PLANNED LOCAL SERVICE COULD GIVE PEGASUS LEVERAGE, ANALYSTS SAY
An application submitted recently to the FCC by Satellite Access Corp. (SAC) proposing a local-into-local service and “other complementary services” for rural and underserved markets points to potential entry into the DBS market by a new player, satellite industry analysts agree. The application, filed in June, asks for permission to deploy one million receive-only VSAT terminals across the U.S. to operate in the DBS band from 12.2-12.7 GHz.
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The terminals would communicate with Telesat’s satellites Nimiq 1 and 2 at 91 degrees W and 82 degrees W, respectively. SAC, a Pegasus subsidiary, said it needed an uplink site and said coordination of the site was in progress. Analysts agreed that at the least, the service could give the company leverage in negotiations with DirecTV. At the most, it “gives them a way into a video delivery service independent of DirecTV and potentially opens the door to providing a wider range of services via Nimiq,” said Stephen Blum of Tellus Venture Assoc. A Pegasus spokeswoman said the company saw the application as one more opportunity to serve customers better.
In its application, SAC said its new “one-way subscription video and data service to portions or all of the Continental [U.S.]” would serve the public interest: “In spite of the expanding [local-into-local] service provided by the 2 DBS platforms, a disproportionate a number of DBS households in rural America are still unserved and are likely to remain disproportionately underserved even as new [local- into-local] markets are launched,” the company said. Coudert Bros. analyst Timothy Logue said the strategy would be popular on Capitol Hill and “hard for the FCC to deny.” Not only would the company make an attempt to increase the amount of local TV programming available, he said, but would implement a bottom-up method, starting with smaller markets, unlike DirecTV and EchoStar, which have looked to larger markets first for local programming.
TelAstra Pres. Roger Rusch said the application didn’t specify an intention to provide national or premium services, but said it’s not impossible. The Nimiq satellites have “very good locations. They're well positioned over the U.S. and… provide terrific service to the East coast,” he said. The satellites also are capable of providing service out to the state of Wash., he said, although they don’t reach Alaska and Hawaii very well. “I would think that the FCC would want to encourage and may very well want to assist Pegasus in this process. It won’t be easy but it’s a very interesting possibility,” Rusch said.
Part of the difficulty will be making sure customer antennas are pointing in the right direction, Logue said. “They would not only have to repoint the antennas, but also replace them” if they were not already compatible with the signal Telesat was transmitting, he said. Analysts agreed that finding programming was less of an issue if it were local programming from U.S. markets. If the company plans to expand the service, Stephen Blum of Tellus Venture Assoc. said, SAC would need some type of agreement with programmers: “It could be hugely complicated, but it’s less complicated than finding unused DBS spectrum.”
While the application is valid and has been accepted for filing by the FCC, it’s possible that what the company wants most is to appear as if it could provide a comparable service to its customers, Blum said: “Could it be a bargaining chip? Sure. Could it be a whole new business? Sure. Could it be anything between the 2? Sure.” Logue said the application definitely would gives the company leverage in light of DirecTV’s recently announced settlement with NRTC (CD Aug 12 p3). The interesting thing, Logue said, is that while Pegasus could decide to break off its arrangement with DirecTV if it maintained the agreement and followed through with the service, DirecTV effectively could implement a 2- dish system, much like the system currently implemented by EchoStar to provide an abundance of local channels in certain markets.
Meanwhile, Digital Broadband Applications Corp. (DBAC) was among the petitioners requesting denial of the application(CD Aug 15 p11). The FCC recently authorized DBAC to provide a number of services, including DBS, Internet and data, from the same satellites (CD May 12 p9). DBAC said the application was incomplete, but in an attachment, SAC said supporting documentation wasn’t necessary if the application sought access to a previously approved non-U.S. licensed space station, “provided the applicants seek to communicate using the same technical parameters and under the same conditions.” DBAC didn’t return calls for comment.