Category: News

Panasonic Avionics, Thales InFlyt Experience are investing in new satellites, but cautious about market take-up

Todd Hill, senior director for global satellite capacity planning, Panasonic Avionics Corp. Space Intel Report photo
PARIS — Two major in-flight-connectivity providers, Panasonic Avionics and Thales InFlyt Experience, are making major investments in satellite throughput but were cautious about whether trans-oceanic passengers will see free service anytime soon.
The problem, they said, has not changed: If passengers don’t demonstrate a willingness to pay and third-party sponsorships are not yet widespread, the airlines will not invest in the necessary hardware and will not stimulate satellite fleet operators to offer massive new bandwidth.
Electronically steered, phased-array antennas? Still too expensive, especially with jet-fuel prices at today’s modest levels.
“They keep getting closer to us in the air transport market, but they’re not quite there yet,” said Todd Hill, Panasonic’s senior director for global satellite capacity planning. “Instead of $1 million, now they’re a couple of hundred thousand dollars in the aero market. It needs to be $100,000.”
Given their lower drag, flat-panel antennas should be a natural for for commercial aero market. But their cost has kept them on the sidelines.
“If [fuel] pries go up in the next 5-10 ears, ou are going to see a much stronger push for ESAs [electronically steered antennas], and the business case will switch,” Hill said here Sept. 9 during Euroconsult’s World Satellite Business Week. “But right now, with prices low, you can’t beat the mechanically steered systems.”
Gustavo Nader, head of IFEC strategy, Thales InFlyt Experience. Credit: SES
Gustavo Nader, head of IFEC strategy at Thales InFlyt, said it’s already complicated for airlines to chart a profitable business model in introducing connectivity. “Bringing in another element that negatively affects the economics,” he said, will not be acceptable.
Panasonic XTS: one ordered, two more on the way
Panasonic Avionics has about 8 GHz of capacity leased on satellites around the world. After what looked like a period of hesitation as many connectivity providers invested heavily and lost money, Panasonic is pursuing its XTS of satellite payloads for higher throughput.
The first of these payloads is Hong Kong-based APT Satellite Holdings’s Apstar-6D, to be launched over Asia in 2020. Hill said Panasonic is “actively working on another two, one over the Americas and one over Europe and Africa. We’re not quite ready to announce that — hopefully by the end of the year.”
Competitor Gogo Inc. has also signed up for capacity on Apstar-6D, apparently riding on the tailored payload designed with Panasonic input.
Panasonic has an agreement with London-based Inmarsat to lease Inmarsat Global Xpress Ka-band capacity, available worldwide if in limited supply, and this will serve as a backup for the primmer XTS service in the event of a satellite failure: http://bit.ly/2mqsB6J
Thales InFlyt is an anchor tenant for fleet operator SES’s SES-17 satellite, to be launched over the Americas next year. Thales is the service provider to the regional JetBlue passenger Wi-Fi, which is free and uses Viasat Inc. Ka-band capacity.
Once SES-17 is launched, Thales will have additional SES capacity to provide backup.
But here too, while in-orbit backup would appear indispensable for a high-quality service, airlines will limit investment in it until the business model is proven.
“People want fast service and people want a low-cost service,” Hill said, adding that Panasonic has first-hand experience with scrambling to replace capacity after a satellite failure.
“In our relatively short period of time we have been involved in three in-orbit failures and two launch failures,” Hill said. “The resiliency of Ku-band was a big selling point for us.
“The [Intelsat IS-29e satellite] died a few months ago. On our primary network, which is automated, the switchover was seamless. People did not really even see a degradation of service. But on our older network, which is more manual, they definitely felt the impact. The question is: Will people pay for the difference?”
Credit: SES
Passenger take-up rates have still not reached a point to where more airlines can justify a substantial new investment in connectivity. And take-up is unlikely to improve until the service is better, an endless loop of frustration for passengers and airlines.
“Take-up rate has been low in part because the quality of the service is not what it needs to be,” Nader said. “As passengers realize the experience fan be better, increased take-up will happen. We’re beginning to see that with both free and fully monetizable models, including subsidization with partnerships. That’s what required for this industry to develop.”
For now, airline hesitation continues. Hill said Panasonic’s oldest satellite-Wi-Fi service has been flying for nine years.
“Imagine trying to use your nine-year-old cell phone. The real key is investing in the network and getting the price down so people can afford it. I am aware of five or six airlines that offer free service, but the are all regional carriers.”
Satellite capacity shortage ahead?
Market studies show what looks like an overcapacity of high-throughput satellite capacity worldwide, but Hill said he worried about a shortage given the lack of investment in geostationary-orbit satellites.
“With all the LEO [broadband] constellations, people have frozen their investments,” Hill said. “Traditional GEOs are now [ordered] at less than half the traditional rate. Getting to the next round of capacity building is a challenge. Who is going to invest in it?
“There seems to be a growing shortage of capacity for the early 2020s as existing GEO satellites run out and all the new promised stuff isn’t quite operational iyet. It seems like it is going to be a very tight time in the next half-decade.”

Intelsat to order new-generation satellite within weeks, updates on C-band spectrum cost, Eutelsat’s empty chair

Eutelsat’s Rodolphe Belmer, left, Steve Collar of SES and Intelsat’s Steve Spengler. Credit: Euroconsult
PARIS — Intelsat expects to order a replacement for its failed IS-29e satellite before the end of the year and will choose a one of the new-generation, flexible, lighter-weight designs being offered by multiple manufacturers.
Intelsat Chief Executive Steve Spengler said that the company is sticking with previous estimates that it will take a $70 million hit to its EBITDA this year, with a $50 million impact on revenue, as a result of the sudden failure of IS-29e in April.
In a Sept. 18 presentation to a Goldman Sachs investor conference, Spengler also discussed — as he must every time he speaks in public — the status of the C-band spectrum auction proposal now before the U.S. Federal Communications Commission (FCC).
Intelsat is drifting one of its own satellites to the North American arc as part of what Spengler called a “multi-pronged” strategy to compensate for the loss of the $400 million IS-29e at 50 degrees west. A second Intelsat satellite will be relocated to the region as well as part of the effort: http://bit.ly/2GzIRK8
Longer term, Intelsat will replace the high-throughput capacity of IS-29e, Intelsat’s first Epic-class satellite, with a new-generation flexible payload that several manufacturers are offering in hopes of luring operators of geostationary-orbit satellites back to the market.
In recent weeks, Boeing Satellite Systems International has introduced its 702X, Thales Alenia Space has showcased its Space Inspire product. Earlier this year, Airbus Defence and Space made the first sale of is OneSat design as part of a three-satellite contract with Inmarsat of London.
“The good news is that we are going to be able to acquire an Epic-class-type satellite to give us excellent economics in a short time frame,” Spengler said.
The new designs are being pitched as offering similar economics, measured by the cost per delivered megabit, as the current generation of much larger Ka- and Ku-band broadband satellites, but for much lower capital cost and, because of their lower weight, much less costly to launch.
Spengler said Intelsat and the other two members of the C-Band Alliance coordinating the cession and proposed auction of 180 MHz of C-band spectrum, plus a 20-MHz guard band, still expect an FCC decision this year. The other two members are SES and Telesat.
He reiterated earlier comments that the departure of fleet operator Eutelsat from the C-Band Alliance — http://bit.ly/2lAKnU1 — has had no effect on the FCC’s treatment of the auction proposal.
Eutelsat’s share of the estimated proceeds from the auction have been estimated at around 5%, following the agreed-to formula of using each company’s 2017 U.S.-based C-band review as the yardstick.
Eutelsat has not been clear about what it hopes to gain from quitting the alliance, leaving industry observers to speculate that the company is seeking a better split of the revenue than would be warranted by its 5% share of the market.
Eutelsat: Our share of the C-band auction proceeds needs to be discussed 
Eutelsat Chief Executive Rodolphe Belmer’s Sept. 9 explanation for his company’s move, made here during Euroconsult’s World Satellite Business Week, appeared to give weight to this idea.
“It’s true that most probably, the CBA will be the best possible, as the FCC calls it, ‘position facilitator’,” Belmer said. “That means it will be the best organization to organize and expedite as much as possible the C-band process in the U.S.
“That doesn’t mean that the rights of other players, which are legitimate, should be ignored. As for ourselves, we are not against CBA at all. We are not against the fact that ultimately CBA stays the facilitator. We don’t dispute that.
“The only thing is, we think some rights, including ours, are very important. This needs to be recognized in many different aspects — proceeds, decision-making process, the size of the bandwidth, contribution to the U.S. Treasury — all those elements should be taken into consideration.”
Spengler said that the FCC remains focused on getting a deal done quickly and that this overwhelms whatever complications might arise from Eutelsat’s departure. He said the C-Band Alliance would welcome Eutelsat back to its ranks.
“It is an international competitive issue for the United States,” Spengler said. “5G services are operating today in Korea in the mid-band spectrum, the same 3GHz spectrum [being discussed with the FCC]. China is about to roll out the same services in the same spectrum, very soon. There is an ecosystem of equipment and technologies being formed around it, so the US has to satay with that game and compete.”
Intelsat has estimated that the cost to all C-Band Alliance members of adjusting making sure their customers will not suffer from the loss of 200 MHz will be between $1 billion and $2 billion.
The cost includes building eight relatively small C-band satellites — four each for Intelsat and SES — and launching six of them to provide more orbital slots to compensate for the loss of spectrum to 5G terrestrial operators. Other costs include providing what Spengler estimated will be 90,000 filters for C-band receive-only Earth stations at 35,000 locations.
Intelsat: We’ll owe taxes on C-band proceeds in both US and Luxembourg
Wall Street is awash in estimates ranging from $2 billion to $50 billion and more on the gross proceeds likely from the C-band auction. The C-Band Alliance, in a move that Eutelsat opposed, has offered to make a voluntary contribution to the U.S Treasury of part of the proceeds.
Spengler said Intelsat, with headquarters in Luxembourg but is main operational facility in the United States, expected to owe taxes in both jurisdictions as a result of the auction. “Of course, we have some NOLs [net operating losses] in Luxembourg that we will be able to take advantage of in terms of this transaction.”

Speedcast’s Beylier on M&A ‘speeding ticket,’ Carnival contract issue, uneven bandwidth availability and IoT

P.J. Beylier. Credit: Speedcast and WTA
PARIS — Satellite services provider Speedcast has had a rough few months. The delayed rebound of the energy markets and a technical glitch in the ramp-up of its large Carnival Cruise contract, among other issues, caused a 65% drop in its stock price since late June: http://bit.ly/2ZqQbxF
Chief Executive P.J. Beylier survived a board shakeup that resulted in the departure of its chief financial officer and is now charged with turning a showcase M&A company into one focused on organic growth.
Beylier addressed these issues Sept. 10 during Euroconsult’s World Satellite Business Week. Here are excerpts from his remarks.
Why remain a publicly traded company?
“We have been publicly listed for five years. The first four years have been fantastic. The past 12 months have been painful. Other companies in this sector have gone through that. We’re not the only one.
“We decided five years ago to list. At that time it was opportunistic more than anything else. I think it has been good for us. With respect to the last 12 months, when you look at what happened, the situation with energy where we are expecting it to start recovering, there is an overreaction and the snowball effect of the public markets.
“Some of the pain was self-inflicted. We made some mistakes. Now we are very focused on organic growth, getting our systems and processes where they need to be. We’ve grown a lot, very quickly, integrating all the different companies. We’re getting a speeding ticket. Now we’re focusing on furthering integration. But we are excited and convinced about the power of the platform that we have been building over the last five years.
“The company is solid and we have capabilities that are second to none in the industry and we are in a very strong position to generate organic growth above what the market will achieve in the coming next ew years. We’re very focused on that and going through the pain but that is part of the experience.”
Speedcast provided a record 3.174 Gbps of throughput to the Carnival Horizon ship during the ship’s inauguration in 2018. But it was provided by several satellites while the ship was in New York harbor and is not reflective of average bandwidth available. Credit: Carnival
What happened with the Carnival Cruise contract that caused costs to rise?
“It’s an issue we will all be facing as an industry. We are a little bit ahead of the pack. To bring the level of bandwidth that our customers need, and the price points they expect, we need to go beyond what we have done in the past in the type of capacity we are using.
“We need the ability to go through a maximum number of options. On a cruise ship, we need to be able to use C-band, Ku-band and Ka-band. To do that we are using tri-band antennas, and there are some teething issues with that. They work on some Ka-band satellites but not as well on others.
“As we are fixing some of these communications it has led us to use higher-cost Ku-band capacity instead of the Ka- band we wanted to use. But we’re getting there.”
Despite all the new capacity coming into the market, you have difficulty duplicating the 1-Gbps-level bandwidth in the Caribbean or the Mediterranean during the trans-Atlantic passage?
Today we are serving ships with 4,000 to 8,000 people aboard, and 400-500 Mbps is becoming common. That is far from enough, because when I say 400-500 mbps this is adding both directions — so maybe 200 Mbps down.
We think this 500 Mbps will become a gigabit, or a gigabit and a half, and 2 gbps potentially. Today we are facing some limits to that. We have delivered 3.2 gigabit to one cruise ship, but this was using different satellites and to a place where we could use different satellites. [New York City harbor]
We are going to be faced with a situation where we can deliver a gigabit to a ship in the Caribbean, but we cannot deliver that 1 gigabit when that ship crosses the Atlantic to go to the Mediterranean. So there are regions where we have access to significant capacity, and there is more coming, and there are regions where we are lacking capacity.
So yes, there is a lot of capacity coming. But it’s not a homogenous picture. there are differences from region to region and frequency to frequency.
When you say a lack of capacity, do you mean there is no capacity available or that it’s too expensive?
Both. Over the crossing we have issues with the amount of capacity available and we have a price issue.
Do you see a long-term need to continue to use C-, Ku- and Ka-band, plus L-band?
We still use a lot of C-band and we would like to continue to use C-band. We have customers who want 99.97% availability for critical applications and we can achieve that only with C-band spectrum. L-band works as well but it’s not the same amount of bandwidth.
I could see customers dividing applications, with noncritical applications going to Ku and Ka and the more critical ones staying with C-band. We are very agnostic in terms of spectrum. For customers who need a lot of spectrum we need Ku-band and probably Ka-band as well to get to that price point.
So I think you will continue to see us using those three spectrums, L-band as a backup as a troubleshooting when things are down.
Our mission is not to fill assets in the sky. It is to satisfy the customer. We are dealing more and more with hybrid networks, with LTE, and in dozens of key ports, big wireless radio hubs so that when the ship is in port, where they may not be able to use the satellite, depending on the regulation, they have connectivity.
You reported having 20,000 IoT devices under contract. Is that a growth area?
We are seeing growth in IoT, meaning narrowband applications. For years we have been talking about more and more megabits, but there is a significant opportunity in IoT for narrowband to connect a growing number of objects.
What is the ARPU for your IoT business?
Let’s assume it is around $10 per month per device.
What’s your latest thinking about whether new flat-panel antennas will be a growth driver for your markets?
In cruise, flat panel is not key, nor is it for energy and offshore. But it could be interesting for commercial shipping and yachts with 60-cm antennas. Current antennas are complex to install, configure and maintain. The idea of an antenna that you throw on the ship with no maintenance because there are no mechanical parts is a game changer.
The same is true for land mobility. Having a small, low-cost antenna that we can install on various assets that move around with a decent amount of bandwidth Government, NGOs and the UN could use this too. That could be very interesting.

Airbus to in-flight-connectivity providers: Here’s what you need to do

Hugues Favin-Leveque, vice president, Airbus connectivity roadmap. Credit: Airbus
PARIS — Airbus has some advice for airlines and providers of in-flight connectivity on how to capitalize on growing demand. Much of it is predictable — lower costs, higher throughput — but it also calls for maintaining air-to-ground service and adding capacity from low-orbiting broadband constellations, of which several are being designed.
In addition, airlines need to consider dual Ka-band and Ku-band networks, as neither on its own is the best solution in the air, according to Hugues Favin-Leveque, connectivity roadmap vice president at Airbus. Related to that is the need to offer immediate backup capacity in the event of a satellite failure.
“It’s important that it’s fully secured, and not ‘One day it’s there, and the next it’s not,’” Favin-Leveque said during Euroconsult’s Smart Plain symposium here Sept. 9. “That means possibly parallel communication links.”
Here are Airbus’ other recommendations:
— Bandwidth needs to be 1 Gbps per plane for peak demand routes, and an average of 50-100 Mbps on average, fleet wide, when both single-aisle and long-haul aircraft are included.
— Cost needs to come down substantially.
“Collectively, we should do some design-to-cost exercise, targeting something like 100,000 euros ($111,000) capex per aircraft and opex in the range of 10 euros per aircraft seat, per month,” he said. “The reason why today only one-third of the fleet worldwide is equipped is because there is high up-front capex and high opex.”
— Outfitting aircraft with both Ka- and Ku-band connectivity likely will be needed.
“Both bands are suitable for aero, and Airbus would not recommend going exclusively with one or the other,” he said. “Both bands will coexist in the next 10 years.”
— Whether it’s line fit or retrofit, installation takes too long.
“Fitting the antenna onto the aircraft  is extremely complicated. It takes several maintenance hours — days. Your aircraft is grounded during these operations. And that’s just during maintenance or retrofit,” Favin-Leveque said.
“As OEM, our primary concern is on the line fit. If you visit our assembly line, you will see this is one of the most complex operations in the work flow. We want to find clever ways with the stakeholders to come to a solution where the integration can be done without having to screw 60 bolts on top of the aircraft. Collectively [the goal] is overnight installation of the terminal. And we should target an operator-agnostic, operator-interoperable terminal.”
— Flat-panel arrays can’t come soon enough.
Today’s mechanical gimbal antennas create drag that is equivalent to adding 250 kilograms to the weight of an aircraft.
“It’s very heavy, roughly [30,000 euros] of fuel per year for a single aisle,” he said.
 But flat panels have their own issues. They are less efficient than directional antennas, and cannot cover the full 360-degree range or 0-to-90-degree elevation. 
“If you want to access the mega constellations, you need a minimum of two beams,” he said. “If you want to have hybrid connectivity, you would need two beams for seamless handover. We have to go from single-beam satcom infrastructure on the aircraft to multi-beam. Here again, the flat panel should allow this. You could also imagine multiple flat-panel antennas, assuming they are cheap, to ensure seamless handover from one LEO satellite to another.”
— Standardization is the goal
Like just about every other player in the IFC ecosystem, Airbus wants to see more standardization and interoperability among the hardware providers, with airlines adopting roaming standards similar to what terrestrial mobile operators do.
 Modem technology is another area ripe for innovation, with the advent of software-defined radio technology paving the way for a completely agnostic piece of hardware on which airlines could load the software needed to communicate with different satellite operators’ gateways.
 “We could imagine a completely dynamic loading of software as a function of which satellite you’re talking to at a given moment,” he said, emphasizing the need to adopt standardization in areas beyond antennas and seamless broadband, including interoperable Ka-band antennas.
 “Why don’t we work on something similar in the aero-connectivity domain?” he asked. “My message is we are all interested in this ubiquitous connectivity.”  
 Contributing Editor Amy Svitak can be reached at aesvitak@gmail.com

China’s IAC attendance, Galileo’s 7-day outage, ESA’s future budget: Jean-Yves Le Gall updates all three

UPDATE Sept. 17: This story was updated to reflect the European GSA’s comment on the Galileo outage and board of inquiry.
PARIS — U.S. visas for Chinese nationals seeking to attend the October International Astronautical Congress (IAC) in Washington, July’s seven-day outage of Europe’s Galileo positioning, navigation and timing system and the upcoming European Space Agency (ESA) conference to set multi-year budget and program priorities were among the subjects addressed by Jean-Yves Le Gall.
Le Gall is president of the French space agency, CNES, which is ESA’s largest contributor. He is also chairman of the ESA council, which is preparing the Nov. 27-28 ESA ministerial conference in Spain, and chairman of he board of the European GNSS Agency, GSA, which manages Galileo.
International Astronautical Congress aims for 10,000 — how many Chinese?
He is also president of the International Astronautical Federation (IAF), which organizes the annual IAC conference, which is perhaps the biggest space-sector meeting of the year.
Le Gall said he bet NASA Administrator Jim Bridenstine that this year’s IAC, scheduled for Oct. 21-25, would surpass the 10,000-registrant market.
Some 4,330 abstract proposals were submitted.
But this year’s meeting comes at a time of rising tensions between the United States and China. How many Chinese papers will be presented, and how many Chinese will arrive in Washington, will depend on the U.S. State Department’s visa requirements.
“We have sent several messages to the U.S. administration” about the visa issue, Le Gall said. “At this point I have no information of any difficulties in getting visas. I cannot predict what will happen between now and the end of October, but at this point our Chinese colleagues have not had problems with visas.”
Galileo July outage: Still no word on root cause
Galileo service shut down on July 11 and took seven days to recover following an unspecified anomaly at one of its two main ground stations: http://bit.ly/2XOqcQ9
Two months later, the board of inquiry established to determine the cause of the problem and prevent its recurrence has still not rendered its conclusions, Le Gall said. He declined to discuss what happened until the inquiry is terminated.
“There are two ground stations, and while one was undergoing maintenance, the other had a problem,” he said.
The GSA said on July 19, after service was restored, that the issue was related to an anomaly in “the calculation of time and orbit predictions, which are used to compute the navigation message. The technical incident affected different elements of the ground facilities.”
Le Gall conceded that communication about the event fell short. A system managed by three organizations — the European Commission as owner, the GSA as operator and ESA as technical lead — makes it difficult to coordinate communications.
In a Sept. 17 response to Space Intel Report inquiries, the GSA said:
“Further to the Galileo technical incident in July 2019, the European Commission set up an independent Inquiry Board to investigate the incident and provide recommendations for the future. The first meeting of the Inquiry Board took place on 5 September 2019. Preliminary recommendations are expected in October, with the final recommendations by the end of 2019.”
ESA ministerial: 14-plus billion euros, if all goes well
Le Gall said ESA’s 22 member governments are still determining their level of space spending for the next three years even as they debate with each other how much ESA’s new budget should be.
One reason for optimism, Le Gall said, is that the usual push-me, pull-you between the agency’s two biggest members, France and Germany, has become less contentious. He agreed there are still points of disagreement on spending details, but said 80%-90% of the issues have been resolved between the two nations. The current proposed total spending, including payments from the European Commission, Eumetsat and others, is about 14.25 billion euros ($16.2 billion).
ESA’s current budget proposal, subject to change, is that its general operating budget, couple with its mandatory-contribution science program, be financed at 4.3 billion euros for the three years starting in 2021.
Exploration would receive nearly 2 billion euros for Europe’s role in the International Space Station and future exploration missions.
An ESA budget line relating to industrial competitiveness in satellites would receive 2.4 billion euros, mainly for Earth observation and telecommunications-related spending.
Launch services: How and how much to compensate for market decline?
That leaves the “access to space” budget line, which includes work on the future Ariane 6 heavy-lift and Vega C light launchers, and technology investment into future launcher technologies including a possibly reusable rocket first stage.
Le Gall said this budget has been tentatively set at slightly more than 2.6 billion euros. He did not provide a breakdown of the different spending categories.
One of the potentially contentious budget lines will be to compensate industry —- ArianeGroup, OHB SE, Avio SpA, Ruag and others — for the collapse of the market for large telecommunications satellites.
This market may or may not be rebounding but has been the life blood for Europe’s Arianespace launch service provider over the past 40 years.
How, and by how much, to mitigate the the impact of this market development on Europe’s launcher sector is almost certain to be an issue at the ministerial conference.

U.S. military signs seven-year, $738.5-million unlimited-use contract with Iridium

Credit: Iridium
PARIS — Mobile satellite services provider Iridium has renewed its showcase contract with the U.S. Department of Defense for $738.5 million over seven years, a renewal that includes a 32% increase in annual commitments and a two-year increase, two seven years, in contract duration compared to the previous arrangement.
Under the contract, the U.S. military, which has long been Iridium’s biggest customer, will have unlimited use of the Iridium constellation, which has recently been refreshed with new satellites as part of a $3 billion capital program.
Iridium officials had long expressed confidence that the increased use of Iridium by the U.S. military — 51,000 in 2013 and 125,000 now — would be reflected in the new contract.
Some analysts had speculated that the deal might reach $1 billion.
At $738.5 million over seven years, the commitment is $105.5 million per year, compared to $80 million per year under the 2013 deal, which lasted for five years and was then succeeded b a six-month, $44 million agreement and a more recent $8.3 million extension.
In addition to putting to rest what might have been seen as a risk factor, the new commitment from the U.S. Air Force Space Command will enable Iridium to refinance its current debt, mainly with the French export-credit agency, Bpifrance, in favor of commercial loans.
Iridium Chief Financial Officer Thomas J. Fitzpatrick said the current economic climate is very favorable for Iridium, especially given that Iridium is now set for a 10-year period of no more than maintenance capex spending.
“Iridium’s relationship with the U.S. government has been the model of what a public-private partnership should look like in the satellite industry,” Iridium Chief Executive Matt Desch said in a Sept. 16 statement.
“The U.S. government has made significant investment in Iridium over the years, and likewise, we have invested billions of dollars to ensure our network remains the premier reliable, mobile satellite service with a proven ability to be deployed anywhere in the world. While this new contract will see continued adoption of Iridium, it will also drive ongoing innovation through collaboration between the U.S. government, Iridium, industry partners and user communities.”

Hughes: Early data shows $150-$200/month revenue from community Wi-Fi in South America, Africa, Russia

Credit: Hughes Network Systems
PARIS — Satellite broadband hardware and service provider Hughes Network Systems’ early experience with rural Wi-Fi in South America, Africa and Russia has shown that each installation generates, on average, monthly revenue equivalent to two U.S. fixed broadband subscribers.
Hughes Chief Executive Pradman P. Kaul said it was too soon to say whether this figure would hold up as Hughes expands its community-Wi-Fi service, but that the early results show each installation producing $150-$200 per month.
“Community wifi is exciting for markets to address people who can only afford $5-$10 per month by combing them to get ARPUs of $150-$200 per month,” Kaul said here Sept. 10 during Euroconsult’s World Satellite Business Week.
“This represents our initial experiences in these countries. It varies from country to country, but that is the general ballpark. I think it is sustainable. We’ll learn a lot more in a year or two. But it is a number that is standing up right now.”
One industry official familiar with community Wi-Fi in Mexico said that in some cases it can return $500 a month in gross revenue, but that a provider like Hughes or its U.S. competitor, Viasat Inc., will take home no more than half of that or less after paying local partners and what this official said is often-onerous government license fees.
Another industry official with experience in Brazil agreed. “Some governments, and Brazil is one of them, talk about universal access to broadband but then make it difficult for a service provider to make it a profitable business,” said this official, who does not work for Hughes or Viasat.
Hughes has said that a community-Wi-Fi terminal typically needs to have a capacity of up to several hundred Mbps to afford download speeds of 10 Mbps or more per user. Each Wi-Fi unit can cover a 500-meter area, depending on the local geography.
Hughes’s Russian partner, KB Iskra, has installed high-power Wi-Fi access points to provide coverage of more than 1,000 meters from the terminal, enough for an entire small village.
“Typically, each VSAT supports 20 to 30 subscribers, each paying on average 50% less each month than individuals with home-based service in urban areas, thanks to the cost-sharing model. The company has installed more than 600 shared VSATs, and now provides affordable service to almost 20,000 regular Wi-Fi users who would have otherwise remained unconnected,” Hughes said of the KB Iskra experience in eastern Russia.

Promus, Seraphim say venture funding still plentiful; wider investor pool awaits successful exits

Mike Collett, founder, managing partner, Promus Ventures. Space Intel Report photo
PARIS — Managers of two space-focused venture funds said the space sector has yet to generate interest beyond a relatively small investment class of wealthy individuals and companies with a strategic interest in the technology.
The wider pool of investors, they said, is likely waiting to see evidence of successful exits by early investors before jumping in.
That may be a problem at some point. But for the moment, Mike Collett, founding and managing partner of Promus Ventures; and Mark Boggett, chief executive of Seraphim Capital, said VC capital remains plentiful. They addressed the Euroconsult World Satellite Business Week here Sept. 11.
“There is a huge amount of interest remaining in this sector,” Boggett said. “That has been demonstrated by the face that the B-round series was the fastest-growing area in this market last year. Lots of new investors are coming in despite the fact that there is little by way of evidence of exits.”
74 Earth observation startups funded in past 12 months
Lots of investors, and also a continued large flow of new projects seeking funding. Boggett said his company is aware of 74 Earth observation startups raised funds in the past 12 months — and probably triple that number that were seeking funds but did not find investors.
But the lack of successful exits remains an issue that is a factor in keeping a larger pool of investors from entering the space sector.
“There are not a whole lot of us who invest in space,” Collett said. “You have to ask yourself: Why is that? Why isn’t Silicon Valley coming in? The realistic answer is that there are very few business models right now among the startups that show sticky, recurring-revenue models.
“That doesn’t mean they can’t come,” Collett said. “We are certainly betting that the ones we are invested in are going to prove that out. But it is a difficult environment [even though] the market to raise is a good one. It is just as hard to raise capital as a space company now as it was last year.”
Mark Boggett, chief executive, Seraphim Capital. Credit: Euroconsult
Boggett agreed that a few successful exits by investors “would obviously be helpful in bringing non-specialist VCs into the market. The more important point is bringing the appetite to the LP [limited partner] investors in venture funds.”
Boggett said sovereign venture funds and strategic investors are still the main investors.
The relative lack of identified customers has been an issue for the so-called mega-constellations of broadband satellites. But Collett said this issue is widespread.
“Are there a lot of good business models that are showing top-line growth that is doubling every year with a sticky, recurring-revenue model? Are there constellations show that the investment needed to get the constellation up is really paying off — not only in government-type work but consistent corporate, recurring seven-figure-type contracts? The more of that we have, the better.”
Boggett said Seraphim is mainly looking at startups that have closed Seed-round funding and are preparing a Series A round. For these companies, immediate revenue is not a priority.
“A Seed-stage company might not earn revenue until they are in their C- or D-round,” Boggett said. “So we have to look at other metrics.”
For its portfolio, Seraphim aims for an internal rate of return of 20%. Boggett said at  least a third of the businesses selected by the fund fail during Series-A funding rounds. “At the Seed stage it’s more like 50%, 60% or 70%.”
Collett said Promus has a similar experience. “If you don’t have around a 30% loss ratio for your portfolio you are not taking enough risk,” he said.

British military announces competition for Skynet 6 operations without a Skynet 6 program, adds SigInt to a proposed radar constellation

British Defence Secretary Ben Wallace. Credit: Wikimedia
PARIS — The British Defence Ministry has added signals intelligence to the payload it wants on a future high-resolution radar intelligence, surveillance and reconnaissance system.
Given the political turmoil in Britain, whether the multi-satellite system will be contracted anytime soon is unknown. But the Defence Science and Technology Laboratory (DSTL), an arm of the Defence Ministry, has awarded Airbus Defence and Space a contract to design cluster of satellites to carry both a synthetic-aperture radar (SAR) and radio-frequency collection payload.
“This addition to our capability is a valuable part of the future of Defence Space. Partnership between DSTL and Airbus on this project secures UK jobs as well as continuing to exploit advances in the UK space sector.”
The project, called Oberon, is intended to enable Airbus to produce a demonstration payload in 2022, with an operational system “as early as 2025,” Airbus said in a Sept. 11 statement.
Colin Paynter. Credit: Airbus
“Project Oberon builds on Airbus’s expertise in space radar technology developed over 40 years,” said Colin Paynter, managing director of Airbus Defence and Space UK. “I look forward to seeing this study leading to a new world-class surveillance capability for the UK MOD, helping to protect our armed forces across the world.”
The UK military’s interest in a radar system, which it does not currently have, has been known for some time. Airbus and is subsidiary, Surrey Satellite Technology Ltd. (SSTL), in 2018 launched the NovaSAR satellite, which has been used by British defense authorities to test a future operational system of several satellites.
But the signals-intelligence payload appears new. It follows the launch this year of the first spacecraft for two commercial SigInt systems, Hawkeye 360 in the United States and Unseenlabs in France. Both companies view the military market as among their most promising.
Also on the British Defence Ministry’s agenda is what to do about the next-generation milsatcom system, Skynet 6. Airbus’s multi-year contract to manage the current four-satellite Skynet 5 network expires in 2022, and the ministry has said it wanted a competition for the follow-on contract.
That is what Defence Secretary Ben Wallace announced Sept. 11.
In a speech to the DSEI conference, Wallace said:
“Fifty years ago Britain put its first satellite, Skynet 1, in space. Today we’re having to deal with increasing threats to satellite-based navigation. So the need for robust communications has never been more vital.
“That’s why we’re developing Skynet 6, which will give our forces unparalleled capacity to talk to each other in any hostile environment. And I can announce the launch of a new competition for an industry partner to operate and manage the ground stations, infrastructure and technology involved in this program.”
It is unusual for a customer to announce a competition for a services contract before the hardware whose services are to be managed is decided. But that is the case here.
Airbus in 2017 was awarded a design contract for a single Skynet 6A satellite, which was supposed to be a gap filler between the current Skynet 5 and the future Skynet 6 systems. But more than two years later, there is still no Skynet 6A construction contract, and British defense authorities remain undecided on what the full Skynet 6 system will look like — a partnership with private industry, as in Skynet 5; a conventional procurement of hardware to be operate by the ministry, as seemed to be the ministry’s priority; a defense payload on a satellite system built in partnership — no decision has been made.
Still, Airbus made the best of the Wallace statement.
“We welcome today’s announcement from the UK MOD that they are looking for a supplier to provide the next-generation secure milsatcom service as part of the Skynet 6 military satellite program,” said Richard Franklin, head of secure communications at Airbus. 
“Airbus has an outstanding track record of being the pioneer of secure milsatcoms within a commercial framework – having provided the UK MOD and its allies with resilient and secure milsatcom services and support for more than 15 years under the Skynet 5 program. 
“As well as taking the technical, commercial and financial risk, on behalf of the MOD, we have developed the system from two Skynet 5 satellites to a fleet of four providing near global coverage when combined with the previous Skynet 4 generation spacecraft.  Airbus operates and manages services for a fleet of seven spacecraft giving the MOD access to the most secure satcom services in the world enabling operational effectiveness. A capability which will endure far beyond the contractual end date offering outstanding value for money.”

Maxar CEO defends decision to stick with commercial GEO product line, despite everything

Daniel Jablonsky, CEO, Maxar Technologies. Credit: Maxar Technologies
PARIS — Daniel Jablonsky took over at Maxar Technologies in January at a time of near-existential crisis at the company and had wide latitude in determining its future direction.
He elected to end a NASA contract for in-orbit servicing because it would have required substantial Maxar investment, but to retain the loss-making commercial telecommunications business after selling off part of the Palo Alto, California, site and making staff reductions.
The commercial, geostationary-orbit satellite telecommunications market, despite what looks like a rebound from the no one-lives-here levels of 2017 and 2018, is not seen as ever returning to its fat years of the 1990s and 2000s.
The Palo Alto facility burned $100 million in cash in 2018 and is still forecasted as reporting a negative cash flow for this year, and somewhere around a break-even in EBITDA terms, Maxar said.
Credit: Maxar’s Q2 2019 earnings presentation.
The market’s uncertain prospects and Maxar’s need for more U.S. government business provoked what threatened to be an exodus of talent from the Palo Alto facility. Maxar reacted by spending what it estimates will be $20 million this year on retention efforts.
Why did Jablonsky keep a business that, even with a rebound, has never been one of large profit margins, and one in which better-financed competitors — Airbus, Boeing, Lockheed Martin, Northrop Grumman, Thales Alenia Space — appear ready to commit self-funded R&D to meet evolving customer demand?
Jablonsky has addressed this question to investors in the past nine months, but on Sept. 11 here at Euroconsult’s World Satellite Business Week, he gave a distilled version of his thesis: A small number of commercial successes combined with NASA and other government work using Maxar’s commercial satellite platform, combined with a lower cost basis, will be enough to operate a profitable business:
“The company has a little more debt than I’d like and we’re working on that,” Jablonsky said. “But I am a believer in optimal capital structures, in optimal returns for shareholders. I looked at every program in the company and asked what makes the most sense for returns to our shareholders, and what doesn’t.
“If it’s not accretive in a certain time horizon and doesn’t have the right business case to it, then they’re not things we’re going to do. The RSGS [NASA satellite-servicing] case is one of those.
“It doesn’t mean we’re giving up on robotics. There are five robotic arms on Mars right now. We built all five. We just won the first two study contracts for Canadarm 3, the dextrous plus the heavy-lifting arm on the Lunar Gateway, the Artemis program. So we’re very embedded in the R&D and what future robotics looks like in space, and potentially in-orbit servicing. We’re doing DARPA contracts for refueling. These are things that we continue to have a unique expertise in.”
Maxar has now become a U.S. company eligible, alongside the big U.S. aerospace primes, for civil and military work. Maxar may be arriving at a good time. The U.S. Defense Department is preparing to recapitalize just about all of its satellite programs, leaving a possible opening for a newcomer like Maxar.
That may be one reason to keep the commercial satellite line and to reinforce its synergies with future government work.
Credit: Maxar’s Q2 2019 investor presentation
“In terms of what happened with what we used to call SSL — It’s Maxar now — we looked at the addressable market and the cost structure we had,” Jablonsky said. “We looked at the opportunity to invest in, and grow, the business. We said: We’re not sure exactly where the commercial geo-comms market is going.
“We have 92 geostationary commercial satellites on orbit, which is astounding. They’re all working and they’re all doing their missions.
“But we needed to retrench a little bit, and get on the right cost footprint for that piece of the business with a mix of awards in GEO comm and LEO comm, our own constellation, the NASA program, defense programs.
“When we put all that together we said: We can break even at something we’re very sure about: one two two GEO awards a year or 1300 [satellite] buses a year. NASA’s Artemis is a 1300 bus program, $375-million, and it qualifies as one of those.
“We also just one our first Legion form factor GEO award [for new satellite operator Ovzon of Sweden], and it’s a digital payload. That’s a new offering we have. It’s not the traditional 1300 bus.”
Ovzon’s satellite uses a satellite platform designed for the next generation of high-resolution optical Earth observation satellites for Maxar’s DigitalGlobe. Repurposing this platform for a GEO order was a surprise early victory for the new Maxar.
“Now we’re doing NASA hosted payloads and we think the pipeline is also good for additional awards there as we pick up the other pieces of the business such as robotics.
“I am very exciting about the business. It has to be at the right cost footprint. It wasn’t before. It was single-threaded into one market segment and that’s not the way to survive.

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