Canadian satellite market ripe for more competition: Ciel CEO

The head of Ciel Satellite LP, the new entrant satellite services provider, says that the Canadian market is ready for more competition, and Industry Canada has a prime opportunity to make that happen. Dave Lewis, president and CEO of the three-year-old firm, made the comments during a wide-ranging interview with Decima Reports this week.While Industry Canada would suggest that the satellite services market has been open to competition since March 2000 in the form of licensing US satellites for use in Canada, "The commercial reality of that is quite different however," Lewis says. He notes that US satellites don’t provide full coverage of Canada, so using an American bird might make sense only if coverage isn’t required beyond a couple hundred miles from the Canada/US border. "In effect, Telesat really hasn’t had any competition," Lewis tells Report on Wireless, but adds: "I think the department has tried to encourage competition and I think they’ve been working toward that." Demand requirements from users – such as direct-to-home (DTH) satellite TV providers, satellite Internet service providers such as Barrett Xplore Inc. and emerging applications yet to be developed and commercialized – will far exceed available capacity in the future. Indeed, according to Lewis, the sheer number of licences available, combined with the internal capacity of a satellite company to manage the procurement, construction and launch of multiple satellites, should leave the door wide open to have more competitors than just Telesat and Ciel in the market. "I don’t think either one of us could swallow that many licences and build them out, unless we are talking about a five- or six-year timeline" Lewis says, referring to the nine licences Ciel applied for and the 10 Telesat expressed interest in. "So they’d have to be staged in terms of construction, program management and launching. And a launch campaign doing three or four a year would be a nightmare." It is for these reasons, explains Lewis, that more companies could have applied for spectrum. "We’re still somewhat shocked that there wasn’t a lot more people ," he says. "But I think timing was very important on a lot of fronts, and if you look at it case-by-case, everyone has a reason why they didn’t apply at the time: business reasons and things going on in the industry that precluded them…but it’s still surprising that there weren’t more applicants." The evolution toward a competitive market has had its stops and starts over the years, as Industry Canada has released satellite orbital resources primarily on a slot-by-slot basis. But competition was given a major boost when the department made the call last July to award an unprecedented 29 satellite spectrum licences in 16 orbital slots. While several parties had previously expressed interest in acquiring some of the licences in question, Ciel, along with Telesat Canada and Canadian Satellite Radio Inc. (CSRI) were the only companies to submit applications (RoW, July 14/06). CSRI was eventually disqualified from participating based on inadequate applications. There have been opportunities in the past to open up the satellite services market, but the department has been reluctant to do so. In 2001, Bird Satellite Communications was denied in its bid for a satellite orbital slot, and in 2004, Barrett Xplore was turned down for the 72.5 degrees west orbital position in favour of incumbent Telesat. Lewis and Scott Gibson, VP and general counsel at Ciel, note that Barrett’s loss marked an important step in the evolution to a competitive environment. The two, who were behind the Barrett bid, were given some advice from Industry Canada staff after Telesat was awarded that particular licence: Lewis says that the department explained what kind of information they were expecting to see and how it stacked up against the winning applicant. Gibson adds that it’s wrong to suggest that the department was unwilling to license new competitors or wasn’t taking a pro-competitive stance back in 2004. "I think the department has adopted an ordered, measured development of this market and they’re continuing to do so," he says. While one of the first steps in opening the satellite services market to more competition came when the department awarded Ciel the 129 degrees west orbital slot in the fall of 2004 (RoW, Sept. 24/04), the next was for Ciel to show Industry Canada that it could develop into a true and viable competitor in the market. Gibson explains the company has done just that. "We’ve invested more than $100 million to date building the satellite. It’s under construction and on schedule for launch in December 2008," he says. "This is an industry that has long lead times, and long development times, but we were able to show Industry Canada that we’re not kidding. We’ve got the money and we’re going to develop into the competitor that needs." But introducing competition into a market isn’t simply done by allowing any and all companies to enter: hopefuls have to have the financial wherewithal and the satellite business know-how to get things done. According to Gerry Wall, VP of regulatory affairs with Ciel, the company has that thanks to its partnership with SES Americom and Borealis Infrastructure Management Inc., an investment company owned by the Ontario Municipal Employees Retirement System. Decima Reports will publish the full transcript of the editorial roundtable with Ciel Satellite in the near future.

Canadian satellite market ripe for more competition: Ciel CEO

News | February 9, 2007

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