Firms Say Unit Cost of Capacity Is Declining

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  Space News Business

Firms Say Unit Cost of Capacity Is Declining

By PETER B. de SELDING
Space News Staff Writer
posted: 14 September 2007
03:44 pm ET





Paris





The cost to a commercial satellite-fleet operator of delivering a megahertz of service to its customers has dropped by 80 percent in the past 13 years and for some applications will drop further




as




new satellite designs and broadcast frequencies are adopted, according to operators Eutelsat and SES.

Yves Blanc, director of strategic planning at Paris-based Eutelsat Communications, said the combination of larger, higher-capacity satellites and the fact that launch costs do not rise in proportion to




capacity increases have combined to make it much cheaper to deliver a unit of capacity to customers in recent years.

In a Sept. 3 presentation, Blanc said Eutelsat’s initial Hot Bird direct-broadcast satellites launched in the mid-1990s had 20 transponders each




. The W series of 30-transponder satellites followed in the late 1990s and resulted in a 40 percent drop in the cost of delivering the same unit of capacity to customers. The latest W-series satellites in service or under construction will carry




60 to




100 transponders and represent an 80 percent cost reduction compared to their mid-1990s predecessors.



Philip L. Spector, executive vice president for business development and chief counsel at Intelsat of Bermuda




, countered that while the costs of doing business may have dropped in the past 15 years, they have been rising of late and would cause Intelsat to stand firm on its average transponder-lease prices. In some cases, he said, prices will have to rise given the cost of new satellites and the rockets needed to carry




them into orbit.

Mark Rigolle, chief financial officer of SES of Luxembourg, agreed with Blanc that the cost of a given unit of capacity has dropped sharply in recent years as satellites have gotten bigger and had




their average




service lives extended from 10 or fewer




to at least 15 years.

“Take our Astra 1A satellite, which had 16 transponders and a 10-year service life,” Rigolle said Sept. 4. It cost around $225 million to $250 million including launch and insurance. Today for the same price you get a satellite with 32 transponders if not more, and an in-orbit life of 15 years. So for the same investment, you get a factor of three increase in the number of tranponder




years. Plus you need to add in the increased power on today’s satellites, so I would say the 80 percent figure is not far off.”