Satellite TV Broadcaster DirecTV is Ka-band’s Surprising Revenue Leader

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WASHINGTON — Pop quiz for the satellite telecommunications industry: Which company generates the most revenue from satellites using Ka-band frequencies?

EchoStar’s Hughes? ViaSat Inc.? Not even close. The answer is satellite television broadcaster DirecTV, whose Ka-band profile has risen so quietly that it may have escaped the notice of the company’s management, according to Philip J. Goswitz, DirecTV’s senior vice president for space and communications research and development.

“No one knows it,” Goswitz said here March 14 during the Satellite 2012 conference organized by Access Intelligence LLC.

The numbers speak clearly enough. El Segundo, Calif.-based DirecTV Group in 2011 generated $27 billion in revenue. It owns 10 satellites in orbit, five in Ku-band and five in Ka-band. The Ka-band satellites are stationed at 99 degrees and 103 degrees west longitude in geostationary orbit.

The Ka-band spacecraft are used for high-definition broadcasts, with the Ku-band satellites handling standard-definition programming.

According to Goswitz, nearly three-quarters of the company’s total revenue is from the Ka-band capacity, or around $20 billion. DirecTV has two more Ka-band satellites on order, and expects that within five years or so, just about all its revenue will be derived from the Ka-band capacity.

Back-of-the-envelope calculations by industry officials attending the conference concluded that DirecTV, by itself, makes about three times as much money on Ka-band as the rest of the satellite industry combined.

“It’s a mindset issue,” Goswitz said. “People have a mental blockage and associate Ka-band only with broadband data access and high-bandwidth applications, and with rain attenuation. For our subscribers there is no difference between Ku- and Ka-band.”

Ka-band satellites are now in operation or under construction in Europe, Russia, Australia, Canada and East Asia, in addition to the United States. Systems for Latin America and Africa are soon to come, according to industry officials. But most of this capacity is for corporate or consumer broadband access.

DirecTV arrived at its current Ka-band focus almost by accident. It acquired two of the three Boeing-built Spaceway Ka-band satellites following its divestiture of Hughes Network Systems of Germantown, Md., which has since been purchased by EchoStar of Englewood, Colo.

DirecTV took a huge write-off following the Spaceway acquisition, saying the satellites were designed for consumer satellite broadband, not for direct-broadcast satellites.

The company has since purchased Ka-band satellites on its own, albeit with less on-board processing that continue to make the Spaceway satellites unique in the commercial industry.

Like the satellite consumer broadband businesses operated by Hughes and Carlsbad, Calif.-based ViaSat, the Ka-band satellites purchased more recently by DirecTV, built by El Segundo-based Boeing and Space Systems/Loral of Palo Alto, Calif., feature multiple spot beams to permit the reuse of frequencies. For DirecTV this has facilitated the company’s local-to-local television programming to individual U.S. metropolitan areas.

The company most recently ordered two more Ka-band satellites, DirecTV-14 and DirectTV-15, being built by Loral and Astrium Satellites of Europe, respectively, for its DirecTV Latin America subsidiary. Both are scheduled for launch in 2014.

What is perhaps less known is that in addition to its spot-beam applications, DirecTV is using Ka-band for a national beam covering the continental United States.

“It’s not just spot beams,” Goswitz said. “We use it for a national footprint and Loral, Boeing and Astrium have been able to do this. This coverage includes some pretty rainy areas like Florida, and Ka-band has been doing pretty well.”

“We have found Ka-band to be exceptional,” Goswitz said. “We’re kind of puzzled as to why no one else does it. It’s OK: Don’t use it. Give it back. We’ll take it.”

 

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