In carving out strategies to work with telcos in developing IP solutions, satellite executives have focused on addressing the biggest disadvantage satellite has against its competitors across the discussion table – scale.
    Intelsat’s Vice President of product strategy, Mohammad Marashi, is one of those executives trying to clear up misunderstandings over the scalability of satellite and work closer with telecoms to emphasize the need for both sides of the network to cooperate.
    “We need to speak to terrestrial companies in terrestrial terms,” said Marashi. “In certain areas, satellite does have issues with scale. But we have solved a lot of those issues. Look at the way we’ve scaled transponders. In the analog broadcast era, we had one channel per transponder. Now, with our transition to digital, we host 12 to 15 channels per transponder.”
    Scalability issues go beyond the efficiency or longevity of a satellite, some telcos, according to Marashi, believe that satellite companies transitioning from a per-megahertz to a per-megabit capacity model will present complications. “These transitions call for contract models to be altered on many levels. You have to give customers the opportunity not to buy a static service. Does it make sense to lump a variety of different customers from business to consumer markets into one type of capacity and network infrastructure? I don’t think so, if the current model works for them."
    Cisco IRIS COO, Rick Sanford said that regardless of loyalty to capacity models, the satellite industry has to work together to provide the same scale, cost and speed of its terrestrial partners. “The challenge is, how do we more of this moving forward? How do we satisfy customers like enterprise outfits who buy capacity for videoconferencing – one of the main drivers of IP,” he said.
    David Myers, executive vice president and general manager of CapRock Government Solutions, disagreed with Marashi. “It is not difficult at all to move from megahertz to a megabit structure. It’s more a matter of motivation. In order for us to be successful with these hybrid network solutions, we have to match terrestrial costs per-bit,” said Myers.
    Spacenet also sees the key challenge for satellite players being convincing those with funds to spend that satellite can do the job. "Satellite is clearly the best technology to meet many of the stated requirements. It’s available today, it’s more economical to deliver broadband to very rural areas and it’s much more cost efficient for an area with low population density," says Andreas Georghiou, CEO of Spacenet. "However, it became clearer that the terrestrial players were intent on making an apples to oranges comparison on bits per second and monthly service rates. What’s more, they were really making this comparison to satellite networks as they existed 10 years ago. While we’re more than happy to have an honest discussion that compares the economics of connecting rural areas with satellite versus terrestrial; at the same time, we thought we should take another approach and go on the offensive. The team at Spacenet really took a step back and said, rather than have a discussion on how we can compete with terrestrial on cost per bit per second, why not have a conversation on where terrestrial can’t compete with us?"
    Paul Erickson, a media analyst at Austin-based IMS Research, believes that telcos will eventually force themselves to form partnerships with satellite pay-TV operators out of convenience. “All telcos with IPTV aspirations will eventually attempt to maximize return on their infrastructure investment by grabbing as large a revenue piece as possible,” he said. “In the short term, they serve a need for the satellite players, bringing in incremental revenue and gaining some exposure and experience with the pay-TV business. In AT&T’s example, it also allows them to penetrate their brand into customer households in a pay-TV capacity in a much larger market than they can currently reach via U-verse. Once the majority of their infrastructure footprint has been upgraded to deliver the requisite bandwidth and the kinks with U-verse are worked out en masse, there’s no reason for them to continue working with EchoStar versus selling their own triple play into those households.”