FCC cites aggressive fiber and LEO choices in approving the SES/Intelsat merger
Among the many main transactions that the Federal Communications Fee just lately permitted is the $3.1 billion buy of Intelsat by rival satellite tv for pc operator SES.
The FCC’s order on the merger encapsulates the aggressive pressures dealing with conventional satellite tv for pc operators: With the proliferation of terrestrial fiber networks and streaming reasonably than linear broadcasting, their content material distribution providers are seeing much less demand and declining revenues. In the meantime, they’re additionally being squeezed by quicker, higher-capacity Low Earth Orbit (LEO) gamers like Starlink.
SES and Intelsat are roughly the identical measurement when it comes to revenues, with SES incomes $2.2 billion in revenues throughout its fiscal 2024, and Intelsat incomes $2 billion in revenues throughout the identical fiscal 12 months. SES operates a fleet of 43 geostationary orbit (GEO) satellites and 26 satellites in medium Earth orbit (MEO), whereas Intelsat has a fleet of 57 GEO satellites. Each corporations function their satellite tv for pc networks primarily utilizing the C-, Ku- and Ka-bands.
The businesses argued to the FCC that the merger would imply an optimized multi-orbit community and would release extra of their monetary sources to put money into new community capability, know-how and providers.
The FCC acknowledged that the speedy modifications within the satellite tv for pc panorama: “We discover that the satellite tv for pc business is a dynamic one, that’s being reworked each by the speedy entry and enlargement of [non-geostationary orbit or NGSO] constellations—that are growing satellite tv for pc capability dramatically—and by the growing ubiquity of fiber networks that present dependable and high-capacity aggressive alternate options to satellite tv for pc providers.”
Nevertheless, commenters on the transaction identified issues concerning the mixed firm controlling the overwhelming majority of satellite tv for pc media distribution in the US and mentioned that different bands usually are not equal to C-Band transmission of programming content material — and that whereas most areas do have entry to different transmission paths comparable to fiber, rural areas could not, and fiber will be costlier and fewer dependable.
Nonetheless, the FCC discovered that whereas the 2 corporations distribute greater than 95% of all video programming that comes over C-Band satellite tv for pc service to the US, there are “necessary substitutes” like different spectrum bands and fiber, which are prone to be extra broadly adopted in coming years. If SES/Intelsat raises costs, their clients might swap, the company concluded.
The FCC additionally did its personal evaluation involving calculating the space from earth stations to the closest broadband supplier with gigabit obtain speeds and located that “practically 65% of C-band earth stations are situated inside 200 meters of a material location the place gigabit broadband is offered, and practically 94% of earth stations are situated inside 1 mile of such a location,” making switching to fiber possible.
By way of the FCC’s now-mandated means to search out and public sale new spectrum, together with an extra 100 megahertz of C-Band spectrum, the company additionally discovered as a part of the transaction evaluation that SES and Intelsat “have substantial extra North American C-band capability” and famous that “SES has mentioned that it could be doable to reallocate an extra 100 megahertz or extra of C-band spectrum.”
In different areas of SES and Intelsat busines operations, the FCC discovered that there was unlikely to be aggressive hurt to in-flight connectivity providers, mobile backhaul and authorities providers due to the probability that LEO suppliers will in the end seize a lot of the enterprise in these sectors and that SES and Intelsat’s “share of complete satellite tv for pc capability is dwarfed by the capability of LEO suppliers.” SES and Intelsat cited numbers that venture that LEO operators are anticipated to account for about 80% of the mobile backhaul and trunking service revenues by 2032. The FCC accepted the businesses’ argument that their mixture will allow them to extra aggressively compete towards Starlink and different LEO suppliers.
SES and Intelsat declare that the transaction will allow them to realize value financial savings of greater than $1.6 billion in three years, and the businesses highlighted “floor tools and platforms, community orchestration, seamless integration, and their MEO community as potential funding and innovation targets.”
