Home >> September 2008 Edition >> FEATURE: Success For Satellite Radio In Europe
FEATURE: Success For Satellite Radio In Europe
by David Krueger

Considering the successful development and increasing maturity of Sirius Satellite Radio and XM Satellite Radio in the U.S., the timing could not be better than right now to introduce satellite radio to Europe. The two companies (now a single entity, thanks to their recent merger) reported a combined USD 2.4B in revenue last year and have, between them, generated a total of nearly USD 6B since services started six years ago.

Unreported is another estimated USD 6B in revenue earned by car manufacturers from the sale of satellite radios in their cars, coupled with several billions more in revenues for radio manufacturers and content providers. Furthermore, infrastructure companies were paid more than USD 5B to build the transmission networks. The bottom line is this: if your company has any radio leanings, you definitely want satellite radio in Europe.

The market opportunity in Europe is even more significant than in the U.S. However, Europe’s radio landscape is marked by different conditions than those of the U.S. and there are a number of major distinctions and challenges to overcome in order for satellite radio to be successfully introduced into Europe.

In order to succeed, a consortium of team members must be built, a group that will carefully and accurately deal with all of the cultural and language diversities, fragmented radio markets, discriminating buyers, and a far more challenging physical broadcasting environment. The latter is created by the fact Europe is located 20° north in latitude of the U.S. markets and displays completely different features in terms of urbanization.

Content Diversity
In Europe, I have personally watched and participated in the ongoing debate regarding satellite radio. So far, this has been a 10 year long debate about technical standards, frequencies, and technologies.

How many acronyms and abbreviations can we create? DMB, DVB, ETSI-SDR, UMTS, DAB, SDARS, DVB-SH, WiFi, WiMAX, even IPTV; then there is L-band versus S-band, and, of course, HEO versus GEO. Meanwhile, 75 MHz of mobile spectrum remain unused by any meaningful European commercial project for more than 15 years. Also meaningful — nearly 50 percent of Europeans would pay a reasonable monthly fee to have a more diverse offering of digital programming available to them in a mobile environment. The CEOs of the formerly two U.S. companies, Sirius and XM, have been quoted over time as saying their business success is about “content, content, and content.”

Therefore, two years ago, in cooperation with our car customers and media partners, ONDAS Media set about designing a massive suite of new digital content that will respond to that extremely important need of Europeans. We learned how to deal with cultural and linguistic diversity so as to satisfy users in all 27 European member states in more than 20 languages.

ONDAS’ extensive market research led this team to understand what services consumers would like to receive, where, and when. ONDAS Media will use this formula to produce proprietary content, which responds to European consumers and will include often innovative, exclusive, and “extreme” content from today’s perspective. But it doesn’t end there… we also learned there is compelling existing content, but some consumers in Europe require this content to go mobile with them.

As a result of the research, ONDAS Media will also acquire and re-distribute some widely accepted and well-established media brands to ensure European audiences will receive their favourite existing content anywhere they go in Europe, rather than just at home.
As our team developed this knowledge base, we began to be approached by key players of the music industry. We observed the business trends and set about to work with this team of experts to design new models for promoting and profiting from this irreplaceable art form. Artists need to monetise their creations — something that has not been so easy for them over the last few years. Plus, they need to monetize content in new ways as the classic revenue models in the music industry have also changed in the past five to 10 years.

We may even have to go back to the future: concerts, promotions, and derivative sales opportunities take us back to an age when artists primarily marketed and distributed their art through live shows. We’ve worked that formula, and now can introduce new means of distribution and revenue generation for all elements of the content business, with methods and manners of distribution, that people today happily pay for to participate in socially.

The time now seems right to develop and implement a serious and decisive alternative to the advertising-based “DNA” of existing commercial radio. Europeans have a love affair with some of their existing radio programs, but they also could do without the commercial interruptions in every country, and they will pay — in every country — to have them eliminated. Plus, DJs, moderators, and music artists need an alternative platform within which to entertain us and promote their works.

A key ingredient of ONDAS Media’s strategy is to start service in the automotive sector. We want to make future drivers safer, better entertained, and more informed through a blend of compelling audio, visual, and data content services. News, localized traffic and weather information are extremely important parts of this mix. We offer car manufacturing clients a new, almost limitless “pipe” through which to send that data to their vehicles and our customers.

ONDAS Media will broadcast its multi-lingual radio, music, video, and data services directly to European consumers in their automobiles, trucks, homes, offices and to their mobile and portable devices through the fully integrated, digital satellite transmission network. Digital entertainment will be provided to 250 million vehicles and as many as 600 million European inhabitants on the move, 24x7, through more than 150 channels of proprietary and re-distributed music, sports, news, weather, traffic and special interest programming in all the key European languages.

As to some of the more technical aspects of this business, one of the principal considerations in designing a mobile, satellite-based broadcast system is the degree of signal loss that might occur in the highly developed, urban and suburban areas of Europe and in regions with lots of foliage. ONDAS Media uses satellites in highly elliptical orbits — this ensures that the signal comes straight down, vertically, onto the cars. ONDAS knows of approximately 10 studies sponsored by the likes of the European Space Agency, research agencies, aerospace companies, satellite manufacturers, service providers, and wireless operators, all of which conclude a GEO-based satellite radio service will not work in Europe unless it relies on several thousand terrestrial repeaters. We have faith that the hundreds and thousands of hours of testing on HEO- and GEO-based systems in the U.S. are accurate in predicting a service availability of 99.7 percent for a HEO-system versus approximately 91 percent for a GEO-system for latitudes similar to Europe (i.e., measured data in Canadian drive tests with highly calibrated equipment).

ONDAS Media has entered into direct contractual mandates from our automobile customers that state specifically that their millions of vehicles will only be serviced by a system that includes a signal coming from HEO- based satellites. The customer is always right — all our customers demand the highest quality service and know that a GEO-only service signal will be greatly inferior in quality. This is scientifically proven fact.

ONDAS Media does see certain benefits of combining GEO- and HEO-based satellite services. That’s why the Company supports and implements a hybrid network architecture approach to ensure uninterrupted signal quality. This is not new. In the U.S., the combined networks of Sirius and XM consist of 11 satellites in HEO and GEO orbits, 25 MHz of spectrum, as well as additional terrestrial frequencies. ONDAS Media is aiming to operate a similar, although smaller scale, network across Europe. To that end, we have recently authorized our satellite manufacturer to develop state-of-the-art satellite infrastructure for our HEO-network filed in Spain. As to the hybrid complement, we have entered into an agreement with the Radio Communications Agency in the Netherlands, which allows ONDAS Media to place up to two geostationary satellites in premium orbital positions claimed by the Netherlands.

The ONDAS Media network is “hybrid” in terms of orbital physics and frequencies and intends to take advantage of the S-band spectrum to deliver content services to automobiles across Europe. The automobile manufacturers use S-band for Sirius Satellite Radio and XM Satellite Radio in the U.S. and are already familiar with the smaller antennas, which can be integrated into vehicle designs more easily. Meeting the needs of the automotive industry is key because this is how consumers receive a significant portion of radio content.

Our current agreements provide access to as many as 10 million subscribers. Car company’s are unified in their belief Europe should use the similar S-band frequencies in order to minimize the physical re-design and re-qualification of equipment for their vehicles.

On the other hand, some markets such as navigation units distributed in retail but with “ONDAS Inside” chipsets, and even handheld mobile phone-based units, may all benefit that much of the core processing and antenna reception technology is already designed and in production in the L-band frequencies — or will be in the future. Additionally, retail units (aftermarket or any units that are not factory-installed) do not present the difficult and costly challenge of re-design and re-test that’s been experienced by the car industry.

In conclusion, ONDAS Media believes if we put aside philosophical technology debates and open our minds to what our customers are saying and, frankly, demanding, we can build a consortium of companies that have the appropriate motivation and vision to make satellite radio a reality in Europe. This team of consortium members is currently being built and already consists of some of the most prominent car makers, satellite makers, and music companies in the business — we heartily welcome others who wish to participate in this digital radio revolution.

About the author
David Krueger is the Chief Executive Officer of ONDAS Media and he has 23 years of experience in satellite systems development. He has directly managed the development, launch, and operations of 67 satellites and 16 launch vehicles. Mr. Krueger and his firm advised major satellite telecommunications companies and other corporate clients in satellite imaging as well as broadband and mobile satellite-based telecommunication systems. Mr. Krueger led the development of the Global Radio (Digital Satellite Radio) concept and detailed design, managing a team of several contractors. He was a senior manager at Motorola’s Satellite Communications Group, pioneering the successful delivery of the Iridium program and he led the technical implementation of the Iridium domestic launch program and the formulation of the operations and maintenance design for the entire system. He subsequently directed a team of Motorola engineers in the design and development of the follow-on “Iridium Next” project, with full responsibility for all aspects of the program including core research. Mr. Krueger holds a Bachelor of Science Degree from the United States Air Force Academy (1982) and he worked 10 years for the National Reconnaissance Agency, leading the development of advanced systems.