By James Careless

Thomas Paine once wrote, "These are the times that try men’s souls." Although he was referring to the American Revolution, Paine’s comments succinctly sum up the tumultuous state of the satellite newsgathering (SNG) industry.

Keeping Up With Technology

The SNG market is all about technology. Mounting a portable satellite transmitter and antenna on a truck, driving it to wherever connectivity is needed and then pumping signals to satellites 22,300 miles overhead.

In the early days of SNG, the technology was all analog, and simple, single-channel SNG trucks were the norm. Today, "you don’t see analog much anymore, what with everyone moving to digital technology," says Woody Horan, satellite transmission supervisor/SNG operator at WFLA-TV in Tampa, FL. Meanwhile, "clients now demand multiple feeds from a single truck, plus editing facilities and even Internet connectivity," says Eddie Maalouf, RF engineer and manager at Pacsat in Sacramento, CA. "The days when people were happy with a single feed SNG truck–and just delighted that you could get their signal out–are long gone."

Fortunately for the SNG industry, today’s digital SNG (DSNG) transmission equipment is much smaller and lighter than its older analog counterparts. "The trend toward smaller SNG equipment is having a positive ‘cascade effect’ on [SNG] trucks," says Ray Conover, a consultant whose clients include Conus and Hubbard Broadcasting. "These new units take less space and weigh less, which means you can carry them in smaller trucks. They also use less power yet punch out better signals, which allows you to carry smaller generators and smaller rooftop antennas; again allowing the use smaller trucks. In turn, being able to use smaller trucks reduces the cost of customization and coachwork, which also helps reduce costs."

On the downside, today’s SNG trucks are far more complicated than their analog predecessors. One reason is customer sophistication. As Maalouf notes, broadcasters want the capability to send out multiple feeds simultaneously, plus edit video and even surf the Web. This means that today’s SNG trucks need a lot more equipment onboard, which means they cost much more to outfit.

Another cost-booster, ironically, is the same push to digital that is reducing equipment and truck sizes. "The problem is not MPEG-2, but HDTV," says Brian Nelles, senior vice president of Production and Satellite Services Inc. (PSSI) in Las Vegas, NV. "The HD encoders alone are quite expensive, and it doesn’t help that clients want us to replace the 4:2:0 HD profile encoders that they were happy with two years ago, with newer 4:2:2 encoders. There is also the cost of monitoring and controlling these HDTV signals, however, and you need specialized equipment to do this, and it’s not cheap."

"The real problem is that we can’t charge much more for providing HDTV feeds, anymore than the broadcasters can charge for TV commercials aired in high definition," Nelles says. "This means that we have to swallow the majority of HDTV upgrades, just like the broadcasters are having to swallow the costs of taking their stations digital."

Coping With Increased Competition

Making life tougher for established companies such as PSSI and Pacsat is the influx of new, low-cost competitors in the SNG market. "It seems that everyone is getting into the SNG business these days," adds Nelles. "For instance, a lot of experienced SNG technicians have bought trucks and struck out on their own."

"I’m all for competition, but it is really tough on the big guys when the smaller ones come in and undercut us on price," he adds. "I can appreciate that they need to make their mortgage payments, but it hurts. Our main defense is that we’ll be here for the long haul for our customers, which many of these small operators won’t."

"Price-cutting in the SNG industry is getting to the point where we’re losing money on some jobs," says Maalouf. "I mean you have to be able to pay to equip and maintain your trucks, pay your operators, and cover fuel and airtime costs. Despite this, the rates we are able to charge are dropping. Once I could charge $2,500 a day to provide a single satellite path; now clients expect to pay $1,400 to $1,500 for three."

Dealing With Rising Costs

Of all the costs SNG operators have to deal with, fuel is one of the most alarming. It takes a lot of gas to move SNG trucks from job to job. Every time the price of oil goes up–as it has steadily for the past few years–the shock at the gas pump comes out of the SNG industry’s dwindling profits.

"We may be in the SNG business, but half the time I feel like I’m running a trucking company," says Nelles. "Actually, I am. We have 19 trucks scattered around the country, driving from job to job. The logistics of managing these resources–especially out West, where there’s a lot of driving between destinations–can be a real nightmare. Unfortunately, rising fuel prices are making things a lot worse."

If this weren’t enough, new state taxes are hitting SNG operators. These are being driven by federal budget cuts. As Washington cuts back its transfers to state governments, regional legislators are making up the shortfall by demanding more money from the industry. "We are now being taxed on gross revenues by several states for operating in their territory," says Nelles. "The only way to get this money back is to pass the taxes onto our clients. However, that’s not really a smart move in today’s competitive marketplace."

On top of digital equipment, fuel and taxes, SNG operators also have to pay their technicians. Unfortunately, these are the people who take the frontline flack from demanding clients who want more service for less money, and who want what they want right now. "We have instances where the technician has become so fed up with the abuse, that they’ve locked up the truck in the middle of a job and walked away," says Maalouf. Barring some change in how broadcasters treat their SNG contractors–Maalouf himself suggests some sort of session at the National Association of Broadcasters (NAB) convention "to work out rules of behavior for both sides"–larger paychecks will be the only way to keep many disillusioned SNG technicians at their posts.

The Changing Needs Of The Clients

The SNG operators interviewed were unanimous in describing broadcasters as tough customers. "They used to be happy with QPSK [Quadrature Phase Key Shifting] feeds; now they want higher modulation schemes such as 8PSK and 16QAM [Quadrature Amplitude Modulation] for HDTV," says Nelles. "We manage to reduce costs by shrinking our truck size, then they complain that they can’t fit everyone into the truck," adds Maalouf.

Why are broadcasters so cranky these days? One reason is the advertising market; "9/11 really hammered their revenues," says Conover. "Only now, three years later, are things starting to return to normal."

Another reason is the conversion to digital television. In response to Federal Communications Commission demands, U.S. broadcasters are building DTV transmission plants at their own expense, with no apparent options for recouping this multi-billion dollar investment. Faced with this drain on their bottom line, broadcasters are understandably trying to cut costs wherever they can, and SNG is one of those areas where they are looking for savings. In fact, "many local stations that used to use satellites for live feeds have stopped doing so for financial reasons," says Nelles. "Meanwhile, those that are using SNG–both locally and nationally–are demanding lower prices, simply because their budgets are tight."

In addition, part of the problem appears to be attitude. Some broadcasters are accustomed to thinking of themselves, and expect service that matches this expectation. Throw in the pressures of doing live news in remote locations–often in places where the SNG truck is the only source of light, heat and electricity for miles in all directions–and one can see why the life of an SNG technician can be vastly unpleasant. "Typical shifts for an SNG tech run between 10-12 hours a day," says Maalouf. "Often things are so crazy that they find it hard to take a bathroom break, let alone lunch."

Finding Opportunity

Faced with increasing client demands for in-truck Internet connectivity, and no readily available third-party services to provide it, PSSI decided to supply it themselves. "Broadcasters want to be able to connect directly to their network servers, and to access the Web and e-mail wherever they are," Nelles says. "It occurred to us that we could provide such services in-house; not just for PSSI, but the entire North American SNG industry."

This inspiration motivated PSSI, The Space Connection and Panamsat to establish skIP Broadband, a satellite broadband service hosted by PSSI’s Las Vegas teleport. Through skIP, reporters can communicate directly with their newsrooms by voice and e-mail in real-time. They can also transmit live voiceovers via satellite to their production centers; either separately, or combined with their video feeds.

"We are also providing skIP connectivity to other SNG companies, and are talking to government and business clients who want this service to back-up their existing communications networks. Moving into ‘network disaster recovery’ is new to us, but we are happy to be diversifying and adding a new revenue stream; especially one that will help keep us afloat in the current cutthroat SNG environment," says Nelles.

The Road Ahead

The proven economic viability of SNG, combined with the ambitions of its experienced technicians, resulted in a spate of new startups willing to carve their niche by undercutting the big boys. At the same time, SNG customers have become so accustomed to this technology that it has become a commodity to them, like telephone service or the Internet. As a result, they are more than happy to buy it from the lowest bidder, precisely because SNG is seen as a commodity that can be easily supplied by almost anybody.

The fact that the SNG industry is facing these pressures is not unique; they are typical growing pains for any maturing business sector. The hard truth is that the SNG’s pioneering days are over; now comes cost cutting and consolidation. The engineers are being replaced by the bean counters. This is what happens when a business sector gets to this stage in its development.

So what lies ahead? Under the rules of supply and demand, SNG operators will have to either cope with the commoditization of their services, or face defeat at the hands of those who do. One solution is to diversify into newer, less competitive arenas. Another is to be so good that customers will not want to go anywhere else. Whatever the case, the changing needs of the SNG operators and their clients will continue to foster a robust market niche that has turned information dissemination into a commodity.

As Via Satellite’s senior contributing editor, James Careless has covered all aspects of the global satellite industry for more than six years.