by Theresa Foley

When will fiber make satellites obsolete? The question has been posed for decades, and now the answer appears to be…Never! New high-capacity undersea fiber cables with 50 to hundreds of times the current capacity are coming into operation, sending the cost of raw bandwidth for intercontinental transport of telecom traffic plummeting, but that isn’t stopping satellite operators from ordering new spacecraft to cover the same routes.

Transatlantic satellite operators don’t seem to care that fiber is flooding the bandwidth market. They have placed orders for a half dozen new satellites in the closing months of 1999, while operators trying to serve the earth’s landmasses have ordered another six to 10 satellites.

Increasingly, analysts are recognizing that satellites will not be displaced by fiber in the foreseeable future, although they will be relegated to a greater or lesser degree to an auxiliary or backup role for traditional telecom point-to-point traffic. Broadcast continues to be satellites’ bread-and-butter market, with fiber posing no imminent threat to take over that role, even as video signals take the form of bit streams just like any other data package. Emerging Internet-type multicast services are a wild card as far as how much of that traffic will go to satellite or fiber, with both vying for the job.

Oceans Of Fiber

The amount of new fiber coming into play in the Atlantic and Pacific Ocean regions in the next few months is mind-boggling. Telegeography, a leading consultancy that tracks bandwidth traffic and infrastructure systems, says that by mid-1999, the total transatlantic bandwidth was 3 terabits per second, compared to just 100 Gbps a year earlier, due to upgrades and new fiber systems. In the past year on that route, the amount of bandwidth has increased 300 times. By the end of 2001, it will be up to 6 terabits per second.

New fiber cables coming into use in the next year or so in the Atlantic include FLAG, Global Crossing 2, TAT 14 and probably cables from Level 3 and a company called Worldwide Fiber.

"The transatlantic is the most competitive route in the world. Satellite business into and out of Europe and the United States (for telecom services) is almost nonexistent," says Bob Collet, Teleglobe’s vice president and general manager, Data Services Division. Even for broadband Internet services? "Absolutely. New satellites over the Atlantic are for broadcasting rather than Internet."

But Collet says satellites have a future anyway, even in that region. The top city markets will get fiber connections, but hundreds and thousands of secondary cities will not. "Absolutely there is a future for satellites. Star Trek is a metaphor. Some day, there will be so much fiber optic out there it will look like the Borgs assimilating everything. But for a long time, there will be places fiber just doesn’t go, and satellite will be the best way."

In the Pacific Ocean region, three big cable systems-Japan/United States, China/United States and Pacific Crossing 1-all are due to commence service in the next 18 months. "In the really heavy-use routes, there is no way satellites are going to be able to compete. The underlying costs of fiber cables are vastly superior," says Graham Finnie, a consultant with Telegeography Inc. In addition, a new fiber technology, Dense Wavelength Division Multiplexing, has come into use that multiplies the amount of traffic that can be taken on fiber cable by five times.

All of the new 1.2 to 1.5 Tbps cables will have 20-30 times the capacity of today’s high capacity (80 Gbps) fibers, Finnie says. One way to picture just how much capacity this represents is to think in terms of telephone calls: 100 Gbps is equal to the total amount of international telephone traffic in 1998, or 94 billion minutes, Telegeography says. All the U.S. long distance traffic in 1998 equaled 336 billion minutes, which could be carried on.4 Tbps of capacity.

"Fiber prices on a per Mbps basis are falling 60 percent each year. The difference is so enormous, why would anyone use satellite if they can get fiber?" Finnie asks. The answer is because they have to. Satellite prices are holding steady despite the overall trend towards cheaper bandwidth. Finnie expects only perhaps a 5 percent per year drop in satellite transponder costs, but satellite officials say they want to keep their prices at current levels.

A New Wave Of Satellites

Intelsat is in expanding trans-continental satellite services by ordering at least three new satellites that will help open several new slots over the oceans. "These satellite replacements would create additional stationkept roles to help in the Atlantic Ocean region, where we see traffic forecasts that are quite large, and in the Pacific, where Internet demand is driving things," says Bambi Prigel, Intelsat’s director for orbital resources strategy.

Eutelsat also ordered a transatlantic bird in 1999 for its Atlantic Gate position. GE Americom is expected to order two to four trans-oceanic satellites in the next few months as part of its global expansion strategy. New Skies Satellites N.V. also bought a transatlantic satellite that is custom-designed to sell into the new multinational markets.

Market deregulation and the trend toward satellite multimedia are behind Telesat Canada’s decision to contract for two new super-Aniks. With multi-frequency payloads of roughly 100 transponders on each satellite, these mega-birds are likely to set new industry records in terms of size. In addition to the normal 24 C-band and 32 Ku-band transponders, Anik F2 will carry between 40 and 60 Ka-band transponders, covering the United States and Canada. Paul Bush, Telesat vice president for corporate development, says Telesat needs the huge, high capacity bird to compete in a large territory: "The rules are changing with regard to access to each other’s markets. It’s part of our drive to lower cost per unit pricing. You have to have a satellite that has 80 units to sell to get the lowest cost."

Bush believes Telesat’s networking customers are ready to move into multimedia services and will use the Ka-band package. Launch of the 2,500 kg satellite, which requires a large commercial launcher, will be in mid-2002. Another huge satellite, Anik F3, with a different payload will be ordered and launched about the same time. Anik F3 will be used for new Ku-band services and expanded DBS and L-band services. Both super-Aniks will complement, although be different in design from, the large Anik F1 satellite due to be launched mid-2000 to help Telesat break into the U.S. and Latin American markets with its wide hemispheric coverage. Anik F1 will allow Telesat to break into Latin American services, while F2 puts the operator into the multimedia market.

GE Americom was awaiting FCC approval of its purchase of Columbia Communications Corp., before ordering four more satellites, including at least two to fill trans-oceanic positions assigned to Columbia. GE was expected to hold an open competition for the satellites, although its long-time supplier Lockheed Martin may have the upper hand in the contest due to the satisfaction GE has had with the manufacturer’s A2100 series of satellites.

New Skies Satellites N.V.’s new satellite, NSS 7, was ordered in September from Lockheed Martin Commercial Space Systems as the first of many fleet upgrades planned by the company. The satellite is on a "fast track" schedule that calls for delivery by December 2001 to replace NSS K (formerly called Intelsat K) before it reaches its predicted end of life in the summer of 2002. New Skies also operates an NSS 803 satellite at 338.5 degrees E where NSS 7 will be positioned. This satellite will be relocated to 183E to replace the aging NSS 513 for the Pacific Ocean region.

NSS 7 will include several advanced features, such as custom-tailored antenna beams shaped to fit landmasses in Europe, North and South America and Africa, making NSS 7 much easier to market than its predecessor satellites. NSS K’s coverage partially focuses on areas with little or no demand like the Amazon and the ocean, whereas NSS 7 will be much easier to market with its coverage extending east into Saudi Arabia and west to the Caribbean and Canada. Lockheed Martin will shape the beams and power levels so that customers in high rainfall areas will receive more power to overcome rain interference with their signals, which New Skies hopes will appeal to the oil industry and rural telephony players in markets such as West Africa, where NSS 7 will provide Ku-band coverage. The satellite also will have beam-switching to enable the operator to respond to shifts in market demand.

Another unusual technical feature for NSS 7 will allow New Skies to reconfigure the satellite after launch to change the mix of C- and Ku-band transponders. NSS 7 will start life as a 36 C- and 35 Ku-band transponder satellite, but the mix can be changed to all C- or all Ku-band depending on market dynamics.

"We will be ordering one or several more satellites in 2000, subject to Board approval," says New Skies CEO Robert Ross.

Eutelsat’s strategic objectives of expanding into transatlantic and multimedia services will be enabled by the satellites it ordered in 1999. Alenia Aerospazio of Italy was selected to supply a 20 Ku-band transponder satellite for Eutelsat’s new Atlantic Gate position at 12.5 degrees W under a lease arrangement. Equipped with beams over Europe, and North and South America, the satellite will be delivered in 21 months. Alenia’s price, which has not been disclosed, is said to be low.

Eutelsat will join the Ka-band club with a contract awarded in September to Alcatel Space for a Hot Bird 6 satellite, with a multimedia services payload in addition to its 28 Ku-band transponder TV broadcasting services payload. The satellite will cover all of Europe, North Africa and the Middle East. The satellite, which will be launched in late 2001, has four Ka-band transponders and seven Skyplex units. These Skyplex units can be divided among as many as 18 carriers per transponder in 2 to 6 Mbps sections, designed to allow microbroadcasters to get into the video market at a low cost. The Ka-band package is to serve small businesses with interactive IP and DVB services. The third order for the year was the 24-transponder Ku-band satellite called Eurobird which is slated for the 28.5 degrees E position. Due for launch in mid-2000, the satellite will be used for new multimedia applications in Europe.

A Rising Tide Of Regional Birds

While regional or domestic operators generally lag behind the global operators in their aggressiveness toward market expansion, they too are buying satellites. Bolivarsat, Optus of Australia, and NTT of Japan all ordered satellites in 1999. MCI Embratel also was preparing to contract for two or three Brazilsat Cs that would be used to expand its service beyond the traditional domestic Brazilian market into neighboring countries.

Eckart Schober, president of Creotel Comunicaciones y Satelites S.A., a satellite consulting company in Buenos Aires, says the Brazilsat Cs are expected to be hybrids, with C-, Ku- and possibly Ka-band capacity. The C-band coverage would be regional, while the Ku-band would be focused on Brazil. MCI and Embratel hoped to award a contract by March 2000, but the schedule was slipping while MCI negotiated with other operators about a strategic alliance, he says.

Embratel may join forces with Hispasat in an alliance that could include Andesat and Alcatel, Schober says. Hispasat of Spain needed to make a decision on how to replace its Hispasat 1A satellite by 2002. Schober says harmonizing the coverage and markets for the new satellites would make sense.

Space Systems/Loral and Mitsubishi Electronic Corp. of Japan were selected in October to build the Australian Optus C1 satellite for Optus and the Australian Defense Department. The satellite will be launched in 2002 for use in Australian telecommunications. Mitsubishi will serve as prime contractor with payload responsibility, while Space Systems/Loral will have overall system design and will assemble and test the satellite.

Bolivarsat is a new company established in October by Andesat SA and Alcatel Spacecom, which hold 51 and 49 percent respectively in the venture. The satellite is intended to provide Internet, broadband and rural telephony services to the Andean countries of Latin America and to other countries all the way North to Canada from slots at 61 degrees W and 67 degrees W, where Andesat is licensed to operate. Andesat had been trying to jumpstart the project, which has gone under the name Simon Bolivar, for several years, but financing has been a problem. Alcatel’s role is strategic partner, program manager and prime contractor for the satellite, with responsibility for financing and development of the project.

The bottom line for all of the companies that have ordered new satellites is that, despite rising competition from fiber, satellites are here to stay for some time to come.

Theresa Foley is Via Satellite’s Senior Contributing Editor.