SES Americom kills wholesale IPTV offering due to slow adoption

SES Americom today announced it will cease providing its IPTV wholesale programming service, IP-Prime, to North American telcos by July 31, 2009. SES attributed the termination to slow adoption of IPTV by small and medium-sized telecom operators, its primary customer base, as well as what it called a difficult market outlook for this kind of service.

The announcement came just one week after SES Chief Financial Officer Robert Kisilywicz touted the success of the IP Prime platform to attendees at UBS’s annual global media and communications conference. He said the company’s content aggregation business was thriving due to demand for high-definition programming and the long-term agreements it had in place with programmers. He described the business outlook for 2009 as both rare and positive despite the economic downturn. While the termination of IP-Prime is surprising to some considering the rosy picture Kisilywicz’s painted, it will not affect the company’s financial guidance for this year or the next, according to an SES Americom spokesman.

“This does not mean that we no longer believe in satellite’s role in an IPTV environment; we do very much,” the spokesman said. “However, the way the platform was positioned and set up, we just cannot see how we are going to get it to operate according to our self-set criteria for return on investment. We are not getting there, because we have to take into consideration that we are not only talking about the physical platform in Vernon Valley with SES Americom, but we also have a satellite aspect behind it, AMC-9. This satellite is 22 transponders that have been distributing programming okay but to a virtually non-existent audience.”

In the past year, IP-Prime has inked IPTV signal delivery agreements with 70 small telecom operators, 37 of which have reached commercial deployment. Still, the company estimates the end-subscriber base remained at less than 10,000 at the end of November. According to the spokesman, if a third party expresses interest in the IP-Prime platform, or contributing to it, SES may reconsider the service, but – in today’s market – terminating it made the most sense.

“I think that SES Americom is, at its core, a satellite company,” said Bernie Arnason, managing partner at Pivot Media. “I still believe in the concept of IP Prime for sure, in terms of what it is trying to accomplish, but the reality of SES – and this is very specific to SES -- the reality of their core competency hit home. They are a satellite company; they are not an IPTV systems integration company.”