Speedcast plans reorganization, but no asset sale or equity raise, after ‘perfect storm’ cuts H1 revenue and EBITDA

Speedcast Chief Executive P.J. Beylier. Credit: CommunicAsia/WTA
PARIS — Mobile satellite services provider Speedcast International has begun a broad reorganization designed to mitigate the effects of what the company said has been “a perfect storm” of negative events so far in 2019.
The company said that at least for now, it is not considering a sale of any of the multiple assets it has acquired in recent years and that its leverage is well within the bounds of its debt covenants. Scale means power in today’s satellite services market, Speedcast continues to believe.
But early indications of how bad the first six months of 2019 forced Speedcast, whose shares are traded on Australia’s ASX exchange, to issue a revenue and EBITDA warning on July 2. The company also missed its targets in 2018.
“There is no plan for a sale of assets at this stage,” Speedcast Chief Executive P.J. Beylier said during a conference call on preliminary H1 2019 results. “Scale is more and more paramount in our industry…. It is essential to maintain the scale-related competitive advantages we have over smaller competitors.”
The company said it now expects 2019 EBITDA to be $145 million, down from the $165.5 million it told investors to expect during a May conference call. Investors greeted the news by wiping out $340 million in Speedcast market capitalization in a one-day drop of 40%.
Credit: Google Finance
The loss of a major maritime contract earlier this year; the expected drop in revenue from the Australian NBN contract; lower-than-expected revenue from Speedcast’s latest acquisition, Globecomm; delays in expected government contract awards; and unspecified technical issues with the large Carnival Corp. contract combined to work against Speedcast in H1 2019, P.J. Beylier said.
Speedcast’s maritime connectivity business competes against Marlink, Inmarsat, Global Eagle Entertainment and, increasingly, SES Networks, among others.
In an attempt to reassure investors, Speedcast Chairman John A.M. Mackay on July 17 put much of the blame on the underperformance of Globecomm, for which Speedcast paid a net $134 million in cash.
Globecomm had been expected to contribute $12 million to Speedcast EBITDA in H1 2019; the current expectation is for $9 million because of delayed government contract awards, higher maritime churn and lower maritime revenue.
Mackay said that since July 1, all non-government Speedcast business his using  the same Enterprise Resource Planning (ERP) platform, which should improve decision making and forecasting.
Speedcast said its reorganization will yield some $7.5 million in benefits in H2 2019 and $20 million in 2020 “without jeopardizing our ability to grow,” Mackay said.
The drag on H1 2019 performance will put Speedcast’s goal of reducing its leverage to 3-3.2 times EBITDA over two years. Net debt as of June 30 is expected to be stable from Dec. 31 at 3.5-3.6. Speedcast Chief Financial Officer Clive Cuthell said the company had no plans to raise new equity and that its covenants require the company to keep debt to below 4.1 times EBITDA.
“We are well within the covenant requirements,” Cuthell said.
The renewal of the Carnival Corp. contract, which Speedcast had said will require the use of capacity on 40 satellites in C-, Ku- and Ka-band plus 20 teleports, had been expected to account for 8-9% of total revenue.
Beylier said the revenue has not been affected but that profitability will suffer due to “technical difficulties beyond our control. That means the cost of providing the service is higher than it was expected to be. The delay also impacted the sale of our equipment. We expect to be back to the profitability level in 2020.
“We have been caught in a perfect storm in the first half, with non-structural, one-time events happening,” Beylier said. “Over the mid-term, we see strong fundamentals, with maritime, government and energy returning to growth. EEM [Enterprise and Energy Markets] remains a troubled child. Scale should enable us to gain market share.”

Lockheed Martin, in ‘not married, just dating’ message re: Rocket Lab, invests in small-launcher startup ABL Space

ABL Space Systems Co. Chief Executive Harry O’Hanley. Credit: ABL
PARIS— Lockheed Martin in 2018 won some $31 million in grants from the British government to establish a vertical-launch spaceport in Sutherland, Scotland. Since then, it has declined to name the vehicle it plans to use there.
The market’s presumption was that it would be Rocket Lab’s Electron, a U.S.-designed vehicle that operates from New Zealand. Lockheed Martin is a major investor in Rocket Lab.
Lockheed Martin officials had said in 2018 they expected to reach agreement with Rocket Lab on terms and conditions for Electron’s use in Scotland. But no announcement has been made and Rocket Lab officials have been circumspect about the idea.
When Richard F. Ambrose, Lockheed’s executive vice president for space, was asked in mid-June what rockets the company is evaluating for Scotland, he said: “Several.”
Several may start at “three,” but on July 22 Lockheed and small-launcher startup ABL Space Systems of El Segundo, Calif., announced an investment in ABL by Lockheed Martin Ventures.
The amount of investment was not disclosed, but ABL called it “strategic.”
“The U.S. government is increasingly interested in responsive small launch vehicles and the distinct capabilities they offer,” ABL Chief Executive Harry O’Hanley said in a statement. “Lockheed Martin Space has been providing successful end-to-end solutions to the government for decades and its support offers an excellent opportunity for us to deliver ABL products at scale.”
ABL said the Lockheed Martin investment will be used to “advance ABL’s development and test program, including a planned integrated stage test in the second half of 2019. ABL is planning a first launch of RS1 in 2020.”
ABL has declined to list its current funding volume and sources beyond saying it has concluded three funding rounds with mainly U.S.-based venture capital investors.
With more than 100 dedicated small-satellite launch vehicles now in development and a general acknowledgement that most of them are unlikely to survive given market demand, it is increasingly important for launcher startups to secure government business.
Some of these companies resist this thesis, arguing that their low cost structure will enable them to survive only on future commercial business.
ABL has acknowledge the importance of domestic government customers.
In a June 25 address to the Seradata Space Conference in London, ABL Chief Financial Officer Dan Piemont said:
“No launch service provider has ever survived without primary support from their government,” Piemont said. “I see massive potential sources of demand, but that’s not what the U.S. government is, or any government is. But to provide that base level of support, take risk on early missions and be a sustaining source of demand for 1-2-3-4 launches a year is really important in making a project viable.” http://bit.ly/2REoDmk
Piemont said ABL estimates it will need to launch between five and 10 times per year to be financially viable — “closer to five than to 10.”

Startup SigInt provider Kleos: 2-month Rocket Lab slip will delay early revenue, but liquidity is sufficient

The four-satellite Kleos Scouting Mission. Credit: Kleos Space
PARIS — The inaugural launch of commercial space-based signals intelligence provider Kleos Space has been delayed by launch-service provider Rocket Lab for at least two months, to no earlier than October, but Kleos said its liquidity remains sufficient to carry the company to first revenue.
Luxembourg-headquartered, Australian ASX-traded Kleos said in a statement that it had 2.69 million Australian dollars ($1.9 million) in hand as of June 30 and that it was “fully funded to revenue.”
Kleos had expected to generate revenue starting in August from early-adopter customers, which the company said had booked 3 million Australian dollars in services from the Kleos Scouting Mission of four satellites.
Kleos’s business model is similar to that of Hawkeye 360 of the United States, but without the large domestic market that is the U.S. government. The company’s constellation of low-orbiting satellites — in Kleos’s case, a 20-satellite constellation is planned — scan zones of interest to pick up radio signals.
Maritime domain awareness is a large prospective market, enabling coastal authorities to track vessels that have switched off their Automatic Identification System (AIS) transponders to avoid detection.
These ships will need to emit signals for navigation and other purposes, and these frequencies can be picked up by the Kleos satellites.
U.S.-headquartered, New Zealand-based Rocket Lab completed its seventh mission on Jun 29 and announced it had built its 100th Rutherford Engine and was expanding production in addition to preparing a second spaceport.
Built at Rocket Lab’s Huntington Beach, Calif., facility, seventy of these 3D-printed engines have been flown.  Each Rocket Lab Electron vehicle uses nine engines on its first stage and a modified Rutherford on its second stage.
It was not immediately clear whether Rocket Lab’s entire manifest would shift to the right, with a next launch no earlier than October, or whether the company would substitute the launch with Kleos and other passengers for another mission to occur earlier than that.
In response to inquiries, Rocket Lab said July 22:
“Rocket Lab will still launch a mission in August – details about this mission will be announced this week. The Kleos satellites launch window has been extended to no earlier than October due to production and manifest requirements.”
Kleos Chief Executive Andy Bowyer, referred questions about the reason for the delay to Rocket Lab. He confirmed that the early-adopter revenue will only be delayed. “No impact on early adopter contracts themselves,” he said, adding: “Our satellites are boxed and ready to go.”
Kleos, in its statement, said:
“Due to Rocket Lab’s manifest requirements and their evolving production schedule, Kleos’s next available launch opportunity has been extended beyond our contractual launch period ending August 2019, to October 2019. We have been advised that Rocket Lab is doing everything possible to minimize schedule movements and launch the Kleos satellites as quickly as possible.
“Launchers are exceptionally complex and often prone to delays.”
The Kleos statement included a brief comment by Rocket Lab Chief Executive Peter Beck: “We look forward to launching Kleos satellites in the coming months as we continue to increase our launch cadence.” 
It was also unclear whether the Rocket Lab contract with Kleos and other customers includes liquidated damages to be paid to customers for launches occurring beyond the contractually designated schedule.
Credit: Kleos Space
In a statement, Bowyer said the company will use the additional time to “expand the number of customer contracts secured, continue to develop our data products and rapidly progress  our 2nd-generation satellites, [to be] focused on delivering enhanced coverage of the Earth closer to the equator, increasing our revenues and our customer base.”
The first four 8-kilogram Kleos satellites are built by GomSpace A/S of Denmark and Sweden under a contract valued at 2.34 million euros ($2.63 million).
Kleos in June received a 1-million-euro grant from the Luxembourg Space Agency, bringing to 2.96 million euros the Luxembourg government’s total funding to date.
Kleos recently announced an agreement with L3 Harris Corp. to put Kleos data on the list of services available for contracts by the U.S. General Services Administration (GSA).

C-Band Alliance promises ‘significant, voluntary’ payment to US Treasury if FCC OKs auction, rejects other satellite companies’ claims

Peter Pitsch, C-Band Alliance. Credit: U.S. House of Representatives video
PARIS — Bending to pressure, the C-Band Alliance (CBA) of four satellite operators doing business in the United States agreed to donate to the U.S. Treasury an unspecified amount of the proceeds from their proposed spectrum auction.
In July 16 testimony to the U.S. House Energy subcommittee on communications and technology, CBA’s Executive Vice President for Advocacy and Government Relations, Peter Pitsch, committed to a “significant, voluntary contribution” to the U.S. general treasury.
Pitsch said the U.S. Federal Communications Commission (FCC), which the CBA says will oversee the proposed auction of 180 MHz of C-band spectrum, could make such a future payment a condition of approving the auction.
Beyond saying that CBA believes it is legal for private parties to make unsolicited donations to the U.S. Treasury, Pitsch did not disclose how CBA would calculate the proposed payment.
Industry estimates are that the auction could yield gross revenue of between $10 billion and $30 billion.
The prospect of the four operators, none of them U.S.-headquartered, reaping billions in revenue from 5G terrestrial network providers through an auction of 180 MHz of U.S.-controlled spectrum has been cited as key CBA flaw by opponents of the plan. The CBA members are Intelsat, SES, Eutelsat and Telesat.
Asked to amplify on Pitsch’s remarks, the CBA on July 18 said:
“We are willing to discuss a contribution with the appropriate government authorities at the right time. Upon acceptance of the material components of our proposal, we would address the economic aspects of a contribution. As we said before, we will not let a resolvable issue get in the way of moving forward with our proposal.”
The CBA offer removes, in principle, the taxpayer-compensation issue as a weapon used by many of its opponents since the four operators first proposed a privately managed auction as a way to cede spectrum needed for 5G rollout while protecting current satellite C-band users.
CBA has also made written commitments to owners of receive-only C-band satellite Earth stations saying the costs of relocating or modifying their facilities would be borne by the CBA.
In his testimony, Pitsch reiterated a principal CBA argument, that the proposed auction would be the quickest, easiest way to make mid-band spectrum into the hands of 5G networks. Spectrum could be cleared within 36 months of an FCC decision, with the first 60 MHz available in major markets within 18 months.
The FCC has said transaction speed has a high value in assessing proposed spectrum-clearing auction methods.
FCC Chairman Ajit Pai has said the commission is likely to decide the issue in the autumn.
Compensation for ‘prior investment and opportunity costs’
In his July 16 testimony, Pitsch said the auction’s proceeds would allow CBA members to “secure compensation for their prior investment and opportunity costs, in addition to compensation for their reconfiguration and relocation costs, based on objective and verifiable measures such as 2017 C-band satellite service revenues.”
Two of the four CBA members, Intelsat and SES, account for some 92% of the current C-band satellite business in the continental United States. Eutelsat and Telesat Canada divide the rest.
But despite their minority position, Eutelsat and Telesat are indispensable to CBA, which must present a united front to the FCC because each of the operators has rights to the entire 500 MHz of C-band spectrum now reserved for satellite services.
Should even the smallest CBA member choose to quit the alliance, the prospect of a “holdout” would immensely complicate CBA’s life.
That would suggest that CBA, which has never disclosed how it would divide the proceeds among the four members beyond a pro rata distribution based on past revenue, may need to further incentivize Telesat and Eutelsat.
Asked whether these companies’ “prior investment and opportunity costs” mean Telesat and Eutelsat will get a higher percentage share of the proceeds than their past revenue would warrant, CBA said in its July 18 response to questions:
“The CBA not disclosed that [the split among the four members]. First we need an FCC decision. Then, we need an auction. We can’t anticipate the results now. We are discussing our proposal with the FCC, and there are still many moving parts. What is certain is that under our proposal to clear 200 out of 500 MHz, 40% of the satellite capacity becomes unusable.
“We have said the investment in realizing our proposal — developing filters, testing, labs, logistics, installations, the order and launch of new satellites – all this will amount to up to $2 billion. Then there is the acquisition cost at the time when we bought the U.S. entities that were holding the US licenses — in case of SES it was [GE] Americom, for which we paid billions. As far as incentivizing small market share members is concerned, let’s be clear about who that would be: The four satellite operators servicing the U.S. with C-band are in the CBA.”
The Small Satellite Operators group rejects the C-Band Coalition’s metric — 2017 U.S. C-band revenue — in favor of a model that accounts for potential future revenue impact of the loss of spectrum rights. Under this model, operators with aging fleets would suffer less than those that have incurred more-recent capex. Credit: Small Satellite Operators FCC filing
Four other satellite operators have received licenses to operate C-band satellites in the U.S. market — ABS, Empresa Argentina, Hispasat and Embratel Star One.
Acting together under the Small Satellite Operators (SSO) in FCC filings, these companies have said that the same “opportunity costs” that CBA proposes to include in distributing the proceeds among CBA members should extend to them as well.
The Small Satellite Operators argument, made as recently as July 3 to the FCC, is that past revenue cannot be used as a measure to apportion harm. Instead, they use some of CBA’s own reasoning to argue that it’s the loss of future spectrum rights, and not past revenue, that counts.
“In no way to a satellite operator’s spectrum rights depend on the amount of its past revenue,” the SSO members said in an FCC filing. “All eight [satellite operators] will suffer the loss of spectrum access.”
The SSO said all of its members “had plans to market or were actively marketing services using C-band spectrum in the United States,” but concedes that under its argument this should not matter much.
The left side is the distribution of proceeds to satellite operators under the C-Band Coalition proposal. On the right, the Small Satellite Operators’ proposed distribution, based on each operator’s active C-band satellite capacity and the age of each satellite. Credit: Small Satellite Operators FCC filing
The SSO group wants its four members to share in the proceeds as part of what it calls a Distribution and Scoring Model. Here’s how it would work:
Gross auction proceeds would first be used to compensate Earth station operators for their costs, plus a fixed incentive to get them to act quickly.
Then the U.S. Treasury would get its cut, a fixed percentage of the remaining proceeds.
The satellite operators would take their share from the remaining portion.
One-third of the proceeds would be equally distributed among all eight satellite operators with valid U.S. FCC C-band operating licenses.
The remaining two-thirds would be allocated to the eight operators as a function of the age and number of satellites that each of them has in service. The older the satellite — the nearer it is to retirement — the less compensation would be paid.
The SSO group says 62 C-band satellites are in operation with U.S. coverage.
In a July 18 FCC filing, CBA dismissed the SSO argument, principally because its members have no C-band business in the United States and therefore nothing to lose.
Moreover, CBA said the SSO group’s satellites’ beams in many cases do not reach the continental United States, and others have extreme look angles that make services “highly impracticable.”
“It is hardly surprising that the SSOs have been unable to obtain a single U.S. customer or earn a single cent of U.S. revenue despite having held U.S. market access authorizations for years — and in one case, over a decade,” CBA said.

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U.S. space surveillance unit: Few issues with SpaceX Starlink; universities are toughest cubesat owners for us

Diana McKissock, SSA sharing and spaceflight safety lead, 18th Space Control Squadron. Credit: Seradata
LONDON — U.S. Strategic Command’s 18th Space Control Squadron (18 SPCS), which tracks and catalogues space objects and makes data available worldwide, is stepping up efforts to integrate data from commercial space-surveillance companies despite a slow evaluation process, the squadron’s spaceflight safety lead said.
She also said that while it has taken time for 18 SPCS to identify all 60 SpaceX Starlink satellites launched together on May 24, the satellites were quickly catalogued.
“We have a lot of data on that” launch, said Diana McKissock, space situational awareness sharing and spaceflight safety lead at 18 SPCS. “They [the Starlink satellites] have been catalogued since a day or two after launch. We are working very closely with SpaceX” on naming each of the 60 to permit better tracking.
Credit: 18 SCPS
McKissock spoke here June 25 at the Seradata Space Conference as part of 18 SPCS’s campaign to encourage launch providers, satellite operators and launch-service integrators to provide the squadron with data.
A particular challenge for 18 SCPS is the growth in the number of cubesat launches, most on board rockets carrying dozens or more of these small satellites and releasing them in rapid succession.
Because not all launch providers are at ease with submitting data to the U.S. military, 18 SPCS often relies on the launch integrators — those who secure launches on behalf of groups of small satellites — to provide the needed information.
“When they are dealing with a non-cooperative [launch] provider, they can very often get us the launch plans and the information we need to track effectively,” McKissock said.
Perhaps surprisingly, she said the most difficult organizations for 18 SCPS to secure data from are universities, which are ever-more active in launching their own spacecraft.
“Most satellite operators are very forthcoming with information because we are doing much more for early engagement,” McKissock said. “The hardest entities to get in contact with our universities — without a doubt. If any of you know Indian or Japanese universities, please send them my contact information.”
Credit: 18 SPCS
How the growing number of commercial space situational awareness companies will integrate their data into the U.S. Air Force’s Space Surveillance Network and improve 18 SCPS’s tracking ability remains to be seen.
McKissock said it remains a work in progress, in part because of the criteria 18 SPCS uses to clear data.
“We are working on this,” she said. “The challenge is that we have a very onerous numerical evaluation process that right now does not lend itself to rapidly integrating new data sources. But Air Force Space Command, which equips our site, has programs working to do that better.”
The Space Surveillance Network of ground- and space-based radar and optical sensors this summer is expected to receive test data this summer from the new Space Fence system, which will enable to track objects the size of a marble. The Space Fence is scheduled to begin full operations next year.
New telescopes in Australia, managed by the Australian military, will add long-needed surveillance from the Southern Hemisphere.
The collision-avoidance maneuvers reported here are probably conservative. Not all operators disclose that they have performed them. Credit: 18 SCPS
18 SPCS issued 9 million Conjunction Data Messages to satellite operators worldwide in 2018. Less than 1% of these were judged serious enough to require an emergency report to the operators. Most of the activity, unsurprisingly, concerns satellites at between 500 and 750 kilometers in altitude.
On average, only two alerts — meaning a probability of collision of greater than 1% — are issued per day, and even this figure is inflated because it includes the same alert issued over several days.
Confirmed collision-avoidance maneuvers numbered 107 in 2018, including six in deep space, according to 18 SPCS, but McKissock cautioned that operators are not required to report their maneuvers and the statistics may undercount what’s actually happening.
In any event, 18 SCPS does not make recommendations for a particular course of action.
“What we can do [for satellite operators] is provide high-accuracy data at no cost,” McKissock said, noting that 32% of the 2,200 satellites that 18 SPCS supports with tracking are commercially owned. “What we can’t do is recommend courses of action or tell an operator what to do, or do advanced risk analysis.”

Something’s gotta give: Ethiopia’s broadcasters contract first with Eutelsat, then with SES

Credit: Eutelsat
PARIS — A multi-year, multi-transponder contract with Ethiopian broadcasters signed by Eutelsat in February is now in dispute following rival SES’s July 9 announcement that it had captured the business.
Eutelsat and SES both said they count the Ethiopian Association of Broadcasters (EAB) and Ethiopian Broadcasting Corp. (EBC) as customers for what look like identical contracts.
EAB and EBC did not respond to multiple requests for comment on their intentions, but given the Eutelsat and SES comments it is a situation likely to end up in court as one of the two fleet operators files for breach of contract.
Eutelsat said in February that the two Ethiopian broadcast groups would consolidate their demand on Eutelsat 8 West B, part of Eutelsat’s 7/8 degree west orbital slot that has 56 million viewers of programming by North African and Middle Eastern nations. Eutelsat said the Ethiopian contract was for 30 channels.
AEB Chief Executive Amman Fissehazion said the goal of the Eutelsat contract was to “increase and strengthen the number of TV channels in our country. This goal can be reached if all broadcasters operate from a common orbital position to reach their audiences, such as 7/8 degrees west. I am sure our contract with Eutelsat will lead us to many more successes.”
Credit: Ethiopian Broadcasting Corp.
But five months later, the same Amman Fissehazion was quoted in an SES statement on the contract saying:
“We want to harness the momentum for change and create a truly Ethiopian TV neighborhood that will deliver local content to viewers in high quality, and fuel growth in the Ethiopian media sector. We are pleased to be working with SES and its team toward this goal.”
SES said it will load the Ethiopian broadcasters’ programming onto the NSS-12 satellite at 57 degrees east.
Asked to comment on the Eutelsat contract, Ferdinand Kayser, chief executive of SES Video, said:
“[M]ost Ethiopian TV households are currently served by the orbital location of 7/8 degrees West, but the broadcasters have now decided to move to 57 degrees East to create a dedicated Ethiopian neighborhood in order to fuel advertising revenues.
“The nature of this migration is to establish a healthy advertising market for Ethiopian broadcasters.
SES: Ethiopian customers will all have moved to our NSS-12 satellite by August
“The contracts are all in place, and most of the channels are already on NSS-12 today, with the remaining ones to be placed by August 2019. There will be a period of simulcasting on NSS-12 at 57 degrees West and 7/8 degrees West.
“Meanwhile, we are also supporting the Ethiopian broadcasters with an installer training program that is about to start. This will see satellite installers fan out across the country to physically repoint the antennas of millions of households. During that time it makes sense that the households waiting for professional assistance should continue to receive service from 7/8 degrees West.”
Asked about Eutelsat’s position in Ethiopia in like of the SES announcement, Eutelsat said in a statement:
“We can confirm that the contracts we announced last February with AEB and EGC on Eutelsat 8 West B remain active. As a reminder, Eutelsat 8 West B offers coverage both of Ethiopia and, more broadly, the MENA [Middle East & North Africa] region, where a large portion of the Ethiopian diaspora is located.”
That broad coverage area and the number of Middle Eastern and North Arican channels available free to air from the 7/8 degrees east neighborhood may be one reason SES was able to pry the Ethiopians away from Eutelsat.
The SES statement on the contract win said Ethiopian broadcasters have an audience of more than 4 million Ethiopian households.
“The majority of content is currently broadcast from an orbital location that also supplies content to Middle Eastern and North African countries, mixing local and international content.
“The migration agreement with AEB will create a dedicated TV neighborhood for Ethiopians on SES’s East Africa Digital TV platform on NSS-12 at 57 degrees east, and will be launched in August 2019.”
Offering an East Africa-dedicated platform with fewer total viewers may have been, for Ethiopia’s government, preferable to a more-popular orbital location at which less-desirable non-Ethiopian content was also available to Ethiopian viewers.

Galileo agency chief says system will emerge from 7-day outage as stronger system; still no word on root cause

Carlo des Dorides, executive director, GSA. Credit: GSA
UPDATE July 19: The executive director of the GSA, the agency managing the European Commission-owned Galileo positioning, navigation and timing network, on July 19 issued his first statement on the seven-day global outage the ended July 18.
GSA Executive Director Carlo des Dorides promised to deliver a detailed explanation of what happened once GSA collects “all the technical elements and [implements] all necessary actions.” An independent board of inquiry is being formed.
Here are excerpts from his statement:
“The technical incident originated in the Galileo ground infrastructure equipment, affecting the calculation of time and orbit predictions which are used to compute the navigation message. The technical incident affected different elements of the ground facilities.
“A team composed of GSA experts, industry, ESA and the Commission worked together 24/7 to address the incident, and Galileo Initial Services have now been restored. In particular, the dedication and work of our industrial partners has helped to achieve this result.
“Commercial users can already see signs of recovery of the Galileo navigation and timing services, although some fluctuations may be experienced until further notice.
“The team is monitoring the quality of Galileo services to restore the Galileo timing and navigation services to their nominal levels. As soon as we gather all the technical elements and implement all necessary actions, we will provide more detailed information through our NAGU (Notice Advisory to Galileo Users) notifications to users.
“The Galileo system has grown stronger as a result of this experience, and we will continue to deliver Initial Services until full operational capability is declared. These challenging days have shown us how much you, the GNSS user community and stakeholders, rely on Galileo and how much you trust the Galileo system to deliver the services to support growth, business and sustainability. Europe and the world need a strong civil global satellite navigation system today more than ever.”
UPDATE July 18: Service from Europe’s Galileo satellite navigation network have been restored, GSA announced July 18, although it warned users to expect “some fluctuations until further notice.”
The agency said the outage, which began July 11 and affected Galileo services worldwide except for the Search-and-Rescue function, was caused by “an equipment malfunction in the Galileo control centers that calculate time and orbit predictions, and which are used to compute the navigation message. The malfunction affected different elements on both centers.”
An independent board of inquiry will be established to invested the root causes of what GSA conceded was a “major incident.”
PARIS — A general outage of Europe’s Galileo positioning, navigation and timing network has been out of service, except for search-and-rescue functions, since late July 11 due to an undefined ground-infrastructure issue continued into midday July 15 with no indication of when it will return to service.
The problem was first notified to Galileo users in a NAGU — Note of Advisory to Galileo Users — late on July 11, with updates on July 13 and 14h.
The Prague-based GSA, which manages the system on behalf of the 28-nation European Union, said an Anomaly Review Board had been created with experts from GSA, The 22-nation European Space Agency, the European Commission and industry, had been created to assess the problem and restore service “as soon as possible,” GSA said in a July 15 statement.
Galileo ground segment. Credit: ESA
GSA sought to minimize the import of the shutdown, saying the Galileo network remains in its “Initial Services” phase, which began December 2016 and is scheduled to lead to full operational service in 2020.
“During this initial ‘pilot’ phase preceding the ‘Full Operational Services’ phase, Galileo signals are used in combination with other satellite navigation systems, which allows for the detection of technical issues before the system becomes fully operational,” GSA said. “It is precisely to cater for such initial technical incidents that the EU is rolling out Galileo progressively.”
The GSA said that part of the transition from Initial Services to full operations in 2020 is the reinforcement of redundancy. Galileo currently has two main control centers, in Germany and Italy, each of which can act solo in the event of a problem with the other.
The GSA did not say whether a specific system component, which currently has no backup, was responsible for the current outage. It did say the problem will have “no cost impact, as maintenance contracts of the Galileo system currently cover such events.”
The Galileo constellation now counts 26 satellites in orbit, with additional spacecraft to launch in 2020. With full operational status reached then, Galileo should be able to be used independently of GPS, China’s Beidou or Russia’s Glonass constellations.

French President endorses more-active strategy to defend French military satellites

French President Emmanuel Macron. Credit: Elysee Palace
PARIS — French President Emmanuel Macron on July 13 endorsed Defense Minister Florence Parly’s proposal for a more-active defense of French space assets but gave few details on what policy and legal limits would be set.
Notably absent was a hint of whether France’s new military space doctrine would stop at the use of lasers and other nondestructive space-defense tactics or would permit more direct measures in the face of hostile action.
Addressing French defense commanders here, Macron said the new doctrine “will assure our defense in space and through space. We will reinforce our space situational awareness. We will better protect our satellites — including through active means.”
Macron said a Space Command would be created inside the French air force in September and that ultimately the air force would become the Air and Space Force. “The necessary new investments will be decided,” he said.
France’s new military space doctrine had been expected since January but its announcement was postponed in the context of weekly demonstrations by the Yellow Vest movement.
France’s military program law for 2019-2025 foresees spending 3.6 billion euros to renew France’s current fleet of military space assets — intelligence, reconnaissance, intelligence and surveillance with the new CSO optical observation satellites; telecommunications with the coming Syracuse 4 generation spacecraft in geostationary orbit; and signals intelligence with the Ceres constellation in low Earth orbit.
Another 400 million euros has been set aside for military space research and development, much of it carried out in partnership between the French arms procurement agency, DGA, and the French space agency, CNES.
Whether there is much room to increase that budget is unclear.
Parly made clear France’s new concern over what’s happening in orbit in a September 2018 speech that focused on Russia’s Luch-Olymp satellite, which travelled around the geostationary arc 36,000 kilometers over the equator making close observations of several satellites, including the French-Italian Athena-Fidus broadband communications spacecraft: http://bit.ly/2XYNpTS
Since then, prime contractors Thales Alenia Space and Airbus Defence and Space have been tasked with adding cameras to the two Syracuse 4 telecommunications satellites, 4A and 4B, to be launched to replace the current Syracuse-3 system.
Gen. Michel Friedling, commander, French Joint Space Command. Credit: French Defense Ministry
Gen. Michel Friedling, head of the French Joint Space Command, has said France is still debating how far it would go, and under what circumstances, to counter a threat.
“Space has always been militarized, and now it has become ‘arsenalized,’” Friedling said during the Paris Air Forum here June 14, organized by La Tribune. “We see arms developed for use in space or against space assets that are either operational or in development. Our vulnerabilities are increasing at a time when dependence on space has never been so great.”
Friedling shied away from characterizing the new French stance as an “offensive” space strategy. He said it would be limited to defending French assets, as is permitted by the United Nations Charter.
Friedling said France has not been singled out for dubious or threatening actions in space, but that French dependence on space, and its status as a U.S. and NATO ally, mean it likely would play some part in a conflict among major powers that included space.
But how far is France willing to go?
“We are today working with partners, bilaterally and multilaterally, to answer these questions,” Friedling said. “We do not have the answers. For example, as of now we do not know how to determine what constitutes a hostile act in space.
“In the aeronautical and maritime domains, we know very well what a warning shot is. In space, we do not. There is a lot of political and legal work that needs to be done to get through this.”
Another complication for France is how its new strategy fits into a European context in which France is pulled in two directions: Pooling capacity and investment means a stronger presence in the world, but it also could constrain France in the use of its own space assets.
Jean-Paul Granier, a debut for space in the DGA’s strategy directorate, said he remained “skeptical about our ability to regulate space behavior. We couldn’t even find international agreement on a relatively modest proposal for space contract, or rules of the road. Non-space nations thought we were trying to prevent them from developing their own capabilities,” Granier said.
Granier said French cooperation with the United States military on space situational awareness (SSA) includes topics that are unlikely to be shared among all members of the European Union.
Eight EU nations have come together to define SSA services that would start by using existing nations’ assets, including France’s Graves radar, with upgrades partially financed by other member nations and by the EU Commission.

Maxar starts work on Ovzon-3, a novel, 500-kg GEO design for a new satellite operator

Ovzon has ordered an SSL-500 satellite platform, designed to carry up to 250 kilograms of payload for communications missions for a 500-kilogram launch mass.
PARIS — Commercial geostationary-orbit satellite orders are rare enough these days, and startup Swedish satellite operator Ovzon AB’s order with Maxar Technologies is even rarer — a 500-kilogram spacecraft for mobile, mainly government, communications to mobile terminals.
Maxar is using its Legion satellite frame, designed for Maxar’s next-generation optical imaging satellites in low Earth orbit, and borrowing elements from its venerable 1300 geostationary satellite design for the Ovzon-3 satellite.
Maxar announced July 12 that work on the satellite had begun following the latest financial raise by Ovzon. The satellite is scheduled for launch in 2021 aboard a SpaceX Falcon Heavy rocket. It will include an Ovzon-designed digital signal processor.
The use of a Falcon Heavy to launch a single 500-kilogram satellite sounds like overkill. But Ovzon has said the choice made to assure direct injection into the geostationary arc rather than at a more-common drop-off point in geostationary-transfer orbit.
Ovzon has said it has already had bookings totaling $65 million for Ovzon-3, including a three-year contract with Intelsat valued at $56 million. Ovzon is leasing capacity Intelsat’s IS-39 satellite, scheduled for launch this summer aboard a European Ariane 5 rocket.
The Ovzon financing that set in motion the Maxar contract — which was signed in December 2018 — includes a loan from Proventus Capital Partners. Ovzon completed a rights offering in January for 750 million Swedish krona ($79 million)  and a senior secured six-year loan for $60 million and a subordinated loan of 200 million krona.
The Ovzon order was a vote of confidence in Maxar, which had openly speculated whether to close or sell its telecommunications satellite business given the decline in that market. Maxar has since decided to reorganize the business.
How much of a market there is for small geostationary satellites is unclear. Several companies have expressed interest in building or buying such spacecraft to fill in capacity at a given orbital slot without having to commit $200 million or more for a standard-size geostationary satellite.
“We chose Maxar to build Ovzon 3 because they have a strong reputation of delivering world-class, reliable products backed by industry leading customer service and manufacturing agility,” Ovzon Chief Executive Magnus Rene said in a July 12 statement. “Ovzon 3 is an important first step towards fulfilling our strategy to further revolutionize mobile broadband by satellite, offering the highest bandwidth with the smallest terminals.”

Indonesia, unable to find gapfiller Ku-band HTS satellite, seeks extension of regulatory deadline

Indonesia’s PT Palapa Satelit Nusa Sejahtara and China Great Wall Industry Corp. signed the $220-million Palapan-N1 in-orbit delivery contract in May 2017, but it did not enter into force until October of that year. Credit: CCTV
PARIS — Indonesia’s May 2017 contract signing ceremony with China Great Wall Industry Corp. (CGWIC) for the Palapa-N1 Ku-band high-throughput satellite was always going to be a close call with respect to the satellite’s regulatory in-service deadline of August 2019.
Given the five-month delay between the ceremony and the $220-million contract’s effective start date on Oct. 20, 2017, that became mission impossible.  The contract calls for CGWIC to deliver Palapa-N1 into orbit by early June 2020.
Indonesia’s PT Palapa Satelit Nusa Sejahtera, the company signing the contract, knew it needed to find an in-orbit satellite using the same Ku-band HTS frequencies as those reserved for the Palapa-N1 to keep the reservation with the International Telecommunication Union (ITU).
A gapfiller satellite was necessary because even though Indonesia’s Palapa D now occupies the 113 degrees east orbital location planned for Palapa N1, it does not cover all the Ku-band capacity reserved for the new satellite and its HTS capacity.
Indonesia estimated that there are the equivalent of seven transponders of capacity that would be abandoned if it could not find a temporary replacement to add to Palapa D at the 113-degree slot.
Indonesia’s Ministry of Communication and Informatics had reserved the Palapa-N1 slot with the ITU in August 2012 under the name Palapa-C1-B. Under the standard ITU rules, that meant the frequencies reserved had to be put into use within seven years, or August 2019.
The remaining frequencies in the reservation would be secured by Palapa-D, whose anticipated retirement date is July 2020.
Indonesia in recent years has become one of the world’s most active nations in terms of satellite use and the dynamism of its domestic satellite market. With a population of 250 million spread over 17,500 islands, it is a satellite service provider’s dream come true. Multiple fleet operators are active in the country.
But finding a suitable in-orbit satellite proved difficult. “Given that only a few satellites are equipped with the frequency band of interest, it has not been possible to identify a suitable satellite,” the Indonesian ministry said in a statement to the ITU.
With the deadline fast approaching, the ministry is now asking the ITU for a deadline extension, to July 2020.
Indonesian authorities have not sought to hide behind smokescreens such as “force majeure” or alleging military use for Palapa-N1 to explain why the country will miss its deadline by nearly a year. The reason was simply “the difficulty [in finding] financing,” the ministry said.
The CGWIC contract includes an offer of financing in addition to the satellite’s construction and launch and a portion of the ground segment.
In defense of its request, the ministry is asking the ITU to take account of Indonesia’s status as a developing country.
This stands every chance of obtaining the extension. The ITU’s Resolution 80, which is now being reviewed for possible modification, deals with applying due diligence to the ITU’s Convention and says:
“[C]onditions could be specified under which extensions might be granted on an exceptional basis to developing countries when they are not able to complete the regulatory date requirements, so that sufficient time for design, construction and launch of satellite systems is made available….
“[The conditions created under the previous paragraph should be included in the Radio Regulations as provisions that would allow the Radiocommunication Bureau to grant the extension.”

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