Eye of the hurricane…

Posted in Aeronautical, Broadband, Eutelsat, Inmarsat, Operators, Services, SES, Spectrum, ViaSat at 12:54 am by timfarrar

This week in Paris all seemed calm, after the turbulence of the last few years, with the only major announcement coming from SES with its new O3b mPower MEO constellation. But under the surface a lot is happening, and (perhaps appropriately) I think we are now just in the eye of the hurricane, and the storm will shortly ramp up once again, before we find out who and what will be left standing in a couple of years time.

SES’s announcement came several months after it selected Boeing to build the O3b NEXT constellation (the “development agreement” was announced in July as part of SES’s half year results) and the delay until now appears to have been due to SES waiting for an anchor tenant that never materialized. In fact I believe SES originally expected to announce the contract in May, as was hinted at when SES’s CEO said he was “too busy” to go to Satellite 2017). However, SES is clearly not willing to see OneWeb, ViaSat and Inmarsat take the lead in new data-oriented satellite systems, whether or not it secures a major anchor tenant for this system.

Another subject of much debate is what Panasonic will decide to do now its original plan to invest in dedicated XTS satellites appears to be dead. Panasonic wants to lay off much more of the risk on a satellite operator, rather than underwriting the satellite costs in full, as Thales did with SES-17. Will an FSS operator be prepared to take this risk, bearing in mind that Intelsat is short of money, SES is now building O3b NEXT (which won’t be well suited for high latitude aero operations) and Eutelsat is intending to partner with ViaSat? Or would Panasonic do something more radical and let a rival like Inmarsat take over provision of connectivity services?

Finally, Inmarsat seems to be under a lot of pressure after a 15% decline in its share price in the last two weeks, and some were speculating that recent personnel changes were connected to this uncertain outlook. Profitability of aero contracts (notably that with Lufthansa) remains a major concern, and issues remain to be resolved for the EAN air-to-ground network, especially if Inmarsat is forced to provide a more robust satellite link in the wake of ViaSat’s legal challenge.

All of these issues provide much food for thought, and could lead to significant realignments in the industry over the next year. Decisions affecting the inflight connectivity market are almost certain to occur, because Panasonic can’t wait too long to provide clarity on its future positioning, and so we had better batten down the hatches for the coming winds of change.


Me first, no me…

Posted in Broadband, Regulatory, Spectrum at 9:42 am by timfarrar

Yesterday the FCC released the proposed text of its Report and Order on “Updating Rules for Non-Geostationary-Satellite Orbit Fixed-Satellite Service Constellations” which will be voted on at the Open Meeting on September 26. There are some minor wins for SpaceX and other systems that aren’t as advanced as OneWeb, notably in the relaxation of the 6 year construction deadline so that only 50% of the constellation needs to be completed by that date.

However, the key text on the geographic scope of the FCC’s in-line interference avoidance rule (that requires the spectrum to be shared equally between NGSO systems when their satellites are aligned with one another) marks a major defeat for SpaceX, because the FCC will allow the ITU’s “first-come, first-served” coordination procedures to take precedence for non-US systems operating outside the US.

53. Geographic Area. SpaceX and SES/O3b ask that we clarify the geographic scope of our NGSO FSS sharing method as it relates to non-U.S.-licensed satellite systems granted U.S. market access. While SpaceX argues that it should govern such operations worldwide, a grant of market access typically considers radiofrequency operations only within the United States. Sharing between systems of different administrations internationally is subject to coordination under Article 9 of the ITU Radio Regulations. We believe this international regime is the appropriate forum to consider NGSO FSS radiofrequency operations that fall outside the scope of a grant of U.S. market access. Because ITU coordination procedures do not apply between two U.S. systems, our coordination trigger of ΔT/T of 6 percent will govern such operations both within and outside the United States.

OneWeb is licensed by the UK and Telesat by Canada, and these systems have ITU priority in the Ku and Ka-band NGSO spectrum respectively. Thus SpaceX will have to operate on a non-interference basis with respect to these systems in either band outside the US. This (proposed) ruling represents a big problem for SpaceX, which needs to find another line of business outside of launch to justify its latest $21B valuation.

SpaceX is already building two experimental 400kg Ku-band satellites, apparently pictured above, which are scheduled for launch at the end of 2017, as co-passengers with the Hisdesat PAZ SAR imaging satellite (note that the orbital injection parameters of PAZ and SpaceX are identical: a sun-synchronous orbit at 514 km altitude with an inclination of 97.44 degrees). A license from the FCC, both for these test satellites, and likely for the entire constellation as well, is expected very shortly.

The key purpose of SpaceX’s accelerated launch schedule is to beat OneWeb (which plans to launch its 10 test satellites in early 2018) to orbit, as under the FCC’s regulations, the first system to launch gets to choose its “home” spectrum during an inline event. Presumably on the assumption that possession is nine-tenths of the law, SpaceX also recently extended the planned lifetime of these two satellites from 6 months to at least 20 months, stating that “if this lifetime is exceeded, SpaceX plans to continue operation until such time as the primary mission goals can no longer be met.”

However, now the FCC’s proposed order appears to have derailed its strategy, SpaceX will need to find a way to gain ITU priority, if it is to build and operate a global constellation. From this point of view, Telesat, which has been adamantly defending its ITU priority, appears to be sitting pretty. Indeed we are told that after its planned test satellite launch later this year, Telesat will wait until next summer before deciding how to move forward, presumably expecting to have a wide variety of suitors once its ITU priority status is recognized.

A joint venture with SpaceX (to which Telesat contributes its licenses and SpaceX brings the money) is certainly a plausible option, though it would require SpaceX to shift its plans to Ka-band. However, if this became a real possibility, it wouldn’t be surprising for SoftBank to try and head off SpaceX by investing in Telesat, or perhaps even buying Loral Space and Communications.

The ramifications of such a move on SoftBank’s part would be even more significant, given that Intelsat’s investors apparently expect SoftBank to return to the negotiating table next year, after they rejected SoftBank’s previous offer in May, and a switch to Telesat would put them in a tricky position.

So now we have to wait and see how SpaceX responds to this setback. Will SpaceX still move forward aggressively into the satellite business or will some of the executives who have in the past counselled caution gain the upper hand? Will the experimental launch proceed on plan (I assume so)? And most importantly, which partners will emerge for Telesat’s proposed LEO system?