Old business_ new future - Satellite Evolution Group by pengtt


									     Q&A Loral Skynet

     Old business,
     new future

32   September/October 2004   w w w. s a t e l l i t e - e v o l u t i o n . c o m
                                                                                                                          Q&A Loral Skynet

 A pioneer in the satellite industry, Loral Skynet is
dedicated to providing secure, high-quality connectiv-
ity and communications throughout the world.
                                                              At a more general level, I would
     As a subsidiary of Loral Space & Communications,        say that the worst is over for the
Loral Skynet offers a unique source for all broadcast,
data network, Internet access and Internet Protocol              satellite industry. The past
(IP) requirements thanks to its fleet of satellites and a
well-established global infrastructure of fibre and Very
                                                              couple of years have been fairly
Small Aperture Terminals (VSATs). Headquartered in           tough, but there is no doubt that
Bedminster, New Jersey, Loral Skynet has been an
industry leader for over 40 years.                                 better times lie ahead.
Question: How would you introduce Loral Skynet
to the readers of Satellite Evolution Asia (SEA)?
Would it be possible for you to sum up briefly the
company’s history?                                           Q: So where has all this left Loral Skynet?
Pat Brant: The company currently called Loral Skynet         PB: Loral Skynet now has a fleet of four satellites cov-
was originally founded in 1962 as the satellite arm of       ering the entire globe, as well as leased capacity on a
American Telegraph & Telephone (AT&T). With remark-          number of other satellites that we re-sell. The Loral
able foresight, the North American telecom operator          fleet at this point includes: Telstar 10 and Telstar 18
was one of the first companies to see, and take ad-          over the Asia-Pacific region, the trans-Atlantic Telstar
vantage of, the future opportunities for global satellite    12 and Telstar 14, also known as Estrela do Sul 1,
communications. 35 years later, AT&T sold its satellite      located over Brazil.
arm to Loral and renamed it Loral Skynet. Thus, the               Telstar 14/Estrela do Sul 1 and Telstar 18 are the
company became part of a major integrated space and          latest two additions to our fleet: the first was launched
satellite communications business.                           in January 2004 with coverage of North and South
    At present, Loral Space and Communications is            America and the North Atlantic Ocean region.
organised into two segments: satellite manufacturing,             Telstar 18, on the other hand, was placed in orbit
conducted by Space Systems/Loral (SS/L) in Palo Alto,        at the end of June this year and offers standard and
California, and satellite services managed by Loral          extended C-band as well as standard Ku-band serv-
Skynet.                                                      ices from the Middle East and throughout the Indian
                                                             subcontinent, to China, Hong Kong, New Zealand and
Q: What about Loral Skynet’s recent history? Over            Australia. The Telstar 18 satellite links North America
the past year, Loral Space and Communications,               to Asia via Skynet’s teleport facility in Kapolei, Hawaii.
your parent company, has seen difficult times.               We began transitioning customers to Telstar 18 in mid-
What happened, and how did this affect Loral                 August.
PB: It is common knowledge that over the past few            Q: What is your assessment of the marketplace’s
years Loral Space and Communications witnessed a             current conditions? What does the future hold for
range of issues due to, among other things, its invest-      Loral Skynet?
ment in Globalstar.                                          PB: We are feeling strong right now for a lot of rea-
     Globalstar struggled to meet its business plan and      sons. First, because of our planned emergence from
left Loral saddled with a large amount of debt. Loral        Chapter 11 - which, as I said earlier, will now happen
filed for bankruptcy in 2003, and in March 2004 final-       before the end of this year. Second, we are unique in
ised a deal to sell its five North American satellites to    this business: we have capacity in space and a robust
Intelsat for around US$1 billion, allowing the proceeds
of the sale to repay all the secure debt it had taken on.
After this process, Loral still retains its international
fleet of satellites positioned in key areas such as Asia,
Europe and Latin America.
                                                                      A Satellite Evolution Asia (SEA)
Q: What about the most recent developments?
PB: On 19 August Loral filed a proposed plan of reor-                 exclusive!
ganisation with the US Bankruptcy Court with the sup-
port of its creditors. The company expects to emerge
from chapter 11 with a healthy balance sheet before                  In his first interview as newly-appointed
the end of the year and has already begun growing,
with the recent launches of Telstar 14 over Brazil and               President of Loral Skynet, Patrick K Brant
Telstar 18 over Asia.                                                talked to Giovanni Verlini, Editor of SEA about
    At this point, we are all very energised by our new
prospects and are ready to move forward.
                                                                     the company’s future.

      w w w. s a t e l l i t e - e v o l u t i o n . c o m                                                                September/October 2004   33
     Q&A Loral Skynet

                                                                                                  Loral names Patrick K Brant
                                                                                                  President of Loral Skynet

                                                                                                  Loral Space & Communications has announced
                                  global infrastructure on the ground that is operational         that Patrick K. Brant has been named President
                                  right now, today, providing very effective solutions for        of subsidiary Loral Skynet. Brant succeeds Terry
                                  customers. A lot of other providers are trying to imple-        Hart.
                                  ment similar satellite and fibre networks, and strug-                Brant, 53, takes the helm at Loral Skynet as
                                  gling. We have already done it and we are still doing it.       Loral prepares to file a plan of reorganisation that
                                       Complete this picture with over 40 years in satel-         should allow it to emerge from bankruptcy before
                                  lite and almost 20 years in network operations and it           the end of the year. Loral Skynet owns and oper-
                                  is hard to argue with our experience. And that is what          ates a fleet of four telecommunications satellites
                                  makes us reliable-something that our customers de-              that, in combination with its established hybrid
                                  pend on. Also, our experience allows us to be more              VSAT/fibre global network infrastructure, provides
                                  creative in delivering what our customers want, at the          secure, high-quality video broadcasting,
                                  price they want.                                                broadband data transmission, Internet services
                                                                                                  and other value-added communications services
                                  Q: How do you see the marketplace at a more gen-                to commercial and government customers.
                                  eral level?                                                          Brant ser ved as an executive at Loral
                                  PB: At a more general level, I would say that the worst         Cyberstar from 1999 to 2003, ultimately as its
                                  is over for the satellite industry. The past couple of          President and Chief Operating Officer (COO). He
                                  years have been fairly tough, but there is no doubt             was a leading participant in Cyberstar’s integra-
                                  that better times lie ahead.                                    tion into Loral Skynet in 2003. His strong sales,
                                      But you also have to be realistic. A recovery will          marketing and business development background
                                  not happen overnight. It will be gradual. Things are            includes senior management positions at satellite
                                  improving, but it is going to take time for the market to       companies, including Orbital Communications and
                                  find its balance and become consistent.                         American Mobile Satellite Corporation. Brant holds
                                                                                                  a Bachelor of Science degree in Economics from
                                  Q: As you just mentioned, the past couple of years              the University of Maryland.
                                  have been fairly tough for the satellite industry.                   “Pat Brant’s strong sales and marketing expe-
                                  Many commentators seem to be of the opinion the                 rience, knowledge of the industry, and leadership
                                  last few years have changed the industry. Would                 capabilities will unquestionably enhance our ef-
                                  you agree with this analysis? If so, how has the                forts to build out our international network of sat-
                                  satellite industry changed?                                     ellite services,” stated Bernard L. Schwartz, Chair-
                                  PB: The satellite industry has shifted its focus in a           man and Chief Executive Officer (CEO) of Loral.
                                  number of ways, but the most fundamental change is                   Terry Hart, who served as President of Loral
                                  the shift in focus from an engineering technocracy to           Skynet for seven years, left the company to pur-
                                   becoming more commercially-minded. In addition to              sue a career in academia, a longstanding objec-
                                    supplying services to larger, more experienced sat-           tive. “We are grateful to Terry Hart, under whose
                                     ellite users with just bandwidth, there is a move to         leadership Loral Skynet grew from a one-satellite
                                       provide more end-to-end services. For example,             company in 1997 to an international satellite serv-
                                        working with large enterprises in the develop-            ices company today. He has our respect and ad-
                                          ment of secure Internet Protocol-based (IP)             miration for staying the course through the recent dif-
                                           VSAT networks like SkyReach, or helping tra-           ficult time at Loral and in our industry,” Schwartz con-
                                            ditional Moving Picture Expert Group (MPEG)           tinued. “And we wish him well,” he concluded.         !
                                              customers for business television migrate to
                                               IP-based technologies.

     Image: Telstar 18. Picture                   Q: In terms of applications, what can         Q: Will Loral Skynet take advantage of the new sat-
     courtesy of Loral Skynet.                     we expect from the satellite industry        ellite multi-beam technology?
                                                    over the next few years?                    PB: Yes, we will. We have plans to launch both multi-
                                                     PB: I can see two major trends             beam satellites, as well as spot beam satellites em-
                                                      emerging in our industry. The first       ploying frequency re-use technology within three to
                                                      one, and perhaps the most impor-          five years. In fact we already have a multi-beam satel-
                                  tant, is the expanding development of broadband sat-          lite in orbit. Telstar 14 is designed to operate with five
                                  ellite services. This is an area that will experience radi-   different beams over Brazil, the Americas and the
                                  cal changes. Data services and private video distribu-        North Atlantic Ocean.
                                  tion such as IP-based business television will begin to             We will continue to look at areas and satellite op-
                                  fulfill the projections that were forecast in the late        portunities where we can use these technologies to
                                  1990s, as second generation Internet services                 our advantage.
                                  emerge, and Virtual Private Network (VPN) technol-
                                  ogy evolves.                                                  Q: Looking at current market conditions, what is
                                       The second trend is the fact that, as an applica-        hampering the development of a consumer mar-
                                  tion, satellite broadcasting will grow, as High Defini-       ket for Very Small Aperture Terminals (VSATs)?
                                  tion Television (HDTV) and further technical break-           PB: There are two issues to consider here: first is the
                                  throughs happen.                                              price of bandwidth, which is still too expensive when

34   September/October 2004                                                                            w w w. s a t e l l i t e - e v o l u t i o n . c o m
                                                                                                                        Q&A Loral Skynet

  Loral files for re-organisation plan
  Loral Space & Communications Ltd. and certain of its subsidiaries have filed a proposed plan of reorganisa-
  tion (the Plan) with the US Bankruptcy Court for the Southern District of New York. The Plan is supported by
  the Official Committee of Unsecured Creditors appointed in Loral’s Chapter 11 case. The company expects
  to exit Chapter 11 under current management before the end of the year.
       The Plan, which is subject to confirmation by the bankruptcy court, resulted from negotiations between
  the company and the Creditors’ Committee to implement the previously-announced agreement in principle.
  It provides, among other things, that:

  •    Loral’s two businesses, Space Systems/Loral (SS/L) and Loral Skynet, will emerge intact as separate
       subsidiaries of reorganised Loral (New Loral);
  •    SS/L, the satellite design and manufacturing business, will emerge debt-free;
  •    The common stock of New Loral will be owned by Loral bondholders, Loral Orion bondholders and
       other unsecured creditors. In addition, bondholders and other creditors of Loral Orion will receive an
       aggregate of US$200 million in new senior secured notes to be issued by reorganised Loral Skynet,
       New Loral’s satellite services subsidiary;
  •    New Loral will emerge as a public company and will seek listing on a major stock exchange; and
  •    Existing common and preferred stock will be cancelled and no distribution will be made to current

      The plan of reorganization is available via the court’s website, at www.nysb.uscourts.gov/. Please note
  that a PACER password is required to access documents on the Bankruptcy Court’s website. Loral’s bank-
  ruptcy case number is 03-41710 (RDD).                                                                    !

compared to terrestrial solutions. We expect the new         are mentioned, the thought immediately goes to
generation of multi-beam satellites to address this          the question of transmission/receive standards.
problem.                                                     What is Loral Skynet’s position in this regard?
    The other issue is the price of the ground termi-        PB: Loral Skynet will take a leadership position in rec-
nals, which at present are still averaging around            onciling the role of these standards. However, there
US$2,000 per installed terminal. We have already             are many variables that have to be considered. Things
come a long way over the past few years, but for VSATs       like enterprise vs. consumer requirements; the
to become a viable consumer market application,              geographies being served; the specific applications
prices will have to decrease even further.                   being supported, etc. These are some of the elements
                                                             that will shape our view towards the use of standards
Q: When broadband, two-way VSAT applications                 moving forward.

  Loral’s TELSTAR 18 enters full commercial service over the Asia-Pacific region
  Loral Space & Communications has announced that Telstar 18, a powerful and flexible satellite designed to provide communication
  services across Asia, has completed its in-orbit testing and is now fully operational.
        “With Telstar 18 joining Telstar 10 over Asia, Loral now operates two of the most powerful and strategically placed satellites in that
  region,” said Patrick Brant, President, Loral Skynet. “Telstar 18 covers a large area that stretches from Central Asia, through the Indian
  sub-continent, China, Korea, Japan, South East Asia, Australia and Hawaii. It offers our customers a strong footprint for intra-regional
  applications, as well as the ability to directly connect with the US.”
        Built by Space Systems/Loral (SS/L) and operated by Loral Skynet, Telstar 18 was launched on 28 June 2004 aboard a Sea Launch
  Zenit-3SL rocket. During the launch, the rocket’s upper stage shut down early and placed the satellite in a lower than expected orbit.
  Engineers from SS/L, however, were able to raise the satellite to its proper orbital position at 138 degrees East longitude. The satellite
  still has sufficient on-board fuel to exceed its specified 13-year life.
        Telstar 18’s users include well-known regional video and data providers, such as Smart Digital Communications Bhd, of Kuala
  Lumpur, Malaysia, and PSVN, Inc., which is based at the Hawaii Pacific Teleport. Loral’s other satellite over Asia, Telstar 10/APSTAR-IIR,
  hosts one of the largest video communities in Asia at 76.5 degrees East longitude.
        In addition to transmitting innovative new applications, cable programming and direct-to-home broadcasting services, Telstar 18 is
  scheduled to begin hosting Skynet’s SkyReach(SM) two-way IP-based networking solution in 2005. SkyReach is already available and
  in use by customers throughout the Americas, allowing organizations to create an instant infrastructure using a VSAT network, connect-
  ing offices between cities or around the globe.
        Telstar 18 carries a total of 54 active transponders, of which sixteen are high-power Ku-band transponders and thirty-eight are C-
  band transponders. In consideration for funding a portion of the satellite project’s cost, APT Satellite Company Limited, Hong Kong, will
  initially use 68.5 percent of Telstar 18’s transponder capacity for APSTAR-V services. The number of transponders used by APT will be
  reduced over time, ultimately to 54 per cent of the satellite’s capacity.
        Telstar 18 is a version of SS/L’s space-proven 1300 satellite platform, which has an excellent record of reliable operation. The
  geostationary 1300 has a specified service life of 13 years and maintains station-keeping and orbital stability by using bipropellant
  propulsion and momentum-bias systems. In all, SS/L satellites have amassed more than 1,100 years of on-orbit service.                     !

      w w w. s a t e l l i t e - e v o l u t i o n . c o m                                                              September/October 2004   35
     Q&A Loral Skynet

                              Q: Let us move on to your core business now. How                 A two-way IP-based service called SkyReach is
                              is the market for transponder leases these days?             already operational in North and South America, and
                              PB: It really depends region by region. Generally, our       we are in the process of rolling out something similar
                              business is strong right now for video broadcasting          throughout Europe and the Asia-Pacific region.
                              and C-band capacity. The Ku-band market is slightly
                              softer.                                                      Q: What is your assessment of the regional satel-
                                   Telstar 10, for example, is a good example of a         lite markets?
                              strong video broadcasting satellite in a growing mar-        PB: There is no doubt things are looking up in the Asia-
                              ket. Telstar 10, which is currently about 85 per cent        Pacific region. TV channels are being launched liter-
                              utilised, serves cable head-ends throughout the Asia-        ally every week, and India and China are booming
                              Pacific region that reaches over 80 million TV house-        economies that will keep growing for the foreseeable
                              holds.                                                       future.
                                   We also have a number of exciting projects for the           In addition, privatisation of the telecoms and me-
                              near future. For example, with the recently launched         dia sectors is being implemented throughout the re-
                              Telstar 18, we intend to focus on two-way broadband          gion. So, as far as I am concerned, at the moment, the
                              services.                                                    Asia-Pacific region is the place to be.               !

                              Corporate messages via satellite: a case study
                              If you are expecting to deliver your annual corpo-           culture that other companies our size sometimes lose.”
                              rate message live to thousands of employees around                According to Erickson, the live broadcasts add
                              the world, you better have a very good plan.                 some ‘flash and sizzle’ to the event. “If we took our
                                  For the past ten years, the corporate communica-         show on the road, we could not include the entertain-
                              tions plans of GMAC’s Residential Funding Corpora-           ing parts,” he says. “By broadcasting Bruce’s message
                              tion (GMAC-RFC) have included an annual kick-off             live and only once, we can be confident that it is timely,
                              event broadcast by satellite live to its entire workforce    uniform, and highly motivating.”
                              on two continents. The crowd-pleasing event has be-               GMAC-RFC’s 2004 kick-off in February was broad-
                              come an integral part of the company’s corporate cul-        cast from the Minneapolis Convention Centre, near
                              ture. Founded in 1982 and part of the General Motors         the company’s headquarters. Eight cities participated
                              family, GMAC-RFC is a global leader in the financial         in the broadcast - three with two-way satellite links and
                              service industry with 4,300 employees throughout the         the rest with dedicated telephone links - enabling most
                              US and in Canada, Mexico, Germany, the Netherlands,          of the company’s workforce to actively participate. The
                              and the UK.                                                  plan also included a simultaneous webcast for those
                                  With its widespread workforce and charismatic            unable to travel to one of the host cities, plus a DVD
                              President and Chief Executive Officer (CEO), Bruce           for anyone who missed the kick-off or wanted to see it
                              Paradis, GMAC-RFC takes full advantage of its an-            again.
                              nual kick-off events. “Broadcasting live by satellite lets        Any event of this magnitude requires meticulous
                              us act like a small company when, in fact, we are quite      co-ordination and, for that, GMAC-RFC relies on the
                              large,” explains Neil Erickson, Director of communica-       Juntunen Group of Minneapolis as its general contrac-
                              tions for GMAC-RFC. “With Bruce in front of all of our       tor with Loral Skynet as one of Juntunen’s subcon-
                              associates in real time at least once a year, we have        tractors. “We have become very good at putting on
                              been able to retain a certain identity and corporate         these events, and sometimes we forget that Juntunen

36   September/October 2004                                                                       w w w. s a t e l l i t e - e v o l u t i o n . c o m
                                                                                                                           Q&A Loral Skynet

and Skynet are working behind the curtain and in the          ment at each site, plus our trucks have built-in redun-
uplinking truck making sure that everything turns out         dancy. It is all part of providing the best possible serv-
as planned,” Erickson observes. “It is seamless, so we        ice to the customer.”
can concentrate on the content and creativity, rather               Quality service is also Christianson’s top priority.
than worrying if the equipment is working properly.”          “The most important thing is to deliver the product the
      That seamlessness is largely the result of excel-       customer wants,” he explains. “You must keep the cli-
lent teamwork. “We work shoulder-to-shoulder plan-            ents’ best interests in mind at all times. I’m always an-
ning the event,” notes Erickson. “The relationship be-        ticipating their needs and managing their expectations
tween Juntunen and Skynet - and their expertise - is          and, for that, excellent communications is absolutely
critical to making it happen.”                                essential.”
      Not surprisingly, planning begins well in advance.            Managing expectations also applies to the event’s
“We sit down with GMAC-RFC to brainstorm months               audience. Erickson advises companies planning simi-
before the event,” explains the event’s producer, Erick       lar events to consider what their viewers are accus-
Christianson of the Juntunen Group. “Together we set          tomed to seeing. “Today’s television and cable media
the tone of the event, and develop a theme. They pro-         has taught people to expect more than just talking
pose content and together we create an envelope to            heads,” he says. “If what you are planning is very static,
wrap around it.”                                              the technology may not support itself. But if you are
      Most of the event’s most noticeable components,         planning to deliver your message with a creative, col-
such as graphics, animation, lighting, and sound, video       ourful, fast-moving production, then it can really pay
production, are handled by Juntunen. “We produce live         off.”
meetings and events of all sizes,” says Christianson.               Making the production of the show worth the trans-
“We have our own studio and video production capa-            mission is key. “We approach our annual kick-off event
bilities, so we can produce content for the event.”           as if it were a stage show,” Erickson notes. “From the
      For Christianson, delegating the satellite commu-       time the doors open, people can see the graphics that
nications to a dedicated account manager, Loral               are already in place complementing the show. The
Skynet’s Mary Pat Ingwell, is a welcome advantage.            music and lighting and other supporting elements are
“Being able to hand off a portion of the project - with       all handled like a television show or a live show. It wows
the confidence that it will get done - is a huge help,” he    the audience but it is also a very effective use of the
says. “Mary Pat provides really good service, which           technology. The benefits of the razzle dazzle extend
makes it a lot easier for us to manage the ad hoc net-        well beyond the event. “It enhances our employees’
work.”                                                        impression of the company itself,” Erickson explains.
      According to Ingwell, being responsive is not lim-      “It sends a clear message about our level of profes-
ited to the initial requirements. “For this year’s event,     sionalism and it makes employees feel good about their
we set up the downlinks to all eight cities and brought       jobs. It’s become one of the most recognisable aspects
in trucks for the three cities needing two-way trans-         of our corporate culture.”
mission. We also set up a telephone bridge for live                 According to Christianson, a professionally-pro-
Q&A for the other five cities and manned the telephone        duced event offers advantages a road show cannot.
bridge from the convention centre,” she explains. “Af-        “All of your employees can get the same message at
ter the kick-off, on 18 hours notice, we set up a live        the same time, delivered with the same nuance and
tape feed to London.”                                         emphasis. Even if your offices are located all around
      Flexibility and reliability are also important con-     the world, for the duration of the event, you can bring
siderations. “You always have to be prepared, because         your company together.” For important corporate com-
the requirements can change right up to the day of            munications, that sort of togetherness can be price-
the event,” she says. “We always have redundant equip-        less.                                                    !

       w w w. s a t e l l i t e - e v o l u t i o n . c o m                                                                September/October 2004   37

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