Future of satellite TV

The Internet is:

A. Good for the satellite business;

B. Bad for the satellite business;

C. Both of the above;

D. None of the above.

Which answer did you circle? Since the 1990s, when the business of delivering Internet trunking via satellite emerged, I think most people in the business would choose option A. It is not so often that an industry finds a completely new line of business, and delivering Internet connectivity to remote regions certainly proved to be one. Yet the longer we live with the Web, and the more it changes how we do things, the more nuanced the answer becomes.

For one thing, there is the lingering concern that, sooner or later, a ubiquitous high-speed Internet will take over many of the applications currently delivered via satellite. We see the early signs of this in digital newsgathering, where live streaming and file transfer are on the rise as an alternative to rolling the satellite truck. Sports, which once traveled via satellite from most stadiums, now heads for the broadcast center in IP format over fiber. Yet the launch of ViaSat-1 this month reminds us that the demand for cost-competitive Internet is so strong, it has justified business plans that are putting more than $5 billion worth of Ka-band spacecraft into space through 2014.

A recent report, Future TV and the Teleport, looks at the impact of “connected TV” – television to the computer, mobile device, iPad or Web-enabled TV set – on the service providers that make a living from video. The rate of change is staggering. Informa Telecom & Media forecast in July that, by 2016, there will be 1.8 billion “in-home video devices, ” including tablets, so that 70% of all in-home video devices will be able to connect to the Internet.

As interactivity becomes an essential component of the television experience, how will it affect the satellite business? The experts interviewed for the report ranged from cautiously optimistic to pretty darned pumped about the future. The cautious ones noted that fast growth of alternatives to linear TV consumption does not appear to be dampening the appetite for linear content. Quite the reverse: the more ways people have to consume media, the more media they seem to consume. As one broadcast executive put it, "The alternative media platforms are like parasites. The TV network and the linear business are like hosts. If the parasites kill the hosts, they die. The legacy engine needs to be sustained in order to grow these new businesses."

The cautiously optimistic group includes broadcasters, who believe that ownership of content will increase their leverage as media outlets proliferate, and satellite operators, who see demand for video distribution continuing to grow.

The “pumped” crowd is made up in part of alternative media distributors, as you might expect. But teleport operators, steeped in satellite technology, are equally excited. "Take a pay TV channel that is already distributed on satellite to cable headends, ” one executive explained. “Today, the same one-way TV channel may be repurposed on fixed or mobile broadband. That is additional business right there. But as those alternate distribution paths develop – growing their advertising and subscription revenues – they will want customized offerings that exploit their interactivity advantage. This need for customized content will drive higher content production, management and distribution volumes for everybody."

Another executive reported already seeing “a lot of demand for archiving, format change, media asset management and cloud solutions. Customers want content preservation, digital rights management for mobile and Internet markets. We upgraded our global network last year to be all-IP and are in the final stages of building a new state-of-the-art teleport to support all the new services."

So, what do you know? If these teleport and satellite operators are right, the Internet may turn out to be a good thing after all.