Intelsat overseen Intelsat for nearly six years and speaks with Via Satellite Associate Editor Mark Holmes about lessons learned during this time and what is next for the globe’s largest FSS operator.

VIA SATELLITE: How has your vision of the industry changed?

McGlade: I have learned a great deal over the last six years. Maybe it was blissful ignorance, but I always thought the government business would be the fastest growing, and that ended up being the case. But it wasn’t through any deep rooted knowledge of what the market would be. It was about how we were able to address a changing landscape for our government customers. We see a market that is large and a situation where it has been difficult for government customers to get capacity on time and on budget. It allows us to come in with firm, fixed pricing and offer cost-effective, flexible and timely solutions. We have seen this phenomenon really blossom over the last couple of years.

VIA SATELLITE: With interest growing in hosted payloads, what impact will they have on government business?

McGlade: We are optimistic that we will continue to see hosted payload opportunities. We have an FAA payload in the United States which is on Galaxy 15. We have the IRIS payload which is with Cisco. That was pretty groundbreaking. We continue to look at opportunities. Every time we launch a satellite, we look for the ability to do a hosted payload, because we are, by far, the most diversified of the FSS operators. Having 20 percent of our revenues from government services allows us to do things that I think others cannot do, so to get a good return for our investors and to be competitive for our customers, hosted payloads are key and allow us to be more cost-effective.

VIA SATELLITE: Which emerging markets excite you the most?

McGlade: What should be the most exciting market in the world is the Asia-Pacific region, however, there is a fragmented marketplace and so many operators there. Pricing is often compressed due to the nationalistic satellite operators that price very low, because they don’t have the fleet with the resilience and the ability that we have. Plus, there are barriers to entry in markets like China and India, which we hope will continue to improve. That should be the market with the most potential, but ultimately these other conditions have kept the growth down. Long term, we would like to see better growth out of that market.

Latin America has been our top performing region. Strong demand comes not only from our media customers, but network services well. We have to make sure with the new capacity we are putting in that we can continue to serve that region in a way that no-one else does. When we look at the content coming into Latin America from the United States, we bring in the vast majority of that content. We have ultimately the best position in Latin America. In the short term, in the Middle East, there is more demand than there is supply from government customers. We have done a lot to bring in capacity where it was needed. We have taken some capacity out of North America to reposition it in Southwest Asia and the Middle East to provide capacity for our government customers.

VIA SATELLITE: What do you see in the African market?

McGlade: When we announced the satellite some time ago, we were significantly built out and continue to see great demand We have blue chip customers, long-term contracts and a very large proportion of the payload already sold out, so we are in terrific shape there. It is still a developing market, and as we looked at the media opportunities, they are nascent. The idea of building a long-term business with our capacity is certainly viable, and looking better than ever.

What I have referred to recently is the price sensitivity that has occurred due to fiber capacity coming into the market. To clarify, the fiber prices have been reduced substantially, and the demand has come in for fiber. However, it has only had a modest impact on satellite capacity pricing.

VIA SATELLITE: What are your expectations for in-orbit servicing of spacecraft?

McGlade: It has to be really precise in the satellites we choose for refuelling. There are certain applications that require less bandwidth, because when you look at the newer satellites that are going online, it is ultimately a question of cost per bit throughput, so higher throughput capabilities for certain applications are key. For other ones, it is less important, so being creative and flexible with our fleet and how we can have certain backup capacity for example, is critical. There are some very expensive satellites out there which still have a lot of value, and I am thinking of our government customers, where we can add value.

VIA SATELLITE: What do you see in the future of the launch services market?

McGlade: I am very pleased that SpaceX is gaining momentum. They have taken an innovative approach to manufacturing their own capabilities, so they are less dependent on other suppliers, which I think is a very novel and smart way to look at the business and provide a cost-effective solution. I think it is fantastic that SES went out and did this deal. I hope they are successful. We are certainly interested in expanding the universe of launch providers.

There are three key criteria we examine when considering a launch. Firstly, we look at the quality and the reliability of the launch vehicle. Secondly, the launch time frame is critical. Thirdly, there is the price. All those are accessed, with quality being priority one, but all three have to be considered. Launch prices have gone up fairly substantially over the last several years, and we must be cost-effective in what we are able to do for our customers, because the pricing for our customers does not always go up as fast.

VIA SATELLITE: Should satellite operators be worried by trends such as OTT?

McGlade: OTT threatens linear programming, and as young people consume content in different ways, broadcasting will have a less predominant role than it has today. But that is going to take many, many years. There are those who question what impact it will have over the next couple of years. I think we need to continue to look at this market by market, and, ultimately, see how people want to consume different types of programming. That being said, I understand from the programmers in the United States that their viewers have increased over the last year. As more data goes over wireless 3G or 4G networks, we could get a side benefit of doing more cellular backhaul in developing countries if they indeed start to consume OTT programming. In the developed nations, it is somewhat of a threat, but it could be overstated by some at this point.

VIA SATELLITE: Do you believe in 3-D?

McGlade: To get the best adoption, you will need a high-quality product with no glasses, but that is many years away. I know LG has just come out with a very good plasma TV that you can view with passive glasses, but prices will have to go down. For some people, it will always cause sickness. It won’t be for everybody, but it should improve, and the costs to do programming should also improve, so there can be more content to be consumed, and this will ultimately drive television set sales and penetration. I do believe in 3-D, but it will take time for it to be adopted. It depends on the economy and the replacement cycle of other televisions.