How has the 1 degree West neighbourhood evolved in the last few years?
Our 1 degree West neighbourhood, with Thor 5, 6, 7 – and Thor 10-02 / Intelsat 10-02, has experienced a very positive development for many years now. Our key orbital position is fully deployed frequency wise, and I am happy to say that the utilisation of our broadcasting transponders has never been higher.
The two main markets where Telenor Satellite has a strong DTH presence – CEE and the Nordics – have both recently gone through long-awaited consolidations.
Earlier this year, Canal Digital and Viasat merged into Allente, and Allente is now in the home stretch migrating all prior Viasat customers from 5 degrees East to the 1 degree West position. This has been a formidable project, with hundreds of antennas moved every day across the Nordics – during Covid-19 lockdowns. Following this migration, 1 degree West will be the only DTH pay-TV satellite position for the Nordic market, which brings comfort in our capacity planning, and also enables us to fully focus on how to support Allente with teleport services in order for them to reach their goals.
In CEE, 1 degree West has a particularly strong position in Czech Republic, Slovakia, Hungary, and Romania. As well known to the Broadband TV News readers, UPC Direct was acquired by M7 Group, which again was acquired by Canal+ Group. Canal+’ strong focus is very positive for the growth of DTH, and I am confident they will develop their markets further.
Are there plans to develop it further, for instance, by adding more 4K channels targeting the Nordics and CEE?
The introduction of HD and flat panel TV sets was some sort of a perfect storm. HD became a “fashion statement”. When we introduced the first HD services to the Nordic market, I think for the FIFA World Cup in 2006, we arranged a friendly poll internally to bet on how many HD services would be launched the following years. Except for a couple of bets, we all underestimated with a margin. Today, 86% of the bitrate is used for HD services in Mpeg4 format in the Nordics.
We are not able to see the same perfect storm for UHD. It is there, on 1 degree West we transmit a sports channel on the Allente platform, and NASA TV in 4K. The format is still up for discussion and evaluation by the distributors; however, I think it is challenging to reach attention for the majority of the end-users. Their TV sets are good, and the HD transmissions are at a decent bitrate level, often statmuxed with high peaks and average around 8 Mbps.
The reports I’ve seen on viewing of UHD showed some very decent results from the dedicated UHD channels from Tokyo 2020 Summer Olympics, both on ratings and perceived quality. This is positive, of course, and UHD – and high quality in general – is one important differentiator going forward. TV sets just get better and better, and they continue to grow in size – 75” and beyond. Engaged movie and TV series viewers like myself are just extra happy when my favourite show is available in high quality. And equally disappointed when the show is in low quality, full of artifacts and low colour dynamics.
We will experience a growing UHD portfolio on 1 degree West. And as a satellite and teleport operator we are able to quickly take on board new UHD services when introduced by our customers.
Maybe, the markets in CEE will have a more rapid and strong introduction of UHD – bypassing HD as the main format. It will be interesting to follow this development in particular.
Telenor Satellite has long had a strong presence in CEE. Are there any markets it is particularly focused on?
The pay-TV operators at 1 degree West – Direct One, Focus Sat, Digi, Telly – mainly operate in Czech Republic, Slovakia, Hungary, and Romania. All markets in CEE are different, some are strong on cable, some deploy fibre roll-out at high speed. DTT plays a significant role in some markets, irrelevant in others. It seems now that the strong foothold for 1 degree West is still in the four countries mentioned. I think it will be particularly interesting to understand how the Hungarian and Romanian markets develop in the coming years. These markets are large, and with tough competition. It really takes high level of creativity and skills by the operators to develop differentiated and compelling products in markets which operate with such competitive pay-TV ARPU levels. In my experience, Canal+ Group, Digi and the others are well positioned to further strengthen their DTH position, and we look forward to contributing and bring value in any way we can.
What do you do at your teleport in order to improve services for your customers?
We know that it is of great importance for our customers that we are able to adjust, launch, terminate or move services, add functionality and so on – on short notice at a communicated cost. This is essential, as content negotiations between the pay-TV operators and the broadcasters happen more frequently than they did just a few years ago. Results of negotiations are to be implemented on short notice. This could mean adding a new audio-track, adding subtitles for a new language pack, installing ad-insert servers, changing input format from TVRO to mezzanine format, and launching a new TV-channel. Telenor Satellite has over the years designed and installed an IP platform at Nittedal Teleport to accommodate these various demands on short notice.
When feasible, we take control of the contribution of the TV signals from the broadcasters play-out and to Nittedal Teleport to have full control of the quality – currently we tend to do this in mezzanine format. This design introduces flexibility to prepare the very same TV channel to DTH, to IPTV, and with multiple profiles for Adaptive Bitrate streaming distribution.
Currently, we deliver more than 550 IPTV services, and close to 300 streaming services (ABR). As we discussed in an earlier question – regarding UHD and quality – we see an increased demand for improved quality on these non-satellite services as well, quality often related to low-latency, higher framerate, ad-insertion, and better and more sophisticated ways to provide subtitling.
Looking to the future, how do you see the DTH business developing in the Nordics and in CEE in the next few years?
I think the strong position of DTH in our part of the CEE market will continue. I think there are several reasons to support that view, with the ARPU level as one important factor. A basic pay-TV package could be between EUR 7 and 10 for some CEE markets, and Netflix is offered at €10. This limits the churn from linear distribution platforms to SVOD.
So, even though the growth of SVOD products is significant, it is nowhere close to the take up seen in the Nordics – with 3-6 SVOD subscriptions per household. And with a typical pay-TV ARPU of €60-70 – and with Netflix at €10, it is evident that SVOD gains a strong position.
Allente is brilliant in providing high-end receivers, high quality video and programming, include and provide multiple SVOD products and wherever-whenever-whatever-however functionality to their market. And I have no doubt they will stay strong and relevant going forward.
In CEE Direct One, Focus Sat, Digi, Telly will continue to provide services in demand. The market dynamics are slightly different from high ARPU markets, but their concepts have proven right year after year. I think we will see further consolidations, and hopefully the sharing of satellite capacity between our DTH operators, the footprints we provide, and the perfect orbital position will ensure that such consolidations happen toward our 1 degree West position.