Intelsat's money chase: a year after Intelsat's restructuring, its Data, Carrier and Internet unit now accounts for 70% of the company's overall business. It's not all easy money in the midst of an industry downturn, unit president John Stanton tells global technology editor John C. Tanner, but there's still opportunity to be had - One-To-One - Interview

Telecom Asia, Feb, 2004 by John C. Tanner

Telecom Asia: For those who aren't up to date on Intelsat's new business structure, let's start with a summary of the Data, Carrier and Internet unit.

John Stanton: Our business unit looks after what the name says--data, carriers and Internet. It's about 70% of Intelsat's business. On the data side it's mainly corporate networks, and on the Internet side it's typically Internet trunking for ISPs around the world. The carrier side covers our traditional PSN [public switched network] type business--point-to-point voice and fax-type data--as well as our broadband business. A bit of "all of the above" really.

What sorts of things are driving business in those sectors?

Hmmmm ... I have to be careful about forward-looking statements because we're in a quiet period, but the areas where we're seeing the greatest potential for continued growth is in the corporate/broadband market. And corporate networks and broadband networks are heavily converged now, so it's hard to say whether it's one or the other or both--the convergence started happening over the last three years, and it's at a fairly advanced stage at the moment.

For corporate networks, what exactly are you offering?

Whatever they look for, but typically these days a corporate network requirement will be a combination of IP access, high-speed data and file transfer, often now with VoIP included, so it's typically a multimedia-type network. There'll very often be videoconferencing on it as well.

How about on the broadband side?

The broadband networks we have in place today typically operate on platforms such as Gilat [SkyStar] 360E. Those are targeted at small to medium-size enterprises, small office/home office and sometimes the remote outposts of larger corporate networks that are primarily terrestrial in terms of their connectivity. That's the target for clients that we've been serving to date. Through our link-up with WildBlue, we'll have the opportunity to sell a solution in North America that's slightly higher up the scale, more of a corporate offering.

You recently announced a deal to do broadband Internet access in the Middle East that'll be run from your Australian hub. What's the story there?

It's a DTH network using a DOCSIS [Data Over Cable Service Interface Specification] platform for Orbit Data Systems, which is one of the major DTH players in Saudi Arabia. That's sort of a residential-type offering--it can obviously be used for corporate-type needs, but it's a residential play.

What are the challenges involved in residential satellite broadband, particularly since Intelsat doesn't usually target residential customers?

The challenges revolve around the overall value solution--what's the customer premises equipment going to cost? What's the sustainable rate that you can charge to have the service delivered? How does that compare against other satellite-based alternatives and/or terrestrial competition? The set of factors varies slightly from market to market, obviously, depending on the ability of the customer to pay and what sort of throughput speed they're looking for. But those variables have to be dealt with.

Cost is a well-known inhibitor to satellite broadband, from the CPE costs to the air-time charges. What will it take to get those costs down low enough to be competitive?

On the customer premises equipment side, there's a wall of work that continues on terminals in terms of size and cost. In some cases we're not there yet, but some great strides have been made in the last five years. There will continue to be heavy progress. On the satellite side, it's a question of how efficiently you can use a platform, how many customers you can service at once without falling into contention troubles and using bandwidth efficiently so you can charge individual users.

One of the industry debates is the need for a standard like DOCSIS or DVB-RCS to enable multi-vendor broadband satellite deployments and reduce equipment costs. Do you think that will help?

I don't know ... We're not crying out for a new standard. We've assessed most of the platforms and vendors that are out there, and we feel comfortable in being able to operate in any environment that exists. I don't have a strong view on that, I'm afraid. I'll be interested to see what my learned colleagues are coming up with on that front.

Do you support both DOCSIS and DVB-RCS?

Yes.

Do you see heavier demand for one or the other?

I think it's too early to say. I mean, historically there's been more demand for DVB-RCS, but DOCSIS is just now starting to hit its stride.

How's demand for your hybrid fiber-satellite business? Are you getting good response from customers?

Yeah, that's a business that we built up over the last year to the point now where there's about 100 customers on the system--which doesn't sound like a lot, but these are wholesale customers. They're typically the ISPs or service providers that are servicing a lot more end-user customers. It's still a relatively small proportion of our overall revenue, but it's a business that's growing.