Space Intel Report - Intelligence report for the space industry

U.S. C-Band Alliance proposes to auction 9 20-MHz blocs; 3 can be cleared within 18 months

May 21, 2019

The C-Band Alliance proposes to divide the 200 MHz it is offering to sell to terrestrial 5G operators into nine 20-MHz blocs, called Partial Economic Areas (PEAs), plus a 20-MHz guard band. Credit: C-Band Alliance
LUXEMBOURG — The C-Band Alliance of satellite operators proposing to auction off 180 MHz of C-band spectrum to 5G terrestrial network operators in the United States proposed to auction the frequency in nine 20-MHz blocs that it said would optimize the participation of rural and urban bidders.
Three of the nine blocs could be released for 5G deployment within 18 months of an order by the U.S. Federal Communications Commission (FCC), the CBA said.
In a May 21 submission to the FCC, the CBA said the number of C-band dish antennas in these three Partial Economic Areas (PEAs) is low enough to permit them to be refitted with filters to allow terrestrial 5G within 18 months without disturbing the C-band satellite distribution that would continue in the remaining 300 MHz — and without launching new C-band satellites.
The CBA, led by satellite fleet operators Intelsat and SES and including Telesat and Eutelsat, has committed to financing the antenna retrofits and other costs incurred by their current customers to avoid signal interference as 5G terrestrial broadcasts enter what is now their exclusive C-band territory.
The CBA has said it could make the entire 200 MHz — 180 MHz after accounting for a 20 MHz guard band separating satellite and terrestrial users — available within 36 months of an FCC decision approving the auction.
For certain areas, the spectrum clearing will take more time and require the launch of new satellites. Intelsat and SES have committed to ordering eight small C-band telecommunications spacecraft if the FCC OKs the auction. Six of these would be launched: http://bit.ly/2Wpybql
“All incumbent C-band satellite users will be served by a denser satellite network delivery capacity similar to the planned pre-relocation C-band satellite fleets, but in the remaining 300 MHz,” the CBA said in its May 21 filing to the FCC.
The nine-bloc scenario is still subject to modification pending ongoing discussions with the interested parties, CBA said. The goal, the alliance said is to optimize the participating of bidders in both rural and urban areas.
Each block is small enough to allow regional players a shot at winning a bid, and large enough to appeal to bidders seeking to aggregate spectrum for seamless coverage in larger areas.
The CBA said the 20-MHz bloc size is compatible with 3GPP, an organization that develops mobile communications standards.

Airbus says 3 orders prove geostationary-satellite market’s continued viability, describes new GEO-market product

May 20, 2019

Nicolas Chamussy. Credit: Euroconsult
WASHINGTON — For Airbus Defence and Space, the market for geostationary-orbit satellites is, if not well, at least alive and likely to remain so for the long term as manufacturers develop software-defined payloads smaller, less-costly satellites in GEO orbit.
Airbus announced three GEO-orbit satellite orders on May 6, two of them won in cooperation with Thales Alenia Space for the Spanish Ministry of Defense — http://bit.ly/2WqWosY — and one for Malaysia’s Measat commercial fleet operator including Measat’s first HTS payload and an L-band GPS-overlay hosted payload for the Korea Aerospace Research Institute (KARI).
“These are GEO satellites, even if they are with a new-generation platform and flexible payloads,” said Nicolas Chamussy, head of Airbus Space’s satellite division. “If you want a demonstration that there is still a need for these big satellites — this is it.”
Chamussy is leaving his post as of June 1 and will be reassigned, presumably within the Airbus Group but he declined to talk about his future during a briefing here at the Satellite 2019 conference.
Given the state of the geostationary-satellite market — less than 10 GEO-orbiting satellites ordered in 2018 worldwide — Chamussy is going out with a bang. The two Spainsat NG satellites were in negotiation for a long time. Airbus is providing two Eurostar NEO all-electric platforms, with Airbus and Thales Alenia Space both prodding the X-, UHF- and military-Ka-band payloads.
Industry officials said Airbus has also won a competition to build at least two or three midsize, identical Ka-band satellites with flexible payloads for mobile satellite services provider Inmarsat of London. A contract announcement is expected in the coming weeks: http://bit.ly/2vF5CpD
Airbus expects to deliver four GEO-orbit telecommunications satellites this year: the Telstar-16 satellite for AT&T’s DirecTV; the Eutelsat 5WB, using a Northrop Grumman Innovation Systems platform and an Airbus payload; and two military satellites that Chamussy declined to name.
The two are almost certainly for Egypt’s military, here too in cooperation with Thales Alenia Space; and the KMilSatcom satellite for South Korea’s Defense Acquisition Program Administration (DAPA).
The Korean contract resulted from an unusual sequence of events in which Lockheed Martin was to provide the satellite as part of a wider deal to provide F-35 Joint Strike Fighters, with a satellite thrown in. Lockheed transferred the satellite piece to Airbus after running into delays: http://bit.ly/2JQKo0s
Chamussy said Airbus has designed a new product, called OneSat, intended to capitalize on GEO orbit’s advantages — wide coverage — while reducing its disadvantages — high cost, long manufacturing cycles and the stranded-asset problem as GEO satellites’ 15- to 20-year operating lives are too long to keep up with technology advances.
OneSat is a midsize satellite platform — 10- 12 kilowatts of power, no more than 3,500 kilograms’ launch mass, and a delivery time of 18-24 months from contract.
“This would be focused on one mission, with a kind of series production of a couple of satellites per year of the same size and the same frequency band,” Chamussy said. “The idea is to avoid bespoke satellites, and especially bespoke payloads. Instead it is a recurring design with fully flexible payloads.
“It’s not just a bus, but a full satellite with as much recurring [from satellite to satellite] as we can. We want a standardized satellite that we do not need to tweak too much. We want to deliver a high megabits-per-dollar solution.”
Chamussy declined to comment on the Inmarsat competition beyond saying Airbus had proposed the OneSat product to Inmarsat and to other satellite operators. Fleet operator SES in particular is preparing a competition for a similar product.
Airbus is also under contract to Inmarsat to deliver two large Inmarsat-6-generation L-band satellites to maintain Inmarsat’s core L-band mobile communications business.
Other manufacturers are working on similar designs as OneSat as satellite operators seek to cut costs and remain competitive.

With Dish transaction, EchoStar is now Hughes Network Systems and little else

May 20, 2019

Charlie Ergen. Credit: CNET via Youtube
PARIS — EchoStar is selling almost all its EchoStar Satellite Services (ESS) business to sister company Dish Network in a transaction that formalizes what has been true for some time: EchoStar is now Hughes Network Systems and little else.
EchoStar and Dish on May 20 said all the ESS satellite assets and tracking, telemetry and command services that now are used for Dish Networks’ direct-broadcast television service will be transferred to Dish.
In return, Echostar shareholders will receive 22.9 million shares of Class A Dish stock in what EchoStar describes as a tax-free transaction.
Dish and EchoStar separate in 2008, but Dish has remained the dominant customer for ESS. In 2011, EchoStar — like Dish, majority-owned by Charlie Ergen — paid $2 billion to purchase broadband ground hardware and services specialist Hughes.
Since then, the ESS business has been unable to get much traction in the United States market or break into the dominant businesses of competitors SES and Intelsat.
In recent years, the U.S. market for fixed satellite services operators has been especially battered by the move to streaming services and the broader decline in the market for geostationary-orbit television satellites.
ESS revenue has declined, while Hughes’s has increased.
EchoStar Chief Executive Michael T. Dugan said the decision to hive off ESS and to focus on Hughes is a reflection of that reality.
“This transaction will allow EchoStar to focus our efforts on our high-growth business of broadband services and other initiatives, while eliminating a negative growth component of our financial performance and the risk associated with providing services to a solitary customer,” Dugan said in a May 20 statement.
ESS will not disappear entirely. EchoStar Mobile of Ireland, which is commercializing an S-band mobile service in Europe, will remain with EchoStar.

Panasonic challenges flat-panel antenna builders Ball Aerospace, Kymeta, Phasor on cost & interoperability

May 17, 2019

Lisa Kuo, Panasonic Avionics Corp. director of technical sales. Credit: Panasonic
WASHINGTON — Electronically steered antenna designers Ball Aerospace, Kymeta and Phasor and aero-connectivity provider Panasonic Avionics said affordable mass-market products were still some ways off for user terminals and that reliability is already an issue for mechanically steered antennas.
Lisa Kuo, director of technical sales at Panasonic, said airlines want antennas and modems that are future-proof, meaning at least 10 years of service before they are obsolete. That means hedging between Ku- and Ka-band equipment.
In a statement repeated multiple times here during the Satellite 2019 conference, Kuo said hardware builders need to move to interoperability even if that means sacrificing some early market advantage.
“I get it: You want to dominate the market with a proprietary system,” Kuo said. “But that is not in the interest of the customers. How can we make sure these systems can all work together?”
One path to standardization would be to design a dual Ka-/Ku-band system to permit users to remain connected as they move in and out of a given satellite’s coverage, or to switch immediately in the event of a satellite failure.
The phased array antenna builders said they are working on both.
“When we started, around 2012, Ka-band was very recent in orbit,” said David Garrood, senior vice president of business development at Phasor. “That’s why we went to Ku.
“But Ka is increasingly seen as important, and as offering lower-cost satellite capacity. So it is definitely a market we are looking at and we propose start that development in the next few months.”
Peter Moosbrugger. Credit: Ball Aerospace
Ball Aerospace has been building electronically steered antennas for military applications for years and is now positioning itself for commercial applications including low-Earth-orbit satellite constellations and 5G terrestrial networks.
Ball recently tested such an antenna to communicate with satellite fleet operator Telesat’s experimental LEO Phase 1 satellite. Ball said in January that its antenna tracked the satellite over several passes.
Peter Moosbrugger, Ball’s chief technologist for phased array and RF technology, said has already demonstrated ground user hardware for Ku- and Ka-band systems. He said the goal is to leverage the large volumes needed for 5G network antennas to bring down the unit cost of satellite user terminals.
“We are building a supply-chain ecosystem that can address a pretty wide range of supply,” Moosbrugger said. “That includes 5G and different satcom market verticals. We focus our [second-generation] architecture on something that could scale from an ecosystem that needs to be ITAR-compliant — export-control compliant — to address a worldwide market at really high volumes.”
Kymeta Corp. made a splash in the electronically steered antenna market in 2017 by saying it had deployed hardware to customers, military and commercial. Kymeta has been working with satellite fleet operator Intelsat on antennas to operate with OneWeb’s constellation of low-orbiting satellites, in Ku-band.
Lilac Muller. Credit: Kymeta Corp.
“Kymeta started with Ka-band development and pivoted to Ku for our business partnership with Intelsat,” said Lilac Muller, Kymeta’s vice president of product management.
“But when you look at what [satellite] capacity is going up in the next few years, it’s a lot of Ka capacity. We’re pursuing a Ka product in parallel to Ku. Interoperability is a big question. We’re going to tackle interoperability between GEO and LEO first, before we go to interoperability between Ku and Ka. So for us right now it’s two product lines.”
Panasonic and mobile satellite services provider Inmarsat in September 2018 announced a strategic collaboration that would enable each of them to offer the other’s in-flight connectivity solutions. Panasonic’s IFC package is in Ku-band, Inmarsat’s Global Xpress fleet is in Ka-band.
There was much industry speculation at the time over whether this was Panasonic’s way of conceding that Ka-band was the future, or was Inmarsat’s concession that it needed Panasonic’s customer base to succeed.
Kuo said it was Panasonic’s way of hedging its bets.
“We are not looking at this as Ku vs Ka,” Kuo said. “There are a lot of technologies out there and we need to diversify our portfolio. We picked Inmarsat as our first step because they are very established in the industry. This is a strategic first step that we chose. It’s really not about the frequency band.”
Unit cost vs life-cycle cost of ownership
Moosbrugger said the cost discussion between electronically and mechanically steered antennas often forgets the total cost of ownership of mechanical systems.
“I’ve seen numbers o mechanical systems that are in the 80,000- to 100,000-hour range” of commercial lifespan, Moosbrugger said. “You go on line and find the calculator for reliability and how many planes are going down [for servicing] a year, and with 10,000 planes, it’s a pretty significant number.”
Muller said Kymeta has seen similar problems with the land-transportation market where Kymeta is focused. Kymeta is not targeting the aero market yet.
“Just for reference: There are about 100,000 new or refurbished inner-city buses purchased each year,” Muller said. “That gives you a sense of the volume. You want to talk higher? RVs [recreational vehicles] — 1 million a year. Two million trucks going city to city in a year.”
While these current rooftop systems are less expensive than the electronically steered antennas, they hold out the promise of longer service life.
“The number one complaint [of railroad customers] is the amount of time they have to pull it out of service,” Mullen said. “They have guys on top of the locomotives messing around with various mechanical systems that are wearing down.
“They can’t wait for all our technologies to be out in the market to stop messing with mechanically steered systems.”

Eutelsat: Yes, we missed our revenue target again. Judge us instead on EBITDA margin, cash flow, ROIC

May 16, 2019

Credit: Eutelsat
PARIS — Satellite fleet operator Eutelsat said its core broadcast market remains solid and that its poor track record in forecasting annual revenue is less important than hitting its key performance targets on EBITDA margin, free cash flow and return on invested capital.
Paris-based Eutelsat surprised the market on the downside yet again by saying its total revenue for the fiscal year ending June 30 will not be flat from the previous year, but down 3%.
But the company reiterated its EBITDA margin target of at least 78% of revenue, and a 5% average annual growth in free cash flow between 2017 and 2020.
“Even though we have missed on the revenue [forecasts] in the past, we have met all the non-revenue KPIs,” Chief Executive Rodolphe Belmer said. “Cash flow and EBITDA have not been missed. We are delivering a financial performance that is leading the pack. Our EBITDA margin stands significantly higher, with a better orientation, than our competitors.”
That is mainly true relative to its biggest competitors, SES and Intelsat. But it’s not true for Telesat, whose EBITDA margins are better than 80%.
Eutelsat did deliver one positive surprise: an expected favorable French government tax ruling that would add 70 million euros ($78.6 million) to Eutelsat’s cash flow. A final confirmation of that assessment is expected within weeks, before Eutelsat closes its fiscal-year 2018-19 books.
In May 14 conference calls, Belmer said dismissed suggestions that Eutelsat join SES, Intelsat and Telesat in investing in non-geostationary orbit satellite broadband constellations.
While some mobile broadband applications might be well served by lower-orbit constellations, Eutelsat’s focus on fixed broadband and video distribution are immune from these new satellite architectures.
“The video segment will be untouched by LEO,” Belmer said. For fixed broadband, which is a focus of the mega-constellations, Belmer said low- and medium-Earth orbit systems will be unable, for now, to provide low-cost antennas acceptable to consumers.
Belmer also said Eutelsat is in fact making a small step into the non-GEO market with a test satellite to launch this year for a planned IoT constellation with Sigfox. Eutelsat is evaluating bids for a group of several satellites to launch as soon as 2020-2021, to be followed by a constellation of 20-30 satellites.
Belmer said these satellites will be built and launched at a price of less than 1 million euros apiece.
Credit: Eutelsat
Eutelsat’s Video division accounts for 67% of total revenue and was down 2.5% in the three months ending March 31 compared to the same period a year earlier. But the company reported stable revenue from its core broadcast business. The division total was dragged down by the continued fall in professional video, which continues to show double-digit percentage revenue reduction. It is now 8% of the division total.
Total video channels on Eutelsat’s broadcast fleet increased 2%, to 7,021 as of March 31, including 1,509 high-definition channels, up 16% from a year earlier. HD channels are now 22% of Eutelsat’s total broadcast portfolio.
Eutelsat said the total consumption of its broadcast business, measured in megabits per second, was up 2% over a year ago.
The uptake of MPEG-4 compression remains well ahead of HD channel count, meaning Eutelsat should not see a large drop in megabits used as HD expands.
Credit: Eutelsat
Eutelsat’s Konnect Africa consumer-broadband business has yet to gain traction following a remarkable string of bad luck.
Eutelsat had leased capacity on Israel-based Spacecom’s Amos-6 satellite, which was destroyed in a September 2016 on-pad explosion of a SpaceX Falcon 9 rocket. The company then leased capacity on United Arab Emirates-based Yahsat’s Al Yah 3.
Al Yah 3 was late in launching and when a European Ariane 5 rocket conducted the launch, it placed the satellite into a wrong orbit. It wasn’t until May 2018 that Yahsat declared Al Yah 3 ready for service.
But in recent months, elections in several large African markets have effectively shut down internet access. In other markets, regulations on importing satellite two-way terminals have been unclear or non-existent, blocking distribution.
Those are temporary glitches, Belmer said, and served to validate the strategy of starting small in Africa with leased capacity before the launch — now set for December — of Eutelsat’s own Konnect satellite, with a throughput of 70 Gbps.
But during the interim, Yahsat has created a joint venture with satellite broadband specialist Hughes Network Systems for Africa, the Middle East and West Asia, using the same Al Yah 3 satellite whose capacity is leased by Eutelsat: http://bit.ly/2Lmn24X
Hughes and Yahsat have expanded their relationship to Brazil with a second joint venture.
Hughes and Yahsat have said their African venture is doing well but they have not gone into any detail. Even so, the combination of these two companies was not foreseen when Eutelsat ordered its Konnect satellite in early 2018.
“We are in competition with Yahsat for the distribution of connectivity services in Africa,” Belmer said. “We both have capacity on Al Yah 3. “Hughes has associated itself to the distribution of this service, so we are de facto in competition with Hughes.”
Belmer said that once Konnect is in service by mid-2020, it will enable Eutelsat to cut prices and stimulate growth. “Al Yah 3 only covers a portion of Africa,” he said.
The Konnect satellite will also target Europe, where Eutelsat’s Ka-Sat satellite is running out of capacity on beams covering some of the highest-demand markets.
Eutelsat is scrapping part of its wholesale distribution strategy for Ka-Sat after concluding that its distributors did not always have the incentive to maximize sales. A Preferred Partner Program with distributors that are focused on satellite internet has been put into place with promising early results, the company said.

UrtheCast says its Deimos Imaging subsidiary, up for sale, had high operating loss in Q1

May 15, 2019

UrtheCast has opened bidding for the sale of its Deimos Imaging division, including the Deimos-1 and Deimos-2 satellites. Here are the financial results from Deimos. Figures are in thousands of Canadian dollars. Credit: UrtheCast
PARIS — Satellite geospatial imagery and service provider UrtheCast Corp. said its Deimos Imaging subsidiary, which it is trying to sell, reported a 15% increase in revenue in Q1 2019 but a still-substantial operating loss.
UrtheCast said Spain’s Banco de Sabadell has eased some repayment requirements for the loan, valued at 25 million euros ($28 million), taken out in 2015, but the Spanish company’s indebtedness will weigh heavily in negotiations for the sale of Deimos.
In a May 14 report to shareholders, Canada-based UrtheCast said it hopes to generate sufficient proceeds from the Deimos sale to pay off the Sabadell loan.
The Deimos-1 satellite was launched in 2009 and has a designed operational life of 10 years. The higher-resolution Deimos-2, launched in 2014, has at least a seven-year life. Earth observation satellites usually exceed their estimated operating lives, but the likely need to replace the two spacecraft in the near term will be another factor in the sale.
Here are Deimos’s contract obligations as of March 31. Credit: UrtheCast
UrtheCast’s decision to sell its principal satellite assets to shed Deimos’s operating costs is part of UrtheCast’s planned path to regain financial viability and build its own UrtheDaily optical satellite constellation and, later on, its OptiSAR radar satellites using proprietary technology: http://bit.ly/2E8OI7C
The company had just 2.96 million Canadian dollars ($2.2 million) in cash as of March 31, insufficient to carry it though 2019 and maintain the business. It is seeking additional financing beyond a $12-million, one-year loan from Balzano Investments Ltd., which carries a 14% interest. Balzano was given a seat on the UrtheCast board.
UrtheCast management contributed to the transaction in exchange for share-purchase warrants.
UrtheCast reported net finance charges of 1.64 million Canadian dollars in Q1 2019, compared to 158,000 Canadian dollars a year ago, reflecting the weight of the $12-million loan.
Another source of UrtheCast revenue is processing and distributing imagery for the PanGeo Alliance of Earth observation satellite operators.
What UrtheCast’s relationship will be with the PanGeo group after the sale of Deimos is unclear. The company said “ a material portion of its EO business revenue will be derived from the distribution and value-added services it provides… other operators in the PanGeo Alliance.”
In a statement filed May 14 with the Toronto Stock Exchange, UrtheCast said it booked no engineering or value-added revenue in the three months ending March 31, compared to 3.25 million Canadian dollars a year earlier.
The company said “progress delays incurred by its key subcontractors in completing milestones under its engineering and value-added services contract” was the reason.
UrtheCast reported a net operating loss of 1.4 million Canadian dollars in Q1 2019 on revenue of 4.425 million Canadian dollars.

Avio reports 10%-plus increase in revenue, EBITDA for Q1 2019; expects Ariane 6 contract soon

May 13, 2019

Credit: Avio/Arianespace
PARIS — Rocket hardware builder Avio S.p.A. reported double-digit increases in Q1 revenue and adjusted EBITDA compared to last year and said it expected to sign contracts for its work on 14 Ariane 6 rockets in the coming months.
Avio is prime contractor for Europe’s Vega light-lift vehicle, which has been successful in its first 14 flights, the latest being in March. An upgraded Vega, called Vega-C, is scheduled to make its inaugural flight in early 2020.
Avio’s Vega first stage also serves as the strap-on booster for the heavy-lift Ariane 6 rocket, which comes with two-booster and four-booster versions.
Ariane 6 is scheduled to make its first flight in mid-2020. A contract for the first 14 rockets after that inaugural launch had been held up for months as the Ariane 6 contracting team, led by ArianeGroup, pressed European governments for concrete guarantees on Ariane 6 missions between 2021 and 2023.
A recent agreement by European Space Agency (ESA) governments permitted ArianeGroup and Arianespace to sign a 14-rocket production contract on May 6.
Avio said it will in turn sign contracts for its work on the 14 rockets with ArianeGroup in the coming months.
The question for Avio is whether the Vega rocket will be able to capture the currently booming small-satellite launch market by keeping its prices competitive and its Vega launch rate high enough.
The vehicle is expected to launch four times in 2019, including two launches of the United Arab Emirates FalconEye optical reconnaissance satellites.
Vega’s Small Satellite Mission Service (SSMS) is designed to provide relatively low-cost launch to low Earth orbit for cubesats stacked onto a dispenser and then released one by one.
The first SSMS mission is now sold out and is scheduled to carry more than 40 satellites for its first launch in September.
The ESA agreement that cleared the way for the 14-rocket Ariane 6 order included a clear demarcation between payloads to launch on Vega-C, and those to launch on the Ariane 62 rocket, which is fitted with two strap-on boosters.
Payloads weighing 200-2,350 kilograms — the Vega-C limit — will be assigned to Vega-C by Arianespace. Satellites weighing more than that will be assigned to Ariane 62. Payloads weighing less than 200 kilograms will be assigned to whichever vehicle has the earlier launch availability.
For the three months ending March 31, Avio reported revenue of 82.6 million euros ($73.6 million), up 10% from the same period a year ago. Adjusted EBITDA was 7.1 million euros, up 13% from a year earlier and equivalent to 8.6% of revenue, compared to 8.3% a year ago.
Avio said that as of March 31 it had cash and equivalents totaling 48.7 million euros, unchanged from Dec. 31.
Avio Chief Executive Giulio Ranzo said 2019 is a crucial year for the company as it conducts a planned total of four Vega and five Ariane 6 missions.

Gogo sees higher passenger Wi-Fi use; ADS-B deadline is IFC headwind; says IS-29e satellite failure shows Ku- advantage

May 10, 2019

Gogo’s 2Ku antennas during installation. Credit: Gogo
WASHINGTON — In-flight connectivity provider Gogo Inc. reported increased passenger take-up rates on commercial flights but said last-minute U.S. airline purchases of ADS-B aircraft surveillance gear to meet a regulatory deadline had slowed IFC installations on U.S. business aircraft.
Gogo also pointed to the recent failure of the Intelsat 29e satellite as evidence of the inherent superiority of Ku-band and its large installed base of satellites compared to Ka-band.
In a May 9 investor call, Gogo Chief Executive Oakleigh Thorne and Chief Financial Officer Barry Rowan portrayed the company has emerging from the de-icing problem that took many Gogo terminals out of service in 2018, the American Airlines decision to drop Gogo’s air-to-ground system in favor of Viasat Inc.’s Ka-band satellite solution and the profitability issues that affected all IFC providers.
Thorne said the de-icing issue, in which aircraft de-icing fluid seeped into the Gogo gear, is now over, with 22,000 flights conducted after Gogo’s remedial service, all without incident.
The 550 American Airlines planes that are quitting Gogo for Viasat will all have had their Gogo equipment dis-installed by mid-year.
The business model challenges for IFC providers that had put some of them on a watch list of possible failures have now eased as Gogo and its competitors have pulled back from money-losing deals.
Now is the time for cleaning up the balance sheet. Gogo recently closed a $925-million debt offering at 9.875% due 2024, replacing 12.5% notes.
Gogo told investors in February that it was likely to conclude a transaction by May with strategic of financial investors to cut its debt: http://bit.ly/2E1KMVY
The May date now looks unlikely, but Rowan said discussions have narrowed to a strategic investor.
“This is an extension of conversations we had last fall, when we were thinking about selling a division,” Rowan said. “Now it looks more like a strategic investment in the company that would come along in conjunction with some kind of commercial arrangement. It would bring in some capital to the company.”
Gogo said passenger take rates — the percent of passengers on Gogo-equipped flights that use the service — increased to 13.9% from 10.5% a year ago on U.S. commercial flights, and to 13.6% from 12.2% on flights in the rest of the world, where Gogo’s growth lies.
Thorne said just 35% of commercial aircraft outside North America are IFC-equipped by Gogo and its competitors, leaving a long runway for growth in the coming years.
Thorne said Gogo has detected what may be a trend in airlines moving to offer free Wi-Fi to passengers, which will increase take rate and could be used as a marketing argument. Gogo customers Virgin Australia and Japan Air Lines have done this, and he suggested that JAL’s market-share lead over rival ANA is in part due to the free-Wi-Fi policy.
The U.S. Federal Aviation Administration (FAA) set an end-2019 deadline for business aircraft to be equipped with ADS-B tracking equipment.
“We underestimated the impact,” Thorne said. “Apparently more owners than we thought procrastinated, and the MROs [maintenance, repair and overhaul] and dealers are now packed with planes trying to complete the install by the year’s end. These installs are crowding out budgets for IFC, but also literally crowding out shop floor space, and dealers are booked for IFC installs.”
The decline in aircraft on line in North America for the period is due to American Airlines moving part of its fleet to Viasat. Credit: Gogo

The sudden failure of the Intelsat 29e Ku-band satellite in April forced fleet operator Intelsat to scramble to reassign customers to other Intelsat satellites and, when necessary, onto satellites operated by competitors SES and Telesat: http://bit.ly/2GzIRK8
Gogo has said its decision to use Ku-band for its satellite-based IFC offer was mainly because of the large installed base of Ku-band satellites. Thorne said the IS-29e experience validated that decision. His comments may be read as an implicit dig at Viasat and Inmarsat, competitors that have Ka-band IFC offers.
“Because 29e was in the Ku constellation, customers could be moved rapidly to other satellites, and Intelsat has been able to institute restoration agreements,” Thorne said. “We were not on 29e, but had we been we would have been able to recover quickly.
“It highlights the risk airlines run if the rely on a closed Ka- constellation of three or four satellites that are meant to cover the entire globe. If one of those satellites is knocked out, that airline could go dark for a substantial portion of the globe, until their provider managed to launch another satellite. Relying on three or four satellites for global coverage is like playing Russian roulette with passengers’ connectivity needs.”
Gogo has bandwidth-lease contracts on 30 satellites owned by 12 operators, including Intelsat. “Most of our providers can move our adage to another satellite within hours, or weeks at most, if they were to suffer the same issue Intelsat just experienced,” he said.
Airline customers have said they would like to see contracts that account for the fact that their aircraft are spending relatively little time inside the satellite beam whose capacity they have leased.
Satellite builders are moving toward flexible beam-forming technologies that can follow the traffic, but a business model that permits airlines to pay only for bandwidth they use has yet to emerge.
Thorne said Gogo is pushing in this direction with its satellite providers.
“Today we lease capacity 24/7, but we only use it when planes are flying underneath it,” Thorne said. “This architecture suffers low capacity utilization and is not particularly conducive to the extreme mobility of the aero market, where demand moves around the planet at all hours of the day.
“We are working with our satellite partners on dynamic beam-forming technologies that are far better tuned to extreme mobility. They’ll give us ability to aim beams where we need them, when we need them, thereby dramatically improving capacity utilization and lowering per-megabit costs in the future.”
Thorne said the open-architecture approach of Gogo will allow the company to adapt to new satellite technologies more quickly than would be possible if it were tied to a given fleet operator.

Cubesat builder AAC Clyde Space reports 9% drop in Q1 revenue, but points to upward trend for the year

May 9, 2019

Luis Gomes, chief executive, AAC Clyde. Credit: AAC Clyde
WASHINGTON — Cubesat manufacturer AAC Clyde Space of Sweden and Scotland reported a 9% drop in revenue for the three months ending March 31 compared to a year earlier and said its U.S. president would be stepping down to better position the company in the world’s biggest smallsat market.
The move comes after AAC Clyde replaced its chief executive, hiring Surrey Satellite Technology Ltd. veteran Luis Gomes, effective earlier this month.
AAC Clyde Chairman Rolf Hallencreutz said the change in the United States is intended to better capture opportunities in the United States, which AAC Clyde has made a priority.
“We are now entering a new phase in North America and will require a different management structure to take full advantage of the changes we see in New Space,” Hallencreutz said. AAC Clyde Strategy Director Craig Clark, who is the founder of Clyde Space, will be acting head of AAC Clyde Space’s U.S. operations.
For the first three months of 2019, AAC Clyde reported revenue of 14.9 million Swedish krona, or $1.57 million, down 9% from the same period a year ago. Operating cash flow during the quarter was a negative 5 million krona.The company is raising 82.5 million krona via a share issue.
AAC Clyde shares are traded on the Nasdaq First North Stockholm market. The company has been selling itself as a growth story but has also said quarterly revenue could vary widely depending on the flow of orders for full satellites and satellite components.
Mats Thideman, the company’s acting chief executive and also its chief financial officer, said new orders during the quarter bode well for the financial outlook for the rest of the year.
“Order backlog, order intake and interest from the market [sets] the conditions for a profitable business,” Thideman said in a May 8 statement to shareholders. “Given the breadth of the orders we won at the beginning of the year from all over the world, we are well positioned to drive the development of the emerging New Space market.
“Success has meant that we are in an intensive recruitment period of new skills. The new recruits are a prerequisite for us to reach profitability.”
The standout contract during the quarter was to build two satellites for U.S.-based Orbcomm, an IoT hardware and service provider that has its own constellation of satellites but elected to contract with AAC Clyde for “Space as a Service.”
AAC Clyde will own the two satellites, to be used for Automatic Identification System maritime tracking, but Orbcomm will have exclusive use of the data: http://bit.ly/2J6yvTL. The contract is valued at 54 million krona.
York Space Systems’s first S-Class satellite was launched May 5 aboard a Rocket Lab Electron rocket and is reported healthy in orbit. Credit: York Space Systems
Another development that should be promising for AAC Clyde was the May 5 launch, aboard a Rocket Lab Electron rocket, of York Space Systems’s first S-Class satellite. The satellite is reported to be healthy and operating as planned in low Earth orbit.
U.S.-based York licenses multiple AAC Clyde Sirius components.
Above is a comparison of York Space Systems’s X-Class platform, on the left, and the S-Class platform. Credit: York Space Systems
“York’s prompt operation of the S-CLASS showcases their skill in designing and operating cutting-edge commercial spacecraft,” Gomes said in a statement. “We are delighted to partner with them on the S-CLASS and also note that AAC Clyde Space have reached yet another milestone with the successful commissioning of Sirius systems.”
“We believe that the contract model can attract many more customers who work with data from space but not see satellites as their core business,” Thideman said in his statement to shareholders.

Inviting criticism, Iridium CEO Desch says satellite orbital debris/space traffic regulations are needed — now

May 8, 2019

Credit: Iridium
WASHINGTON — With his second-generation constellation safely in orbit and more than 60 first-generation satellites, Iridium Chief Executive Matt Desch thinks it’s a good time get outspoken about orbital debris.
Desch admits right away that he can be accused of being disingenuous. Of his own satellite constellation — 95 satellites launched between 1997 and 2002 — more than 20% failed in orbit and will remain there for a century and now he wants to tighten regulations for debris mitigation?
“It’s a valid criticism,” Desch said. “It’s fair that people would say that. But tell me where I’m wrong in my statements about the problem.”
Iridium several years ago agreed to open its orbital data books to NASA and the U.S. Air Force — on a nondisclosure basis — to give these government agencies data on the Iridium constellation’s orbital data.
The company has one of its employees stationed at the Combined Space Operations Center (CSpOC) at Vandenberg Air Force Base, California.
In an interview here May 8 during the Satellite 2019 conference, Desch said Iridium receives multiple collision-alert warnings from CSpOC every week. It’s not something he likes to trumpet, he said, because too many people will either conclude the space traffic management issue is not a problem, or draw the opposite conclusion that low Earth orbit is a death trap for satellites.
“The situation is manageable right now,” Desch said. “We’re not talking about a situation like in the movie ‘Gravity.’ But if we want it to remain controllable, we need to act.”
Desch’s main issue is that the reliability forecasts made by constellation operators will prove far too optimistic, leaving multiple dead satellites in orbits at 1,000 kilometers and higher.
“From that altitude, if your satellite becomes basically a rock in orbit, it’s up there for 1,000 years,” he said. “If you have a constellation of 1,000 satellites, and you lose 15% of them, that’s 150 satellites.”
Desch does not pretend to have a detailed regulatory proposal on hand. But he said the industry needs one, and that it should include a requirement that satellite and rocket builders be grounded after an in-orbit failure until they have determined the failure’s cause.
This happens among launch-service providers because customers demand it. But for an operator of a constellation that can sustain the loss of 15% of its fleet and keep the business going, there is no similar pressure. Regulation could change that.
He is also in favor of obliging satellites flying higher than the International Space Station — around 400 kilometers — to carry on-board propulsion.
That is one of the proposals made by the U.S. Federal Communications Commission (FCC). It has not won universal support. The U.S. Defense Department worries that if such a rule is not tightly coupled with a requirement for a secure, encrypted satellite uplink, it could increase the possibility of satellites being hijacked to become weapons.
Desch said he would support such a coupling to require encrypted uplinks along with on-board propulsion.
But these measures would not necessarily reduce the number of “rocks” created when satellites fail in orbit.
Desch concedes the point. For now, there is no definitive answer in the absence of a service that can grab and properly dispose of dead satellites in low Earth orbit.
The OneWeb constellation’s 150-kilogram satellites, to orbit at 1,200 kilometers, include a grapple-friendly fixture in the hope that one day such an in-orbit waste-disposal system might be credible.

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