Study is Bullish on European Broadband

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PARIS — The market for satellite-based consumer broadband in and North Africa remains attractive despite the expansion of terrestrial broadband coverage in recent months, especially with the advent of Ka-band services and low-cost user terminals, according to France‘s Audiovisual and Telecommunications Institute in Europe (IDATE).

In a report released March 17 that sharply differs with a market assessment by SES of Luxembourg, IDATE says Ka-band is the key to unlocking consumer broadband potential in Europe because it offers lower per-megabit costs.

The study concludes that 30 million homes in Europe and North Africa, including Turkey, remained without terrestrial broadband access in 2008. That is down 16 percent from the 35.7 million homes in 2007, IDATE found, a reflection of the extension of DSL and cable broadband in the region.

Satellite-based consumer broadband in Europe remains in the start-up phase, and the IDATE study leans on the experience in the United States, Canada and East Asia to project prices and market potential in.

In particular, the study says the introduction of Ka-band broadband will help drive the market for consumer broadband thanks to a much more appealing business model than the one tied to the introduction of Ku-band several years back.

The study says the price of a Ka-band consumer broadband terminal has declined six-fold in the last four years, to 350 euros ($452) in 2008.

The market expected to enjoy the highest rate of growth in the coming years is the Ka-band satellite market, especially thanks to wide-ranging government plans to reduce the digital divide, according to IDATE.

The IDATE study appears to be at odds with a market assessment by SES of Luxembourg, which has decided to stick with Ku-band broadband in Europe instead of investing in Ka-band as its competitor, Eutelsat of Paris, has done.

SES has introduced its Astra2Connect service in Ku-band using satellites located at the 23.5 degrees east orbital slot, where SES has substantial Ku-band frequency available. The company is reserving its core 19.2 degrees east slot for direct-to-home television.

SES Astra, the European division of SES, has reported it has about 30,000 subscribers to its Astra2Connect service, and that several thousand are being added each month. Astra2Connect uses consumer equipment provided by Newtech of Belgium and is offering prices that, for now, appear similar to what Eutelsat’sTooway service is offering.

In a March 11 presentation in Toulouse, France, of Astra2Connect, SES Astra France Managing Director Nick Stubbs said Astra has forecast that its Ku-band consumer broadband service could attract 300,000 to 400,000 subscribers by 2012.

SES officials have said there is sufficient Ku-band capacity available in Europe to serve what they say is a niche market. While they have not ruled out eventually transitioning Astra2Connect to Ka-band, they say the market would need to be much bigger than they forecast to justify an all-Ka-band satellite.

Astra2Connect requires users to install an 80-centimeter-diameter rooftop antenna, compared to a 60-centimeter dish needed for the same homes subscribing to Astra satellite television. The larger dish gives an idea of the amount of power on the satellite that Astra is devoting to the broadband service.

Stubbs said subscribers to both Astra2Connect and Astra television can mount two receivers on the same 80-centimeter dish to receive broadband service from 23.5 degrees and television from 19.2 degrees.

Eutelsat reported that its Tooway service, which is just starting its market push, has some 3,000 subscribers. But Eutelsat is investing heavily in a large all-Ka-band satellite, called Ka-Sat, to be co-located with Eutelsat’s Hot Bird direct-broadcast television satellites at 13 degrees east.

Eutelsat has said Tooway, which is debuting with Ka-band capacity on the Hot Bird 6 satellite, requires users to install a 67-centimeter antenna.

Eutelsat officials say Ka-Sat ultimately could be used for high-definition television broadcasts if the consumer broadband market does not materialize as forecast. Ka-Sat will be able to accommodate about 2 million subscribers, depending on the amount of capacity – both transmission speed and monthly gigabyte download limits – taken by the average subscriber.

Via Astra2Connect and Tooway, respectively, SES and Eutelsat hope to take advantage of government programs designed to extend broadband access through rebates, grants and other incentives.

IDATE reviewed the satellite broadband experience of Denver-based WildBlue Communications and Hughes Network Systems of Germantown, Md., which offer competing services in the United States. WildBlue has been Ka-band from the beginning, while Hughes is now transitioning customers from Ku-band to Ka-band. IDATE also looked at broadband services provided by Telesat Canada and by Thaicom’s Ku-band IPStar satellite.