Satellite television

Media distributors warn of upcoming threats to satellite TV


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PARIS – The telecommunications segment of World Satellite Business Week held here September 14-17 was primarily a celebration of everything satellites do today and a forecast of what they will do again tomorrow.

Connected air, rail, sea and auto travel promise to open up vast new markets for satellite broadband.

The explosive growth of land mobile broadband will overwhelm current networks, giving satellites an important role in transporting signals from rural areas to telecommunications networks.

The price of very high definition televisions is in free fall, and the first channels are appearing, giving hope for a double broadcast of the large networks during their passage from one to the other, filling the satellite repeaters as well as the transponders were filled during the transition from standard definition to digital broadcasts.

Every discussion was quite optimistic – except for one.

Towards the end of the financial side of the conference, in a session on TV distribution that half of the scheduled speakers failed to show up, two major media distribution companies begged not to agree. with the good humor that prevailed.

Bill Tillson, executive chairman of Atlanta-based Encompass Digital Media, and David Crawford, managing director of satellite and media at London-based Arqiva, both heavy users of satellite bandwidth, said the television landscape was changing. much faster than they had expected as little as a year ago, and the news is not good for satellite broadcasting.

Broadcasting television signals is the only commercial satellite business with proven long-term profitability. But it is the industry where, at least seen from London and the United States, the future does not look bright.

Unsurprisingly, the threat is non-linear television and the delivery of on-demand programming by consumers.

“A year ago I thought it was a 10-year horizon, that it would still be a very stable business, even if it declined, over 10 years,” Tillson said of satellite television. “I changed my point of view last year.

In a data point unlikely to be repeated by a satellite fleet operator, Tillson said that 70% of all North American C-band satellite transponder leases feeding television to cable heads and consumer premises were to be renewed between 2015 and 2022.

Most of these date back to the early 2000s, when broadcasters leased satellite capacity for 15 years or more over the life of the spacecraft. It’s contracts like this that allow satellite fleet operators to spend $ 250 million or more on a single satellite at least three years before it starts generating revenue.

“The best information I have for renewing these transponders is that [broadcast networks] will take less than 50 percent of previous capacity – and in most cases for up to 10 years, ”Tillson said. “It’s a dramatic effect.”

Tillson said a few years ago he negotiated an 18-year satellite capacity lease when there were 16,000 heads of cable in North America needed to serve the entire consumer market.

“Today, you can access over 90 percent of the total market with around 350 heads of cable,” he said. “You can reach the entire market with 1,600 headends. “

Crawford of Arqiva said he agreed with Tillson’s assessment “on all key points. The conversations we have with our customers are mainly about the different forms of OTT. Satellites are taken for granted and considered quite mature. “

“The price has to change,” Crawford said. “It has to go down because there is so much more competition – fiber, terrestrial broadband and, increasingly, mobile technologies with the arrival of LTE. And when 5G arrives in 5 to 10 years, it will be another step forward.

“We could have a situation like the one we had with the submarine cable 10-15 years ago, with massive overcapacity which led to price cuts.”

As second-tier channels attract fewer viewers, large networks will be less likely to carry them, meaning large satellite customers will need less capacity, Tillson said.

Ferdinand Kayser, commercial director of the satellite fleet operator SES in Luxembourg, sought to put in context the headwinds of growth during a briefing with journalists on September 14 and a presentation on September 10 at the IBC press conference in Amsterdam.

Even in the United States, where OTT is more developed than any other major market, households watched linear TV for an average of 296 minutes per day in 2014. The average per day has declined over the past two years, but not a lot.

Non-linear television according to SES figures, based on Eurodata TV results, totaled 26 minutes in 2014 per US household.

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