[Satellite News 03-26-09] Federal funding for broadband roll-outs as a threat to the satellite industry, high-definition in 3D and the impact of the economic recession were just a few of the talking points that a panel of operator CEOs initiated at the opening session of the Satellite 2009 trade show.
    Satellite 2009 Conference Chairman and panel co-moderator Scott Chase opened the panel with talk of the economy, describing the global credit crunch as “several elephants in the room.” But, Eutelsat CEO Giuliano Berretta said that driving his company, currently operating with 97 percent capacity utilization feels like “driving a Ferrari in a traffic jam,” said Berretta. “I am not particularly happy with being at 97 percent. In two years, we will have a significantly reduced utilization rate. Satellite should be more than just selling capacity and we have been innovating with S-Band, with our best enemy, SES. I think we are going to work more together. We believe S-Band is a complement, not just to Galileo in the future, but elsewhere as well.”
    SES CEO Romain Bausch was a little more conservative with his company’s standing, yet, he admitted that SES has yet to feel significant impact. “While we should not tell the world that we are immune to any negative impact, we can say that we are in a fortunate position. We are not having any financing problems because of good timing. We will not see a maturity until May 2010, and even though it’s a while off, we’re planning for it,” said Bausch.
    Bausch even named the Summer of 2011 as the specific point in time where the satellite industry would start to feel the effects of a recession, if it continued that long. Telesat CEO Dan Goldberg agrees with Bausch. “For Telesat and the companies sitting on this stage, 2008 was a strong year and 2009 is looking like a growth year. Video-on-demand services and HD video are clearly driving our business in 2009,” said Goldberg.
    Intelsat CEO David McGlade said he felt lucky to be in the satellite business in the current global climate. “The data service is robust and growing and 80 percent of our revenue for the year is in the bag already and we’re taking advantage of our flexible capital structure. The data service is robust and growing,” said McGlade.
    Bausch explained why these services are growing in the current economic climate. “People are not spending money going out to dinner or the movies. So they’re staying at home and they’re not getting rid of their video services,” he said.
    McGlade and Berretta expanded the discussion of the success of HD services by outlining expectations for the next step – 3DHD. “There will be a real revolution in TV over the next 2-3 years for 3DHD. We have equipped 30 theaters in Italy for 3DHD. We’ve been active in HDTV and we’re hoping to get into an epidemic phase which will lead to 3DHD television services via satellite, encoded with MPEG4,” said Beretta.
    “The theaters will definitely get 3DHD first,” said McGlade. “I would love to see it in three years. I think it is a bit optimistic. Technologies always take longer than advertised and HD has not fully materialized yet.”
    Another major focus of the panel was on the costs of launching, which have declined slightly in the last few weeks leading to ILS snatching a few contracts from competitors. All four of the CEOs said they would love to see more competitive U.S. launching options, as well as options in India and China. “We want launch providers that are healthy, but not so healthy. We have supported one launch providers in terms of funds. It is so crucial for us. We have to make sure we get the quality we need, at the price we need. With ILS and others, there are good alternatives. [Space Exploration Technology Corp.] SpaceX needs to be space proven,” said McGlade, who added that the business models of commercial launchers aren’t always parallel with the needs of a commercial customer base. “In the commercial world, we are used to fixed pricing. We need to see a commercial understanding of our business. As long as we are expected to adapt to a cost-plus contract structure like we see with government and civil space deals, we’ll take our business elsewhere.”
    Goldberg, who has launch contracts with SpaceX, said the new launch company, headed by entrepreneur Elon Musk, is a definite U.S. option for the future “I think any of us would consider them if they are flight proven. Our flight cycle fits in well with their launches.” But, Goldberg also said that in order to leverage international options, ITAR restrictions need to be relaxed by the U.S. government. “Having access to a Chinese launch vehicle will be very favorable. ITAR is denying American manufacturers opportunities and is way too broad in defining what an ‘advanced’ space system is. I think what needs to happen is you need ITAR to be revised but not place U.S. manufacturers at a competitive disadvantage,” he said.
    Bausch agreed that ITAR issues are essential to the health of the industry, but that the industry should not focus solely on a Chinese launch vehicle. “It is very important that these launch service providers should not just focus on the government. We are strongly dependent on the launch vehicles but just as dependent on satellite manufacturers and sub-contractors,” said Bausch.
    The panel also reacted to a French government investment in GlobalStar, which was announced earlier in the day. Coface, France’s export credit agency, gave GlobalStar $574 million in financing from which it can use to acquire and launch satellites. McGlade had hard words for the deal. “Government sponsored financing of commercial companies will distort the market, especially in Europe. It’s bad for competition and is unfair to the companies that receive no funding,” he said.
    In relation to the U.S. broadband stimulus roll-out funding, McGlade was not as critical, but warmed that it could still threaten the industry. Goldberg agreed and explained that it has to do with funding. “The lower the level of government put in charge of dispersing the broadband stimulus money is, the lower the chance of satellite being involved. The local governments will most likely go to local terrestrial providers. On the federal level, satellite definitely has a strong play,” he said.