Steve Collar, part two: SES will “probably” leverage LEO in a multi-orbit future
In the first part of this two-part interview with Steve Collar published yesterday, the HSE The CEO spoke about the company’s plans for 2022 and his perspective on the ground segment. In this second part of the interview conducted in December, Collar gives his opinion on the Viasat/Inmarsat agreement, his views on SpaceX and Low-Earth Orbit (LEO), as well as on the possible participation of SES in a possible consolidation of the sector. .
BY SATELLITE: What do you think of industry consolidation moves like Viasat’s acquisition of Inmarsat? Is consolidation good for the industry?
Necklace: We’ve been talking for a while about consolidation in the industry and how that would be a good thing. We have seen a slight vertical consolidation with the acquisition of Gogo’s commercial aviation business by Intelsat and the acquisition of RigNet by Viasat. When the deal between Inmarsat and Viasat closes, it will be the first horizontal consolidation we’ve seen in quite a while. I guess it’s probably not the last.
BY SATELLITE: Could SES consider participating in the consolidation of the sector?
Necklace: I think we are in [one of] the best positions to choose and choose the role we want to play. We have a very strong balance sheet, a young fleet, a brand new constellation that we’ve funded with our own cash flow coming to market and we have $4 billion in C-band revenue up for grabs over the next two years. . Added to this are two complementary businesses with strong cash positions, the best neighborhoods but also a history of strong growth in the networks.
Scale matters and aligning capital investments and creating synergies is attractive to SES and its shareholders, but you can expect us to be financially disciplined and thoughtful about if and where we will engage and we certainly have more than enough to do to implement our organic growth plan.
BY SATELLITE: Given what SpaceX is doing with Starlink, are they as much your competitor now as one of your launch partners?
Necklace: Our partnership with SpaceX leverages their launch capability and it has been long and successful. We have benefited from their capabilities on the launch side, we have a lot of respect for them and hope to continue using them in the future.
Our view of Starlink is clearly different. He is extremely ambitious and, by their own admission, there is still a very long way to go. We think what we offer, and where we are strong, is quite different from the kind of capability they develop. They largely focus on highly distributed services, such as residential broadband, and part of that stems from the low-level LEO architecture. We are focused on providing high flexibility, high throughput and carrier grade services. In the short to medium term, I don’t think there’s a lot of crossover between Starlink and ourselves.
BY SATELLITE: That may be true, but they target mobility and government, which are important targets for SES.
Necklace: If we talk about the commonalities first, we absolutely agree that low latency and high performance services are needed, which is why we were the first to invest in an NGSO [Non-Geostationary] constellation and still the only ones to operate one successfully today. After that, if you look at the architectures of the different LEOs and then compare to what we bring with MEO and multi-orbit, each is naturally better suited to deliver certain services more competitively.
LEO requires hundreds and in the case of Starlink thousands of satellites deployed near Earth and network performance tends to be defined by the performance of each individual satellite. This results in relatively low throughput, relatively low return capacity, and even distribution across the planet. Thus, a good network for LEO is a distributed network with many endpoints requiring limited service per site and limited flexibility in where and when to provide service. If you analyze cruise, aviation, and government requirements, you typically see the need for carrier-grade broadband services with great flexibility in location and demand over time. We think we are farther from Earth and have access to MEO [Medium-Earth Orbit] and geo [Geostationary Orbit] in a transparent and integrated manner gives us significant advantages in how we can approach these markets.
That’s not to say we’ll never be competitive if they’re eventually able to launch mobility services, but we believe we have a compelling value proposition in those segments.
BY SATELLITE: Considering what you said and what SES is doing in MEO and GEO, isn’t a LEO an option for SES?
Necklace: We are not religious in orbits. There are things we could do from LEO that are quite appealing and we have some exciting projects we’re working on and hopefully we’ll be able to announce soon who are likely to take advantage of LEO. We have long said that we are a multi-orbit operator. What I can say with a fairly high degree of confidence is that our future does not lie in a large LEO broadband constellation.
BY SATELLITE: Last year, Rodolphe Belmer and Steve Spengler announced that they were leaving their functions on the same. Does this sound like a changing of the guard at the top of the satellite industry?
Necklace: My pre-SATELLITE group selfie is going to look different than it did in the past! I have huge respect for Rodolphe, Steve and also Rupert Pearce who also left the industry in recent months and they have all led the industry and their respective companies with great talent. That said, a little change is healthy, especially in our industry, which can be a bit incestuous at times. We will welcome two new CEOs in addition to Rajeev Suri who arrived in our industry six to nine months ago at the next SATELLITE and I can’t wait to be there!
BY SATELLITE: We have seen some interesting deals this year between satellites and telecom operators – AT&T/OneWeb, Eutelsat/Deutsche Telekom. Are we witnessing a change in attitude towards the association of telecom and satellite operators?
Necklace: I hope. At SES, we’ve been talking for some time about making satellite mainstream and integrating it into larger ecosystems – cloud, mobile, telecom, etc. We have important partnerships with Claro, Airtel, among others. It is an important part of our business today and our future. We must distinguish between framework agreements and revenue-generating agreements. There is a mix of both in the ones you mentioned. But the very fact that these framework agreements are in place suggests that there is greater integration between satellite and telecommunications and that is a good thing.
BY SATELLITE: How do you see the 5G market in the United States for SES after the end of the C-band compensation and relocation activities?
Necklace: We’ve been a big catalyst for 5G in the US and a big supporter of 5G leadership in the US. Along with the satellite industry, we came together to determine how we could reuse C-band while protecting our customers. I’m proud of the part we played in it and from a financial perspective it gave us a lot of leverage to invest. In terms of what 5G will mean for satellite, I think it will become an important opportunity for us in the years to come. In the short term, 5G will be widely deployed in high-density areas. But there are specific parts of the 5G standard that will allow satellite to play a more meaningful role than has hitherto been the case. Whether in the US or elsewhere, we will see opportunities for high performance, low latency services to play a significant role in 5G.
BY SATELLITE: If you could choose one vertical (Mobility, Government, Consumer Broadband, Video) that you are most excited about over the next two to three years?
Necklace: This is a difficult question. If I really have to pick one, I would say government, because we have the most to offer in terms of significantly improving the kinds of capabilities that governments can access. We excel at integrating trade capabilities like ours with government capabilities, and we have a real voice and a real seat at this table. I believe that our relevance in providing secure and state-of-the-art sovereign services increases significantly with the arrival of O3b mPOWER.
However, there are also exciting developments and areas of growth across all segments. Right now I’m excited about some of the things we see on video. Although we are in a more mature phase of this industry, what we are doing with HD+ in Germany, increasing subscribers, launching new products and creating value at the customer periphery is really exciting. Having direct access to consumers keeps us both honest and young. More to come here for sure.