The commercialisation of the venerable satellite provider Intelsat is being welcomed by both the government and the private sector in New Zealand.
Last month, Intelsat spun off a fully commercial subsidiary, New Skies Satellites, which is not subject to the restrictions and protections which apply to the original global co-operative founded by a group of governments in 1964. Intelsat now has 142 member nations.
In a global market looking to satellite to break the bandwidth bottleneck, Intelsat has lost ground to aggressive commercial satellite operations such as PanAmSat, which now provides a 56Mbit/s "pipe" to the Internet Group (Ihug) and recently contracted to supply a 45Mbit/s feed to Australia's OzEmail.
Ihug director Tim Wood says he met with Intelsat representatives recently "looking at the possibilities of doing business. They were pretty disorganised."
Wood says Intelsat's ownership structure, which has required consultation with signatories in different countries, has until now made it difficult to do business with. He says his company is interested in Intelsat because the Intelsat signal is "a bit stronger on the ground in New Zealand" than PanAmSat's.
"It's not quite the same structure – PanAmSat has one footprint for Australian and New Zealand, where Intelsat has separate beams for each territory," says Wood. "Technologically, they'd have a good offering if they can get round all this signatory stuff.
"It might make it a bit more competitive pricewise, too. They've obviously seen PanAmSat make truckloads of cash."
Communications Minister Maurice Williamson also expects price benefits "throughout the region" as a result of the changes and expressed approval of "competitive safeguards being put into place to "to ensure that there is an 'arms length' relationship between New Skies and Intelsat.
"There also remains an ongoing need to progress further reform of Intelsat,"says Williamson. "The international treaty-based structure of Intelsat was once the only means to ensure global access to reliable international satellite telecommunications circuits.
"Now new technologies and the liberalisation of many telecommunications markets worldwide mean that private companies not only provide those services, but in addition offer a range of competitive options for users."
Under the new structure, ownership in New Skies is maintained by signatories (in this country, Telecom) and investing users (TVNZ and Gennett Services), who will eventually be able to increase their holdings in the spin-off.
Intelsat has picked an initial seven New Skies board members (none of them on the Intelsat board) and will appoint a CEO and a CFO at the end of this month. In July, ownership of five existing satellites and one due to launch next year will be vested in the new company.
An IPO of at least 25% of shares in the company will be held next year, and is expected to result in a considerable natural dilution of New Skies initial signatory ownership in favour of private investors.