Eutelsat Communications, which has Spanish company Abertis Telecom as one of its main shareholders, has made a number of interesting strategic moves over the last year. While continuing to grow its primary fixed satellite services (FSS) business, the operator also ordered its first dedicated Ka-band satellite, Ka-Sat, to target the satellite broadband market as well as teamed up with rival SES Astra to form the Solaris Mobile joint venture to serve the mobile services market in Europe. Eutelsat CEO Giuliano Berretta discusses the company’s strategic moves and how he is positioning Eutelsat for the future.

Satellite Today: You had 49 high-definition (HD) channels broadcast on your fleet at the end of June. Has the growth in HD being slower than you anticipated, despite a lot of industry hype?

Berretta: Many observers were anticipating rapid and enormous growth of HD channels, while Eutelsat remained very prudent in our own predictions. The number of HD channels broadcasting through Eutelsat is actually slightly superior to our expectations. There are a number of factors that have clarified the environment for HD, notably the progressive infiltration into households of HD displays, and the emergence of Blu-Ray as the de facto standard for HD games and as a DVD player. The strength of this off-line content is creating expectations from consumers for HD broadcasts, and pay-TV operators are now responding by adding HD into their mix or launching all-HD platforms. Our second prediction was that we did not believe HD would only take off in Western Europe. We believed that new digital video markets in Central and Eastern Europe would also be early adopters and even kickoff in MPEG-4. A good example is n in Poland, which launched directly in MPEG-4 from our Hot Bird video neighborhood. Our own HD channel figures clearly show this trend. Of the 55 HD channels broadcasting today, half are addressing Western Europe through our premium video neighborhoods and half are broadcast via our major video neighborhoods addressing Eastern Europe, Turkey and Africa.
 

Satellite Today: How many HD channels do you expect to have at the end of June 2009?

Berretta: It is difficult to predict. We are still in the very early stage of the market, which means that even though the long term potential of HD is clear, the precise trajectory through which we will reach this stage is not clear-cut. When the market has really taken off it will be easier to project from one year to the next. One thing I can tell you is that the acceleration we saw in the first six months is continuing.
 

Satellite Today: In Japan, Toshiba announced that Mobile Broadcasting Corp. will cease operations. Do you think Solaris can buck the trend here?

Berretta: Eutelsat and SES have taken a very measured approach to mobile broadcasting, which we think is well aligned with this important emerging market. In particular, through a partnership with our main competitor we are reducing risk in a new area. Our shared strategy is to launch a payload with wide coverage and capacity that can be used for multiple applications. History has shown more than once that a large satellite locked into one application can be a mistake. We have always been clear that the potential for the S-band lies in more than mobile satellite broadcasting and that the return channel could have particular value, notably for vehicular applications as a complement to GPS and data on Galileo. We are also looking at other professional applications where the equipment cycle is developing fast, notably maritime and aeronautical services. We have been very careful in our planning for Solaris Mobile and are the only player that we know of that has made any kind of hard financial commitment to the development of a satellite. We believe this means we will be first to market and therefore able to bring the benefits of these new technologies to the European marketplace before anyone else.
 

Satellite Today: While there have been great advances in satellite technology in recent years, can it ever play more than a niche role in either the residential broadband or mobile broadcasting space?

Berretta: I recently read an article asking whether broadband via a Ka-band satellite is innovation or revolution? I think we are the only ones in Europe to really assert that this step is a revolution requiring an entirely new approach. What we have done is to commit to a satellite that will completely change the concept of satellite broadband, put satellites in a new league in mainstream consumer services and offer a solution to resolving the digital divide. Taking up the challenge of the Internet marks the opening of a third chapter in the satellite sector, which began as a purely professional technology and continues to flourish with satellite broadcasting. Current satellites are simply not adapted for cost-efficient consumer Internet applications, which are all about one-to-one communications rather than the point-to-multipoint feature of broadcasting. We initiated the revolution of conceiving a satellite called Ka-Sat equipped with a very high number of spot beams to optimize the resources on board and allocate them to the people that really use them. In our opinion, we have found the best compromise that can be obtained with today’s technologies.

Satellite Today: In terms of FSS consolidation, you have recently been linked with Hellas-Sat in Greece? Can you comment any further on this?

Berretta: It is well known that we are open to external growth opportunities that complement our own activity, and Hellas-Sat could be a good fit. However, our main focus is on our organic growth driven by our ambitious program of seven launches from now to 2010. This new capacity will meet three fundamental objectives — renew capacity at a certain number of key orbital positions, enable some satellites to be relocated to other locations and increase in-orbit security, notably at the Hot Bird neighborhood, which generates 40 percent of revenues, and at 7 degrees East, which generates a further 10 percent of revenues.
 

Satellite Today: Would you expect to do more deals with telcos similar to your agreements with Swisscom and France Telecom? Do you expect other telcos to look more and more at satellite solutions and perhaps combine IP and DTH delivery?

Berretta: Yes, definitely. The role of satellite in high-speed digital environments is clearly asserted with that fact that Orange, the world-leading broadband TV operator, is using it to complete their coverage. What Orange is doing by proposing to deliver TV by satellite to the 50 percent of French homes not eligible to receive it via ADSL is a model for everyone else. There are similarities between Rupert Murdoch’s strategy and what Orange is doing to find creative solutions to develop triple play. BSkyB is a satellite TV player who acquired Easynet to add broadband to the mix while Orange, as a terrestrial player, is looking to achieve the same objective but is coming from the opposite direction. Swisscom’s choice of Tooway to meet their obligations of universal access to broadband across Swiss territory adds considerable credibility to our new consumer broadband service. It clearly demonstrates that Tooway can meet requirements to operate on a large scale, that it can satisfy the very exacting requirements of a national telco and provide consumers with a comparable broadband experience to ADSL.
 

Satellite Today: What are the main challenges for Eutelsat over the next year?

Berretta: We have a big launch program and want to benefit as soon as possible from this new capacity, as we are currently running at a more than 93 percent fill factor. One of the main challenges is on the launch side, with access to space a huge issue right now. The military effort in the United States is absorbing American launchers. There is huge pressure on Arianespace, high launch costs and not sufficient choice and flexibility for operators. Even for our company, which has planned well ahead, access to space at a reasonable price in the future is a big concern. We have taken the precaution of signing a number of launch contracts: three Ariane, two Sea Launch, two ILS (International Launch Services), which gives us flexibility for delivering our satellites into orbit and achieving our objectives of renewing and increasing capacity as well as raising in-orbit security.

Interested in hearing more?  Join Giuliano Berretta at SATELLITE 2009’s Opening General Session The Big Four: Setting the Pace for Expansion on March 25 at the Walter E. Washington Convention Center in Washington D.C.  Admission to the Opening General Session is included with your free Exhibit Hall Only Registration.