Broadcasting remains the main revenue driver for satellite operators, but the means of delivering that service is changing constantly.
Internet protocol (IP)-based services are likely to be the next big fundamental shift in broadcasting, says Ed Horowitz, president and CEO of SES Americom. In preparation, the satellite operator has developed its IP-Prime service, an end-to-end offering for processing content and distributing programming via satellite to telephone companies and their IPTV consumers.

“If you examine the technology, what is happening today with IPTV is as significant as the move from analog to digital,” Horowitz says. “When we evolved to digital it brought in new users. It forced competitors to respond by also offering digital services and these moves also stimulated new content creation.
“The most recent trend is the shift from digital to IP, and the creation of IP-Prime is for anyone thinking of creating a distribution network that has IP as part or all of that plan. If they want to remain relevant and as they wrestle with trends, they will look for us to help.”

This transition is being driven not just by improvements in technology, but by the viewing habits of the customers, says Horowitz. “Customers in Gen X and Gen Y will be 50 percent of the audience in 10 years,” he says. “Gen X and Gen Y want everything their way when they want it, and they exist in civilian life and in the military. We are looking at this demographic and viewing the expectation shift as a wavefront, not a single shot.

“Anyone born after 1983 is a digital native, and anyone born before 1983 is a digital immigrant. We’ve been serving the immigrant, and now we’re preparing for the native.”

SES Americom also is strengthening its offerings in other markets. The company launched its high-definition (HD) satellite newsgathering service in April and ordered the AMC-5R satellite and a ground spare in May.

“The overreaching message we want to deliver is that we are future-proof,” Horowitz says. “A lot of people say they are in the satellite business, but they are really in the bent-pipe business. Customers doing business with us will not be left behind technologically. We are no different than any media company. We recognize that the power has shifted to the customer. Our customers say they want to do business globally, and we can help them successfully navigate their way around the world – geographically and technically.”

Horowitz spoke with Via Satellite Editor Jason Bates at the April National Association of Broadcasters (NAB) show in Las Vegas.

Via Satellite: Why are you placing so much emphasis on IP-Prime?

Horowitz: It makes sense to position ourselves for IPTV in terms of everything we do. The majority of our revenue when we first started out was in broadcasting when we just distributed HBO. In parallel, we have developed a significant government business as well.

If you drill down to the enterprise and media sector, we have different ways for content to be distributed to different distributors. We are developing IP-based solutions that will have relevance across our core media and enterprise business and the government. For certain, you’re going to see more of an IP-focused customer in the future, and we’re becoming more IP-centric. As customers decide what the right business model is in the future we have to support those models with our solutions.

Via Satellite: Is government adoption of IP-based services matching the pace of the commercial sector?

Horowitz: About 20 percent of our business is U.S. government driven, and we expect that to increase. The U.S. Department of Defense is more and more into IP. The warfighters want to have IP in central command to provide imagery with the highest possible resolution; in a tank traveling at 60 mph they want to have communications on the move; and the soldier in the field with a PDA wants to know in real time what is on the other side of the hill and have that displayed on his screen so he can issue an appropriate command.

With our platform that is being developed for distribution of IP-based content, it doesn’t matter if it’s MTV or data transmitted from a Predator [unmanned aerial vehicle]. Bits are bits, so we have an IP platform for every application.

Via Satellite: How are you relating these efforts to the U.S. Department of Defense (DOD)?

Horowitz: We serve every branch of the military, and we are learning how to become part of the strategic plan of the military. It’s not just bandwidth anymore. They want complete solutions — bandwidth bundled with engineering, equipment and ongoing network support. To be a meaningful partner with DOD we have to understand their requirements and offer a tailored solution.

We were fortunate to attract Tip Osterthaler, a retired Air Force general with private sector as well as military experience. I am learning how to speak the military’s language. Tip already knows how.

Via Satellite: What long-term impact will use of commercial satellite services have on the U.S. military?

Horowitz: I remember the first time I went to Ron Sega’s (under secretary of the U.S. Air Force) office. He said he was in awe of what we had accomplished as we became part of their strategy. We are working with DOD to develop the process that will allow other commercially available communications services to be compatible with regular DOD needs.

Gen. James Cartwright (commander, U.S. Strategic Command) is driving the integration of commercial and military concerns. Companies are joining with DOD to put a hosted payload on a satellite. That would bring a greater assurance of funding. Today, a commercial satellite transponder is purchased by the armed services through a supplemental funding grant issued by Congress. To be embedded in DOD’s strategic plan, Congress must put baseline funding for use of commercial services. We’re looking for an active line in the budget that says commercial spacecraft and services.

The next most difficult challenge for us is the perception that if warfighters use military satellites they don’t have to pay for it. We’re not going to change this, but we need to try to make commanders with budget authority understand that commercial satellite can be a cost-effective option.

Via Satellite: Are there any advantages for you as SES Global grows larger?

Horowitz: As part of a global corporation, we have the balance sheet to invest in the projects and initiatives we have talked about. Astra, New Skies and Americom, in conjunction with SES, coordinate major procurements such as insurance, satellites and launch services. Through this coordination we manage our manifest providing greater assurance that we will be in orbit when we say we will. We currently have 10 satellites under construction. With that kind of volume, we maintain a constant flow of integration to our designs.

Because of the breadth and scope of the company, we can manage our insurance portfolio. Sometimes an NSS-8 situation occurs. If [New Skies] had been an independent company it would have been devastating, but as part of SES, it was not – just a few months later they announced plans for NSS-12. That’s the true benefit and where size really matters.

Via Satellite: What have you seen in the market that brought the development of your HD neighborhood?

Horowitz: Five years ago at NAB, HD had its own tent at the Tropicana Hotel, and there were no HD sets in the building. Today, you won’t find a TV set with a tube and you will not find a [standard-definition] set anywhere. In the last five years, we have seen the tipping point for production and equipment prices. In anticipation, we created HD neighborhoods, which are as important to our business as IPTV. Today, Americom is distributing more than 40 HD channels.