SES AMERICOM SEEKS TO LAUNCH DBS SERVICE IN U.S.
SES Americom filed FCC petition for license to launch new satellite service for TV broadcasters and consumers in U.S. Americom2Home would allow programmers or content providers to deliver broadband services directly to public through small satellite dishes and other equipment in which 2-way digital technologies had been incorporated. At time when DBS market is consolidating, new SES service could provided much-needed competition for EchoStar and DirecTV, Pres. Dean Olmstead said. “We plan to create a best-in-class DBS satellite platform,” he said. SES has received “favorable reaction” from some big players in market that could provide content, Olmstead said. He said he planned preliminary talks on interference issues and outline plans for service with EchoStar Chmn. Charles Ergen and DirecTV Chmn. Eddy Hartenstein at Carmel Group Satellite Conference in Monterey, Cal. (see separate story, this issue).
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Interference “could be a big issue,” SES attorney Phil Spector told us: “A lot will depend on the attitude of EchoStar and DirecTV.” Americom2Home service would be provided by new satellite company that hopes to launch into 105.5 degrees W orbital slot using license granted to its affiliate by govt. of Gibraltar. Slot falls between orbital positions used by DirecTV and EchoStar at 101 degrees W and 110 degrees W. Both Americom2Home and existing satellites use frequencies in 12.2-12.7 GHz range. SES said there was “no real possibility of interference” to EchoStar and DirecTV customers and it planned to work with engineers of both to explain system. SES Americom officials said they also met with FCC before filing for license and “expects no problems.” Gibralter and U.K. permit U.S. satellite operators to offer capacity for similar uses. SES has licenses for Ku-band and Ka-band satellites at 105 degrees W. Another SES satellite will provide high-speed broadband connections to U.S. market.
SES said its system could begin operation in 2004 if FCC moved quickly to approve license. SES plans to spend $250 million for satellite, but won’t begin construction until FCC approves license, Spector said. In interim, it will continue working on development of plan in discussions with TV programmers, broadcasters, ISPs, satellite manufacturers, others. SES could face major hurdle in finding programmers or content providers that could market their services without interfering with exclusive deals with EchoStar and DirecTV. Former declined comment. Hughes “welcomed competition” and said SES “entry into market proves there are plenty of opportunities” available in DBS sector, spokesman said.
Americom2Home will be different from EchoStar and DirecTV because it won’t offer retail services directly to consumers, company said. Instead, content providers will lease capacity to offer programs and interactive entertainment. This is first time U.S. satellite customers would be served from foreign-based satellite. SES is hoping to offer more flexible range of programming and pricing than EchoStar and DirecTV. Company will carry hundreds of channels, many of them free, but backed by ads. “We know that, in order to succeed, we have to be not just as good as, but better than, our cable and satellite competitors,” company said.
Open DBS platform is modeled on success of SES Astra in Europe, which operates 12 DBS satellites that offer similar service for broadcasters and content owners. In Europe, programmers manage service areas such as billing, offerings and subscription plans, while SES Astra provides satellite capacity, transmission services, general marketing support. “No one in the U.S. market has ever been able to offer the flexible and unique configurations of satellites in one neighborhood,” company said. SES market studies confirmed there was “real market for advertiser-supported satellite TV channels, and we expect Americom2Home to lead to several new, free TV channels that don’t exist today,” SES Vp Monica Morgan said. Result could be program offerings similar to DBS and cable, but with others that would be customized for niche markets, including sports, foreign languages, interactive games or ethnic programming, company said.
“There’s ample room” in market for new DBS entrant “with an entirely different value proposition,” Morgan said. “With the EchoStar-DirecTV merger pending and the future of Northpoint up in the air, their timing couldn’t be better,” analyst said: “They might get a free pass” for license. SES said it planned to move forward no matter what happens in EchoStar-DirecTV deal review. DBS companies may not be in position to mount “a lot of opposition” to SES because of unfavorable position and uphill battle they face in getting their merger approved, industry lawyer said.
Rules on local-into-local won’t apply to Americom2Home service, but may apply to some content providers using system. However, SES said it would “find ways to facilitate the availability of local TV channels” within Americom2Home system. Company said it had just one DBS orbital location, compared with several orbital slots authorized for use by EchoStar and DirecTV.