Understanding the “satellite ping” conclusion…

Posted in Aeronautical, Inmarsat, Operators, Services at 9:06 pm by timfarrar

Over the last week a great deal of useful data has been accumulating in the comments section of my previous blog post on locating satellite pings from MH370 and I’ve greatly enjoyed all the input from many dedicated contributors across various fields of engineering and aviation. If you’re visiting for the first time then you might want to read my original primer on pings first.

In this post I’m going to try to distill this information and explain what we’ve been told today, since there is still plenty of confusion out there, and address one thing that we haven’t yet been told, but which should be able to be determined from the analysis that has been conducted. Note that the diagrams shown below aren’t mine – I’ve provided links to original sources in the supporting text.

Almost immediately after the plane disappeared, Inmarsat discovered that the satellite terminal on the plane had continued sending “pings” to the satellite every hour. This was in response to the Inmarsat network checking in with each terminal that it had not seen traffic from, in order to check that it was still connected to the network, just like the cellular network checks every so often that your phone is connected. In technical terms (from the Classic Aero specification), commenter GuardedDon described it well:

The ‘ping’ is a component of the Aero-L [or Aero-H] protocol where the GES [Inmarsat's Gateway Earth Station] attempts to check the ‘log-on’ state of previously logged on but apparently idle AES [the plane's Airborne Earth Station]. The GES determines the AES to be idle if a timer ‘tG6′ expires, tG6 is obviously the hourly period.
The GES transmits to the AES over the P channel & receives over the R channel. The initial response burst on the R channel is the timing datum transmitted by the AES ±300 μs of receiving the incoming frame on the P channel. All very deterministic to give us the range to AES from satellite using the Round Trip Timing.

The delay can be measured fairly accurately, since as noted above, the timing is specified to within ±300 μs. This calculation, from PPRUNE [Professional Pilots Rumor Network], shows that the difference in round trip delay between ping arcs 1 degree apart is around 600 μs at the relevant angle for MH370. Thus the location of each arc is known to within 1 or 2 degrees, depending on whether the satellite actually measures the round trip or one way delay to the aircraft.

The arc information was released to the public on March 15 and there was some confusion at that point about why part of the arc close to Malaysia was excluded. Possibilities included:
1) that the area had been checked by radar
2) that the plane’s minimum speed would have meant it could not have been that close to Malaysia
3) that another Inmarsat satellite over the Pacific would have received the signals in this excluded part of the arc.
This issue has still not been clarified, but of these it appears that a combination of the first and second explanations is the most plausible.

Inmarsat measured the arc positions each hour from 2.11am to 8.11am and the possible routes taken by MH370 can be estimated by assuming that the plane was flying at a constant cruise speed, and then noting that the distance between the points at which the plane crossed each successive arc is equal to the distance the plane traveled in one hour. That led to the NTSB’s two potential tracks for the southern route, published by AMSA on March 18, which included two different assumptions for the speed at which the plane was flying.

Several news organization have published purported ping arcs for the intermediate ping times, including CNN and the Washington Post. However, its important to realize that these arcs are not based on real data, and are purely illustrative, like the chart produced by Scott Henderson.

What was not stated initially by Inmarsat or the investigators was that each of the hourly arcs is further away from the satellite than the previous one. In other words the plane was moving away from the satellite continuously from sometime soon after the 2.11am ping. This statement was made by Inmarsat on Friday (and I have also confirmed it). Once this sequence becomes clear, then it becomes impossible for the plane to have flown out over the Indian Ocean and later have returned to the vicinity of Malaysia. It also has significance for additional reasons that will be discussed below. As Jeff Wise noted, this means that the plane flew only between the green arc (the pink dot where it was at 2.11am) out towards the red arc where the last ping was recorded.

To be more precise, since Inmarsat has indicated that the plane was outside the green arc by 3.11am, the plane did not continue on its northwesterly course for long at all after contact was lost by Malaysian military radar at 2.22am (enabling it to return outside the green arc before the 3.11am ping). That would be consistent with avoiding Malaysian radar, but heading south the plane would have very likely crossed Indonesian radar coverage (something that the Indonesians have denied).

This sequence of ping arcs led inexorably to either a northern or a southern track, but there was still some uncertainty about which one was correct. The analysis that Inmarsat undertook over the last week took into account that the I3F1 satellite is in a slightly inclined orbit, which moves north and south of the equator each day. In other words it is only station-kept in the east-west direction, not north-south. While this situation is often the case for old FSS satellites, where the fuel is nearly exhausted, even new MSS geostationary satellites do not use strict north-south stationkeeping because the beam width of a small L-band antenna is pretty wide and so accurate pointing is not required.

DuncanSteel noted that the satellite was actually north of the equator at the time in question and Inmarsat was able to use the fact that the satellite was moving relative to the aircraft to calculate the resulting Doppler effect that shifted the frequency of the ping as measured at the satellite. If the satellite was moving towards the south, then the frequency of pings from airplanes flying in the southern hemisphere would be shifted up in frequency, while the frequency of pings from airplanes in the northern hemisphere would be shifted slightly down in frequency.

Last week Inmarsat performed an analysis of pings received from other aircraft flying in the Indian Ocean region to confirm that this effect is consistent across all of these planes and therefore concluded that MH370 must have been to the south of the satellite at the time of the last ping, not to its north. This led up to today’s announcement that the plane must have crashed in the Southern Ocean.

Now for an interesting piece of information that does not appear to have been considered in detail. A pilot on PPRUNE pointed out that there are two different modes of operation of the 777 flight management computer. A programmed route will take a straight line (great circle) route to the next programmed waypoint, but if there is no longer any waypoint in the computer, then the plane will fly on a magnetic bearing. While this is not material around Malaysia, it becomes highly significant in the Southern Ocean.

As a result, a magnetic heading would need to start out going significantly further west (and would also fly much further) to end up at the same point as a great circle route.

It is easy to see that in combination with Jeff Wise’s chart of the ping lines, a magnetic bearing heading is highly unlikely to have resulted in the 3.11am ping arc lying outside the 2.11am ping arc. Once this is realized, the hypothesis that the plane suffered an accident that left it flying on autopilot becomes rather less likely than the plane being deliberately directed towards a part of the southern ocean where presumably whoever was in charge believed the aircraft would never be found.

Indeed the NTSB tracks appear to implicitly assume an absolute not a magnetic heading, so would require the plane to be flying in a pre-programmed direction. Of course we need to see the ping arcs themselves (or at least get absolute confirmation about the trend in the ping arcs) before reaching a definitive conclusion, but this issue appears quite significant for any assessment of what might have happened onboard MH370.

UPDATE (Mar25): The Malaysia government has just released this full picture of the potential southern route tracks. The red track appears to be a magnetic bearing heading which would have required a slower speed (400 knots) and would result in a location far to the northeast of previous estimates. The yellow track is apparently the originally assumed programmed heading at cruising speed of 450 knots and is consistent with the current search area. There is clearly an enormous difference in where the plane ended up.

UPDATE (Mar25): The Doppler shift data release by the Malaysian government gives full details of the ping times (note that they are in UTC so add 8 hours for local Malaysian time which is used above). Several pings were received at just before 2.30am, then at 3.40am, 4.40am, 5.40am, 6.40am and 8.11am, not at 2.11am, 3.11am, etc as surmised above.

It seems clear from the Doppler information that the plane made a sharp turn very shortly after it was lost from Malaysian radar coverage at 2.22am. There is also much more time for the plane to move outside the 2.30am arc by 3.40am so this does not impose as much of a constraint on the possible routes of the plane.

The question has been raised about the apparent “partial” ping shortly after the 8.11am ping was recorded. Was that a partial ping because the plane lost power during the course of that handshake? Its hard to tell, but I note that there were several pings quite close together around 2.30am after the “possible turn”. Those appear to have occurred for a different reason than the regular pings (and also from the more frequent earlier handshakes after take off which I assume relate to regular ACARS messages being transferred).

So an understanding of why those occurred is likely to shed some light on why a ping might have been attempted so soon after 8.11am. In particular, could it have been initiated from the plane’s terminal rather than the satellite network? And if so why – for example, could it be due to the plane’s terminal trying to re-establish contact with the satellite after a sharp change in direction?


Locating “satellite pings”…

Posted in Aeronautical, Inmarsat, Operators, Services at 11:30 am by timfarrar

As a follow-up to my post on understanding satellite pings, I thought it would be helpful to give a bit more detail on how the location of a ping can be identified. In my previous post I indicated that you could potentially measure range (based on timing) or angle (based on power). After some further thought, it is likely that the range measurement would be much more accurate, not least because a change in angle (e.g. a plane banking) would throw off the power measurement significantly. The determination of a “measurable distance” is also what David Coiley of Inmarsat described in an interview with the New York Times last week.

How does this measurement happen, and how accurate is it? The first thing to understand is that the pings are sent to the satellite in a specific “time slot”, which has a given frequency and start time, but the burst of energy in the signal might not always be exactly in the center of the slot. This is illustrated very well in a recent Inmarsat patent, which shows the variation between three different bursts B1 to B3 which are scheduled in the same frequency (f1) and successive time slots (T1-T3).

How much the burst is offset in time relative to the center of its designated timeslot gives a measurement of range, since the further the terminal is away, the longer the energy will take to reach the satellite. How much the burst is offset in frequency relative to the center of its designated timeslot gives a measurement of speed, since if the terminal is traveling towards the satellite, the frequency will get higher and if it is traveling away from the satellite, the frequency will get lower (this frequency offset is the Doppler effect).

So in the illustration above, B2 is shifted both in time (range) and frequency (speed), whereas B3 is shifted in frequency (speed) but not in time (range).

UPDATE: One complicating factor is that if the Doppler correction takes place only in the terminal itself, then it is possible that the network may not see much if any frequency shift for the ping that is returned from the terminal. I am trying to confirm how this aspect is handled.

I should also note that it would not necessarily be expected to be standard operating procedures for a satellite operator like Inmarsat to save the precise time/frequency offset associated with each burst received by its satellites. But since the precise time data appears to have been used in the range calculation, it seems logical to conclude that this information (and potentially the associated frequency offsets as well if these are available, although this was not mentioned in a CNN interview today) must have been recorded.

Key point 1: It is likely to be feasible to calculate the range and possibly also the speed relative to the satellite from the ping information via the time/frequency offset method described above.

What we’ve seen in terms of the arcs of possible locations so far just represent the range component of this measurement. It seems that there is no triangulation involved (which is consistent with the CNN interview), because in this particular coverage region the specific frequencies involved are only used on the Inmarsat 3F1 satellite and not on any other satellites.

Its much harder to interpret the speed component (if it is available), because it is the speed relative to the satellite. So if the terminal was moving along one of these arcs, it would not be getting closer to or further away from the satellite and there would be no frequency shift. So in that situation the signal would look the same as from a plane that was stationary on the ground at the time of the transmission. If this information is actually available would expect Inmarsat to have been able to interpret the frequency shift as well as the time shift, but even then there would be no easy way to illustrate “relative speed” on a chart like the one given above.

Key point 2: Speed relative to the satellite is not the same as absolute speed, so (even if this information were available) it would not be possible to determine with certainty if the plane was on the ground and stopped.

Similarly, comparable data has not been released for previous “pings” before the last one. Whether or not the frequency/speed data is available, I would expect that it should be possible to determine that some points on the arcs above are more likely than others, but even with both pieces of information it is unlikely to eliminate any points completely unless other information is known (or assumed). For example, if one assumed that the plane flew at a constant speed and bearing then it would be possible to narrow down the locations quite significantly (because the speed and range would change in a predictable way, although north/south ambiguity would remain). However, that may or may not have been the case.

UPDATE: Similarly, one could test the theory about “following another aircraft” because the track of the other aircraft is known and its position would have to coincide with the arcs calculated for intermediate pings while this “following” was in progress.

Key point 3: The combined information from multiple pings would potentially be fairly dispositive as to whether the plane flew at a constant speed and bearing (i.e. on autopilot), although there might still be some uncertainty in the ultimate location (and north/south ambiguity) unless speed information was also available. The intermediate pings would also determine whether the “following another aircraft” theory is feasible.

So now for the big question, how accurate is the location of this arc. Without the ability to triangulate between multiple satellites, then geolocation accuracy (i.e. the ability to identify where on Earth a signal is being transmitted from) is considerably reduced, but a single satellite geolocation detector from Glowlink is said to have an accuracy of 40-60 miles. However, that detector may use more measurements (of a static source) than is possible with this limited number of pings from a terminal that is moving around. So I would expect my initial estimate of say 100 miles is still fairly reasonable. Its also important to remember that the plane could have had enough fuel onboard to have flown as much as a couple of hundred miles after the last ping.

Key point 4: The range accuracy is unlikely to be much better than 100 miles, and perhaps more because the plane could have continued flying after the last ping.

UPDATE: This is the latest search area, as shown by Reuters Aerospace News, including up to 59 minutes of potential travel after the final ping (i.e. the full period before the next hourly ping, regardless of remaining fuel).

UPDATE (Mar18): The Australian Maritime Safety Authority has held a press briefing today at which they described exactly the procedure outlined above for the southern route, i.e. assuming a constant speed and heading and correlating the results from all of the pings. They have produced the following map based on NTSB analysis showing that there only two paths consistent with the set of arcs and a constant speed/heading assumption. They declined to speculate on the northern route but indicated in the press briefing that similar analysis had been conducted. Presumably therefore it is now known whether or not the “following another aircraft” theory is feasible.

UPDATE (Mar 19/20): This evening, CNN put the image below on screen, showing purported ping arcs and the overlap with one of the projected southern tracks. It is not known if these are accurate locations, or if the image was purely illustrative. However, if the arcs are accurate, then (if the debris is a false lead) the “shadowing” hypothesis can be ruled out because the plane would not have gone far enough out into the Bay of Bengal. Moreover, if the plane is found in the southern search area having traveled along one of the projected paths, then it was flying in a straight line at constant speed (as AMSA and NTSB previously assumed in making these projections) and so was not likely to have been under active pilot control when it crashed. In addition, if the plane is found in the identified search area so quickly, it will intensify the scrutiny of the delays in making use of the ping information which Inmarsat provided very early in the investigation.

UPDATE (Mar 20): As noted by a commenter, the Washington Post published 3 of the earlier ping arcs in a graphic shown below. These are quite similar to the ping arcs depicted by CNN, suggesting that if the 4.11am ping arc is as close to the 5.11am arc as suggested by the CNN graphic, the “shadowing” hypothesis for the northern route is likely to be infeasible.


Understanding “satellite pings”…

Posted in Aeronautical, Inmarsat, Operators, Services at 11:55 am by timfarrar

There’s so much confusion about the satellite communications aspects of the MH370 incident that I thought it would be useful to give a little bit of background and an analogy to aid understanding of what we know and what we don’t. As with all analogies, this is perhaps oversimplified, but may help those without a detailed knowledge of satellite communications. I’m not a satellite designer, so I may also have overlooked some of the intricacies – please feel free to chime in with any corrections or amplifications.

Firstly, it needs to be made clear that the radar transponder “squawks” and the satellite communications “pings” are from completely separate systems (just because its talking about a transponder, that is nothing to do with satellite transponders). The radar transponder sends an amplified signal in response to reception an incoming radar transmission, which has much more power than a simple reflection from the metal skin of the plane, and has additional information about the plane’s ID. If turned off, less sensitive civilian radar will struggle to pick up the plane’s reflection, though military (air defense) radar should still be able to see the plane. But military radar systems are looking for hostile forces and have missed civilian aircraft in the past (e.g. the Mathias Rust incident).

Key point 1: The transponders are nothing to do with the satellite communications system.

So let’s turn to the satellite communications system. There has been talk about ACARS transmissions for monitoring the status of the plane. That is a communications protocol, separate from the underlying satellite (or VHF radio) link. Think of ACARS as like Twitter. I can send a message from my cellphone, which may or may not include my location. When I’m at home, on WiFi, the message goes to Twitter via my home broadband connection. Similarly, when the plane is over land, the ACARS message goes over VHF radio to SITA, who then send it on to the destination (e.g. Rolls Royce if the purpose is engine monitoring, Malaysian Airlines if its an internal airline message, or the Air Traffic Control center if its a navigation related message). [ACARS messages can also be sent over long distances via HF radio, but its not been suggested that was the case on MH370.]

With Twitter, when I leave home, my cellphone connects to the cellular network, and my Twitter messages go over that. But it makes no difference to the message and Twitter doesn’t care. Somewhat similarly, when the plane goes over the ocean, the ACARS system sends its messages over the plane’s satellite connection instead, but it doesn’t affect the content of the message.

Just like I use AT&T for my cellphone service, the plane’s satellite communication system is from Inmarsat, but so long as I have bought the right data service from AT&T, Twitter will work, and so long as I have an Inmarsat data service, ACARS will work fine.

Key point 2: ACARS is an “app” (communications protocol) which can operate over different (satellite and VHF) communications links.

I can sign out of Twitter on my cellphone and then won’t be able to transmit or receive Twitter messages. But that has nothing to do with whether my cellphone is connected to AT&T’s network. Similarly, the pilots can terminate ACARS sessions and stop reporting their position or other data (see for example this document), but that doesn’t affect whether the satellite terminal itself is connected to the Inmarsat network.

Key point 3: ACARS reporting can be disconnected without affecting the underlying satellite communications link.

On my cellphone, even if I’m not sending any data, AT&T needs to know if I’m registered on the network. When I turn on my phone, or move from cell to cell, the network exchanges data with the phone to make sure the network knows which cell the phone is located in. More importantly, even if I stay in one place with the phone in my pocket, the cellphone network checks in occasionally to make sure that the phone is still active (and say the battery hasn’t run out without the phone signing off from the network, or I haven’t gone into an underground car park and the connection has been lost), so that it knows what to do with an incoming call. You don’t normally notice that, because the timescales are pretty long (you don’t usually go into a car park for an hour or two). As another example, if I go to France with my AT&T phone, when I turn the phone on, it is registered in the Visitor Location Register (VLR), but eventually, after I stop using the phone there, my details are purged from the VLR.

Similarly with the Inmarsat connection, the network needs to know if it should continue to assign network resources to a particular terminal in case a communications link needs to be established. Not every aeronautical terminal in the world will be active simultaneously, and indeed there are quite a few that are rarely if ever used, so Inmarsat doesn’t provision resources for all terminals to be used simultaneously. However, once a given terminal are turned on, it needs to be contactable while it is inflight. So the Inmarsat network checks in with the terminal periodically (it appears to be roughly once an hour), to ensure that it should continue to be included in the list of active terminals and gets a message back to confirm that it should remain registered. These are the “satellite pings” that have shown that MH370 was still powered on and active after the ACARS messages and radar transponder were turned off, because the terminal was responding to the requests from the Inmarsat network to confirm it was still connected.

Key point 4: The “satellite pings” are due to the Inmarsat network checking that the terminal on board the aircraft is still connected to the Inmarsat satellite system and the terminal responding in the affirmative.

So now the question is how accurately does the Inmarsat network know where the plane is located? To go back to my cellphone analogy, when the network is checking my phone is still connected, it looks in the last cell it was registered. If I move to a different cell, then my phone should check in with the network to request a new assignment. But AT&T doesn’t need to know my precise position within the cell, it just needs to know where to route an incoming call. Similarly with Inmarsat, there isn’t a need to know exactly where in a cell the plane is located, just that its there and not somewhere (or nowhere) else.

Key point 5: The “satellite pings” indicate the plane is in a cell, but do not intrinsically give specific position information.

How big is a “cell” on the Inmarsat network and why the confusion? First of all, we need to recognize that there are different Inmarsat network architectures for different generations of aeronautical terminals. Think of it like 2G, 3G and 4G phones. If I have a first generation iPhone then I can only use 2G (GSM+EDGE), an iPhone 3G can use 3G, and an iPhone 5 can use LTE. AT&T supports all of these phones, but in slightly different ways. Inmarsat introduced a new SwiftBroadband aeronautical service in 2010, using its latest generation Inmarsat 4 satellites (like AT&T’s LTE network). That has much smaller spot beams (“cells”) than the older Inmarsat 3 satellites. And the Inmarsat 3 satellites (like AT&T’s 3G network) in turn have regional spot beams as well as a “global” beam (covering an entire hemisphere) to support the oldest aeronautical terminals.

As an aside, part of the SwiftBroadband communications protocol (essentially identical to BGAN) conveys (GPS-based) position information to the satellite when establishing a connection, so that the satellite can assign the terminal to the right spot beam. But it isn’t clear that GPS data is required as part of the “pings” which maintain registration on the network. That was one additional source of confusion about whether the specific position was being reported.

In any case, it appears that MH370 had a Swift64 terminal onboard (or possibly an older Aero-H or H+ terminal), not one of the latest SwiftBroadband terminals (that’s hardly surprising since SwiftBroadband is not yet fully approved for aeronautical safety services and is mostly used for passenger connectivity services at the moment, which don’t seem to have been available onboard). This is the equivalent of the iPhone 3G (or the original iPhone), not the newest version.

In the Indian Ocean, Inmarsat’s Classic Aero services, which are provided over both Swift64 and Aero-H/H+ terminals, operate on the Inmarsat 3F1 satellite located at 64E (equivalent to AT&T’s 3G network not its latest LTE network), and can use both the regional and global beams, but it appears that Inmarsat’s network only uses the global beam for the “pings” to maintain network registration. Otherwise it would have been possible to rule out a location in the Southern Ocean.

Key point 6: The “satellite pings” were exchanged with the Inmarsat 3F1 satellite at 64E longitude through the global beam.

So how can anyone find the position within this enormous global beam? There are two potential ways to measure the location:
1) Look at the time delay for transmission of the signal to the satellite. This would give you a range from the sub-satellite point if measured accurately enough, which would be a circle on the Earth’s surface.
2) Measure the power level of the signal as received at the satellite. The antennas on the satellite and the plane amplify the signal more at some elevation angles than others. If you know the transmission power accurately enough, and know how much power was received, you can estimate the angle it came from. This again would produce a similar range from the sub-satellite point, expressed as a circle on the Earth’s surface.

[UPDATE: I believe that the first of these approaches is more likely to produce an accurate estimate. See my new blog post for more information on locating satellite pings.] We can see in the chart below (taken from a Reuters Aerospace News photo of the search area posted at the media center) that the search locations are based on exactly these curves at a given distance from the sub-satellite point. However, it is unlikely that the measurements are more accurate than within say 100 miles.

We can also see that the arcs are cut off at each end. The cutoff due east of the sub-satellite point may be due to the fact that the transmissions would also potentially be received by Inmarsat’s Pacific Ocean Region satellite at that point, and if they weren’t, then that region would be ruled out (although others have suggested that military radar plots have already been checked in these regions). Its possible that the boundaries to the north and south have been established similarly by the boundaries of Inmarsat’s Atlantic Ocean Region satellite coverage, but they may instead be based on available fuel (or simply the elapsed time multiplied by the maximum speed of the plane), rather than the satellite measurements per se.

UPDATE (Mar 18): I originally attributed the picture below to a Malaysian government release, based on information from a journalist in Kuala Lumpur. As a commenter below notes, the diagram was put together based on an interpretation of what was stated in a briefing (indicating that the ends of the arcs were determined based on the minimum and maximum speed of the aircraft, rather than being based on the overlap of the Inmarsat satellite coverage areas) and is not an official document. Apologies for any confusion.

Key point 8: The position of the aircraft is being estimated based on the signal timing/power measured at the satellite. Its not based on the data content of any message and is not highly accurate.

ADDITIONAL POINT (Mar 17): Many have asked why it took so long to figure out where these satellite pings were coming from. Taking an extension of the analogy above, assume you have a friend staying in a hotel. The hotel catches fire and burns to the ground and your friend’s regular Twitter updates cease. For the first few days, the fire department is trying to find his body in the hotel. When he can’t be found the police check to see when his iPhone was last turned on. It turns out the phone was still connected to AT&T’s network hours after the fire. So then the police ask AT&T to figure out where the phone was operating by looking at their database of network records.

That’s exactly the sequence of events here. The plane’s ACARS (and radar) communications suddenly ceased and in the first few days, everyone assumed there had been a crash and was looking for the crash site. After no debris was found, investigators started to look at other possibilities. Inmarsat discovered the plane’s terminal was still connected to their network even after the ACARS messages ceased. Then it took a bit more time to calculate the location of the pings from Inmarsat’s network data records.

Finding missing people this way using cellphones is well known, but no-one’s ever had to do it before in the aeronautical satellite world, so its hardly surprising that this would be not be standard practice in an air accident investigation. I’m sure it wasn’t standard practice for cellphone companies in the 1980s either.

UPDATE (Mar20): The WSJ is reporting that Inmarsat had this information very quickly but the Malaysian government delayed making use of ping arc data to revise the search area for several days.

I hope that’s helpful. Let me know of any questions or need for further explanation.


Busman’s holiday…

Posted in DISH, Financials, Inmarsat, LightSquared, Operators, Regulatory, Spectrum, Thuraya at 9:35 am by timfarrar

Back in 2009, only a year before it embarked on the original $1.2B and now $1.6B Global Xpress Ka-band project (this new figure implicitly includes the launch of the fourth I5 satellite), Inmarsat’s CEO was happy to tell investors that “We are going into a period of capex holiday”. So perhaps it was inevitable that earlier this month at Inmarsat’s Q4 results presentation, some analysts were worried about the “risk that CapEx in 2015 won’t come down by the $300M figure you’ve mentioned”.

It does seem they were right to be concerned, because its now being reported (and I’ve confirmed) that Inmarsat and Arabsat are negotiating the inclusion of an S-band payload on Hellas Sat 3, similar to the Solaris piggyback payload on Eutelsat W2A.

I’m told that Inmarsat is now actively applying for national licenses to preserve its rights to 2x15MHz of S-band spectrum in Europe, after turning down an offer from Charlie Ergen to buy the license from them (in fact Ergen met with Rupert Pearce, Inmarsat’s CEO, in Washington DC this week). Inmarsat was previously exploring the development of an Air-To-Ground (ATG) network using this spectrum in Europe, but that has been abandoned, because it proved impossible to resolve the regulatory issues in the short timeframe available before the license deadlines (for a satellite launch) expire.

The new S-band business plan is instead directed at “smaller, cheaper terminals” for traditional MSS services (an opportunity that Inmarsat’s CEO highlighted on the MSS CEO panel that I moderated at Satellite 2014) rather than terrestrial exploitation of the spectrum. Another potential reason for Inmarsat’s move is that Thuraya will be trying to secure backing for a replacement L-band satellite over the next year, and by teaming up with Arabsat, Inmarsat could look to undermine Thuraya’s pitch that having an MSS satellite from the Middle East is a matter of regional pride.

In fact, Inmarsat was very firm at the conference that MSS spectrum should not be reallocated for terrestrial use, and even described the LightSquared Cooperation Agreement as something they were “forced” into (implicitly by the FCC), with Inmarsat’s preoccupation being to protect their MSS users from interference. This was quite a striking signal that Inmarsat may not be very supportive of compromise with LightSquared, which is a condition of the current bankruptcy exit plan.

In particular, Inmarsat is sitting on about $260M of deferred revenues, which were paid by LightSquared prior to the bankruptcy, to pay Inmarsat for fitting filters to its existing terminals (as I’ve noted before Inmarsat concluded this wasn’t actually required, so they kept the money). If Global Xpress revenues don’t ramp-up as quickly as expected (and there is now a high likelihood that the third I5 satellite will not be launched this year, since its not even on the latest Russian schedule and the second satellite is currently listed as launching in September), then the easiest way for Inmarsat to meet the 8%-12% wholesale revenue CAGR from 2014-16 that it reiterated on the Q4 results (which requires an increase of $200M to $300M in absolute terms) would be to book most if not all of those deferred revenues in 2016.

Of course, that is actually supportive of Ergen’s original proposal to just use the LightSquared uplink spectrum, because filters would only be required if the downlink band is actually used for terrestrial services. On the other hand, because Inmarsat would want to book the deferred revenues in 2016, rather than 2014 or 2015 when the bankruptcy process is complete, it seems plausible that Inmarsat would agree to an additional two year deferral of most payments from April 2014 to early 2016, aligned with the assumptions in LightSquared’s latest plan that FCC approval would be received by the end of 2015 and that their new funding would last through the first quarter of 2016.

At that point, if LightSquared has made no progress with the downlink band and is forced to fall back on uplink only use of the MSS spectrum, Inmarsat could book the deferred revenues and potentially could even get some additional payments for leasing the uplink spectrum at a later date. Don’t forget that Ergen might still be on the scene as well, since the deadline for completion of what will now likely be two competing European S-band projects is also in the first half of 2016.

So now we move to the key hearings next week in the LightSquared bankruptcy case, which will address the adversary proceeding against Ergen and LightSquared’s plan for emergence. As I’ve noted previously, despite the evidence LightSquared has marshaled about Ergen’s strategic objectives for his investments, it would be a major step for the judge to allow LightSquared to put Ergen/SPSO in a class of his own, then designate his vote and give him a third lien note with no exit for 7 years (and potentially no value in the absence of FCC approval). However, no one seems clear about what the judge will do, and what any compromise ruling might entail.