They keep coming ... more and more DBS satellites to support DirecTV and EchoStar's DISH Network.
In August, EchoStar launched its ninth satellite, a hybrid Ka/Ku-Band spacecraft, and in July entered into a construction contract for its 10th satellite. As part of its renewed contract with Space Systems/Loral, DirecTV has two satellites (DirecTV 8 and DirecTV 9S) on the drawing boards.
The DBS fleet in space is getting older, with some satellites approaching nine to 10 years in age. Those birds will need to be replaced, which could begin happening in 2005 and 2006 with current satellite orders. There's also the debut of new services, such as HDTV, which require more capacity and new technology in space.
But while there are challenges, the companies also have options.
Kevin Smyth, senior vice president of residential satellite services for SES Americom, makes a strong case in the November BRIDGE for DBS companies to use FSS (fixed satellite service) spacecraft to support their services. His company has a deal in place with EchoStar to supply capacity to DISH via its future AMC-15, a satellite it wants to place at 105 degrees.
While they spend millions of dollars on satellites, DBS companies could be spending some of that money for on their core business. "Wall Street doesn't give them (DBS companies) any credit in terms of the valuation for owning satellites. They are valued on a per-subscriber basis," Smyth says. "If they can take their capital and spend it on subscriber acquisition instead of satellite acquisition - then that's probably a good deal for them in terms of how they are valued by Wall Street."
With subscriber acquisition costs rising, more money being spent on DVRs and other technology, and a cable competitor that's getting smarter, relying on a satellite services company for capacity may make sense for a dish platform.
Bell ExpressVu and Star Choice in Canada do just that - using satellite capacity owned by Telesat Canada.
In the states, GlobeCast and other niche satellite TV players like Russian Media Group use Telstar satellites operated by Loral Skynet. SES Americom's European sister company, SES Astra, has developed a successful DTH platform serving the European continent, supporting companies like British Sky Broadcasting.
The capacity options don't end there. DBS companies also are eyeing Ka-Band frequencies.
EchoStar is poised to become the first U.S. commercial operator of Ka-Band frequencies with EchoStar 9. Last week, DirecTV Chairman Eddy Hartenstein reiterated company plans to use Ka-Band capacity with SpaceWAY, the next-generation satellite platform being developed by Hughes set for launch next year.
And don't forget about technology in the home. DVRs are an important asset in managing the goods delivered to viewers.
(More on the satellite capacity issues - and the story behind bandwidth management - can be found in the November issue of The BRIDGE, details for which can be found at: http://www.mbc-thebridge.com.)
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