SES is Shutting Down IP-Prime Satellite Television Service

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PARIS Satellite-fleet operator SES is shutting down its IP-Prime service, which since 2007 has been providing satellite-delivered television programming to telecommunications companies to bundle with their Internet and telephone offerings. SES’s SES Americom division made the announcement Dec. 15 saying IP-Prime’s customers—predominately rural telephone companies—were unable to win sufficient subscriber interest in the television service to justify continued operation.

IP-Prime will cease operations July 31, just two years after it arrived on the market. Since its commercial introduction, SES had signed up 70 small telecom operators to IP-Prime. But these operators in total had secured fewer than 10,000 subscribers for the service.

SES’s investment in IP-Prime includes a large program-distribution facility in Vernon Valley, N.J.. More importantly, the company had dedicated its AMC-9 satellite’s 22 C-band transponders to IP-Prime, providing more than 300 channels of television to the telecom operators, including 20 high-definition channels.

For SES, keeping a satellite dedicated to a service whose revenue potential is now viewed as weak was unacceptable, and the Luxembourg-based company’s board of directors agreed with the company’s executive committee to cut the losses.

“[W]ith a subscriber base of less than 10,000 at the end of November, and after more than two years of service, the consumer uptake is insufficient to justify continuing operations,” SES Americom Chief Executive Rob Bednarek said in a Dec. 15 statement.

SES is under contractual obligation to its IP-Prime customers to give six months’ notice before shutdown, SES spokesman Yves Feltes said Dec. 15. But even without that obligation, SES would want to give the affected telecom operators time to consider alternatives to IP-Prime.

“The decision we are making should not be viewed as our saying that satellite platforms will not have a role in delivering IP television,” Feltes said. “But we don’t see how this platform could be made financially viable. We consider ourselves to have been successful in signing up the telcos. But there would need to be an additional effort in educating the telcos in signing up their customers.”

The decision to shut down IP-Prime was not a complete surprise. SES Americom had reduced staff at the service earlier this year, and Bednarek said in a September interview with Space News that IP-Prime needed to be rethought.

“What we’re now looking at is: Who is the right party to scale this thing up?” Bednarek said. “Are we at SES prepared to go to the thousands of telcos in the United States and install head-end equipment [necessary for the link from the satellite to the customer]? It’s like the cable-head-end business. We don’t install the head-ends. It makes some sense to get some other people to do this.”

Feltes declined to disclose the size of the investment SES has made in IP-Prime, but said the overall business model was built on SES being paid based on the number of subscribers the local telecom operators booked for the service.

With so few subscribers, SES could not justify reserving an entire satellite for IP-Prime, he said.

“I am convinced you will see IP-TV on SES satellites in different regions of the world,” but with business models different from what was tried with IP-Prime, Feltes said.