ExpressVu and Star Choice win satellite slots; financing and design work begins

The federal government has given Canada’s two DTH companies the bandwidth they need to compete in the high-speed Internet market, but first they need partners and a solid business plan to finance the construction and launch of two new satellites. On Nov. 10, Star Choice Communications Inc and Bell ExpressVu received Industry Canada approval to co-locate Ka-band satellites in the same orbital slots as their broadcast satellites. Depending on the bells and whistles, the new satellites could cost between US$250 and US$275 million each, not including launch, insurance and other start-up costs. The combined price tag for both companies could climb as high as CDN$1 billion. Manufacturers are expected to be signed on early next year, with a satellite launch tentatively planned for 2004. (Coincidentally, 2004 is also the date chosen by the federal government to ensure that broadband Internet is made available to all rural and remote communities across the country – CCR, Oct. 26/00.) "We’ll have to be in construction early on next year to meet a launch schedule," says ExpressVu president David McLennan. "It will be a fairly complicated payload on the spacecraft. There aren’t really any off-the-shelf Ka-band configurations out there right now. It’s a fairly new technology." It’s also the first time that a company other than Telesat Canada has been authorized to build and launch its own Canadian satellite, and investors will want assurances that in the high-risk satellite market, these birds will make money. With a geographic footprint that includes the continental U.S., both Star Choice and Express-Vu will likely seek out U.S. firms that are interested in leasing part of the satellites’ capacity to serve American customers. "Obviously we’ve given this some thought going forward as to whether or not there is a potential return on owning your own satellite and we believe there is," Star Choice president Peter Classon told CCR. "But it will require some strategic alliances and business partnerships with some American partners." McLennan says finding a U.S. partner is a more likely scenario than seeing his company selling Internet services south of the border. "I’m not really sure if we have an interest in serving the U.S. market," he says. "Our franchise is here in Canada. I view this as a very strong complement to our direct-to-home TV service, which we don’t offer in the United States. From ExpressVu’s perspective, I view this as being very focused on the Canadian marketplace." McLennan adds that ExpressVu would likely use about one-third of the satellite. Star Choice nixes interim solution Once launched, the new satellites will be able to deliver two-way broadband Internet access to all regions of Canada. In July, ExpressVu began offering DirecPC to its DTH customers for $39.95/month. The DirectPC service, which relies on a telephone return path, has been slow to catch on, but McLennan says that should change soon. Three weeks ago Michael Beard, the VP/GM of ExpressVu’s commercial division, took on the additional job of growing the service. "We’ve had a fairly un-aggressive approach to it so far…," says McLennan. "But starting last month, we’ve put some more resources behind it in terms of a management team and plan to turn it into a full-fledged product offer to complement our video business." Star Choice cancelled plans to launch a similar service, saying it would rather wait for two-way broadband Internet to arrive in 2004. "That was the interim Ku-band solution which would have been a downlink off a satellite and a return on a telephony line," explains Classon. "We do not believe that that is the best way to go. We would prefer to wait for the Ka-band satellite to be in place and offer the two-way high speed Internet, rather than having an interim offering which you would then just have to change out 18 to 24 months later." The Ka-band satellites will provide access to a plethora of new services, including high-speed Internet, e-commerce, video conferencing and tele-medicine.

ExpressVu and Star Choice win satellite slots; financing and design work begins

News | 11/23/2000 5:00 am EST

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