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Interviews
10.02.2010
Satellite and cable have different paths

In the market of digital television and Internet the main positions are occupied by cable TV operators, Internet providers and companies providing access via satellite. On the place of satellite TV and the Internet on the mass market, and what are the expected prospects of the industry we spoke with Director of Marketing Department of Orion Express Maria Zhilina.

IP-News: Maria, tell us about the existing infrastructure and what services the company Orion Express provides on it.

Maria Zhilina: Historically, the company's business is distribution of channels in the network of cable operators. Today there are 16 channels of various genres. In 2007, appeared DTH - Direct-to-Home - Satellite TV for individual customers - residents of houses and apartments.

As of today, we provide services from two satellites: Intelsat 15 (85 ° E) and Express AM3 (140 ° E). With the Express AM3 Orion Express broadcasts package of television channels, specifically designed for residents of Siberia and the Far East – “Orient Express”. Federal channels in this package are presented in versions +4, 5 and +7 hours from Moscow time. In September 2009, also on the Express AM3, we, together with HeliosNet, began to provide a one-way satellite Internet. But this is more a marketing offer  - when you connect two simultaneous services - TV “Orient Express” and Internet Access on the tariff “Flight” - the subscriber will receive 20% discount on each service.

In the first quarter of 2010 on a new spacecraft Intelsat 15 (85 ° E) Orion Express launches the project of Digital TV “Continent TV”. Area of broadcasting covered by the spacecraft suggests that satellite television “Continent” will be available for 99% of the population of Russia.


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Зона покрытия Intelsat 15



IP-News: When you are going to begin to provide services of “Continent TV”?

Maria Zhilina: Launch of Intelsat 15 was implemented on November, 30 in last year - it is a brand new satellite.
In order to begin broadcasting a package of TV channels, in addition to launching the satellite itself must be implemented a number of other operations. Technical services need time to form and raise on the satellite the television package, test the signal and allow the testing for our partner installers. We plan to execute the whole range of activities in February and to connect the subscribers in March.

IP-News: Are you going to transfer your subscribers to the “new” satellite for the possibility of providing services of “Continent TV”?

Maria Zhilina: Yes, the transition of subscribers is included in our plans.
The new draft stipulates new equipment - receivers, specially designed for “Continent TV”. The new equipment, which is represented by two receivers (Continent CSD-01/IR and the Continent CHD-02/IR) allows wider opportunities. One model of the receiver is in standard definition SD, the other - for the reception of signals with high-definition picture (HDTV).

We do not set ourselves the goal - to transfer all subscribers. For receive the services of “Continent TV” subscriber will have to buy all the equipment by himself, but we offer a program that will reduce costs as a part of the project.

IP-News: What is market average ARPU for the services of satellite television?

Maria Zhilina: ARPU of subscribers of Orion Express is about 220 rubles.
However, I wouldn’t say market’s average ARPU because of too different target audience of satellite TV operators: some are Low Cost-oriented, others aim at Premium. So I wouldn’t try to measure the average temperature in the hospital.

IP-News: How much does the user equipment to connect to satellite TV cost?


Maria Zhilina: A set of equipment includes a satellite television receiver (receiver), antenna with a converter, card of access and various communication components (cables, etc.).
Market prices for subscriber equipment are ranging from 6 - 10 thousand rubles depending on the manufacturer and its functional.

Recommended price for a set of equipment of “Continent TV” – 7,400 rubles. This price includes annual subscription.

IP-News: As you know, the basic threshold of connecting new subscribers to services like satellite TV and IPTV is the cost of equipment. Internet service providers have solved the issue by offering users lease or loan. Are you going to implement similar programs?

Maria Zhilina: We monitor the initiatives of our colleagues in the market.
Orion Express now isn’t implementing such programs, however, in the future we are considering that possibility.

IP-News: Judging by the pricing policy, satellite TV can seriously compete with IPTV.

Maria Zhilina: Satellite television will be important where the penetration of Internet providers and cable television is at a low level.
Obviously, if the house is connected to a cable network, for subscriber it would be more profitable to connect to cable TV, thus saving on the cost of the antenna and  installation. But in the case with satellite TV, there is one important argument: a set of satellite equipment - it is a personal set of the subscriber, just as his refrigerator or washing machine. The subscriber can use the same TV or the Internet anywhere in the residence (for example when moving to other residence or during the summer outside the city).

IP-News: And what about the Internet? Here is the same situation?

Maria Zhilina: Yes, satellite Internet will also never compete with wired one. On the territory of Siberia and Far East our joint proposal with HeliosNetis in effect: connecting to the package tariff (internet + TV), the subscriber receives a 20% discount on both services. As a result, the cost of satellite TV after the discount will be 208 rubles, and the Internet - 869 rubles. The offer is valid in Siberia and the Far East.
Here, the average cost of the Internet is in the area of 1 thousand rubles. In this situation, you can talk about competition, but only because of the area’s population density, and, respectively, the low level of Internet penetration.

The main drawback of a one-way satellite Internet is the fact that for its use upstream bandwidth is required, which is organized through the Dial-up or through GSM-networks, which means low speed for uplink.
For the organization of the same bi-directional satellite Internet one needs to install equipment worth about 90 thousand rubles - this service can afford only little proportion of users.

Therefore, satellite Internet is relevant only in places where there’s no immediate plans for development of wired Internet.

IP-News: It turns out that satellite operators can compete only in areas remote from metropolitan areas with low population density?

Maria Zhilina: No, not only.
As we know, no city in Russia is covered at 100% by cable networks. Therefore, in this case, the niche for satellite operators are all sorts of “white spots”. Almost half of Russia's population lives in small towns (with population of less than 50 thousand inhabitants), in towns and villages. The appearance in their town or village of operator of cable TV, or IPTV is even more unlikely. Satellite television also can be set anywhere, if there is electricity supply.
 
IP-News: How would you assess the competitive situation in the market of satellite TV?


Maria Zhilina: The main market players are NTV Plus, Tricolor TV, Orion Express. Each company has its own niche of clients. For example, Tricolor TV serves Low Cost segment, in connection with which the operator focuses on the free package and offers a low cost services. NTV Plus specializes in premium-class users.

The company Orion Express keeps oriented to the average buyer.
However, we also provide 10 channels for free. The volume of our subscriber base is of some 100 thousand active users.

IP-News: Which means of providing satellite TV are most effective?

Maria Zhilina: I can tell about the concept of “Orion TV”: our advertising budget is divided between TV commercials and advertising or joint action with our regional partners.


Image ads will be sold only when the brand “Continent TV” will be familiar prove itself to our partners, in this case the mass market will react to it.

by Darya Trenina




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10.02.2010
Satellite and cable have different paths
   In the market of digital television and Internet the main positions are occupied by cable TV operators, Internet providers and companies providing access via satellite. On the place of satellite TV and the Internet on the mass market, and what are the expected prospects of the industry we spoke with Director of Marketing Department of Orion Express Maria Zhilina.
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