The teleport business is a US$ 15 billion-a-year segment of the global satellite industry or roughly 15 percent of the industry revenues, according to the World Teleport Association (WTA). But no other segment of the industry has undergone so many changes as the teleport business in recent years . While the basic function of teleports remains to provide connectivity between the ground and the space segment, teleports have been providing many ancillary services that are constantly changing due to market demands and customer requirements.
In the ‘good old days,’ as veterans in the industry would say, teleports catered to two main clients--broadcasters and and/or telecommunications service providers or telcos. In the past, up to 90 percent of a teleport’s business either came from broadcasters or telcos. It was also a relatively easy business to get into needing only a vacant lot and some dishes to set up a "teleport." Some of those early start-up mom and pop operations became successful and were taken over by larger operators, then by the satellite operators themselves, who became teleport operators as well. "The commercial teleport business got its start uplinking video for TV channels. That still contributes 35% of the sector’s revenues, but terrestrial carriers, enterprises and government combined now contribute over 47%. The entrepreneurial spirit that got this industry on its feet will, no doubt, serve it well as the industry negotiates the current financial uncertainties and the certain changes still to come," said Robert Bell, Executive Director of the WTA.
New Markets, New Services, New Competition
A recent study by the WTA entitled "New Markets, New Services, New Competition" reveals that teleports currently serve diverse markets and clientele. The report is based on a global survey of senior executives in the teport business. It highlights the diversity of income sources that teleport operators currently tap with the largest portion coming from media and entertainment at 35 percent, on average. But, surprisingly, as many respondents ranked mobile telephone backhaul as a high-priority market as they did for the traditional business of television/radio contribution and distribution.
Another key change in recent years, according to the report is the growth of non-transmission services in the mix. More than half of operators provide their customers with systems design, engineering and integration services, conditional access services, as well as video or audio production and post-production. Yet transmission services remain at the core of operations, with 100% of respondents providing satellite and 76% roviding fiber transmission. Twenty-three percent reported that they were already deploying WiFi, WiMax and other wireless solutions for last-mile connectivity.
As teleport operators add services to their portfolio and both satellite carriers and integrators develop and operate their own teleports, the lines between sectors is beginning to blur. The survey report explores both the levels of current competition between teleport operators, carriers and integrators, and the perceived degree of threat in the future. The survey reveals that overlapping business growth opportunities are putting teleport operators and satellite carriers into competition for the first time, and suggests that the means they find to manage this commercial tension will help determine their future success.
Consolidation have seen the influx of satellite operators in the teleport business and the diminishing number of small, independent teleports, who are unable to compete with the larger more, integrated teleports. In WTA’s annual ranking of the Top 21 teleports in 2008, 14 are part of or associated companies of satelltie operators (see chart on previous page), even as 57% of al teleports worldwide are still independently-owned.The infux of satellite operators into the teleport business has led some to speculate that these teleports owned by satellite operators bundle ground services with their space segment with a preference for their own satellites. But lately, the economic downturn and competitive pressures have forced satellite operators to sell or divest some non-performing or redundant teleports. Some of these teleports have been bought by independent operators who serve niche markets. So now we see a situation whee big operators coexist or even partner with small niche players.
Niche Operators Are Key
For smaller, independent operators having a niche in terms of a market segment or a specific application like broadband access using low-cost VSATs or mobile communciations to a specific community is key to success in this business. One company that has successfully turned around a facility that it purchased from one of the satellite operators is ABS-CBN International (ABS-CBNi). ABS-CBNi purchased a teleport in Richmond, California from Loral Skynet in 2005 and made it into one of the leading distribution centers for ethnic programming in North America (see sidebar). ABS-CBNi, one of the largest media companies in Asia based in the Philippines, leveraged its long history and experience in distributing its own programs throught Asia, the Middle East, Europe, and North and South America by providing the same service to its diverse clients.
Another company serving a specific niche is Salt Lake City-based LbiSat, which focuses on the government sector. LbiSat serves the various satellite communciations needs of various agencies including the US State Department and the DoD as well as emergency management departments in the Western region of the US. LbiSat uses it location from its teleport in Jordan, Utah to its advantage by emphasizing that it can respond quickly to customer needs--a key feature especially in emergencies and natural disasters where they specialize in.
The teleport sector is one area where large operators with multiple locations can coexist with smalller operators serving niche markets. Much has changed in how teleports operate, but that can only be good for everyone, most especially to the customers and end-users that teleports serve.
