SES Americom Shuts Down Satellite TV Service

PARIS - Satellite-fleet operator SES isshutting down its IP-Prime service, which since 2007?has been selling satellite-delivered televisionprogramming to telecommunications companies to bundle with their Internet andtelephone?offering. SES?s SES Americom division madethe announcement Dec. 15 saying IP-Prime?s customers - predominately ruraltelephone companies?- were unable to win sufficientsubscriber interest in the television service?to justify continued operation.

IP-Prime will cease operations July 31, just two years after itarrived on the market. Since its commercial introduction, SES had signed up 70small telecom operators to IP-Prime. But these operators in total had securedfewer?than 10,000 subscribers for theservice.

SES?s investment in IP-Primeincludes a large program-distribution facility in Vernon Valley, N.J. Moreimportantly, the company had dedicatedits AMC-9 satellite?s 22 C-band transponders to IP-Prime, providing morethan 300 channels of television to the telecom operators, including 20 channelsin high-definition format.

For SES,keeping a satellite dedicatedto 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?sexecutive committee to cut the losses.

?[W]ith asubscriber base of less than 10,000 at the end of November, and after more thantwo years of service, the consumer uptake is insufficient to justify continuingoperations,? SESAmericom Chief Executive Rob Bednarek said in a Dec. 15 statement.

SES isunder contractual obligation to its IP-Prime telecom operators to give sixmonths? notice before shutdown, SES spokesman Yves Feltes said Dec. 15. Buteven without that obligation, SES would want to give its customers time toconsider alternatives to IP-Prime.

?Thedecision we are making should not be viewed as our saying that satelliteplatforms will not have a role in delivering IP television,? Feltes said. ?Butwe don?t see how this platform could be made financially viable. We considerourselves to have been successful in signing up the telcos. But there wouldneed to be an additional effort in educating the telcos in signing up theircustomers.?

Thedecision to shut down IP-Prime was not a complete surprise. SES Americom hadreduced staff at the service earlier this year, and Bednarek said in aSeptember interview with Space News that IP-Prime needed to be rethought.

?What we?renow looking at is: Who is the right party to scale this thing up?? Bednareksaid. ?Are we at SES prepared to go to the thousands of telcos in the UnitedStates and install head-end equipment [necessary for the link from thesatellite to the customer]? It?s like the cable-head-end business. We don?tinstall the head-ends. It makes some sense to get some other people to dothis.?

Feltesdeclined to disclose the size of the investment SES has made in IP-Prime, butsaid the overall business model was built on SES being paid based on the numberof subscribers the local telecom operators booked for the service.

With so fewsubscribers, SES could not justify reserving an entire satellite for IP-Prime,he said.

?I amconvinced you will see IP-TV on SES satellitesin different regions of the world,? but with business models different fromwhat was tried with IP-Prime, Feltes said.

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