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Satellite television
| When: 1962 | |
| Where: USA and Europe | |
| Why: Satellite TV allows widespread delivery of programming without the need for expensive infrastructure | |
| How: Rapid advances in satellite technology meant that science fiction became reality | |
| Who: NASA and private consortiums | |
| Fact: By far the biggest satellite TV provider in Europe, Sky TV is in 36% of UK households |
Walk down any street in the UK, and if you didn't spot at least a few of the distinctive dishes mounted to the sides of houses, it's fair to say something would be amiss. With the potential to bring a complete viewing experience to even the most obscure corners of the globe, and enabling instantaneous live transmissions in a way once thought impossible, the satellite has changed the way we think about television.
The background
The first person to suggest the idea of satellites being used for the relay of information was in fact the science fiction writer Arthur C. Clarke in 1945, 12 years before the first satellite was even sent into orbit. In his piece entitled 'Extraterrestrial Relays', he suggested that information could be beamed up to space stations in orbit and dispersed over a wide area, enabling instantaneous worldwide communication. The article was purely speculative – but uncannily similar to how satellite television ended up operating.
The first-ever orbital satellite, Sputnik I, was launched by the Soviets in 1957, followed closely by the USA's Explorer 1 in 1958. Almost immediately, scientists began exploring the concept of using these heavenly bodies to relay data over a wide area, using the satellites as a 'mirror' to reflect focused rays sent from Earth and dispersing them across the globe.
Just a few years later, in 1962, concept became reality, with the first-ever satellite television signal broadcast from Europe across the Atlantic via the AT&T-owned Telstar satellite. At the same time, NASA was experimenting with the concept of 'geosynchronous' satellites – satellites that would move at the same speed as the Earth's rotation, enabling them to 'hover' over the planet and deliver a constant, uninterrupted communication to a specific area. The first such satellite, the Syncom 2, was launched a year later, in 1963.
JPL team (part of NASA) works on complex pieces of Explorer 1.
Hot on the heels of these early experiments came the next rapid advances towards satellite television – the launch of the first commercial communications satellite (IntelSat 1) in 1965, followed by the first national satellite-based television network in 1967 (the Soviet-run Orbita) and the first commercial television satellite launched from North America (Canada's Anik 1, launched in 1972).
The early satellite broadcasters relied on the only model that was feasible at the time – they would broadcast direct to Earth-based receiver stations owned by the cable companies, who would then deliver the picture via the older cable system to their subscribers. The first of these satellite-to-cable transmissions came in the landmark year of 1976, when Home Box Office (HBO) broadcast the heavyweight boxing match between Frazier and Ali, 'The Thrilla in Manila', to subscribers all over the USA.
The first of these satellite-to-cable transmissions came in the landmark year of 1976, when Home Box Office (HBO) broadcast the heavyweight boxing match 'The Thrilla in Manila' to subscribers all over the USA.
The year 1976 was a landmark year for another reason; it marked the inception of Direct-to-Home broadcasting (DTH), a fundamentally different way to deliver television to consumers, and still the basis for the current satellite television model. It came from an unlikely place – the garage of Stanford professor and former NASA scientist H. Taylor Howard. Whilst experimenting with video transmissions, Howard created for himself a large receiver dish made out of used microwave parts. He found that the dish was able to pick up the satellite signal intended for the cable companies and used his new invention to watch the cable service HBO for free. He attempted to reimburse them, sending them a cheque for $100 to cover the movies he had watched – only to be returned the cheque and informed that HBO was concerned only with the large cable companies and was not seeking remuneration.
The first geosynchronous Satellite.
This innocuous rebuttal proved to be a huge missed opportunity for television networks, as the next years saw the explosion of free satellite television, a model that left them firmly out in the cold. H. Taylor Howard co-founded Chapparal Communications in 1980 with engineer Bob Taggart in order to sell their home satellite receiver dishes. When they began, the dishes they sold were prohibitively expensive at over $10,000 – but six years later the average price of a dish had dropped to around $3,000, the free satellite television market was booming and Chapparal was worth $50m. For customers, the advantages over cable television were plain; the initial setup costs may have been much higher, but in return the customer was able to receive over 100 channels from different providers, apparently for ever, at no cost – and the removal of the intermediary cable service also meant significantly better picture quality.
All of this, of course, horrified the networks, who were incensed that the service they were providing at high cost to themselves was being watched by millions of people, none of whom provided them with a single penny. They set about trying to reclaim these lost profits by lobbying governments, and in 1984 were granted permission to encrypt their satellite feeds through the US Cable Act. Starting with HBO in 1986, this was the beginning of the end of satellite dish owners being able to watch television for free. This, along with an accompanying crackdown on illegal decoders, saw the market for satellite systems plummet during the next four years, as cable made a resurgence.
By 1990, however, with free satellite television well and truly killed off, the stage was set for companies to provide their own brand of licensed direct-to-consumer satellite television – the Direct-Broadcast Satellite (DBS). DBS used more powerful satellites, meaning that much smaller dishes were needed; from just 18 inches in diameter as opposed to the two- to five-metre giants needed to receive Taylor's DTH. The mini-dish was connected to a set-top box which decoded the feeds, usually through a card plugged into the device that was normally paid for with subscription charges. Starting with Primestar's inaugural service in the USA, this marked the moment when satellite television became a major commercial success for the providers.
Commercial impact
The history of direct-to-consumer satellite television in the USA is told through several companies: initially Primestar pioneered the service, but it gave way in the mid-1990s to DirecTV and others.
In the UK, however, commercial satellite television has been dominated since its birth by one name: British Sky Broadcasting (BSkyB), the corporation that continues to be the market leader in the sector by some distance. Sky Television Plc, owned by News Corporation's Rupert Murdoch, which owns Fox in the USA, started its DBS service in 1989, broadcasting four free channels from the Astra satellite, but the service was not popular and failed to return a profit. A year later, in an attempt to shore up its finances, Sky decided to join forces with fellow struggler British Satellite Broadcasting. The merger was a success and very likely rescued the fortunes of both companies; whilst Sky's overheads were much lower, because it did not own or maintain its satellite and was based in an industrial estate, it was let down by a lack of advertising revenue, something British Satellite was able to provide with its more prestigious contacts. BSB's own satellites were shut down, the service was moved to Astra, and BSkyB was born.
In 1992, Sky secured a major coup by gaining exclusive live broadcast rights to the inaugural FA Premier League in a £340m deal.
The next few years saw changes and a rapid phase of growth for BSkyB, admittedly helped along by hefty injections of News Corporation money. In 1991, the Sky Movies channel became the first to use encryption technology to operate along a subscription model, with others soon following. In 1992, Sky secured a major coup by gaining exclusive live broadcast rights to the inaugural FA Premier League in a £340m deal; this represented a significant bargaining chip (Murdoch described it as a 'battering ram') to attract subscribers. The year 1992 also marked a turning-point for the company as it began to turn in an operating profit. An indication of how much Sky had grown in just six years came in 1996, when over half a million subscribers tuned into the Bruno vs Tyson heavyweight boxing match, broadcast on pay-per-view.
A further milestone was 1998, when the Astra 2A satellite was launched in a new orbital position. This allowed Sky to begin transforming its previously analogue service to Sky Digital, a new way of broadcasting that had the potential to deliver many hundreds of video and audio channels to consumers; and paving the way for high-definition broadcasts in the future. A year later, it increased sales with a free mini-dish-and-digibox deal, and by 2003 it passed the remarkable milestone of seven million subscribers.
With the company firmly established as top dog, it began to focus on greater innovation in its products – Sky+, launched in 2001, allowed subscribers to pause, rewind and record live TV, a feature that now ships as standard on many pay-TV packages, and in 2004 it was the first in the UK to introduce broadcasting in high definition. In 2010, it was also the first to launch a 3D service.
What happened next?
British Sky Broadcasting is still growing, and continues to lead the market. In 2010 it passed 10 million subscribers, the first and currently only company in Europe to do so, and is now in over a third of households in the UK. In June 2010 it bought out rival Virgin Media Broadcasting for an estimated £160m, further consolidating its advantage over its competitors. In that same year, it reported revenue of almost £6bn; of which £855m was profit.
In fact, Sky's dominance has been such that concern over the health of the industry has arisen, with a 2010 Ofcom report requiring the company to wholesale its exclusive sports and film channels to other providers such as ITV and Virgin, after it found that there was a danger of a monopoly developing. Further issues have arisen over majority owner Rupert Murdoch's bid to mount a full takeover of the company, taking it off the stock market; numerous media groups have lobbied the government over the issue, describing the potential sale as a serious threat to media plurality.
And it's not just Sky's power that is a source of concern for the satellite TV industry. Over half of households have satellite in the UK, and there are worries that demand may be reaching a plateau, with the growth in subscribers slowing down across Europe. After countries complete their digital switchover, people will be able to watch a greater selection of channels than was offered by terrestrial satellite TV and may feel less of a need to switch to satellite.
The traditional subscription payment model of satellite TV may also see a change in the coming years, with the return of the early 1980s model in Freesat, a service provided by BBC and ITV, which allows customers to receive satellite channels for free after paying for the dish and receiver (Sky also has a similar service). Although any sustained threat to paid satellite from Freesat is in its infancy, with just over 1% of households using it, it may be the case that the value offered by such services will eventually undermine the paid subscription model.
A real threat to satellite TV comes with the rise of the internet. Previously, of course, customers were restricted to watching television on their TV set and simply had a choice between terrestrial, cable and satellite. But with both BT and Virgin rolling out high-speed fibre optic lines across the country, television delivered via the web is becoming a reality; Sky already allows all its subscribers to watch a selection of channels live online, and the major networks now operate on-demand online services where viewers can revisit shows at their leisure. It could be that in the future, given that it is already in many homes, the web may prove to be the smart choice for watching television for many; diminishing satellite's influence.
The traditional subscription payment model of satellite TV may also see a change in the coming years, with the return of the early 1980s model in Freesat ... which allows customers to receive satellite channels for free after paying for the dish and receiver.
As the world is introduced to high-speed internet, it also marks the beginning of a new challenge to satellite in fibre optic television. The technology takes advantage of the bandwidth offered to deliver greater interactivity than can be offered by satellite, giving the customer more control. Currently, Virgin is the only operator of fibre optic, and again the technology is just beginning to be used, so it remains to be seen whether this is a serious game-changer; but the concept of delivering internet, phone and TV through one simple port, without the need for installation of a dish, may well turn out to be an appealing one for many people.
In the face of all this, one thing seems clear – BSkyB's adaptability and continued innovation are set to continue its strong presence into the future. As for satellite TV itself, it remains the most popular choice for television, but only time will tell whether it will weather the storms of new technologies in the years to come.