PARIS - Satellite-fleet operator SES is
shutting down its IP-Prime service, which since 2007 has been selling satellite-delivered television
programming to telecommunications companies to bundle with their Internet and
telephone offering. SES's SES Americom division made
the announcement Dec. 15 saying IP-Prime's customers - predominately rural
telephone companies - were unable to win sufficient
subscriber interest in the television service to justify continued operation.
IP-Prime will cease operations July 31, just two years after it
arrived on the market. Since its commercial introduction, SES had signed up 70
small telecom operators to IP-Prime. But these operators in total had secured
fewer than 10,000 subscribers for the
service.
SES's investment in IP-Prime
includes a large program-distribution facility in Vernon Valley, N.J. More
importantly, the company had dedicated
its AMC-9 satellite's 22 C-band transponders to IP-Prime, providing more
than 300 channels of television to the telecom operators, including 20 channels
in high-definition format.
For SES,
keeping a satellite dedicated
to a service whose revenue potential is now viewed as weak was unacceptable,
and the Luxembourg-based company's board of directors agreed with the company's
executive committee to cut the losses.
"[W]ith a
subscriber base of less than 10,000 at the end of November, and after more than
two years of service, the consumer uptake is insufficient to justify continuing
operations," SES
Americom Chief Executive Rob Bednarek said in a Dec. 15 statement.
SES is
under contractual obligation to its IP-Prime telecom operators to give six
months' notice before shutdown, SES spokesman Yves Feltes said Dec. 15. But
even without that obligation, SES would want to give its customers time to
consider alternatives to IP-Prime.
"The
decision we are making should not be viewed as our saying that satellite
platforms will not have a role in delivering IP television," Feltes said. "But
we don't see how this platform could be made financially viable. We consider
ourselves to have been successful in signing up the telcos. But there would
need to be an additional effort in educating the telcos in signing up their
customers."
The
decision to shut down IP-Prime was not a complete surprise. SES Americom had
reduced staff at the service earlier this year, and Bednarek said in a
September interview with Space News that IP-Prime needed to be rethought.
"What we're
now looking at is: Who is the right party to scale this thing up?" Bednarek
said. "Are we at SES prepared to go to the thousands of telcos in the United
States and install head-end equipment [necessary for the link from the
satellite to the customer]? It's like the cable-head-end business. We don't
install the head-ends. It makes some sense to get some other people to do
this."
Feltes
declined to disclose the size of the investment SES has made in IP-Prime, but
said the overall business model was built on SES being paid based on the number
of subscribers the local telecom operators booked for the service.
With so few
subscribers, SES could not justify reserving an entire satellite for IP-Prime,
he said.
"I am
convinced you will see IP-TV on SES satellites
in different regions of the world," but with business models different from
what was tried with IP-Prime, Feltes said.
