Emerging Markets Communications (EMC) will own the 24-beam Ka-band payload on Arabsat’s Badr 7 satellite, launching in late 2015 into Riyadh, Saudi Arabia-based Arabsat’s 26 degrees east orbital slot, which is better known for its 30 million satellite television viewers.
Miami-based EMC is already a large operator of C- and Ku-band capacity on satellites owned by several fleet operators. Its decision to invest in Ka-band in a 34-nation area covering the Middle East, Europe and Central Asia was a spectacular signal of the company’s belief in the near-term future of Ka-band entertainment.
EMC Chief Executive Abel Avellan discussed the company’s strategy with SpaceNews staff writer Peter B. de Selding.
Some forecasts show Mideast demand for Ka-band going up steadily in the coming years. Do you believe them?
I don’t think anybody knows. At the end of the day, a satellite costs a certain amount of money, which needs to be paid back. That sets the costs. We are in a business that is cyclical. During the Iraq and Afghanistan wars, bandwidth prices went through the roof. When we pull troops out of there, prices will level off to more decent numbers.
But really I don’t think anybody knows. I do know that satellite capacity is not just sold as megahertz but as a component to a solution, which is different from what some people believe. It is just a piece of the total end solution. Of course it’s a very important part but it’s not what drives the final costing. It’s a lot of things, and it depends how it’s sold. If it’s wholesale capacity, it is driven by certain things, whereas if it’s end-to-end services it is driven by other things than the capacity.
You apparently believe in Ka-band enough to have invested in a lot of it on Badr-7.
I don’t believe in C-, or Ku- or Ka-band or fiber per se. I believe in an end-to-end solution, in solving a problem for end users. It’s the economics of the market where these solutions are going to be deployed, and I do believe in the need for entertainment and media and broadband access in the countries we are covering. It’s not a matter of which frequency. It’s just a tool to address certain markets. The part that’s attractive about Ka-band is that there is more spectrum than in regular Ku- or C-band. So there is an abundance of spectrum that clearly can compete, as has been shown here in the United States, and in a much lesser degree, in Europe.
We do believe in the ability of Ka-band to deliver very low-cost terminals, and we believe in the abundance of its spectrum. But above all we believe in the need for entertainment, triple-play services and broadband in the markets we are covering. We will address them through these tools.
You are among the first to be going into the Middle East with a lot of Ka-band, after Yahsat of the United Arab Emirates.
Yahsat is a broadband proposition over satellite. Our proposition is entertainment, TV and broadband. Broadband is a piece of our proposition, to enable things like Netflix, Hulu, Amazon and others to cover the entertainment and video portion, which is the most important piece of the Internet today. A huge amount of the Internet backbone in the United States is consumed by things like Netflix during peak times.
With current technologies and current Ka-band configurations it is not really possible to address that properly over satellite, or to cover the growth in local content. See what happened in Iraq — all the new TV channels that came out after Saddam Hussein went. Look at all the news channels that are coming out now in Syria, in Libya.
All these channels are generated locally, not in Europe. Our payload has the capability to combine TV, Internet and entertainment in the same payload with a very low-cost terminal.
But again, it’s not about Ka-band. We also have Ku- and C-band.
Last I checked you had the equivalent of some 50 transponders in C- and Ku-band alone.
We are one of the largest, if not the largest, C-band satellite consumers in Africa, Central Asia and the Middle East, and probably the largest on Arabsat by far.
You still have about 2 gigahertz of C- and Ku-band capacity?
Yes, that’s correct.
Your documentation refers to an EMC-5a satellite. What is that?
That is the Arabsat 5A. We have a C-band hosted payload there that we purchased.
Is the same true for Badr-7 — this is not a lease but your own hardware?
It is our payload, yes.
What is the Ka-band capacity on Badr-7?
I would prefer not to talk about transponder equivalents, but it is the whole Ka-band spectrum at that orbital location. So all the Ka-band spectrum is activated, and we have it.
Whose job was it to coordinate that spectrum?
That is Arabsat’s role. It is their orbital location.
Has that coordination been completed at the International Telecommunication Union?
Yes, I am confident about how that is being managed.
You refer to EMC-patented technologies on Badr-7. What does that mean?
First of all the way the payload is configured is patented by us. All the Ka-band deployments in the United States and Europe are designed for consumer broadband, which is good. But the problem is that it limited the flexibility for other applications in those payloads. It’s limited in distribution of local TV content, and it’s limited in distribution for GSM backhaul networks and for use of the footprints for using consumer broadband in a way you can support the other two applications.
I cannot tell you what the patent is but I can say that the way we have patented that payload and configured it to allow multipurpose uses in Ka-band. It is not just for accessing consumer broadband. We will be disclosing more of that later.
Is this patent pending or already patented?
We have around 12 patents, some are pending.
When you say flexibility, do you mean the ability to assign capacity after launch to different areas depending on where demand is greatest?
That is one aspect, yes. The other one is how the payload is used for local content combined with international content, domestic combined with international traffic, distribution of local video and web capacity as well.
Have you selected partners yet for the ground segment?
We’re working on it.
You are targeting 34 nations with your Badr-7 payload. What is the biggest application you foresee?
Consumer broadband that enables entertainment, GSM backhaul, where we are already a prominent player, and to a smaller degree private networks — in country, not international.
When did you first contact Arabsat for Badr-7? The satellite was first contracted in 2009 without your payload.
We have been working on this for about 18 months.
Has the landscape changed much in that 18 months?
A couple of other Ka-band projects in the region have emerged.
We understand that each of the others has its own merits, and we wish them good luck.
You said the model you are using on Badr-7 could be replicated elsewhere. What do you mean?
A hosted payload to service consumer broadband in emerging markets. We may have an announcement later in the year on this.
What can you say about bandwidth pricing in Africa and South America?
Pricing is stable.
Even though there are a lot of new satellite operator entrants?
There are, but I have not seen any of these projects ever work that are just government supported. A government launching a satellite, like Venezuela or Nigeria — I don’t think these will change anything. There is a portion of the market that may not be attracted to the commercial market, such as rural education or subsidized cyber cafes — applications like that may provide some business for them. But I can’t see fully commercial applications being dependent on satellites like these.
Is Ku-band capacity over the Middle East tight now?
There is a lot of growth of video content, but there is also capacity that has been made available by the pullout from Iraq and Afghanistan. So I don’t know how tight it is, but I can tell you that what you can do in Ka-band is several times the spectrum of all the other bands. That’s a fact. And to be able to be competitive with LTE and 3G, you need spectrum.
If you fill a satellite, and we saw this in North America, they filled up the spectrum in Ku- band with consumer broadband, that increases the price of Ku-, which makes consumer broadband uncompetitive.
You need to be in a spectrum where you can put in a lot of consumer broadband services before filling up the Ku-band. At the end of the day you have hundreds of thousands of consumer broadband subscribers, no matter what spectrum you use. You start filling it up. But to avoid the vicious cycle of pricing, you need to be in a spectrum where if you need more spectrum you just put in another spot beam.
Traditional satellite people see things in terms of transponders. That’s not the way to see it. It is how many consumer broadband subscribers are potentially there, how many can pay $30 or less per month, how many do not have available entertainment services because the terrestrial network is not good enough. That’s what drives demand. There is enough of an addressable market to fill multiple Ka-band satellites. But of course it has to be competitive with LTE and 3G.
So your approach is not what the two U.S. satellite Ka-band broadband providers, ViaSat and EchoStar/Hughes, are taking?
What is interesting with ViaSat and EchoStar/Hughes is they appear to have designed these things to be consumer broadband only. That is fine, but satellite should be good for anything that is distributed to millions of people that is broadcasted. That is where satellite is unbeatable.
Our approach is to combine that fact with the fact that with Ka-band you can get significant throughput in a neighborhood where there are already 30 million viewers at the Badr-7 orbital location. That is a big aspect of what we are doing. There are 30 million consumers, households, at that orbital location. When people are at an orbital location it is difficult to move them.