Even though the weakly-worded press release would suggest otherwise, you can bet the selection process for Harmonic to win the C-band contract at SES was an arduous one – given the size of the prize at stake estimated to be in the region of $40 billion (of which SES is targeting 10%). It also points to a blossoming relationship between the two video delivery heavyweights that has all the ingredients to define a new era for satellite technology.
Harmonic has been brought in to “fast-track” the deployment of technology upgrades to free up C-band spectrum for allocation instead to 5G networks, while maintaining quality of critical video services for existing SES customers on C-band – primarily DTH TV services. Describing the collaboration between Harmonic and SES as a fast-track deployment is reflective of the general rush to clear satellite players from the C-band spectrum two years ahead of what was initially planned. The FCC has floated additional incentive payments totaling $9.7 billion to entice the likes of SES into a hurried retreat from C-band – with the US government stopping at nothing in the battle against China for the crown of the world’s 5G frontrunner.
Harmonic’s XOS advanced media processing and XOS edge transcoding products have made the cut for installation in remote sites for primary video feed distribution. The Electra XOS is designed to process delivery signals across DTH, DVB-T2, IPTV, cable, HbbTV and OTT. Harmonic’s Pure Compression Engine powers high quality video at any bitrate and optimizes CPU power consumption, with AI-based algorithms tuned to crunch bitrates even for existing MPEG-2 applications.
UHD is of course a core component of the XOS offering, suggesting certain UHD DTH TV services will remain active following the reallocation of C-band spectrum. It supports multiple UHD 10-bit transcoding in a single 1-RU server in addition to SD and HD encoding for multi-profile encoding.
For OTT video delivery, Harmonic’s EyeQ technology comes into play in XOS, using content-aware encoding to simplify OTT architectures with a built-in OTT push packager supporting DASH and fragmented HLS in CMAF. On cable, terrestrial and satellite networks, XOS performs statistical multiplexing for optimal bandwidth usage, and Harmonic encourages customers to connect the Electra XOS video processor to the Harmonic Hub for access to faster software upgrades, direct connection to Harmonic DevOps, and extension to new services or disaster recovery.
Back to the C-band topic at hand now. SES filed its transition plans to the FCC on June 19 this year, along with Intelsat, in documents showing the sheer scale of the operation. Some 60,000 new blocking filters will be installed in 3,500 cable headends and 13,500 Earth stations to limit interference, while SES intends to build six new satellites and Intelsat requires seven – at a cost of approaching $1.7 billion each. The plan is that 280 MHz of the 500 MHz in the C-band will be reallocated to cellular services and 200 MHz remain available for satellite services, such as DTH TV, leaving 20 MHz as a guard band between the two.
Disruption could be significant, with SES preparing to repurpose 114 services on its US satellites and a further 82 internationally. This will involve switching from MPEG-2 compression to MPEG-4, and is likely where Harmonic’s encoding expertise will come in handy.
Our issue is that ever since SES agreed to vacate C-band spectrum, the Luxembourg-based fleet operator has waxed lyrical about how it will make the transition while protecting broadcast services – without once stating specifically how it plans to do this. We suggest SES doesn’t even know itself how to minimize disruption, which is again where we see Harmonic playing a vital role.
Then, only last week, SES filed a $1.8 billion claim against Intelsat’s bankruptcy proceedings case, in response to an alleged breach of contract. The pair had originally agreed to split the control of the C-Band Alliance and its assets, but Intelsat enraged SES when it began asking for changes to the FCC’s accelerated relocation payments.
Meanwhile, operators such as Verizon have argued that part of the 6 GHz band – the unlicensed band which was recently opened up for WiFi 6 services – should be allocated to 5G, due to the apparent difficulties in obtaining additional mid-band spectrum for 5G, despite the FCC slicing off a 280 MHz chunk in C-band spectrum for auction. Verizon has gone quiet here lately.
Additional ripple effects from 5G will be felt in C-band satellite distribution, with a fast-decreasing amount of C-band spectrum which is very desirable for the mobile sector, as well as highlighting the need for efficiency improvements in encoding. In addition, 5G could be another catalyst for the shift from AVC to HEVC, in turn encouraging efficiency improvements and statmux developments.
Its significant SES deal comes ahead of Harmonic’s second quarter results event, which is now just days away. The company has hardly come up from air among all the new deployment announcements this year, so it should be a fruitful period for the vendor, although looking back to its first quarter earnings shows things unfortunately aren’t quite so simple.
As with most companies, Harmonic experienced certain headwinds during the early stages of the Covid-19 pandemic, recording a 2.1% revenue decline in Q1 2020 to $78.4 million, while video revenues tanked 19% year on year, accounting for $54.4 million of total revenue for the first quarter. We would be pretty surprised if Harmonic didn’t make a speedy recovery during Q2, given the influx of custom in recent months.