Playout & Transmission Global Viewpoint – January 2019

Satellite Business Strengthens Despite Rise Of The CDN

With all the concentration on IP and fibre networks as the future of video delivery it is easy to neglect just how robust satellite technology is and to what extent pay TV operators have faith in placing their future on its platforms. Satellite operator Eutelsat reports that its business will strengthen over the next decade albeit that is aware it needs to evolve its technology offer too.

In most emerging markets satellite is accelerating – in MENA 9 homes out of 10 (94%) receive TV through satellite. But according to Eutelsat, satellite is growing even developed markets like Europe too.

It predicts the total number of TV homes worldwide will increase by 95 million to 1.7 billion by 2021 with satellite reception growing by 50 million to 430 million homes in that period.

“We believe satellite and IPTV will be the two winning platforms in the long term,” Jean Hubert Lenotte, Director of Strategy told The Broadcast Bridge on a visit to the firm’s central teleport near Paris.

Of Eutelsat’s €1.48 billion turnover, video accounts for 65%. It broadcasts 6,755 TV channels, of which 1,210 are in HD (15 in UHD), to more than one billion viewers (direct and indirect) around the globe.

Video accounts for 65% of Eutelsat’s €1.48 billion turnover. It is a B2B provider of satellite services to DTH, cable and IPTV operators (customers include Arqiva in the UK and Sky in Italy). It operates 39 geosatellites with a total of 1300 transponders each capable of 40-60 Mbps. Eutelsat broadcasts 6,755 TV channels, of which 1,210 are in HD, to more than one billion viewers (direct and indirect) around the globe.

“In the past satellite has provided data services for corporates only in very remote areas and with a less than stellar performance,” said Lenotte. “There has been very significant progress meaning that we can provide a high quality broadband service at similar costs to that of fibre. In very remote areas, satellite is the more cost-effective way to provide broadband services. It’s why, typically, in Europe the last one or two percent of the population can only be reached via satellite for broadband services, and in other markets like Africa broadband via satellite is a very competitive and often the only solution.”

However, it has no plans to get into the low Earth orbit (LEO) market to provide data connectivity. Lenotte explained that the cost of usable capacity is very high. “The Earth is 70% sea and 30% is land and out of that, 15% desert and 15 inhabited. Of that inhabited portion 95% of the world’s population is concentrated in 5% so by design when you build a LEO constellation you are covering almost symmetrically the full surface but only using according 5-15% of the capacity. The technology is evolving so we are constantly monitoring that and looking at different alternatives.”

The operator outlined three key advantage it believes satellite has over IPTV; cost efficiency, universal reach and service quality.

“The cost of satellite is fixed whereas the cost of OTT grows with volume,” Lenotte argued. “While the cost of CDNs is coming down, until at least 2025 in mature markets the threshold at which satellite is more cost effective than CDN is 50,000 viewers. In developing markets, the threshold is as low as 15-20,000 viewers.”

Satellite’s broadcast reach and quality has always been its strongest asset. “If you take Europe and look very closely at all the plans which operators have to cover a territory with fibre there will be at least 5% of the population which will not be covered with high speed broadband in the next decade and probably beyond,” Lenotte said. “Operators won’t be able to carry most HD and certainly UHD channels to those audiences.”

Rambouillet teleport near Paris, one of six teleports operated by Eutelsat.

Rambouillet teleport near Paris, one of six teleports operated by Eutelsat.

In Europe, Eutelsat believe that the “reach differential” between satellite and IPTV will be 5-10% by 2025 and in MENA it will be closer to 50%. “For most broadcasters it is not even a question. You chose satellite,” he said. “Even if broadcasters take a risk and shift to terrestrial networks the bottleneck is the last mile. The internet was not built to support the massive increase of capacity of a terrestrial network.”

Nor does the satellite company view rollout of 5G as a business threat. On the contrary satellite paired with mobile connectivity is seen as critical for backhaul. “Satellite is now, and will be in future, a good solution for backhauling in some areas where the cost to transport data through terrestrial means (fibre or microwave) is high,” says Lenotte.

However, the company is not ignoring satellite’s inherent blind spots. It acknowledges latency, which tend to dog connectivity, but contends that - aside from gaming and financial trading applications – “realtime is not an issue for the large bulk of consumers.”

The firm has also tabled plans to enable multiscreen at home and TV everywhere, facilitate new non-linear services via satellite and provide access to analytics as well as enable targeted advertising on satellite – details of which it promised will to reveal in 2018.

“Because satellite doesn’t have a return path it is not as optimal as it can be,” admitted Gerry O’Sullivan, EVP, Global TV and Video. “When we add a return path this will increase the monetization potential of the reach.”

Sullivan held executive positions at BSkyB from 2000 to 2010 include Director of Strategic Product Management, responsible for innovations that included the launch of Sky+ HD and Video on Demand services. From 2011 to 2013 he was SVP Global TV and Entertainment at Deutsche Telekom to develop its global media business. Most recently, at Digicel Group, he devised strategies on cloud-based multi-screen consumer propositions and steered the launch of IPTV across the Caribbean.

The Eutelsat SmartBeam technology relies on a small satellite receiver that acts as a local CDN. The receiver captures the satellite-delivered programs and then transmits them to smart TVs and mobile devices via a local Wi-Fi network.

The Eutelsat SmartBeam technology relies on a small satellite receiver that acts as a local CDN. The receiver captures the satellite-delivered programs and then transmits them to smart TVs and mobile devices via a local Wi-Fi network.

A recent Eutelsat innovation is SmartBeam, a solution enabling platform operators to broadcast live video channels in IP via satellite, to smartphones.

Sébastien Grazzini, Head of Future Applications, Innovation explained that, on the transmit side, native IP content is received at a satellite teleport, converted from unicast to multicast then encapsulated over a DVB transport stream and broadcast via satellite in a standard DVB-S2 transmission platform. Content is received via a standard satellite dish connected to a small, €100 satellite receiver. The receiver decodes the stream, extracts the original IP packets and delivers them to IP native devices through a regular Wi-Fi access point or home router. Live content is served on-the-fly, while VOD content is stored for accessed any time. The solution is flexible enough to support encryption with DRM and non-linear TV like Push VOD.

Russian pay TV operator Tricolor TV has begun rolling the solution out to select public venues in the country.

“Instead of asking customers to adapt their OTT to satellite we are adapting satellite to OTT,” said Grazzini. “With SmartBeam, we are leveraging multiscreen solutions to help broadcasters extend OTT services and offer the same experience to users located beyond range of terrestrial networks. It will also be able to circumvent user frustration with buffering and disconnection as terrestrial mobile networks saturate.”

Ultimately this is satellite’s main play. It remains the best technology to reach remote and rural neighbourhoods but providers like Eutelsat can still trade handsomely on the guaranteed quality of the signal, provided it also evolves its offer.

“There is a paradox in that consumers demand more channels and high quality content as well as access to that content,” says O’Sullivan. “If consumers demand hundreds of UHD channels then the internet wasn’t built for that. People will want to access cheap low quality content through OTT but at the same time there is a natural desire to view the best quality TV and that is what satellite delivers.”

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