President, Federal Network Agency, Germany

Pacific Telecommunications Council

www.ptc.org

Please visit www.ptc.org/ptc10/ for an up-to-date list of confirmed program participants as well as for the complete program.

http://www.ptc.org/ptc10


Featured Event

The next Pacific Tele-communications Conference,PTC ’10, will again focus on a

hot topic for many in thetelecommunication and IT industries,“cloud computing”. While seeminglyesoteric to many, especiallysome in the sometimes insularsatellite sector, cloudcomputing is coming todominate the thinking ofplanners and implementers inmany telecommunications andIT sectors. The conference, tobe held January 17-20, 2010,in Honolulu, Hawaii(www.ptc.org), will bring theconcept of cloud computingdown to earth and examine itsimpact in a variety of ways,including the challenges andopportunities it presents to the satellitesector.Making the first effort to bring “thecloud” and the guys “in orbit” togetherwill be the World Teleport Associationand Society of Satellite ProfessionalsInternational organizations (WTA andSSPI), which have organized a morning-long workshop on Sunday, January 17.The workshop will focus on how satelliteservices can be integrated into theemerging world of cloud computing.Mark Dankberg, chairman and CEO ofViasat, which plans to launch its own100 Gbps satellite early in the newdecade, will describe that project, howit will build onto the recent acquisitionof WildBlue, and future prospects for

high capacity satellites. Other speakersfrom iDirect, Cisco and Hughes NetworkSystems will address such questions as therisks and rewards of ground vs. spacebased routers. Gary Hatch, President &CEO of ATCi and Alan Young, CTO of

SES World Skies will discuss the impactof IP on content distribution and how thesatellite industry is staying ahead of thecurve; and Stephen Yablonski , ofGlobecom Systems, who will discuss newconcepts for satellite-based contentdistribution in a cloud-driven world. Theworkshop will wrap up with a discussionof how the increasing bandwidth demandsof cloud computing are pushing satelliteservices providers in new directions. Thisdiscussion will be headlined by GlennKatz, President and COO of Spacenet, Inc.The second day of the conference will alsohave a significant satellite focus. Industryleaders will appear in three differentsessions, giving their views on the state ofthe industry and how it will adapt and

complement the emerging cloudcomputing model. A special luncheonpanel will focus on challenges andcontributions in meeting increasingoperator requirements from keyinfrastructure suppliers. Jean-Yves Le

Gall, Chairman and CEO oflaunch industry-leaderArianespace and GwynneShotwell, President ofSpaceX, the emerginglaunch challenger, will joinArnold Friedman and EddieKato, theSenior VicePresidents, Marketing andSales, respectively, at SpaceSystems/Loral and ThalesAlenia Space. They will befollowed immediately bythe annual headline Asia/Pacific satellite leaders’

panel session, chaired by Susan Irwin,of Irwin Communications. This yearthe panel will feature Peter Jackson,CEO of AsiaSat; Baozhong Huang,Vice President of China’s consolidatedindustry leader, Sinosat; and AndrewJordan, President & CEO of SAT-GE,as well as others.

For those seeking complimentaryinformation and to have it allexplained further, PTC’10 will featurea variety of top experts from industryleading companies, both big andsmall, who will examine theimportance and impact of cloudcomputing around the world andregion.

PTC 2010Hilton Hawaiian VillageHonolulu, Hawaii, January 17-20, 2010

PTC 20PTC 20PTC 20PTC 20PTC 20111110 to F0 to F0 to F0 to F0 to Focus on ‘Cloud Comocus on ‘Cloud Comocus on ‘Cloud Comocus on ‘Cloud Comocus on ‘Cloud Computing’:puting’:puting’:puting’:puting’:What’s in it for Satellites?What’s in it for Satellites?What’s in it for Satellites?What’s in it for Satellites?What’s in it for Satellites?


Executive Spotlight

To view a video of the ful interview with JonathanCrawford and other interviews with key satellite

executives conducted at SATCON 2009 in New York City, go towww.satellitemarkets.com/media/videolist.php

At the SATCON 2009 show in New York City, Satellite Markets andResearch Editor-in-Chief Virgil Labrador spoke with JonathanCrawford, President of Los Angeles, Calif.-based satellite serviceprovider The SpaceConnection, a subsidiary of Canadian satelliteoperator, Telesat. Jonathan just assumed the presidency of thecompany in May 2009, where he held various positions prior to thatin sales and operations including Vice-President of Sales andMarketing. Excerpts of the interview:

InterInterInterInterIntervievievievieview with The SpaceConnectionw with The SpaceConnectionw with The SpaceConnectionw with The SpaceConnectionw with The SpaceConnectionPresident Jonathan CraPresident Jonathan CraPresident Jonathan CraPresident Jonathan CraPresident Jonathan Crawfordwfordwfordwfordwford

For the benefit of our readers can yougive a brief overview of your companyand what you do?

The SpaceConnection was established22 years ago and our primary focus hasbeen to provide bandwidth for variousapplications such as newsgathering,sports, syndication as well full-timeservices for cable networks, racingnetworks, distance learning, datanetworks and other VSAT -typeservices.

Does your company do moreoccasional services or full-timeservices?

We’ve been perceived in the industrymore as an occasional-use provider,but actually about two-thirds of TheSpaceConnnection’s business are full-time services.

Does your affinity with Telesat helpyou in this market?

We are now focusing more into theinternational markets and havingTelesat as a parent company helps usa lot. We are able to repurpose Telesatcapacity in order to expand ourcoverage areas and we utilize our

parent company a lot for growthopportunities.

I’m sure you’re not limited by Telesatand you go all over the industry tofind the best capacity for your clients,right?

That’s correct. Actually, we are oneof Intelsat’s largest customers. Wewere historically a large customer ofLoral and Panamsat and due to theconsolidation among satelliteoperators, we are now the largestreseller of occasional use services forIntelsat here in the United States.

Where do you see the demand comingfrom for your services in thischallenging economic environment weare all facing?

I would say more in the data world.The SpaceConnection has seen achange in the video market where wedon’t see too many new networksbeing launched today. We primarilysee most of the growth coming from

the VSAT world. We have capacity now thatwe’ve fractionalized specifically for thatmarket and the capacity that we’ve retainedtoday is primarily focusing on the datamarket.

You’ve been President of the company nowfor six months, how has it been so far andwhat are your plans?

Prior to assuming the position, my focus wasin sales and marketing. Now I’m focusingmore on what we can do to make thecompany more efficient, how to developourselves, how to service our customers morewith a full solution. Now when we talk tocustomers we try to provide a full solutionwhether they need ground support or asatellite truck with the bandwitdh. Thisactually makes us more competitive in themarket. Where we see ourselves going istowards being a full-service providerinternationally. You’ll start to see TheSpaceConnection increase its presence in theinternational markets such as Latin America,where we just opened a new office, and inAsia, Europe and Africa.


Mobile SubscriberMobile SubscriberMobile SubscriberMobile SubscriberMobile Subscribers on the Rise Globallys on the Rise Globallys on the Rise Globallys on the Rise Globallys on the Rise Globally

Source: ITU (www.itu.int)

The International TelecommunicationsUnion’s latest statistics, published in

The World in 2009: ICT facts and fig-ures, reveal rapid ICT growth in manyworld regions in everything from mobilecellular subscriptions to fixed and mo-bile broadband, and from TV to computerpenetration - with mobile technology act-ing as a key driver. The report showsthat mobile growth is continuing un-abated, with global mobile subscriptionsexpected to reach 4.6 billion by the endof the year, and mobile broadband sub-scriptions to top 600 million in 2009,having overtaken fixed broadband sub-scribers in 2008.

http://www.sfig-teleport.com


Price % change fromCompany Name Symbol (Nov 02) 52-wk Range 52-wk High

Satellite Operators

AsiaSat 1135.HK 11.30 -4.24% 4.61 - 12.60 10.32%Eutelsat Communications ETL.PA 21.53 0.09% 14.69 - 22.085 2.49%Hughes Communications Inc. HUGH 22.83 -22.56% 7.77 - 31.52 27.57%Inmarsat ISAT.L 568.00 6.17% 362.00 - 614.00 7.49%SES SES.F 14.70 -9.15% 12.76 - 16.38 8.64%

Satellite and Component Manufacturers

Boeing BA 48.02 -7.19% 29.05 - 55.48 13.46%COM DEV International Ltd. CDV.TO 3.05 -4.39% 2.21 - 3.98 23.37%Lockheed Martin Corp. LMT 68.80 -7.85% 57.41 - 87.06 20.99%Loral Space and Communications LORL 26.01 -13.39% 6.02 - 34.83 25.32%Orbital Sciences Corp. ORB 12.91 -11.45% 11.60 - 20.62 37.39%

Ground Equipment Manufacturers

C-COM Satellite Systems Inc. CMI.V 0.3550 18.33% 0.15 - 0.39 8.97%Comtech Telecommunications Corp. CMTL 32.08 -0.96% 19.56 - 50.34 36.27%CPI International, Inc. CPII 10.34 -9.46% 5.07 - 12.93 20.03%EMS Technologies, Inc. ELMG 17.80 -9.41% 16.93 - 28.53 37.61%Viasat VSAT 29.21 -3.85% 15.90 - 31.58 7.54%

Satellite Service Providers

Gilat Satellite Networks Ltd. GILT 4.40 1.15% 2.17 - 4.99 11.82%Globecomm Systems Inc. GCOM 6.56 -6.55% 3.96 - 8.57 23.45%International Datacasting Corp. IDC.TO 0.26 -1.89% 0.15 - 0.43 39.53%ORBCOMM Inc. ORBC 2.39 -22.15% 1.16 - 3.45 30.72%Skyterra Communications SKYT.OB 4.85 -0.82% 3.55 - 8.85 45.20%

Consumer Satellite Services

British Sky Broadcasting Group BSY 35.05 -4.70% 21.08 - 38.54 9.06%The DIRECTV Group DTV 26.53 -0.38% 17.85 - 27.99 5.22%ECHOSTAR Communications DISH 17.63 -8.94% 8.34 - 20.40 13.53%Globalstar, Inc. GSAT 0.65 -13.33% 0.15 - 2.00 67.50%Sirius XM Radio Inc. SIRI 0.5811 3.42% 0.05 - 0.78 25.50%

% Change from2-Weeks Ago

The Satellite Markets 25 Index TM

The Satellite Markets 25 IndexTM is a composite of 25 publicly-traded satellite companies worldwide with five companiesrepresenting each major market segment of the industry: satellite operators; satellite and component manufacturers;ground equipment manufacturers; satellite service providers and consumer satellite services. The base data for theSatellite Market Index is January 2, 2008--the first day of operation for Satellite Market and Research. The Index equals1,000. The Satellite Market IndexTM provides an investment benchmark to gauge the overall health of the satelliteindustry.

© 2009 Satellite Markets and Research, Satellite Executive Briefing and the Satellite Market IndexTM are trademarks of Synthesis Publications LLC. Synthesis PublicationsLLC is the owner of the trademark, service marks and copyrights related to the Index. This newsletter does not constitute an offer of an investment product. SatelliteExecutive Briefing makes no representation regarding the advisability of investing based on the information provided in the Satellite Markets IndexTM. All information isprovided ‘as is’ for information purposes only and is not intenteded for trading purpose or advice. Neither Satellite Executive Briefing nor any related party is liable for anyinformational error, incompleteness or for any actions taken based on information contained herein.

Comparison of Indices Index value Percentage Change (Nov. 2 ’09) 2-Weeks Ago Jan. 2 ’08Satellite Markets 25 IndexTM 955.53 3.14% 7.37%

S & P 500 1036.18 3.53% 28.15%

Satellite Markets 25 IndexTM

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