This year the satellite sector has gone through many changes. EchoStar acquired Hughes, Astrium agreed to acquire Vizada and deal making was abundant, involving SES and SpaceX as well as Intelsat and MacDonald, Dettwiler and Associates to name just a few. Here, six CEOs and one deputy CEO of major operators around the world discuss the year that was 2011 for the satellite sector.

It has been another strong year for the satellite industry, with operators around the globe posting positive numbers as the demand for capacity shows no signs of decreasing.

In this Via Satellite roundtable, senior executives from seven major satellite operators discuss the highlights, surprises and key trends to emerge in the satellite sector in 2011. Taking part are Tareq Al Hosani, deputy CEO, Yahsat; Khalid Balkheyour, CEO, Arabsat; Michel de Rosen, CEO, Eutelsat; Matt Desch, CEO, Iridium; David McGlade, CEO, Intelsat; Pablo Tognetti, CEO, Arsat; and William Wade, CEO, AsiaSat.

VIA SATELLITE: If you could name one surprise that occurred in 2011, what would it be?

Al Hosani: I would say the main surprise in 2011 was the amount paid at the recent auction for Brazilian orbital slots. The highest bidder, Echostar/Hughes paid more than $110 million for just two slots. This accentuates two interesting factors impacting the industry: orbital slots are clearly a major asset and emerging markets are expected to continue to drive significant growth in the DTH sector.

Balkheyour: The unsuccessful selling of Telesat and the EchoStar/Hughes deal is as interesting as it is surprising because of the new dynamic it is bringing into the market place.

Desch: At Iridium, we rely on our ecosystem of partners and their expertise to grow our reach into different markets and industries, so it’s been really interesting watching other companies take a completely opposite approach and use a ‘go-it-alone’ strategy by consolidating key distribution partners. That’s a lonely road.

McGlade: I would say the surprise for me is the incredibly strong demand for bandwidth across the globe that we continue to see. In particular, we have witnessed strong momentum with our media business, which has grown very well. We have seen strong demand coming out of Russia and India, which we have worked hard to meet. In India for example, we sold an entire beam on our Intelsat 17 satellite for existing and new customers for television distribution. In Russia, we are seeing strong demand, not only from DTH programmers like Orion Express, but for other services like cellular backhaul.

Tognetti: It would probably be the agreement between Intelsat and MDA on ‘in-orbit’ fueling. It is a solution that looks like a dream for satellite operators.

Wade: There has been talk for some time about consolidation among smaller operators in the Asian satellite market, however we haven’t yet seen it happen. Instead, there has been an increase in partnerships and cooperation among satellite operators. This has been seen in condo arrangements, joint slot development and marketing agreements between competitors. This cooperation could in part be due to the recent credit crisis that has restricted funding for expansion forcing operators to look for creative solutions to exploit resources and expand their businesses. 

VIA SATELLITE: What deals did you find particularly interesting this year?

Balkheyour: The EchoStar/Hughes deal is definitely a highlight not only because of the size of the deal, but also because of the new market dynamic we are seeing between a traditional broadcaster (EchoStar) and a broadband service provider (Hughes). This combination that excludes traditional FSS telecoms players and targets end-users directly with end-user products is something to keep an eye on.

Desch: There seemed to be many high-value consolidation acquisitions, such as EADS Astrium’s purchase of Vizada for nearly $1 billion. While some found the price tag a bit surprising given the economic environment, if you look at it from another perspective, these transactions are evidence that there is still quite a bit of growth in the mobile satellite services (MSS) industry.

McGlade: I don’t know if I would highlight one particular deal, but rather a change in tone that we have seen with our government customers. There are indeed budgetary challenges these days, not only in the United States, but also in many of the developed countries in the world. We can’t predict where budget cuts will be in the future, but we do know that commercial satellite communications offer dependability and a better value in many cases than government programs. To that end, there is an acknowledgement from our government customers that our industry offers cost-effective solutions that are instrumental to them fulfilling their needs.

Tognetti: Generally speaking, the growth in Ka-band satellite contracts was interesting to see.

VIA SATELLITE: Do you believe that any new trends emerged in the sector in 2011?

Al Hosani: The drive towards HD has continued to increase, and during the last 12 months has gone from a niche market to mainstream. Broadcasters and pay-platforms are competing to lead in the HD arena. There has also been an increased focus on Ka-band broadband with operators looking to tap into this growing sector, especially in highly underserved emerging markets. Finally, markets that were previously closed are now opening up — for example India has recently acknowledged the need for capacity from international players, which is great for the market overall and for Indian consumers.

Balkheyour: The start of utilization of Ka-band to provide broadband services. More satellites are ordered or are going to be ordered in all regions for this emerging service.

de Rosen: While Ka-band didn’t begin in 2011, there was clearly a big step forward in terms of capacity and the sophistication of new programs like Ka-Sat and Viasat 1 that are adding new strengths to the satellite landscape. We are also seeing increasing creativity in satellite design and an optimization of programs. Last year, we pursued this strategy with the Eurobird 2A satellite program initiated with ictQatar; this year, we sealed a new partnership with Astrium Services and ESA, to host one of the EDRS payloads on our Eutelsat 9B satellite.

Desch: The satellite industry is abuzz about hosted payloads. The 2010 U.S. National Space Policy calls for the use of inventive, non-traditional arrangements for acquiring commercial space services, including measures such as hosted government payloads aboard commercial spacecraft. Commercially hosted payloads bring affordable access to space, particularly given slowing federal budgets. My prediction is that hosted payloads will be an even hotter topic in 2012, when we see many of the deals in the works come to fruition.

McGlade: It’s important to note that high-definition programing is now being adopted more broadly in the developing world, outside of North America and in Western Europe. The strong demand for broadband connectivity in maritime, aero and COTM for government customers is another trend from 2011.

Tognetti: We see two main trends emerging — one for TV and one for Internet. We are already working on DVB-S2, MPEG-4 as the main video distribution format for television services. This allows us to save up to 35 percent of bandwidth and increase our HD services. For Internet, we see that Ka services are evolving fast and, although Latin America is still growing on Ku VSATs, it is undeniable that a migration to Ka is unavoidable and should be planned accordingly in future satellites and services.

Wade: The continued growth of the video and television services generated by an increasing number of new DTH and pay-TV platforms in Asia continued to boost the demand for capacity. In some high-growth markets such as India, the trend in 2011 was to allow more participation from foreign satellite operators, as the domestic operators were unable to meet the capacity demand. 

VIA SATELLITE: What was the most important announcement to happen in the satellite sector in 2011?

Al Hosani: The return of Sea Launch! The limited options in the launch sector are still one of the most crippling aspects of the satellite business and the expansion is good for everyone. With SpaceX also making a strong return, we hope to see more options in terms of cost and timing related to the launch sector.

Balkheyour: So far, the additional competition in the launch vehicle sector (through the return of Sea Launch and the entry of SpaceX for smaller satellites). In the satellite manufacturing space, a renewed interest from U.S. manufacturers that were mostly focusing on the now dwindling defence sector is very important to FSS operators.

McGlade: Clearly, access to space is vitally important to all of our customers, as well as to governments around the world. Sea Launch’s emergence from bankruptcy was a wonderful thing for our industry. It provides operators another launch option, which is critical. 

VIA SATELLITE: If you could name one highlight for your company in 2011, what would it be and why?

Al Hosani: Yahsat’s most important accomplishment in 2011 was the launch of our first satellite (Yahsat 1A). The satellite provides services for both government and commercial customers across the Middle East, Africa, Europe and Southeast Asia.

Balkheyour: Arabsat has had 25 percent growth in revenue and the successful in-orbit delivery of all of its fifth-generation satellites. With the launch of the last satellite 5C, in September, Arabsat is entering a new era in terms of market share and future growth opportunities.

de Rosen: Eutelsat’s highlight clearly was the entry into service of Ka-Sat. It was a watershed for us and for the satellite sector at large. In the broadband market, Ka-Sat represents the opportunity for users beyond range of terrestrial high-speed networks across Europe and the Mediterranean Basin to have immediate access to a 10 Mbps service. As a new infrastructure, that lowers the cost per megabit, it is a powerful platform for broadening the scope of satellite-based services, in complement to Ku- and C-band capacities.

Desch: If I had to pick one, it would be that Iridium surpassed 500,000 subscribers worldwide this year.

McGlade: The continued strong momentum we are experiencing in Intelsat’s media business would be the top highlight. Our recently announced deal with DirecTV Latin America is a great example of the incredible demand for capacity we are experiencing. It involves two large satellites providing incremental capacity for new programing into Latin America, as well as back-up services.

Tognetti: I believe that growth, as a whole, is the right answer. 2011 is a turning point for Arsat since during the last nine months we have doubled our personnel and increased our sales in double-digits. We have also started the assembly of Arsat-1 and purchased all components and equipment for Arsat-2 as well.

Wade: In this fourth quarter, we will be launching a new satellite AsiaSat 7, which is the major move this year. Additionally, this year we also commenced the procurement process of AsiaSat 6 and AsiaSat 8, the first time in AsiaSat’s history that we have initiated the procurement of two satellites at one time. 

VIA SATELLITE: How do you see 2012 shaping up for the satellite sector? Do you believe the industry will remain largely resistant to a double-dip recession?

Al Hosani: The successful drivers of the industry have not changed significantly, despite the global recession. In fact, we believe the satellite sector may benefit from possible investment in longer-term competitive plays like FTTH and 4G, which have slowed due to the downturn. Other pressures will continue to take effect, such as the continued proliferation of fiber, which will have an impact on the trunking revenues of some operators. Given the right investments and portfolio of services, the fundamental growth drivers are still intact for FSS players, and although we may not see the explosive growth we saw in the last 10 years, we still expect a continued and balanced growth in this sector.

Balkheyour: 2012 could be a decisive year for the satellite industry, not so much because of the recession, as its effect on satellite will be lagging, but mostly because it will be decisive for the next big thing for the FSS sector — Ka-band. We will know for sure whether this will take off or not.

Another decisive moment for the sector could be the tightened regulatory rules that the ITU may enforce at its WRC Conference in early 2012. As you can see, there are more and competitive regulatory pressures coming our way.

de Rosen: The FSS sector has repeatedly proven to be resilient to dips in economic cycles but certain regions and certain applications are clearly performing better than others. Eutelsat has focused significant efforts on addressing buoyant TV (including HD), data and broadband markets in high-growth regions, notably central and eastern Europe, Africa and the Middle East. In a more challenging economic environment, we may see ambitious and costly high-speed terrestrial broadband programs pushed into the future. In 2012, the satellite industry will continue to improve people’s lives.

Desch: If 2011 is any indication of what 2012 will be like; I’m predicting a solid year for the satellite sector. For example, I believe we will see hosted payload opportunities grow for commercial operators. For Iridium specifically, we’ll likely see new enhancements in communications options for maritime and aviation. M2M applications will continue to develop, and we’ll likely see more partnerships with traditional cellular companies to bring seamless connectivity around the globe. The satellite industry is pretty resilient to recessions — and there is plenty of room for growth, particularly for those that diversify their business and grow smartly. Those focused on the long-term with a continued track record of wise investments will weather the economic storm.

McGlade: I believe the FSS industry is recession resistant. We operate in a steady growth environment, with a strong base of blue chip customers and almost $10 billion in backlog. We offer critical services to our customers, and because of that, we will be there to support their businesses.

For Intelsat, next year is “the year of the launch.” We have at least five launches scheduled in 2012, part of the biggest fleet investment in our company’s history. We know other operators have a large number of launches too.

Tognetti: Historically, the satellite industry has survived most of the crisis, and has come up even from deep recessions. A financial crisis like the one the world is facing today may slow down some satellite replacements or manufacturing, but demand and consumers services are constantly growing so eventually the supply will get there. A clear sign of this is that, at least in Latin America, the supply is still below demand and many new satellites have planned launches in the next three years and transponder prices have not been reduced a bit.

Wade: Despite the economic uncertainty that continues to impact many parts of the world, the Asian satellite industry generally has stabilized and is making good progress. Assuming no catastrophic development in the global economy, we expect continued improvement in Asian economies. This, coupled with changing government legislations to introduce market competition and government initiatives to improve communications services, should help stimulate investment and expansion across the broadcast and communications sectors.