PTC09: Satellite CEOs Speak
This afternoon’s session is described here.
The initial question was about recommendations from the speaker’s perspective to the incoming US Presidential administration. Co-moderators Susan Irwin and Patricia Cooper (MOD), interviewing panelists: John Celli (JC), Peter Jackson (PJ), Jean-Yves Le Gall (JYLG), Yutaka Nagai (YN), and Dean Olmstead (DO).
MOD: Economy is a key driver. Tell me what you think effects of economic downturn have had on industry, how are we doing, what indicators are you following?
DO: big infrastructure projects are of a such a long term nature that current situation is a point. We’re looking to our users and competitors, expansion. As an operator, we have to be prepared to understand the level of risk we’re willing to engage in. Based on users and customers to plan short term.
JYLG: where market needs credit, is more difficult.
YN: established operators have longtime base, no immediate impact. need to look long term. Two concerns: project like geo mobile systems: can they raise enough money to continue? Also some operators will have problems because of increasing satellite costs.
JC: seeing satellite industry has indicators of good health. Mobile systems and other systems, including broadband–lack of capital will put a break on activities and pehaps increase mergers and acquisitions to expand growth. Backlog is healthy. What concerns me: drops of 40% in (?). Risks coming through in last few years. Quite different opinion than 2001, bomb was fast; now much deeper and more global.
PJ: Although certain failures, TV grows, which is a key factor for them. People don’t spend money unless they think their job is safe, so they do see TV companies may not be growing but they’ll continue to grow (esp ads). Asia was example (cultural choice). If values don’t support small and medium-sized enterprises, there might be trouble.
MOD: what are you doing to offset some of the economic problems:
DO: frugal management, how you choose to live. We take advantage of opportunities that are out there, being in a crisis means more of same. When things appear to be slowing, things may change.
JYLG: will introduce something this year. hmm.
YN: Efficiencies of the operation, synergies between companies. No special measures taken.
JC: have a backlog that takes short term pressure, No secret that you must create discretionary expenses, careful spending this year, focus on customers.
PJ: reassure staff that we won’t cut staff, be frugal (a state of mind). Staff treats expenses carefully.
MOD: Money in your pocket, would you spend it? Consolidation in the winds?
JC: question is what’s going to happen to competition.
DO: for most of us, we have luxury to sit back and wait.
YN: possible programs and new satellites being developed, look to parnering.
MOD: #1 priority in Asia Pacific region is pricing. What impact is global economic downturn having?
PJ: may have to visit terms for your customers, but is a real cost and difficult to cut them (failures, launching, etc.). Efficiencies work better than cutting real costs.
YN: price is low enough, no attention to lower price. Japan domestic: no reason to produce.
MOD: Parts of the world having capacity crunch.
DO: old satellites but new company, uses price regardless of economic situation.
MOD: manufacture and launch vehicle costs?
JYLG: even if we are working very hard to provide customers w best quality and abilities, this is still a cost.
JC: prices are going up slightly, Euro going up, vendor prices going up. Our focus is on cost reduction. We’re successful at providing value. Slowdown: military vendors not active in commercial sector but they may come back. We’ve built in so much efficiency that it will be hard to change.
Projects being impacted?
DO: we’re getting relatively good value, if launch cost were on parity wed be pursuing more.
YN: Not a problem (lots in orbit).
MOD: demand-side? where is push coming from?
PJ: everywhere. Interesting thing about TV: once satellite is up the opportunity to serve more is good to provide multi-channel services. Not just electronics at each end, but equipment in between can be quite expensive.
DO: it’s all about video, in different formats (HD, now push for 3D). Inexhaustible demand. Also government increasing needs.
YN: HDTV last October, this fall 70 channels, over 100 channels in 2012.
JC: commercial satellite for non-secure transactions, still have the need for special satellites for secure and other needs (e.g., troops). Scientific apps: testing for certain areas being watched.
JYLG: demand for edcuation, etc.
Questions: demand side: consumers have less to spend, pay TV subscribers (more than one member per household). How to drive this in Asia? Supply side: assume situation continues: how to encourage launches? many projects would be possible.
YN: Not a good idea to get customers who don’t pay, seeking to get good customers.
PJ: advantages of cable over ADSL is bandwidth. In terms of what suppliers can do, make boxes cheaper, esp for reduction in price of second and third boxes. HOng Kong is different, viewership went up during recession.
DO: yes, same in US.
Question: With transponder revenues dragging down, what can transponder, vendors and others do?
JC: fundamentally: strive to reduce costs, provide customers with best value. Work together to better understand what customer wants.
YN: joined satellite operators, can save launch costs.
Question (couldn’t summarize)
DO: dish video business is cash machine.
Q: launch companies; how is your biz changing? Climate change, military activities, are you launching commercial or other service?
JYLG: we’ve launched several satellites lately, observing that size is decreasing
Q: focus on cost and how to make space more accessible, what started change in manufacture model, test philosophies, etc. (?)
JC: standardizing large fleets, but otherwise…
Q: SpaceX? Claim to be able to reduce cost of launch…
JYLG: wait for more successful launches.
DO: good step in the right direction.
SpaceX rep: took fewer launches to get to success, we are in the business to compete.
JYLG: compare tonnage costs.
another SpaceX rep: what portion is launched, what’s a good value of launch service?
DO: about 1/2 of what they are today would be a good price. $60M seems to be the right number. Not analytics.
Where’s doubling of costs?
DO: supply
How to get Hollywood to help reduce costs? (laughter)
Final q: what one word to describe future?
PJ: mobile.
DO: excite
JC: imagination
JYLG: change
YN: TV