Company delivers broadband by satellite to rural Europe

Three satellite communications companies are investing EURO200 million (CDN$280 million) in a new venture which will offer broadband telecommunication and Internet services to European customers by the end of the year.

SES Global SA, Gilat Satellite Networks Ltd. and Alcatel SA, through its subsidiaries Skybridge and Alcatel Space, aim to make the so far unnamed company the leading European provider of broadband services, by picking up business in areas where cable and DSL (Digital Subscriber Line) networks cannot reach, they announced Monday.

The new company will offer two-way satellite broadband communications to enterprises, consumers and small office/home office customers across Europe.

“This is not a start-up, greenfield venture. We’re not building from scratch. We have existing products and platforms from the start,” Romain Bausch, president and chief executive officer (CEO) of SES Global said. “We will build on technologies developed by the different partners and their penetration of the market — we have strong existing markets and satellite capacity.”

Alcatel Space Chairman and CEO Pascale Sourisse said the company expects that up to 25 per cent of the potential broadband market in 2005 will not be able to receive service by terrestrial methods.

“We will position ourselves as complementary to those terrestrial offerings, and aim to pick up around 5 to 10 per cent of the segment that cannot be reached by upgraded cable or DSL,” she said.

By 2005, this potential market segment will consist of up to 7.3 million residential customers, 240,000 large enterprises and 1.3 million small office/home office (SOHO) customers and small and medium-size enterprises (SMEs), she said.

In the large enterprise and SME markets, the new company will offer complete satellite communication services, the companies said in a statement. These will be provided directly and through wholesalers, and will use both Gilat’s Skystar Advantage VSAT (Very Small Aperture Terminal) product and SES Global’s Broadband Interactive System (BBI).

In the consumer and SOHO markets, and for some SMEs, the company will provide broadband communication services through Gilat’s 360 VSAT satellite modem. This gives speeds up to 20 times that of a dial-up modem, the companies said. It will provide these products on a wholesale basis through telcos, ISPs (Internet service providers) and direct-to-home television providers. One satellite dish will be suitable for both television and broadband access, the companies said.

BT Openworld, the broadband arm of British Telecommunications PLC, and Tiscali SpA have both signed up as providers of the service and are currently running pilot projects, said Amiram Levinberg, president and chief operating officer of Gilat Satellite Networks.

Tiscali plans to roll out the satellite service in Germany and Italy in the next few months, Levinberg said, followed by the U.K. and then additional countries next year. BT Openworld will start a rural service in Scotland and Northern Ireland in the near future and will roll out a full SOHO service late this year, he said.

While most of its customers will be enterprises to start with, Bausch said he expects residential customers to account for three-quarters of the company’s revenue by 2008.

The company will be headquartered in Luxembourg. SES Global and Gilat will be the initial owners with 50 per cent each, but Alcatel Space and Skybridge aim to take a 20 per cent stake in the near future, the companies said. The German cartel authority has cleared the joint venture between SES Global and Gilat, but European regulatory authorities may want to look into Alcatel’s involvement because of its size, Bausch said.