Fees for Television Satellites In Europe Are Astronomical
May 15, 2011
While profits from new satellite television services remain literally up in the air, at least two clear winners have emerged. Societe des Satellites, or SES, operator of the Astra fleet of satellites, and the European Telecommunications Satellite Organization, Eutelsat, in Paris, enjoy a virtual stranglehold on television delivery in Europe, where the most lucrative information markets lie under the sweep of their powerful beams. According to Euroconsult, a Paris-based satellite consultant, the two organizations together control over 78% of the distribution of TV satellite signals in Europe. Small wonder then that the prices in Western Europe for renting space on a transponder -- the devices which bounce a signal back to earth -- are also the highest in the world. Large broadcasters such as MTV Europe and NBC Super Channel enjoy discounts of up to 36% on long-term leases, but smaller channels and start-up ventures are feeling the pinch. ``Transponder cost is a significant part of our service cost -- to a point where it dominates the cost of the service,'' says Michaele Moriah, managing director of Hughes Olivetti Telecom, which is launching its digital DirecPC information service this month across Europe. The price for an Astra transponder can run from $2 million to as high as $7 million per year. Eutelsat's rates for the big television companies such as MTV and NBC range from 3.366 million ECUs ($4.35 million) a year for a 12-year lease to 5.28 million ECUs ($6.82 million) a year for a shorter, three-year lease. Transponder space in Asia costs between $1 million and $6 million a year, while prices in the U.S. are as low as $300,000. To increase supply, both SES and Astra have been launching satellites as fast as they can thrust them into orbit. Given that Europe's digital satellite revolution is just beginning, and includes, in addition to broadcast television, as-yet unproven services such as pay-TV, video games and pay-per-view TV, being fully booked is a perception that neither company wishes to encourage. ``I don't like to be sold out, because there is nothing worse than an empty shop,'' says Pinard Ormsby, commercial director of Eutelsat. ``It's like being in Russia before perestroika.'' The new digital transponders do reduce the price per channel. Digitizing the television signal allows for compression, which in turn permits the satellite companies to squeeze as many as 12 channels onto one transponder. But some of the new services require broadcasters to use more channels. Near-video-on-demand, for instance, which is the industry term for staggering the start times of a single movie throughout the day, demands a separate channel for each start time of the movie. ``Sleepless in Seattle'' might begin, say, every hour on the hour. Thus, a total of 24 channels, or at least two transponders, are needed to provide the service to one market. Companies such as Nethold NV have reserved 30 digital transponders across Europe and Africa to meet the technical requirements for near-video-on-demand as well as its regular lineup of programs for its existing dozen markets. Nethold is betting that subscribers will pay to view blockbuster films delivered via satellite rather than visit the video shop. To broadcast its existing programming, it has been leasing 17 of the old, analog transponders, one for each channel. Still, even as the price of distributing television signals rises, the cost of the programming itself remains the biggest headache for television companies. ``The transportation-of-the-product charges aren't inconsequential,'' observes Rolando Valverde, president of NBC Super Channel in the U.K. ``But programming is always going to be our biggest expense.''
