Telesat. President & Chief Executive Officer March 31, 2009
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Daniel S. Goldberg Telesat. President & Chief Executive Officer March 31, 2009 Ms. Chantal Beaumier Director, Space and International Regulatory Activities Radiocommunications and Broadcasting Regulatory Branch Industry Canada Room 1564C-Jean Edmonds Tower North 300 Slater Street Ottawa ON K1A0C8 Dear Ms. Beaumier Re: Application to Industry Canada for the 17 GHzBSS 111.1°WL and 113°WL Orbital Positions Telesat Canada is pleased to submit its application to develop the 17 GHz BSS frequencies at both the lll.lcWandthe 113°W orbital positions. As noted by Industry Canada in its January 2009 call for applications, these orbital positions are valuable for meeting the needs of Canadian satellite users, in particular for direct-to-home satellite use. The department also noted the use of either of these licences for the delivery of service in Canada is interdependent and inextricably linked to the other. For this reason, Telesat is applying for both licences as a single package. This application pertains to spectrum which is critically important to the Canadian broadcasting industry and the expansion of its program offerings to Canadian viewers. Furthermore, if this spectrum is not developed in the near term, Canada risks losing this valuable resource to another country. As outlined in the attached application, Telesat has developed a comprehensive plan to develop this spectrum and its award to Telesat will bring numerous public interest benefits to Canadians. hi preparing this application, Telesat has followed the requirements set out in the Department's January 2009 Notice No. DGRB-003-09 - Call for Applications to License the 17 GHz BSS Spectrum at the }11.1°Wand 113°W Orbital Positions. Should the Department require further information on any aspect of this application, please contact: Mr. Ian Scott Executive Director, Government and Regulatory Affairs Telesat Canada 1601 Telesat Court Ottawa ON K1B 5P4 Tel: 613-748-0123 Fax: 613-748-8825 e-mail address: [email protected] 1601 Telesat Court, Ottawa, Ontario, Canada K1B 5P4 Tel: +1-613-748-8744 Fax: +1-613-748-8804 Email: [email protected] /Page 2. Telesat Canada claims confidentiality with respect to the contents of its application. This document contains sensitive commercial and technical information whose disclosure could reasonably be expected to confer a competitive advantage on other parties, as well as prejudicing Telesat's ability to negotiate in future with certain customers and suppliers referenced therein. Telesat claims all protection available under the Access to Information Act. Telesat is providing an abridged version of its application for public disclosure, as well as a non-confidential Canadian Satellite Capacity and Services Plan for review by the Canadian satellite user communit YtfdVrs truly, Daniel S. Goldberg enclosure TELESAT CANADA Application to Industry Canada for the 17 GHz BSS 111.1°WL and 113°WL Orbital Positions March 31, 2009 ABRIDGED CONTENTS Executive Summary 1.0 Organization of the Application 2.0 Telesat’s Competencies and Qualifications 2.1 Telesat’s Proven Track Record 2.2 Technical Competency 2.3 Operational Competency 2.4 Institutional Competency 2.5 Financial Qualifications 2.6 Eligibility 3.0 Market Overview and Analysis 3.1 # 3.2 # 3.3 # 3.4 # 4.0 Business/Capacity Services Plan 4.1 Capacity Plan 4.2 # 4.3 Satellite Design and Coverage 4.4 Marketing Approach 4.5 # 4.6 Summary 5.0 Technical Plan 5.1 # 5.2 # 5.3 # 5.4 # 5.5 # 5.6 # 6.0 Benefit to Canadians 6.1 Meeting Canadian Capacity Requirements 6.2 Securing Canadian Access to Orbital Resources 6.3 Spillover Benefits to Canadians 6.4 Promotion of Canadian Satellite Policy Objectives Appendices Appendix 1 Declaration of Ownership and Control Appendix 2 Telesat’s Canadian Satellite Capacity and Services Plan for the 17 GHz BSS Orbital Resources at 111.1°WL and 113°WL [Public Version] Appendix 3 Financial Statements of Telesat Canada 2004-2007 Appendix 4 Financial Statements for PSP Investments 2005-2007 Appendix 5 Financial Statements for Loral Space & Communications Inc. 2005-2007 Application for 111.1 °°°WL/113°WL 17 GHz BSS ABRIDGED EXECUTIVE SUMMARY In this application, Telesat seeks authorization to develop the 17 GHz BSS frequencies at both the 111.1°W and the 113°W orbital positions. As noted by Industry Canada in its January 2009 call for applications ( DGRB-003-09 ), these orbital positions are valuable for meeting the needs of Canadian satellite users, in particular for direct-to- home satellite use. The department also noted that the use of either of these licences for the delivery of service in Canada is interdependent and inextricably linked to the other. For this reason, Telesat is applying for both licences as a single package. The 111.1°WL position is an integral part of the Canadian broadcasting neighbourhood that Telesat helped to create in this portion of the North American orbital arc. One of Telesat’s largest customers, Shaw Broadcast, operates from this position (and the neighbouring position of 107.3°WL) to deliver its services across Canada using Ku-band capacity on Telesat’s Anik F2 (and Anik F1R) spacecraft. These services include Shaw’s Star Choice DTH services, its Satellite Relay Distribution Undertaking (“SRDU”) and its broadcast delivery services. The creation of an orbital arc DTH neighbourhood is of critical importance due to the implications for user terminal design. User terminals must be small, inexpensive and are deployed in very large numbers. However, all conventional Ku-band capacity on Anik F2 at the 111.1°WL position (and on Anik F1R at 107.3°WL) is currently being utilized. Consequently, Telesat must access additional spectrum resources if it is to serve the future demand requirements of the Canadian broadcasting industry operating in this orbital neighbourhood. The band which these customers want first to be developed is Extended Ku-band. Extended Ku- band offers the best near -term solution to accessing required additional capacity in a reasonable timeframe and at an affordable price. However, the 17 GHz BSS is a natural candidate for broadcasting capacity expansion at the 111.1 °WL/113°WL positions, and is well-suited to address its broadcast customers’ future demand requirements. # # # Telesat Canada - 1 - March 2009 . Application for 111.1 °°°WL/113°WL 17 GHz BSS ABRIDGED # Canadian Capacity Demand Drivers Telesat’s market analysis indicates that Shaw Broadcast and Canadian broadcasters will have substantial demand for new satellite capacity in the 107.3°-111.1 °WL/113°WL neighbourhood over the next several years, driven largely by the increasing popularity and significant bandwidth requirements of High Definition (“HD”) television programming. The following main demand drivers have been identified for use of 17 GHz BSS frequencies: • Conversion of programming services to HD format: Currently, a transponder can transmit a maximum of 10 to 12 Standard Definition (“SD”) TV programming channels, whereas this number falls to a maximum of 4 to 6 channels per transponder for programming in HD format, assuming the full deployment of next generation transmission standards. While it is expected that the full conversion of the existing Canadian broadcast distribution undertaking (“BDU”) base of some 400-plus programming services from SD to HD format could take up to 10 years to complete, the bulk of that conversion is expected to occur within the next three to five years. Conversion of the existing base of programming services to HD format would require on the order of twice as many transponders in the next five years than are used today to deliver this programming. • Growth in the existing base of programming services: Over the past several years, approximately 30 new specialty and pay-per-view programming services have been licensed each year by the CRTC for distribution in Canada. While it is unlikely that all new services will be launched commercially, a significant number of them will, likely in HD format. Based on next generation transmission standards, transponder demand will increase by one transponder for every 4 to 6 new programming services distributed via satellite (i.e., between 5 and 8 additional transponders would be required each year to accommodate the yearly introduction of 30 new programming services in HD format). While the current economic situation may temporarily slow the number of new licences, there is no indication that the overall trend will change significantly. Telesat Canada - 2 - March 2009 . Application for 111.1 °°°WL/113°WL 17 GHz BSS ABRIDGED • Development of new broadcasting applications : The surge in new broadcasting service applications, such as mobile television, is expected to continue over the next few years. While no precise Canadian demand estimates are presently available, it is expected that satellite technology, with its inherent advantage in the delivery of broadcasting services over a wide geographic area, will play an increasingly important role in the carriage of these services, likely as part of hybrid satellite/terrestrial networks. • Demand from outside Canada : In addition to the identified requirements from the Canadian broadcasting community for spectrum at this location, Telesat expects that capacity in this frequency band will be in demand from non-Canadian markets. The total new satellite transponder capacity requirements attributable to these demand drivers therefore promise to be significant. Telesat’s Satellite Capacity Plan To address these new capacity demand requirements, Telesat has prepared a comprehensive Satellite Capacity and Services Plan for the optimal development of the full complement of 17 GHz BSS frequencies available at the 111.1 °WL/113°WL position, and the Extended Ku-band frequencies at 107.3°WL and 111.1°WL, where Telesat already holds the authorization. Based on current market projections, payloads in both bands will be required to address rapidly rising Canadian broadcasting demand requirements over the medium to long term.