Controlling the Change That Needs to Happen
By the time SATELLITE 2018 opens its doors in March, you will have heard the phrase “transition is nothing new to satellite operators” at least a dozen times. If you’ve been in the industry for longer than a few years, you might even have this phrase tattooed on your arm so you don’t forget that it’s true. The satellite industry has, historically, operated in a way that rewards those who stick to long-term plans stretching several years while surviving a handful of heart attacks along the way. For operators, previous “transitional periods” were largely a matter of timing between technological shifts on the ground, the resulting new requirements and periods of time required to build and launch satellites that met those new requirements. During the past decade of economic recession and recovery, operators have been fortunate enough to enjoy stability due to the varying timeframes of supply and demand in video, government and enterprise markets.
That said, I’ve heard more than a few very experienced satellite professionals tell me that this transition period feels different. Some attribute this to the changing landscape and pace in the manufacturing and launching sectors. Others point to a bigger-than-usual freshman class of new industry entrants backed by powerful investors with high expectations and less patience for traditional long-term business models. For operators, however, this transition is only unique in that they feel they have more options and means of navigating through the change. There’s more agreement among operators than you think and I have a few examples.
A few weeks ago, I read three separate news articles covering three different satellite operator CEOs with three very different short- and long-term perspectives on change. All agree that the video business still sets the table for satellite operators and that there is still room to grow in providing video to developing markets. In my colleague Mark Holmes’ excellent interview with Tom Choi, the outgoing ABS CEO stated that the FSS sector is going through a difficult period of lack of demand and over supply. “This imbalance has happened several times before in our history. There is still strong growth left in video because most of the countries around the world do not have hundreds of TV channels and they don’t have DTH systems, so satellites that concentrate on this video segment will do fine.”
During SES CEO Karim Michel Sabbagh’s third quarter results conference call, the executive made very similar remarks about the health of video (and for good reason, considering that SES is a global leader in this market), but also added that his company has spent a lot of time developing future growth strategies for a new world driven by data-centric networks. SES is also changing its wholesale bandwidth business model, moving away from increasingly commoditized raw bandwidth and towards a broader service offering beyond bandwidth to customers.
In testimony before the U.S. Senate Committee on Commerce, Science and Transportation about the current state of the commercial satellite services industry, Intelsat CEO Stephen Spengler testified that he believes there will be significant convergence of satellite with other communications technologies to build a singular telecommunications infrastructure. This statement came shortly after the company put forward a semi-controversial proposal with Intel to share C-band spectrum with outside parties to enable 5G connectivity services. Spengler also stated that his company is investing more in what have traditionally been considered “niche verticals” for satellite – mobile education, healthcare, transportation and developing connected enterprises in remote regions.
While the paths forward for operators may deviate here and there and the timing of change may be a little off, operators are very much aware of the same reality – change needs to happen. The rules of how that change happens, however, no longer apply, and operators seem to have a lot more control of how they evolve than in years past.