Viasat in Europe: Poland, Norway and Spain w/ Ka-Sat now, preparing for Viasat-3 über alles in 2021

Evan Dixon, managing director, Viasat Europe. Credit: Mobile World Congress video
MARGARETVILLE, N.Y. — Satellite broadband provider Viasat Inc., establishing a foothold in Europe while waiting for the late-2021 arrival of the Viasat-3 terabit-throughput satellite, is finding out that European governments are as bad as the United States in assessing broadband penetration in their territories.
That has made it more difficult for Viasat and its erstwhile partner and future competitor, fleet operator Eutelsat, to plan a commercial consumer broadband strategy.
Viasat and Eutelsat are still tied by the terms of their joint venture as it relates to deployment of capacity on the Eutelsat Ka-Sat satellite, whose beams in the highest-demand nations of Europe are about full.
Instead of competing for the remaining capacity in those markets, Viasat is devoting its efforts to Europe’s secondary markets, where Ka-Sat has capacity available.
That has meant Norway, Poland and, more recently, Spain — three countries of varying geographies, wealth distribution and populations.
“[W]e are in markets where we have meaningful capacity on Ka-Sat,” said Evan Dixon, managing director of Viasat Europe. “Ka-Sat is rather constrained in terms of capacity in Western Europe. What we’re trying to do is launch our retail services in markets where we can really build a foundation for the future.”
In a question-answer webcast on Viasat’s corporate blog, Dixon — based at Viasat’s Lausanne, Switzerland, office — said available maps of broadband penetration in all three nations are inaccurate. It’s a problem that exists in the United States as well, as recently highlighted by the U.S. Federal Communications Commission (FCC).
“[O]ne of the things we’re very focused on understanding is: How big is the market for our product? That question is one that we are finding out. The public data sources in terms of how large the populations are for unserved and underserved in these markets are entirely flawed. Our data is telling us very different things, so we’re trying to understand, based on experience, how big the market size is so we can bring that right into into ViaSat-3.”
Viasat’s offer to customers in Spain as of August 2019. Credit: Viasat Espana
Paris-based Eutelsat and Viasat have parted company with their future broadband plans and are now heading into direct competition. Eutelsat’s Konnect satellite, to launch late this year, is mainly for Africa but has a European footprint as well to add to Ka-Sat. Following in 2021 is the Konnect VHTS satellite centered over Europe.
That is the same year that Viasat has scheduled to launch of its second Viasat-3 satellite, the one covering Europe, the Middle East and Asia. The first Viasat-3, over the Americas, is scheduled for launch in early 2021.
ATP with Boeing for 3rd Viasat-3 satellite structure converted to formal contract in July
Viasat in July transformed an earlier Authorization to Proceed agreement with Boeing on a third Viasat-3, over the Asia-Pacific, into a firm contract. The satellite is scheduled for launch in 2022. Once in orbit, it will give Viasat a global ring, except for the poles, of coverage for aeronautical and military customers.
Viasat’s U.S. consumer broadband business has reported regular increases in average monthly subscription fees. But its total consumer base has stagnated and stood at 587,000 as of June 30 — a 1.7% increase over the previous year.
Viasat has said it prefers fewer, more-loyal and more-demanding customers taking the high-end subscription packages to a larger number of less-profitable customers. That business mix also allows Viasat more leeway to provide capacity for aeronautical broadband and military users.
Eutelsat has made consumer broadband a core of its future growth now that its the growth of its main business, direct-to-home television broadcast, is slowing.
Eutesat focusing on indirect distribution via partners in UK, France, northern Italy
After initial struggles with Ka-Sat market take-up, Eutelsat said its recent switch to a Preferred Partner Program (PPP) of distribution intermediaries has begun to establish a foothold in Britain, France and northern Italy.  Eutelsat reported 10,000 PPP subscribers as of June 30.
Viasat is currently offering unlimited-data, 50-mbps contracts in Spain for 50.96 euros per month, rising to 69.95 euros after three months.
In addition to the learning curve on where broadband capacity actually is, Viasat is confronting the fact that European consumers don’t always act the same as U.S. consumers.
“Certain markets that we’re in… customers do not feel comfortable about given a credit card over the phone,” Dixon said. Given the cost of acquiring each subscriber, “we like to make sure we know that the customer can pay us for the service we’re going to provide.
How to de-risk that subscriber acquisition cost will be one of the tricks Viasat, and Eutelsat, will need to learn.

UrtheCast looks to Deimos Imaging sale, new credit agreement this year to secure its future

Progress, but still many rivers to cross. Credit: UrtheCast Corp
FREEPORT, Maine — Canadian Earth imagery and data analytics provider UrtheCast Corp. reported improved financial results for the three months ending June 30 but said its viability depends on finding new sources of financing and the sale of its Deimos Imaging subsidiary.
Vancouver-based UrtheCast said it has received non-binding expressions of interest from several prospective buyers of Deimos Imaging. Chief Executive Donald Osborne said in an investor call that he was optimistic about concluding a transaction “in the coming months.”
Deimos Imaging includes two satellites in orbit that provide much of UrtheCast’s current revenue, plus ground assets. The satellites are both operational but Deimos-1 was launched in 2009 with a 10-year design life, and Deimos-2 was launched in 2014 with a seven-year design life.
Deimos Imaging, now reported as a discontinued operation on UrtheCast’s books, generated 365,000 Canadian dollars ($279,000) in positive adjusted EBITDA for the three months, compared to a loss of 3.64 million a year ago.
UrtheCast said receipt of a delayed payment from a Deimos contract with the 22-nation European Space Agency (ESA), combined with a sharp reduction in operating costs at Deimos, accounted for the change.
UrtheCast said it would be moving toward positive EBITDA this year, but it did not predict it would get there by then.
The company reported total revenue of 5.06 million Canadian dollars for the period, up from 1.5 million dollars a year ago. The operating loss was 3.2 million Canadian dollars, down from $4.3 million Canadian dollars a year ago.
Cash on hand as of June 30 was 2.94 million Canadian dollars, up from 1.4 million at Dec. 31, but less than what UrtheCast needs to grow its business by building and launching the UrtheDaily constellation of imaging satellites, with Surrey Satellite Technology Ltd. (SSTL) of Britain as prime contractor.
To fund that work, UrtheCast will need to secure new financing to replace the $142 million credit line that was terminated, by mutual agreement. The company said that delays in financing had already pushed the start of UrtheDaily operations to early 2022.
UrtheCast has booked more than $200 million in binding customer commitments for UrtheDaily data, sufficient to give the company confidence that it is on the right track.
UrtheCast’s purchase of the Geosys agricultural data-analytics business from Land O’ Lakes for $20 million will result in the company’s receiving Land O’ Lakes contracts totaling some $10 million per year.
UrtheCast made the first payment, of $5 million. A second payment of $5 million is due in October. Whether Land O’ Lakes will loosen the payment deadlines is unclear. UrtheCast Chief Financial Officer Sai Chu declined to speculate on that during the conference call.
The third and final Geosys payment, of $10 million, is due in April 2021.
The company’s $12 million loan from Bolzano Investments was amended in late June, increasing the interest rate to 17% from 14% and adding the Deimos assets as security.
A second Bolzano loan of $1.5 million, was concluded in June and a third, with Luna Ventures Inc., was concluded in July, for the same amount and with the same terms and conditions including 10.56 million in warrants for UrtheCast stock at 48 Canadian cents per share.

Rocket Lab flexes market muscle in payload launch-date swap as industry awaits more competition

Rocket Lab CEO Peter Beck. Credit: Callaghan Innovation
LOGAN, Utah — Rocket Lab’s first-mover advantage among dedicated small-satellite launch-service providers has allowed it to shape its manifest to assure the desired mix of premium government customers and commercial startups. First-in, first-out is not the model.
The latest result of this was the July announcement that a planned August launch of commercial signals-intelligence satellites for startup Kleos Space had been scrapped in favor of a mission carrying two U.S. Air Force cubesats and two commercial payloads — including one from a direct competitor of Kleos.
That mission, the eighth for Rocket Lab’s Electron rocket, is scheduled to occur Aug. 16-30 from the company’s New Zealand spaceport.
Industry officials said U.S. Air Force missions generate as much as three times the revenue, on a per-kilogram basis, to Rocket Lab as commercial missions.
The U.S. government has always been a better customer for launch providers than commercial satellite operators. But it’s also a demanding one. SpaceX, for example, has said accommodating U.S. government launch requirements adds 20%-30% to the cost of a launch.
The fact that the U.S. government cannot, as a general rule, launch on a non-U.S. rocket limits the government’s bargaining power.
The lack of U.S. government smallsat launch options has given Rocket Lab, a U.S. company granted U.S. government permission to operate from New Zealand, a market power that larger rocket operators don’t have.
It’s not likely to last. Dozens of smallsat launch startups are planning launches in the next two years, and larger launch systems — most recently SpaceX’s Falcon 9 — are crafting smallsat offers as the decline in demand for large geostationary-orbit satellites continues.
In addition, the Indian Space Research Organization (ISRO) is making its PSLV rocket more user-friendly and reducing the time between contract and launch. India is also development a new, smallsat-dedicated rocket.
GK Launch Services, which commercializes Russia’s Soyuz vehicle, is reducing prices for smallsat owners.
Europe’s Arianespace is offering tailored smallsat launches aboard its Vega rocket, which is expected to resume operations in 2020 after its first failure in 15 launches.
Kleos moves to India’s PSLV, secures late-2019 flight
Kleos Space announced Aug. 15 that instead of waiting for a firm new launch date from Rocket Lab, it had secured a flight for its inaugural four-satellite cluster aboard the PSLV for late this year.
Kleos further said that the PSLV flight will place its spacecraft in an orbit with a 37-degree inclination relative to the equator, given it 4.5 times more data-collecting capability in key geographies including the South China Sea, the Straight of Hormuz, the coasts of Brazil and Australia and the southern United States.
Australia- and Luxembourg-based Kleos Space said in July that the Rocket Lab launch delay, then expected to be just two months, would delay expected revenue from early-adopter customers but that the company had sufficient cash reserves to withstand the impact:
One industry official seeking satellite launch options said the Kleos launch appeared to have been pushed out beyond October, to nearer the end of the year.
Rocket Lab’s market clout came into sharp relief during the SmallSat Conference here Aug. 3-8 as word spread that Vector Launch, a startup that had raised $100 million, was closing its doors following the pullout of a key investor.
Vector confirmed the news on Aug. 9:
When asked about Rocket Lab’s apparent shuffling of its manifest to favor government customers, several industry officials said they were not surprised.
“Tell me a commercial launch service that doesn’t do this,” said one official not involved with Kleos.
“The launch business has always been a Ponzi scheme, with current revenue financing the necessary investment. Commercial companies have to favor their highest-paying customers,” said another. “They won’t survive otherwise.”
Several smallsat launch startups are trying to avoid becoming dependent on government business, saying they feared exactly the sort of schedule shuffling that Rocket Lab just ordered. Whether these companies can survive without government business is an open question.
Rocket Lab says its launch-injection accuracy gives customers quicker access to their satellite data. Credit: Rocket Lab
Rocket Lab Chief Executive Peter Beck addressed the company’s manifest-shuffling policy here Aug. 6. He said part of the problem is that Rocket Lab is not yet producing rockets at a rate high enough to meet demand.
Beck: The problem is too-low production cadence; we’ll do better
“At the start of the year, we set our launch cadence and book our manifest spots,” Beck said. “We try to maintain a 50/50 commercial vs government [mix] in our manifest. We think that’s important. Obviously, we’ve got important government missions, and some of those missions have stakes in the ground and they just can’t move. And with commercial customers, we try to have many early-stage companies as well. We understand our role in trying to get those early-stage companies on orbit.
“The reality is we’re trying to build as many launch vehicles as we can. Our ramp is good, but really by the end of the year we want to be at one every two weeks and we are struggling to get to that rate.
“Our struggles to get to that rate mean we just don’t have the launch vehicles to service those customers. It’s not an ideal situation to be in, but we are absolutely trying our best to increase the rate and make sure everybody gets on orbit as quickly as we can.”
Beck said it takes Rocket Lab about 30 days to build a full Electron rocket, with some components on a 20-day cycle. The goal, he said, with the help of new facilities in New Zealand and the United States, is to produce a vehicle every two weeks.
The production bottleneck will also be eased, he said, with the company’s plans to gradually move toward recovering and reusing the Electron first stage.
“We think launch cadence is the absolute key here,” Beck said. “If you can increase frequency and opportunities to get into orbit, that’s really where the innovation can really occur.”
The August flight will carry the inaugural satellite for commercial signals-intelligence provider Unseenlabs of France. Three satellites booked through launch integrator Spaceflight will also be aboard: the Global-4 optical Earth observation satellite for BlackSky’s planned constellation; and two U.S. Air Force satellites.
The Air Force Space Command’s satellites are part of the Pearl White program to operate two 6U cubesats, built by Tiger Innovations Inc., to test multiple new technologies including propulsion, power, communications and drag capabilities.

NASA outlines U.S. government smallsat funding opportunities

The BioSentinel mission, to fly on NASA’s Artemis 1 mission. Credit: NASA
LOGAN, Utah — Startups, small businesses and educational institutions interested in the smallsat sector stand to benefit from a wealth of annual seed funding and grant programs available from NASA and other U.S. government agencies. NASA provided a sampling of these awards at the Smallsat Symposium 2019:
 NASA Cubesat Rideshare Opportunities
 NASA’s CubeSat Launch Initiative (CSLI) is soliciting proposals for U.S. smallsat missions to accompany the first crewed launch of the Orion lunar exploration vehicle.
 Slated to fly in 2022 aboard NASA’s new Space Launch System, the Artemis 2 mission is looking for candidates to help reduce risk for the agency’s manned lunar and Mars exploration programs. To that end, the proposed missions should address at least one aspect of the agency’s goals outlined in its 2018 strategic plan, and address identified strategic knowledge gaps related to the Moon or Mars.  
 NASA has already booked 13 cubesats to fly as secondary payloads on the Artemis 1 mission, an unmanned demonstration of the Orion vehicle expected to launch in June next year. Artemis 1 will include a cubesat designed to explore resources at the lunar south pole and another smallsat mission that will test the impact of cosmic radiation on live yeast samples in outer space.
 The CSLI is also looking for cubesat mission proposals under its Educational Launch of Nanosatellites (ELaNa) program. So long as the missions are consistent with NASA’s science, technology and education objectives, ELaNa will provide rideshare opportunities on a variety of rockets, including U.S. military and commercial missions and non-U.S. commercial launches, as well as the International Space Station.
 ELaNa will pay the full cost of launching 3U or smaller cubesats, while larger form factors will have to chip in after the first $300,000 is covered by NASA.
Since 2011, CSLI has launched 95 small spacecraft to LEO under the ELaNa program. In the last year alone, 22 satellites were launched on seven ELaNa missions using a variety of rockets. CSLI has 45 ELaNa cubesats booked for rideshare missions scheduled to launch by the end of 2019, and the program is adding more. ELaNa also has another 42 spacecraft in backlog and expected to fly in 2021 or 2022.
 Proposals for all CSLI rideshare opportunities — Artemis 2 and the 11th ELaNa cycle – must be submitted by Nov. 4, with selections to be made by mid-February 2020. 
 Small Business Innovation and Technology Grants
U.S. small-business owners — and those who aspire to be — are eligible for a piece of roughly $220 million in annual seed funding from the U.S. government through the Small Business Innovation and Research (SBIR) and Small Business Technology Transfer (STTR) programs.
 The program comprises three phases, with 25% of Phase One proposals awarded and 40% of those moving on with Phase Two awards. If a small business is able to partner with a U.S. research institution for an STTR proposal, the Phase One odds increase to 35%.  
 Phase Three comprises commercialization, wherein a company or another NASA program takes over the proposed technology while providing additional funding. Business owners maintain control of their company, data rights and intellectual property.
 SBIR/STTR awards target all four NASA mission directorates, with dedicated subtopics for small spacecraft technologies. The topics do not change a great deal from year to year, so reviewing the 2019 solicitation could provide small businesses and research with ideas for the upcoming January 2020 call for proposals.
 NIAC Awards
Each year the NASA Innovative Advanced Concepts (NIAC) program awards a handful of grants to nurture visionary ideas with the potential to transform future NASA missions. In the past, this has involved annual Phase One awards of $125,000 over nine months to put a concept into a mission context and demonstrate what could be gained from exploring the idea further.
 Phase Two provides $500,000 over two years to explore difficult challenges to breakthrough concepts uncovered in the first phase, and to create a roadmap for continuing to development.
 This year, NIAC has expanded the program to offer a Phase Three grant of $2 million in funding over two years to give an extra push to ideas that are especially prone to transitioning to NASA missions. This year NIAC awarded two such Phase Three studies, with the expectation of continuing to offer one Phase Three award annually.
 Past awards to smallsat proposals included a mission to test the ability of cubesats to conduct missions in deep space, and a smallsat maneuvering demonstration using laser thrusters.
 Applications for the upcoming round of Phase One, Step A concepts are due by mid-September, with Step B submissions due in December.


Viasat says can keep leverage down while R&D/capex remains high; Viasat-3 service 2-3 years out, but Viasat-4 design begins

Eating the R&D and capex and de-levering, too. Credit: Viasat
SALT LAKE CITY, Utah — Broadband satellite services and hardware provider Viasat Inc. said it can maintain enough profitable growth in its business to offset the R&D and other expenses that come with a never-ending investment cycle to produce ever-more-powerful satellites.
The rap on Viasat, and on its satellite broadband competitor, Hughes Network Systems, has been that as soon as they reach good profitability from an essentially fixed-cost infrastructure, they are obliged to dive into another expensive investment cycle.
That remains the case, and Viasat has already begun early designs for a Viasat-4 generation of satellites 2-3 years before the three-satellite Viasat-3 generation is scheduled to enter service. But Viasat on Aug. 8 reported a sharp drop in leverage as profitability more than offset spending. Net debt as of June 30, at 3.3 times EBITDA, was down from 5x a year ago. Adjusted EBITDA was up 115% from last year.
Takeaways from Viasat quarterly results issued Aug. 8:
— Consumer broadband subscriber base up only marginally, to 587,000, but ARPU is up 16%, to $84.26, from year ago.
— Despite Viasat-3-related R&D, EBITDA growth has reduced leverage from 5x EBITDA to 3.3x.
— Government Systems rev up 37%; backlog up13% to $879M, not including $1B-plus in IDIQ contracts.
— 1,335 commercial aircraft now use Viasat’s connectivity service, up 76% from a year ago, plus 510 under contract awaiting delivery.
— 46 Boeing 737 MAX planes installed with Viasat IFC gear, but grounded.
“In the mid-term, we expect net debt to grow with ongoing investments in ViaSat-3 space and ground infrastructure,” Viasat Chief Executive Mark D. Dankberg said. “But corresponding adjusted EBITDA growth can maintain prudent levels of net leverage.”
Investors take note: There is no capex holiday — ever — but that shouldn’t mean no return on the invested capital. So onward and upward to Viasat-4.
“We’ve now made enough progress on ViaSat-3 to begin designing and analyzing a ViaSat-4 follow-on, that could achieve similar or better relative productivity advances as ViaSat 1, 2 and 3 did in their time,” Dankberg said, exhibiting the engineer’s penchant for using the past tense for a program whose design is completed even if it’s years away from revenue generation.
Viasat President Richard A. Baldridge said R&D spending on Viasat-4 likely will be less than Viasat-3, and that Viasat-4 would be able to use the Viasat-3 ground infrastructure.
Credit: Viasat
Operators of geostationary-orbit satellites in the past three years have been bombarded with questions over whether their model isn’t outdated relative to the multiple, and multibillion-dollar, low-orbiting constellations being designed from OneWeb, Telesat, SpaceX and Amazon, among others.
Dankberg has detailed his view of broadband GEO satellites’ inherent advantages over global LEO systems: The question for Viasat is, first, whether these constellations will be built, and second, whether once built they can generate a sufficient investment return to please investors and finance, immediately, the capex needed to replace a short-lived LEO satellite network.
During the Aug. 8 call, Dankberg updated his thinking and his defense of the GEO satellite model.
“We haven’t seen any technical architecture under construction or even proposed that we believe is comparable in the geosynchronous satellite space,” Dankberg said. “There are some LEO regulatory filings with aggressive and innovative payload architectures. But we believe the ViaSat-3 architecture is the most scalable, considering long-term trends and payload device integration.”
Addressing the GEO latency issue, not with LEO, but with a terrestrial in-home complement
The one advantage LEO systems highlight over GEO is the lower latency from operating closer to Earth. How many applications require low latency, and the size of the markets willing to pay for it, remains a debate.
Dankberg said one way of addressing the latency issue is by combining a terrestrial link with a GEO satellite — “essentially putting a router in a user’s home that allows them to optimally combine satellite bandwidth with some terrestrial bandwidth.
“It’s not as fast as the satellite, but has lower latency. By combining those two, we can create the effect of high-speed, high-bandwidth, low latency communications,” he said. “We are aiming to expand market tests that offer low latency comparable to that expected for LEO systems — suitable for gaming, for instance — to more U.S. customers this fiscal year. With continued success, those technologies could also meaningfully increase our addressable markets in the U.S. and internationally.”
More generally, he said, LEO-orbit broadband systems will need to impose bandwidth-volume caps on their customers to assure sufficient capacity in a given area, or charge prices that Viasat thinks it can beat.
Viasat announced development of a new-generation dual Ku-/Ka-band aero antenna for wide body aircraft that had begun the process of getting certified for commercial use. The company’s goal is to have three Viasat-3 satellites in service — over the Americas, EMEA and the Asia-Pacific — by late 2022, allowing airlines to start planning now for how to use the network.
“For a number of [airlines], a large fraction of their seat-mile expectations are in areas where we have Ka-band, and the Ku provides continuity and basically the same level of service that you would get from any other kind service in those Ku- areas. There are some that are depending on the delivery date of new aircraft where the Ku-/Ka- is also interesting.”
Viasat is one of several companies working on a dual-band antenna that would give airlines reassurance that if a large Ka-band satellite were to fail — just as Intelsat’s 29e satellite failed after less than four years in service — the airlines could shift immediately to Ku-band capacity.

Hughes says LEO & GEO are complementary. Will that be true in Canada?

GEO country for now, but the Canadian government is weighing in for LEO. Credit: Xplornet
LOGAN, Utah — Broadband hardware and service provider Hughes Network Systems declined to speculate on whether it’s on a collision course with Telesat of Canada over satellite broadband provision in rural Canada, where Hughes has a $250-million, 15-year contract with rural broadband provider Xplornet Communications Inc.
Hughes President Pradman P. Kaul, in an Aug. 8 investor call, said operators of large geostationary-orbit satellites such as Hughes and LEO broadband constellations such as Telesat’s future network will serve complementary markets.
The low-latency attractions of low-orbiting satellites, he said, will add niche markets that geostationary satellites have been unable to reach, such as gaming. These markets are not particularly large, he said.
But Telesat’s recently announced memorandum of understanding with the Canadian government is more than just a LEO-constellation provider entering the global satellite ecosystem. It includes a sizable cash investment by the government, in return for which Telesat will sell broadband connectivity at below-market rates to service providers in Canada’s rural regions:
Hughes’s Xplornet contract is for hardware and 50 Gbps of capacity on the Hughes Jupiter 3 satellite starting in 2021, the year of Jupiter 3’s scheduled launch. The Telesat constellation is still in development and service is unlikely before 2022.
Depending on how Canada’s rural-broadband incentive program is structured, that make Telesat LEO a direct competitor to Hughes for the Xplornet business.
How Xplornet assesses the relative costs of the Hughes service, which is also subsidized in certain regions, versus Telesat’s future subsidized offer will be interesting to watch. The Canadian deal is conditioned on Telesat’s meeting numerous performance targets.
Hughes’s Canadian business is not counted in its consumer subscriber tallies because it’s distributed through Xplornet.
As of June 30, 169,000 consumer broadband subscribers in Central and South America; Mexico on the way
Hughes said its total consumer subscription base at June 30 was 1.415 million in the United States, Central and South America, up 2% from where it stood at March 31. The company has established satellite broadband businesses in six Central and South American nations and Mexico is scheduled to be added in the coming months. The U.S. business is constrained by the lack of available capacity on the current Hughes fleet. The arrival of Jupiter 3 is intended to solve that problem.
Hughes Network Systems said it had 169,000 consumer broadband subscribers in Central and South America as of June 30, a region where the company has sufficient in-orbit capacity to allow for growth.
Hughes and satellite fleet operator Yahsat of Abu Dhabi in May created a joint venture for consumer satellite broadband in Brazil. Yahsat contributed its current Brazilian business and Ka-band capacity on its Al Yah 3 satellite for a 20% stake in the venture.
Community Wi-Fi hotspots is the the way this region is being approached by Hughes. Its U.S. rival, Viasat Inc., has adopted a similar strategy.
The growth of Hughes’s parent company, EchoStar Corp., in recent years has been pretty much all Hughes related. EchoStar’s fixed satellite services business, mainly in the United States and dedicated to serving sister company Dish Network Systems’s direct-to-home satellite TV service, has seen negative growth.
Dish and EchoStar in May agreed to sell the EchoStar Satellite Services business to Dish in return for Dish equity. The transaction, which EchoStar Chief Executive Michael T. Dugan would be “transformative,” is expected to close by the end of this year and will position EchoStar as a nearly pure-play satellite broadband company — one with $2.5 billion in cash as of June 30.
EchoStar Mobile of Ireland, which has a license to offer mobile satellite services in Europe and has a large S-band satellite over the region, will remain with EchoStar. It is pursuing a hybrid satellite-terrestrial business but its strategy has never been clear.
Al Yah 3 will be added to the Ka-band capacity Hughes already has under lease for the region on Telesat’s Telstar 19V and Eutelsat’s 65W satellites. The two companies have a similar arrangement for the Middle East and Southwest Asia, this one relying on Yahsat’s Al Yah 2 and Al Yah 3 satellites. Hughes paid $100 million in cash for a 20% stake in the venture.
EchoStar said Hughes booked $6 million in revenue from hardware sales to this joint venture in the first six months of 2019, with another $3 million in accounts receivable as of June 30.
Kaul said the company is now targeting Europe and the Asia-Pacific region for growth of the broadband business. Hughes already has enterprise networks in these regions.
“We plan to expand this strong presence through partnerships. This strategy will allow us to access orbital slots, landing rights, regulatory approvals and existing distribution channels,” Kaul said.
Hughes EBITDA takes a hit with loss of Elbit patent-infringement lawsuit
For the three months ending June 30, Hughes reported a 6% increase n revenue, to $451.85 million compared to the same period a year earlier,, on the strength of the increased consumer business. But EBITDA dropped by 13.4%, to $131.8 million, following a $25 million adverse ruling in a patent-infringement lawsuit brought by Elbit Systems Ltd.
Elbit alleged that its patent was infringed by “broadband satellite systems that practice the Internet Protocol over Satellite standard and by broadband satellite services that provide certain types of cellular backhaul links.
The case dates from early 2015. Elbit said the total award, including accrued interest and attorneys’ fees, could total $31 million.

OneWeb responds to Virgin Orbit lawsuit, says contract termination done on agreed terms

Virgin Orbit completed a drop test of its LauncherOne vehicle in July and plans its inaugural orbital flight by the end of this year. Credit: Virgin Orbit
LOGAN, Utah — OneWeb asked a U.S. District Court to dismiss launch-service provider Virgin Orbit’s lawsuit demanding $46.5 million in termination damages, saying Virgin’s complaint omits agreements between the two companies that would collapse Virgin’s case.
Virgin Orbit in June sued OneWeb for nonpayment of what Virgin said were damages flowing from OneWeb’s termination of a contract for 35 launches of Virgin’s LauncherOne rocket.
A separate agreement four four initial launches was left untouched, and OneWeb apparently still plans to use LauncherOne for these missions despite the fact that the vehicle has yet to fly and that its prices, at $6 million per launch, are now considered high:
The original contract was signed in May 2015. OneWeb cancelled the 35-launch piece, called “Remaining Firm Launches,” in June 2018. Virgin said the cancellation, made without cause, would deny it between $234 million and $834 million in revenue.
OneWeb asked to be given two months, to Aug. 5, to respond to the complaint, made in the U.S. District Court for the Southern District of New York.
The core of the OneWeb response is a request that the court read the full launch-service contract from 2015 and, importantly, the contract’s modification of July 2017, and related communications between the two companies.
OneWeb, in its filing with the court, said the 2017 contract amendment was designed “to keep the termination liability from increasing while the parties attempted to negotiate amendments to the LSA [launch service agreement],” OneWeb said.
It said the modification, endorsed by both parties, “materially altered the payment that would be due to Virgin if OneWeb terminated the launches without cause.”
As portrayed by Virgin, the original contract is extraordinarily generous to Virgin given the fact that the company had not demonstrated its service and was already on the high side of the commercial launch market.
OneWeb: Virgin orbit is 2-3 times the prevailing market rate
OneWeb said that now, Virgin’s $6 million price per launch — of a single 150-kilogram OneWeb satellite to a 1,200-kilometer orbit — “is two to three times the market price.”
OneWeb said the original contract allowed it to cancel the deal without cause, and that the termination fee it would owe Virgin would be reduced by whatever advance payments OneWeb had already made.
OneWeb said it agreed that its termination triggered a $70-million fee, as Virgin alleged, but that this amount  should be reduced by the amount of previous payments.
Because it rejected the amount of the fee, OneWeb declined to pay the Virgin bill.
To date, Virgin has received $66 million from OneWeb, of which $18 million was paid “in respect to launches that will still go forward,” OneWeb said. “That is, Virgin has received more than $48 million for future launch services that Virgin will no longer need to provide.”
For OneWeb, the termination fee should be reduced by $19 million in previous payments.
OneWeb did not say that Virgin’s delayed entry into service would have the effect of terminating the contract, but did note that Virgin “would not have been able to perform on the original schedule set forth in the LSA.”
OneWes launched its first six satellites in February aboard a Europeanized Russian Soyuz rocket.
That rocket will be used to launch the vast majority of OneWeb’s 650-satellite constellation starting late this year, with 34-36 satellites carried on each flight. Most of these launches will be from Russian spaceports. The contract was negotiated with Europe’s Arianespace launch provider.
OneWeb on Aug. 7 said it had passed a key regulatory milestone, called “bringing into use,” at the International Telecommunication Union, by operating in its assigned Ku- and Ka-band frequencies, from its assigned orbit, for 90 days. OneWeb is registered in the United Kingdom, through Britain’s Ofcom agency.

Maxar books $12M non-cash impairment charge on OneWeb equity investment

Credit: Maxar
LOGAN, Utah — Maxar Technologies booked a non-cash impairment charge of $12 million to reflect the dilution of its equity interest in the OneWeb satellite broadband constellation.
The charge followed OneWeb’s most recent round of funding, totaling $1.25 billion.
Maxar’s MDA division in Canada in 2016 invested $25 million in OneWeb as a condition for receiving a contract to build 1,600 communications antennas for the OneWeb constellation at MDA’s Montreal facility.
Maxar was one of several suppliers and partners of OneWeb that invested modest amounts in the network. Others include Hughes Network Systems and satellite fleet operator Intelsat.
Since that investment, Maxar has carried the investment on its books at the $25-million value, which since the latest OneWeb funding round is probably more than what it’s worth.
Maxar Chief Financial Officer Biggs Porter said in an Aug. 6 conference call on Maxar’s financial results that other smaller investors in OneWeb are likely to take similar charges.
“OneWeb is funded through private capital,” Porter said. “They had a second round of funding, it was a down round of funding. So we and everybody else that had investments in OneWeb had to evaluate whether or not that last funding round at lower value represented an impairment. If you look across the industry, you will see other people who had OneWeb investments similar to us impaired their investment this quarter. Roughly speaking, 50% is reasonable, in the range of what others did.”
OneWeb has raised a total of $3.4 billion. OneWeb founder Greg Wyler, in an Aug. 6, presentation to the SmallSat Conference here, referred to the system as requiring $5 billion in capex.
Earlier estimates put OneWeb’s estimated capex at $6 billion, before the company reduced its first-generation constellation from 900 to some 650 satellites.
An industry official said the $1.25-billion funding round in March, much of it not in cash, includes:
— $505 million from lead investor Softbank.
— $300 million from Grupo Salinas of Mexico.
— $200 million from Airbus, co-prime contractor of the OneWeb satellites.
— $98 million from Qualcomm, providing the wireless air interface and modem.
— $27 million from the government of Rwanda, an early OneWeb backer.

Know your U.S. satellite regulations: A primer on ownership, freqencies, propulsion, encryption and the use of lasers

Barbara Braun. Credit: Aerospace Corp.
LOGAN, Utah — For smallsat owners and operators, obtaining U.S. government approval to launch and operate spacecraft can sometimes take longer than developing the satellite.
When it comes to new services like rideshare and the emergence of non-traditional entrants, startups and non-U.S. launch opportunities, U.S. policy lags behind the pace of rapidly evolving technologies, says Barbara Braun, systems director of space innovation at the Aerospace Corporation.
“Good policy takes time to develop, but our industry is changing faster than policy,” she says.
Addressing the SmallSat Symposium here, Braun reviewed regulations on:
— Satellite ownership
—Frequency allocation
—Orbital debris mitigation
—Propulsion and proximity operations
—The use of lasers 
Rideshare missions like the Defense Department’s STP-2, or the December 2018 SSO-A mission on a SpaceX Falcon 9, leave launch service providers to sort out regulatory approvals and licenses for a plethora of satellites from different countries and agencies, both commercial and military in nature, as well as those developed by universities or small businesses.
“We might have hosted payloads on top of NASA satellites on top of a commercially procured launch vehicle, and it’s not clear who is responsible for what,” Braun says of the many gray areas unforeseen by the current policy structure.
Many of these policies are in the process of being updated, notably U.S. guidelines on orbital debris, encryption and propulsive maneuvering in orbit. What follows is a primer for navigating the complex maze of regulations, guidelines and rules that comprise existing U.S. national space policy.
Determining who owns a satellite launched on a rideshare or other multi-spacecraft mission can prove baffling. Yet ownership is key to maintaining compliance with U.S. policies enforced by different government agencies.
For example, the range that launches a satellite is responsible for range safety, including informing operators as to any hazardous material associated with a spacecraft that may be prohibited during launch. The range also controls fueling operations, as well as transmissions and frequencies during pre-launch testing.
As for the rocket itself, the nature of the launch-vehicle provider determines the type of policy to be followed. In a rideshare scenario, a commercial launch vehicle is required to follow commercial policy, which calls for safe in-orbit delivery of all spacecraft attached to it. Once a spacecraft separates from the rocket, however, responsibility reverts to the agencies or other entities that own the spacecraft. But how is that ownership determined?
The STPSat-5. Credit: SNC
For example, STPSat 5, the Defense Department-owned satellite launched on a commercial SpaceX Falcon 9 as part of the SSO-A rideshare mission: Managed by Spaceflight Industries, the rideshare provider was responsible for safe orbital insertion of all 64 payloads, including the government-owned STPSat 5.
Until STPSat 5 separated from the Spaceflight Industries upper stage free-flyer, the satellite was under the control of Spaceflight, and thus subject to commercial regulations. “But once STPSat 5 separated from that upper stage free-flyer, it became a government satellite subject to government regulations,” Braun said.
Although STPSat 5 is owned by the DoD, the satellite was built and integrated by satellite manufacturer Sierra Nevada Corp. Post-launch, its science experiments and operations are being managed by NASA.
“Who gets to decide when this mission’s life is over?” Braun asked. “Even if we hand day-to-day decisions off to a company, in this case NASA, to operate it for us, we still make those final decisions, and we would be the ones to decide when the satellite reaches its end of life. So we own that satellite,” she said, referring to the U.S. Department of Defense.
Another example is a university cubesat developed with government funding.
“We had this on a couple of the satellites on STP-2 that were built by universities,” Braun said. “Even though they got some government sponsorship, they are university satellites because the university makes all the decisions for that satellite.”
Frequency Allocation
Obtaining frequency allocation is another policy hurdle determined by spacecraft ownership. A privately owned commercial satellite would seek uplink and downlink frequencies from the Federal Communications Commission (FCC), while a DoD or NASA satellite would go through the National Telecommunications and Information Administration (NTIA).
Orbital Debris Mitigation
Launches of government satellites are required to work through their respective agencies to seek orbital debris mitigation approval. For private and commercial satellites, however, the FCC is the regulatory body that manages orbital-debris mitigation compliance.
“The only regulatory agency that governs satellites in space, when you’re not the DoD and you’re not NASA, is the people who can grant or deny your frequency license,” Braun said.
The FCC, which is in the midst of an update of its orbital debris rules, will not grant a commercial license unless it’s in the best interest of the United States. As a result, some commercial spacecraft operators have trouble obtaining FCC license because their potential risk for creating debris is too high.
In all cases, spacecraft must demonstrate they can meet the required reentry or disposal orbit requirements with 90% reliability, though different agencies may have varying standards for compliance.  For example, a cubesat orbiting above 600 km is unlikely to reenter the atmosphere within 25 years, “so you need to show that whatever device you’re going to use, whether it be propulsion, or whether it be a drag device of some sort, is at least 90% reliable, and this can be a subject of debate,” Braun said.
NASA provides Debris Assessment Software (DAS), free of charge, to orbital debris mitigation applicants. The tool is used by most U.S. agencies that screen for debris risk.
Propulsion, Proximity Operations and Maneuvering
Currently, in-orbit maneuvers executed by private and commercial spacecraft are not regulated.
“This may change, it is something of increasing concern,” Braun said. “Not just regular impulsive propulsion that we’re used to, but it’s awfully hard to track these low, continuous propulsive maneuvers that are happening. This unexplored territory and so this is something that we expect to see,” notably in the area of in-orbit satellite servicing, which she said is likely to be a topic of debate as the government rewrites the ODMSP.
For private and commercial satellites, there is no requirement to encrypt uplinks or downlinks.
“A lot of people wonder how does the lack of encryption on your uplink and your ability to move around the sky translate to security in space,” Braun said. “One of the things I’ve seen discussed is the idea that if you do have translational propulsion greater than a certain amount — not attitude control propulsion but propulsion that can move you around greater than a certain amount — maybe you need to have some basic encryption on your uplinks and downlinks.”
DoD requires encryption on all of its satellites. NASA does not, but the agency does require an assessment of the criticality of protecting satellite data.
Hosted payloads present a unique challenge when it comes to encryption, as for most of these satellites, regulatory compliance falls to the host.
“If you’re a DoD hosted payload on a Taiwanese satellite, that doesn’t make that entire satellite subject to the FCC and debris-mitigation and so forth,” Braun said. “But that DoD data may be subject to encryption that you then have to apply to the host satellite or that you have to encrypt onboard and pass through that way.”
Lasers on private or commercial satellites – whether for use in space or pointed at the ground – are not regulated. Compliance approval through the Laser Clearinghouse is required for DoD satellites, but for all others it is merely encouraged.
“There are some FAA rules, mostly involving lasers and aircraft that you have to watch out for if you’re using laser communications to the ground,” Braun said. “My idea is if you are a commercial or private satellite, talk to the Laser Clearinghouse, even though you’re not required to; they’re the ones who can give you the guidance you need.”
For operations near the International Space Station, NASA has a set of flight rules for use of any lasers near the orbiting outpost.
“You have to recognize this is not dealing with hunks of metal in space anymore, these are humans in space, and therefore you need to get started with their safety process very, very early,” Braun said.
All of these regulations are under review, and are being updated with input from industry and the public.
In the meantime, the Aerospace Corporation is developing a new service dubbed PETRA, for Performance Evaluation Technical Risk Assessment, and is seeking feedback from satellite industry stakeholders in the process.
“Good policy takes time, and the struggle is when the technology outpaces the policy,” she said. “But it’s best when the policy is informed by the people who have to abide by it.”

OneWeb’s Wyler: Debris regulation needed before constellations launch; confident on landing rights in India, China, Russia

Greg Wyler. Credit: OneWeb
LOGAN, Utah — OneWeb founder Greg Wyler, whose constellation is preparing for monthly launches of 30-plus satellites starting late this year, acknowledged that landing rights will be a challenge for OneWeb but that the company is making headway with regulators in China, Russia, India and elsewhere.
In an address to the SmallSat Conference here, Wyler also reiterated his call for stricter regulatory oversight of satellite constellations to assure they minimize production of orbital debris. Leaving it to free-market forces, he said, will not work.
“There needs to be more regulation. Someone needs to be telling the government: It’s not the NASA, ESA and Jaxa groups. It’s the FCC and Commerce in the U.S. and other regulatory bodies around the world.
“We need to be speaking with a strong voice to them: Get your regulations in place now, not after the launches. All they’re doing is letting all the horses out and then saying, ‘We’ve got this idea about closing the door.’ We have a problem.”
Wyler said the OneWeb satellites — 650 to start, ultimately 1,980 — each have a 500-gram grappling hook to make it easier for future space tugs to latch on and remove them from orbit. In addition, they include multiple redundant systems to assure against failure.
“We have four reaction wheels, three magnetorquers [for attitude control], redundant magnetometers, redundant sun sensors, redundant star trackers, redundant GPS, redundant TT&C computers, flight computers — a lot of redundancy in that 150-kg, 1,000U cubesat,” Wyler said.
Wyler told the audience to expect many failures among the 150-odd satellite constellations now being designed, and many major modifications to them as pressure builds to ensure they cause no harm to others in orbit.
There are at least 150 constellations that have been announced,” he said. “You look at some of them and you say: ‘That’s not going to work.’ If you want to watch what’s going on, watch for the number of failures. I am looking for the day when regulators will do something, before they have to. There should be a requirement for a minimum test of your satellites before they go up, and there is going to have to be some redundancy.”
The U.S. Federal Communications Commission (FCC) is in the middle of an update of its orbital-debris requirements for satellite communications systems seeking licenses to operate in the United States.
Wyler said OneWeb’s first six satellites, launched in February, are all operating as designed, with 400 Mbps, low-latency throughput on half a channel that promises 800 Mbps in full operations and, he said, the hope of 1 Gbps.
Recent statements by Russian authorities have raised anew the question of how regulators in some of OneWeb’s most promising markets will react to OneWeb’s request for an operating license in their territory.
Arguing in OneWeb’s favor is that its network does not feature inter satellite links or one-board processing, features that could improve network performance but obviate the need for ground stations — not something regulators like.
Clearly referencing China but not naming it, Wyler speculated that U.S. regulators would think twice before granting landing rights to a Chinese constellation that did not need a U.S. ground station.
“There are remote places in China, in Africa, in Brazil, all over the world. A lot of these countries have this little concern that if you send your signal up from their citizens and it goes to an on-board processor and then a copy of it can be sent and not land in the same country, they get really nervous,” Wyler said.
“If you said to the U.S.: ‘I have — I won’t pick a country — another country’s satellite system that had optical links, and we were going to download a copy of all of it that went on in the U.S. and make a copy of it in our country and maybe even manipulate it and send it back — the U.S. would start to show concern. That possibility is there and it is becoming more real and more alive with what’s going on with Facebook and what’s going on with manipulation of videos and fake videos.
“The point that you can actually manipulate data on the satellite itself. This is becoming real. Some say: Encryption! I am not a believer in encryption. If I watch what is going on in quantum computing I don’t believe in encryption beyond a small period of time until you can decrypt.”
Credit: OneWeb
OneWeb has said it will be able to use islands in the Pacific Ocean to downlink data and assure connections over the Pacific for aeronautical and maritime customers despite the lack of inter satellite links.
He said he had talked to enough political leaders around the world to be confident in their acceptance of OneWeb to bridge the digital divide in their nations.
“I do believe OneWeb will get full global coverage – in India, China, Russia and other places. OneWeb already has landing rights in many places around the world. There is already a sort of a consensus among the BRICs and other countries.
“I do believe we will get access in every single one of these countries. I have met with senior leaders of these countries and they are very, very keen to have OneWeb support their mission.
“Will we have onerous conditions? I will not know until we get into the nitty gritty details. We have had lots fo conversations with all these countries and I believe there is a large interest and acceptance of OneWeb. And OneWeb is a global company. Our investors are from almost every continent. We are seen as a world company.”

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