Category: News

OHB satellite business doing well, rocket division less so; multiple ESA ITTs stress Europe’s supply chain

Credit: OHB SE
LUXEMBOURG — Satellite and rocket hardware builder OHB SE reported increased revenue and profit for the nine months ending Sept. 30 despite headwinds as its Ariane rocket division manages the rough transition from the Ariane 5 to the Ariane 6 rocket.
It is a problem that is not going away as Ariane 5 heads toward retirement and its replacement, the lower-cost Ariane 6, enters an uncertain market. Its inaugural flight is scheduled for late 2020.
OHB, through its Aerospace and Industrial Products division, has an 11% share of the Ariane 6 work.
“We are on schedule and on budget,” OHB Chief Executive Marco R. Fuchs said of the company’s Ariane 6 contracts. “The overall market is something that [European launch-service provider] Arianespace is working on. Of course it’s very competitive. There is price pressure, and new players.
“Ariane 6 has to prove that it is as good as we all hope it will be. As a supplier, noting has changed. Our contractual agreements are the same as negotiated some time ago. We are hopeful that the ramp up on the market happens as planned, but as a supplier we are really not in control of that.”
Arianespace has ordered the first batch of 14 Ariane 6 vehicles from prime contractor ArianeGroup, which is OHB’s customer.
Because it is unclear what the market’s response to it will be — particularly given the tumult in the traditional geostationary-orbit satellite sector — Ariane 6 is being ordered more slowly than what contractors like OHB had hoped. That, plus Ariane 6’s lower-cost design, is making the transition from Ariane 5 more difficult for its manufacturers.
OHB’s satellite business, based on European government programs, is doing well. But the Aerospace and Industrial Products division is where the work on the Ariane rocket work is done. The transition from Ariane 5 to Ariane 6 was never going to be easy. How difficult it will turn out to be won’t be known for another year or two. Credit: OHB SE
“We have significant volume decreases,” Fuchs said of the transition’s effect on MT Aerospace, the division that does the work. “We had something like 11,000 production hours on a shipset of Ariane 5. Now we have 7,000 production hours on Ariane 6.”
OHB SE as a whole reported an EBITDA of 8.8% of revenue, which was up 3.9%, to 659 million euros ($735 million), for the nine months ending Sept. 30.
The Aerospace and Industrial Products division, which includes Ariane rocket component builder MT Aerospace, reported a 7% drop in revenue, to 130.8 million euros  and an EBITDA margin of 9.6%, down from 11.1% last year.
“The goal is to make MT less dependent on the Ariane business,” Fuchs said. “It used to be a very high percentage — two thirds. Soon we will have one-third. This is part of the healthy evolution of MT Aerospace.”
OHB’s current largest programs are as prime contractor for Europe’s Galileo positioning, navigation and timing satellites; prime contractor for the six-satellite Meteosat Third Generation meteorological spacecraft; and prime for the three-satellite SARah radar reconnaissance mission for the German military. Airbus Defence and Space is building one of the three SARah satellites.
OHB, and the entire European space-hardware sector, is looking to the Nov. 27-28 conference of European Space Agency (ESA) governments to approve multiple new programs. OHB will be bidding either as prime contractor or as part of a team.
Multiple ESA bid requests putting stress on supply chain
Like the other two European space system prime contractors, Airbus Defence and Space and Thales Alenia Space, OHB is struggling to manage as many as 10 simultaneous invitations to tender from the 22-nation ESA.
The competitions, for Earth observation and exploration programs, have put strains on Europe’s space-contracting ecosystem. It’s particularly difficult for smaller companies, insofar as the ESA tenders require them to deliver priced bids to the prime contractors, which then include them in their bids.
Industry officials said they have never seen so many bid requests coming at the same time.
A small- or medium-size subcontractor will be hard-pressed to handle the wave of bids now facing deadlines. Officials from Airbus, OHB and Thales Alenia Space said it’s not the programs’ production schedule that is the problem — the actual development is stretched out — but the densely packed deadlines for the bids.
Some of these contractors are the sole European suppliers of a given piece of equipment.
Rocket Factory Augsburg AG: OHB’s small-launcher pitch
OHB is a family-owned company. The Fuchs Family Pool has 69.72% of the equity, which gives it the luxury of investing in what might be considered risky ventures without much shareholder blowback.
So it is with Rocket Factory Augsburg AG (RFA), OHB’s small-satellite launcher initiative. Established in 2018, the company now has more than 50 employees designing a rocket to carry a 200-kilogram payload into low Earth orbit. The company is among those bidding for selection by the government of Portugal to operate from the Azores.
“Initial tests of major subsystems have already been successfully completed,” OHB said in a statement to investors. “To market the rocket, RFA can also draw on the resources of the OHB Group, which in OHB Cosmos has a company specializing in this area. Given the expected rise in demand for the transportation of small payloads, the future market prospects for a mini launcher are positive, especially as the OHB Group itself develops and builds such small satellites at several locations.”
Fuchs explained the venture this way:
“We believe in the market for micro launchers. We have our own assessment of the demand. We have always been a space company, not a satellite company.”

Satellite broadband constellation startup LeoSat ends hunt for investors, shuts down; Thales Ka-band ITU filing at risk

Credit: LeoSat
UPDATE NOV. 13: This story was updated to reflect Telesat’s comment that it is not seeking equity investment from the future prime contractor for Telesat LEO.
PARIS — Startup satellite broadband B2B provider LeoSat has suspended operations — which in recent months has mainly consisted of looking for investors — and laid off all its staff in the wake of management and ownership changes at its two investors, Sky Perfect JSat and Hispasat.
LeoSat Chief Executive Mark Rigolle said both satellite operators have indicated that they have changed focus and could no longer support LeoSat under current circumstances. LeoSat’s efforts to close its $50 million Series A financing round have now ended.
The shuttering of LeoSat makes it all the more likely that the Ka-band filing registered with international regulators, which expires in January 2021, will be returned to the general pool and made available to others.
Rigolle said a central problem for LeoSat has been that the Ka-band radio frequency filing at the International Telecommunication Union (ITU), submitted through France’s National Frequencies Agency (ANFR), was registered to satellite builder Thales Alenia Space.
Because it owns the filing, Thales has long been the presumed prime contractor for LeoSat’s $3-billion, 84-satellite network, designed to deliver large amounts of data to corporate and government customers.
LeoSat’s B2B focus set it apart from other satellite broadband constellations including OneWeb, SpaceX’s Starlink and Amazon’s Kuiper. Telesat’s LEO system has a more B2B focus and relies less on a vast consumer market.
Mark Rigolle, chief executive, LeoSat. Credit: APSCC
“We built a successful book of business in terms of customer reservations but raising the capital has been a problem,” Rigolle said in a Nov. 12 interview. “The main reason for that was the amount we needed.” LeoSat had announced commitment letters totaling some $2 billion from prospective customers.
Industry officials have said for months that satellite operators Sky Perfect Jsat of Japan and Hispasat of Spain, which committed small amounts of capital to LeoSat in the expectation of much more to come, had been reluctant to accept a non-competed bid from Thales Alenia Space as system prime contractor. Both operators insisted that LeoSat reduce its capex requirements. The company was able to find a 15% savings but not much more.
LeoSat’s original agreement with Thales Alenia Space basically gave LeoSat access to the ITU-registered frequencies in return for a prime contract for Thales Alenia Space.
But unlike Airbus Defence and Space with OneWeb and industry officials’ description of current negotiations on a prime contractor for Telesat’s LEO — they say Telesat wants a large equity investment from LEO’s prime — Thales Alenia Space declined to invest in LeoSat equity.
Telesat on Nov. 12 said it is not seeking equity investment from its prime contractor.
Thales Alenia Space Chief Executive Jean-Loic Galle has said his company — prime contractor for the Iridium and Globalstar mobile communications constellations and the current-generation SES O3b broadband satellites — does not like to invest in its customers’ business.
That has not stopped Thales Alenia Space from making early-stage investments in the LeoStella satellite production facility with BlackSky in the United States, and in NorthStar Earth and Space Inc., a Canadian startup planning a constellation of satellites for Earth observation and space situational awareness from low Earth orbit.
But both these investments were relatively small compared to what LeoSat needed.
Rigolle confirmed that Sky Perfect JSat and Hispasat were not comfortable with a no-bid contract.
“Both these companies are used to managing competitive tenders,” Rigolle said. “That was a problem that we couldn’t solve. And then came the changes in management at both of them.”
Management changes at Hispasat, Sky Perfect JSat
Earlier this year, Red Electrica Corp., an electric utility, purchased a majority stake in Hispasat and more recently changed the company’s senior management.
Also earlier this year, Sky Perfect JSat named a new chief executive, whose early announcements about the company’s strategy made no mention of LeoSat.
Rigolle said both have confirmed that LeoSat is no longer a priority for them.
In October, LeoSat laid off its staff to reduce cash burn, Rigolle said. “Effectively, there is no one on the payroll anymore.”
Rigolle did not rule out a LeoSat revival but said it would be difficult given the January 2021 frequency deadline. He said other filings at the ITU are available for a LeoSat-type business, but whether LeoSat’s original investors would choose to pursue them is unclear.
He said France’s ANFR has made clear that it would not accept a “bringing into use” confirmation of the ITU frequencies on the bases of a small cubesat launched into LEO. “They want something more than that launched before accepting the filing,” Rigolle said of ANFR. Under current ITU rules, a cubesat operating in the same frequencies as the constellation could suffice, but ANFR apparently has a stricter policy.
“LeoSat is being mothballed,” Rigolle said. “At least we haven’t lost our shareholders hundreds of millions.”

ESA seeks $2.6 billion for Earth observation programs, weighs Digital Europe investment in data storage/transmission

Josef Aschbacher. Credit: ESA video
WASHINGTON — The European Space Agency (ESA) is seeking 2.35 billion euros ($2.6 billion) from its governments to fund next-generation Sentinel satellites and other Earth observation programs.
The budget will be decided at ESA’s Space 19+ conference of ministers, scheduled to meet Nov. 27-28 in Seville, Spain.
The biggest slice of ESA’s proposed Earth observation budget, at 1.4 billion euros, is intended as ESA’s share of the European Commission’s Copernicus program over the next three years. The commission is proposing to spend 5.8 billion euros over seven years as part of its own 2021-2027 budget.
ESA’s Copernicus Space Component budget line stretches over nine years given the time it takes to build, launch and operate the satellites.
While Earth observation is a popular investment among ESA’s 22 governments — it has accounted for an average of 27% of ESA’s total annual budget since 2015 — the negotiations this year will be colored by the fog surrounding Brexit.
Britain has indicated that while it will be leaving the European Union, it will redouble its commitment to ESA: http://bit.ly/2kQWyfz
Even so, the Sentinel satellites’ appeal for ESA governments likes in their recurring business. The first models are built mainly with ESA funding, and follow-ons are funded by the European Commission. It is still not known whether Britain’s Brexit deal will leave it out of Copernicus with respect to the commission’s budget.
ESA’s second-large budget envelop is for what it calls Future EO, a series of missions focused on Earth observation science, many of which could make it into Copernicus once their technology has been validated. For Future EO, ESA is asking 650 million euros over three years.
The agency’s proposed InCubed+ program is looking for 150 million euros that would be matched, mission by mission, by private-sector investment.
Josef Aschbacher, ESA’s director of Earth observation, has welcomed the New Space movement and its focus on geospatial imagery and data analytics. Aschbacher hopes the private sector eventually will be able to take over some of what ESA does, leaving the agency to focus on the risker technologies.
In an interview here during the International Astronautical Congress (IAC), Aschacher said ESA has opened a dialogue with the European Commission’s DG-Connect to figure out how to store and distribute the current 250 terabytes per day of Copernicus data. It was 150 terabytes just a year ago.
You have said the European Commission’s proposed seven-year Copernicus budget, at 5.8 billion euros, is 2 billion euros short of previously set program goals. Where does this stand?
This has not changed. The same delta is still missing if we assume the same content and a confirmation of the Long-Term Scenario Content in 2021. We will have a review in 2021, when we will have the real cost from our Invitations to Tender (ITTs) to industry, which are now open. We are soliciting proposals from industry.
What is the schedule for selecting the winners from these ITTs for future Sentinel satellites?
Two will close in December and the rest, early next year. By then we’ll know ESA’s funding level and the Commission’s budget, and we should know what the Brexit situation is — a hard Brexit or a soft Brexit. If it is a soft Brexit, then the UK can negotiate an agreement with Brussels for 2021 and beyond.
All these things should be on the table by then, and other things as well, such as the state of performance of the current Sentinels. That will help us define a launch and deployment scenario for the next generation.
The European Space Agency manages three categories of Earth observation missions. Science missions are ESA’s own satellites, funded by its member governments. Copernicus is the European Commission’s large environment-monitoring network whose Sentinel satellites are developed by ESA and majority-financed by the commission. Similarly, meteorological missions are financed mainly by the 30-nation Eumetsat meteorological satellite organization, with ESA handling development. Credit: ESA
In 2021 we have our major review point with the commission, and with our member states, to decide how to proceed. That may have an impact on this 2-billion-euro issue and on our next funding slice on the ESA side.
The 2 billion that is missing was over seven years?
On the EU side, yes. For ESA funding, It covers three ESA ministerial — 2019, 2022 and 2025. But the period goes longer. Some of the activities extend beyond 2030 because of the start of the next generation of Sentinels.
And the shortfall you mention is set against commonly agreed to Copernicus program objectives?
Yes. I should stress that all six Sentinels whose ITTs are now out have the same priority. Some people say CO2 [the Sentinel 7 satellite] has the top priority. It does not. It is more urgent because we have a 2028 [United Nations] COP deadline for stock taking. To use Sentinel 7 for stock-taking in 2028, we need to launch by the end of 2025.
But ESA and the commission have signed statements saying that all six have the same priority. We are not de-selecting one or of delaying any of the six. They are all moving at the same speed but we have to have a firm late-2025 launch date for CO2.
When do you want responses by industry for Sentinel 7, the CO2 monitoring satellite?
It was part of the second batch, which means it’s around January 2020.
How will this 2-billion-euro deficit be absorbed by the program?
We don’t know. That’s why we have this decision point in 2021. If the UK joins the EU program, that, together with Norway and Switzerland [non-EU nations that are ESA members] would be roughly 1 billion euros. So the 2 billion becomes 1 billion — if the UK comes in at its usual GNP position. That would be a big addition.
The Sentinel 6A and 6B satellites, to launch starting in 2020, follow on from the U.S.-French Jason series of ocean altimetry satellites, which have been instrumental in measuring sea-surface rise since 1993. Sentinel 6A is a collaboration between ESA, NASA, Eumetsat and the U.S. NOAA. Credit: ESA
Another thing: Several of the Sentinels are scheduled to be launched in the 2028-29 time frame, but we included the launches to be fully paid in the current commission’s 2021-2027 budget.
Since they are launched after the budget period, this funding can be pushed out.
If the UK is not part of Copernicus at the EU, other companies will need to assume responsibility for the contracts UK companies have been managing with ESA money. How big a headache is that?
The nominal case is that the UK puts money into ESA and they get their money back, just like in all the other ESA programs. Of course, UK industry and the UK Space Agency are also interested in continuing with the follow-on, recurrent units. That’s the interesting part.
This option is already built in to the ITTs we have sent out. It says very clearly that in the event the UK is not joining the EU program, then the work has to be transferred from the UK into other countries.
But effects on the Sentinels’ budget and schedule?
Schedule wise there will be an impact, and also money-wise. This will require negotiations but this is foreseen and there is a very small delta cost which is foreseen to allow this to happen. It’s a very small amount.
From a programmatic point of view, having the UK on board makes a huge difference. They add a significant amount of money — whatever they subscribe to ESA and whatever they might bring through EU channels. That is good for a solid, stable Copernicus program, which is good for all the countries involved — France, Germany, Italy, everyone.
So embedded in your budget request is the expectation of a substantial UK contribution?
I do expect a very solid UK subscription, yes.
What is the Arctic program you’re proposing?
The Arctic Weather Satellite is new. It was proposed by Sweden. It is a small LEO-orbit satellite, with one year of observation, carrying a radiometer to complement to the [Eumetsat] Metop SG radiometer. This would be the first prototype of a future constellation of small satellites. There are different numbers — 12, 16, 20 satellites — that have been proposed.
Eumetsat will look at the data from the first and decide if they find it interesting. Then, in a few years, they might agree to a joint program with a constellation.
With one satellite you demonstrate the added value. Then you need the temporal coverage. Sweden proposed it, but it is an ESA mission and we have had a huge interest from other countries, not only Arctic countries. I am pretty confident that this will be well-subscribed.
After Copernicus, your Future EO program is the biggest funding slice, at 650 million euros.
Future EO is a domain where I am most concerned about getting a good subscription. It’s the most important program, the backbone. There are small Scout mission proposals, and HAPS [high-altitude observation platforms]. We are pushing the technology, as we do with any program.
How to you look at higher-resolution Sentinel satellites with respect to what’s going on at the national or private-sector level?
It would not be a problem to develop 50-cm satellite for ESA. But it’s a programmatic issue. ESA will not compete with its own commercial companies in its own member states. So it is unlikely we would enter this domain because it remains a commercial domain.
You refer to Future EO as over nine years, three segments of three years each.
Yes, we used to have an envelope program that spanned five years. Now we have three years and the 650 million is for that.
Were you surprised that the French space agency, CNES, and Airbus agreed on the jointly funded CO3D 50-cm constellation?
They are convinced that there is a very good market, a good business case and I appreciated the fact that they did this. I think they did the right thing.
Look at Pleiades Neo [Airbus’s future 30-cm optical satellites], where they have invested they own money. it was courageous of them to do that. They had to work very hard to get it approved. I applaud them for doing it.
Airbus said it has advance orders of several hundred million euros for Pleiades Neo, two years before the launch of the four satellites.
Isn’t that great? It shows that Earth observation is becoming a very dynamic domain, growing very fast, and with a much higher commercial commercial element than it used to have.
So you’re optimistic about prospects fo the businesses of the New Space startups? There are a lot of them in the Earth observation sector.
I am very positive. What they have managed — Planet and Spire and others — is to create an awareness of the use of Earth observation for many aspects of society, which of course we also do with our public missions. But they are funded in a very different way. They have given it such a momentum and positive energy. It’s good for everyone. I really hope they succeed and make big money.
What effects does this have on your program?
It makes us, on the public side, think about how to realign our concepts for the long term. It’s clear that in the medium to long term, our future will look quite different in terms of the kind of satellites we produce and how we produce them and how we get data.
It’s a way for us to critically assess our program in relation to those companies, and to find synergies to use their data along with the more classical, traditional companies.
It’s clear that the resolution scale is moving downward, but it’s also clear that we, as ESA, have to move out of segments that are becoming commercial.
That’s the whole idea of a government R&D agency.
It is the whole idea. But sometimes people are reluctant to do what they are supposed to do. It’s not as easy as you might think. We’re not unique at ESA in this reflection. We are taking it very seriously and we need to see how it affects our architectural setup. We will continue to provide some segments of this Earth observation part, but others, meaning commercial, will be integrated into our system.
Airbus Defence and Space is financing, without government anchor-customer guarantee, four Pleiades Neo 30-cm-GSD satellites to match competitor Maxar at the very-high-resolution end of the market. Credit: Airbus
Do you see any particular threat to the package you are putting before ministers at the end of the month?
I think Copernicus will do very well, assuming that the UK comes as strongly as I hope. We may even get more than the requested 1.4 billion euros.
As for an Aeolus [atmospheric dynamics satellite] follow-on, I’ll make a proposal in 2022 after we learn lessons from the current design. We’re looking at this with Eumetsat.
Has there been a definitive resolution to the laser issue?
Yes. It was running on the A-laser for about a year but that laser was degrading continuously. We have switched to the identical B laser and it has degraded slightly but this is what yo expect. They do degrade over time. But it is degrading much less. We switched from A to B in July. Since early September we have regular measurements and they are very good.
One lesson I have learned is that despite a reduced signal, the wind information is just as good. So maybe we don’t need to aim for such a high power going forward.
There’s a lot going on in orbit and in data analytics, but ground storage and data dissemination has not taken off as much in the private sector. Does this need an extra push?
Of course. In space we have reached a good infrastructure in Europe with the Sentinels and Earth Explorers and the national missions. We have a good picture of where to go and what investments will come.
What I see missing is on the ground. We’re going to hit a bottleneck pretty soon.
150 Tb per day from Copernicus a year ago, 250 Tb today; possible collaboration with DG-Connect
Today we are disseminating, with Copernicus, 250 terabytes per day from the central hub in Esrin [Italy]. It was 150 We manage well. The data uptake is good, the data flow is good and users are happy. We have a 98.5% or 99% reliability so it’s really working well.
But we’re going to reach our limit on IT capabilities sooner or later. The trend is to go to cloud-based processing. The other part we’re pushing is AI for data management.
I’ve met with DG-Connect’s head —  Roberto Viola — twice now. He has written to request that we make a concrete proposal for how Earth observation could be used as a case for investment under the framework of Digital Europe. That’s in the seven-year budget as well, but on the DG Connect side. I am now doing this assessment and we need to see what this means.
But certainly I would need to reinforce access to high-performance computing, most likely with a networked approach. But this needs to be verified. And we need to se what is needed on our side to increase our computing capability.
Does DG Connect have in its seven-year budget room to do something with you?
Yes, they do.

Spanish government approves ~50% increase in ESA spending for seven years starting in 2020

Over a decade in development, the Spanish government’s medium-resolution optical imaging satellite, Ingenio/SEOSat, is scheduled for launch in 2020. Credit: Airbus Defence and Space
PARIS — The Spanish government restated its intention to sharply increase its investment in the 22-nation European Space Agency (ESA), a decision that likely would confirm Spain’s place as ESA’s fifth-largest national contributor.
Meeting Nov. 8, just two days before national elections and three weeks before ESA’s triennial ministerial conference, the Spanish Council of Ministers agreed to boost Spain’s current ESA budget by about 50% over the period from 2020 to 2026.
The increased funding over that seven years would total 586.7 million euros ($655 million). The Nov. 10 elections gave no clear signal as to the composition of the next coalition government, making it difficult to assess the stability of the budget plan.
In addition, Spain’s contributions to ESA will be determined only after negotiations with other ESA governments at the ministerial conference, called Space 19+, scheduled for Nov. 27-28 in Seville, Spain.
Spain’s ESA contributions over the past 15 years have seen dramatic ups and downs. By around 2008 it looked like Spain could replace Britain as ESA’s fourth-largest national contributor. The planned budget for that year was 210 million euros.
But the financial crisis reversed the trajectory and the budget was cut repeatedly, sinking to a low of 132 million euros in 2015. Since then, it has climbed to reach 205 million euros in 2018. This year, Spain’s financial obligations to ESA are expected to total 202 million euros.
Annual contributions to ESA vary based on each nation’s program commitments and these programs’ budget schedules. Governments make a la carte commitments program by program at ESA’s ministerial conferences, with the exception of ESA’s science program, to which member states make obligatory contributions based on their GDP.
Spain’s spending at ESA between 2013 and 2019 totaled 1.13 billion euros before adjusting for inflation over the period.
A 586.7-million-euro increase for 2020-2026 would put the total at 1.71 billion euros, a 52% increase over the previous seven-year period.
Government goal with ESA spending: Boost Spanish industry
The Council of Ministers said the increase would redress the imbalance between the Spanish economy and its weight at ESA in recent years.
“Spain has invested, in recent periods, well below the rest of the leading countries in the space sector and below the relative economic weight of Spain in the organization, according to GDP,” the council said in explaining the budget priority.
“The spending commitment will allow Spain to develop an important industrial fabric, gain competitiveness and technological specialization, since ESA guarantees the return of these contributions through contracts to companies in each country,” the council said. “For every euro invested in ESA, Spanish companies get 2.1 euros in contracts.”
It was not clear how the council arrived at the 2.1:1 multiplier. ESA’s geographic-return rules generally commit the agency to return to member governments, in the form of contracts to each nation’s industry, 90% or more of the national contributions.
The council had approved, in April, a spending plan that would set its ESA contribution at a maximum 260 million euros per year. The Nov. 8 decision would average 245.3 million a year.
“The final distribution will be fixed in the negotiations at the ministerial conference,” the council said.
One of Spain’s flagship space programs is the Paz radar and SEOSat/Ingenio optical Earth observation satellites, both built by Airbus Defence and Space with the substantial participation of Spanish industry, as mandated by the contract.
Paz was launched in February 2018 and is used by Airbus to enhance the coverage of its TerraSAR-X and TanDEM-X spacecraft.
SEOSat/Ingenio, more than a decade in development, is scheduled for launch in the first half of 2020 by Europe’s Vega light-class rocket. Spain hired ESA to be technical and procurement authority for the satellite’s space and ground segments, as well as for the launch.

OneWeb & SoftBank say Intelsat never had a contract to resell OneWeb capacity, seek dismissal of lawsuit

Credit: Intelsat
PARIS — OneWeb and SoftBank asked a New York court to dismiss Intelsat’s lawsuit alleging breach of contract, fraud and theft of trade secrets, saying Intelsat’s entire case is based on a contract that never existed.
Specifically, OneWeb and SoftBank said the “strategic cooperation agreement” under which Intelsat had exclusive rights to sell OneWeb services to four key vertical markets never came into effect because the parties were unable to agree to related purchase and service-level contracts.
Despite some 17 months of negotiations and several deadline extensions, Intelsat and SoftBank never agreed to the terms and conditions under which Intelsat would purchase OneWeb capacity from SoftBank. The latest deadline extension was March 31, 2018.
Until early 2019, SoftBank, a major OneWeb investor, had exclusive rights to sell OneWeb capacity worldwide.
Also left unsigned was an expected service-level agreement between Intelsat and OneWeb.
Credit: SoftBank
With a seat on OneWeb’s board following its $25 million equity investment in OneWeb, Intelsat signed off on both the arrival of SoftBank as global OneWeb capacity sales agent, and the termination of that agreement.
“Despite the passage of years since the parties entered into the 2016 Cooperation Agreement, Intelsat and SoftBank have never agreed upon a Purchase Agreement,” Intelsat and SoftBank said in their response to the Sept. 10 Intelsat lawsuit. “And Intelsat and OneWeb have never agreed upon an SLA,” or Service-Level Agreement. “Intelsat’s claim to exclusivity — in fact, any alleged right to purchase OneWeb services at all — depended on the parties reaching agreement on separate but interrelated” capacity-purchase and service-level agreements that were never concluded.
The two companies’ Nov. 8 petition that the Intelsat lawsuit be dismissed is accompanied by excerpts of OneWeb board meetings designed to show Intelsat’s full involvement in the OneWeb strategy, including the arrival of SoftBank as investor and global sales agent and the subsequent decision to terminate the sales deal even as SoftBank increased its investment in OneWeb.
Intelsat’s lawsuit makes occasional reference to negotiations with OneWeb over pricing and service-level details, but never mentions that these supplemental agreements were crucial to Intelsat’s rights to OneWeb capacity.
The Intelsat suit, for example, says Intelsat agreed to add $20 million to its initial $25 million investment into OneWeb, but that the fresh investment was “conditioned… upon the parties reaching a signed contract and concluding their negotiations, which had commenced between OneWeb and Intelsat n 2015 and 2016 and were later continued between Intelsat and SoftBank in 2017 and 2018.”
At another point, Intelsat’s lawsuit says that in April 2018, “the parties had reached agreement on many of the material terms, including pricing,” but that the negotiations with SoftBank were “put on hold” before an agreement was reached.
Intelsat’s suit against OneWeb and SoftBank, filed in the New York State Supreme Court September, alleges breach of contract, fraud and theft of trade secrets: http://bit.ly/2kFXJP3
The Intelsat legal action was triggered by what Intelsat characterized as duplicitous negotiations by OneWeb with prospective customers active in the four verticals to which Intelsat claimed exclusive OneWeb sales rights — aviation, maritime, oil and gas and government. 
Intelsat added fraud and breach of confidentiality to its claim without detailing the events that would buttress the claim.

As U.S. C-band auction proposal nears home stretch, Eutelsat proposes new formula for dividing the proceeds

Credit: FCC
PARIS — Eutelsat told U.S. regulators that the proposed auction of satellite C-band spectrum should return “up to 50%” of its proceeds to the U.S. Treasury, with the rest being distributed to the C-band satellite operators based on a formula that has been rejected by the C-Band Alliance.
Instead of dividing the proceeds based on 2017 C-band revenue in the United States, as the CBA has proposed, Eutelsat would employ a more complex formula that takes into account the amount of capacity each operator has in orbit and the age of its satellites, regardless of whether this capacity has any customers.
In a Nov. 7 letter summarizing its Nov. 5 meeting with the U.S. Federal Communications Commission (FCC), Eutelsat says the CBA’s formula “would introduce unnecessary legal risk.”
“[R]regardless of revenue from CONUS C-band customers, C-band satellite operators are relinquishing spectrum, will face a fundamental change to their authorizations, and have made sunk capital investments in satellite capacity to serve the United States, which they will be required to abandon if the Commission moves forward with this transition,” Eutelsat said.
Here’s how Eutelsat proposes to divvy up the proceeds from an auction of C-band spectrum. With a younger fleet, Eutelsat would stand to benefit from this formula compared to the C-Band Alliance’s proposal to base distribution on 2017 revenue from each operator’s U.S. C-band business.
Industry estimates are that Intelsat and SES together generate a bit more than 90% of the satellite revenue from C-band business in the United States, with Eutelsat and Telesat dividing the rest.
For Eutelsat, abandoning rights to spectrum to which each operator has equal access should be compensated regardless of whether the operator is managing much of a business. The investment counts, too, not just the revenue, according to Eutelsat.
Eutelsat’s fleet over the Americas is younger than the other CBA members, and weighting newer satellites more than older ones also would produce a more favorable outcome.
Eutelsat left the CBA in September, citing numerous issues including an undefined complaint about the proposed revenue share — which CBA members said Eutelsat had agreed to, in writing, before it changed its mind.
Eutelsat: The U.S. Treasury get up to 50% of the C-band auction proceeds
Another issue Eutelsat raised to this FCC, this time in an October meeting, was that the “voluntary contribution” to the U.S. Treasury not exceed 50% of the proceeds, which most observers believe will total at least several billion dollars as 5G terrestrial operators seek mid-band spectrum for their network deployments.
Intelsat Chief Executive Steve Spengler told an investor call that he had never heard the 50% figure being raised and could not explain its origin.
The Eutelsat Nov. 7 letter suggests that Eutelsat itself is the source for the 50% figure.
The CBA has said that clearing 300 MHz of the 500 MHz now allocated to satellite transmissions between 3.7 and 4.2 GHz would cost about $3 billion in launching eight new satellites, financing the introduction by broadcasters of new signal-compression techniques and installing filters on thousands of customer antennas.
With relatively little business to protect in the United States, Eutelsat has reason to propose to the FCC that each operator handle its customers’ transition on its own, without the need for CBA involvement.

Government development spending protects Avio from low Ariane 5, Vega launch activity in 2019

The Z23 second stage is where the July Vega failure originated. Without a specific root cause found, the inquiry board proposed stricter procedures to be in place at Avio’s production facility. Avio produced these images, showing development of the stage to be used in the next flight, in its Nov. 7 presentation to shareholders. Credit: Avio SpA
LONDON — Launch vehicle hardware builder Avio SpA said its 2019 financial results will not suffer from the fact that only two of a planned 4-5 Vega launches will have occurred, and only four of the planned five campaigns for the heavy-lift Ariane 5.
Avio is prime contractor for Vega and a major component supplier for Ariane 5.
Neither vehicle has been as active as was planned early in the year. For Vega, the expected four or five launches including the inaugural flight of the more-powerful Vega-C vehicle did not occur because Vega has been grounded since its July failure.
The vehicle is currently expected to return to flight around March, and its manifest is unclear for 2019.
In a Nov. 7 investor presentation, Avio said it expected the Vega-C flight to occur by mid-year.
The July failure was caused by a still unexplained “sudden and violent” event localized in the forward dome of the Vega rocket’s Zefiro-23 second stage.
It was the first failure in Vega’s 15 flights. An investigation could not identify a root cause and instead said Avio should reinforce production verifications overall. Avio told investors that given the lack of any other explanation, there was a “possibility of an undetected non-compliance in production” of the Z-23 stage.
In his Nov. 7 presentation, Avio Chief Executive Giulio Ranzo displayed pictures of the production of the stage planned for the return-to-flight launch.
Credit: Avio SpA
Much of Avio’s revenue comes not from production of vehicles  and components but from development programs managed by the 22-nation European Space Agency (ESA).
In addition, the company’s customer, the Arianespace launch service provider, books batch orders that mean hardware builders may not feel any immediate effects of a failure.
Avio is an Arianespace shareholder but shareholders in Arianespace do not view their investment as a source of funds. For Arianespace, the lower-than-expected activity in 2019 will have a direct effect on its revenue and profit.
At the end of 2018, Avio had been counting on three or four Vega launches and, in addition, the inaugural flight of Vega-C. Instead, 2019 like 2018 will be a two-launch year. Vega-C does not use the Zefiro-23 stage.
Longer term, Vega rocket competitiveness will depend on the rocket’s being launched as often as possible to reduce unit costs as it confronts a long list of competitors entering the market to launch small satellites.
The heavy-lift Ariane 5 rocket is being phased out between 2020 and 2022 in favor of the Ariane 6. The Vega and Vega-C first stage serves as the Ariane 6 rocket’s strap-on booster. Depending on the mission, Ariane 6 carries two or four boosters.
Ariane 6, whose first flight is scheduled for late 2020, is likewise facing a highly competitive market among heavy-lift vehicles and will need to fill its manifest in order to reach the production cadence required to keep its costs down.
ESA is preparing a package of support programs to ease the market entry of Ariane 6 and Vega C. Totaling 2.67 billion euros ($2.95 billion), the measures will be decided at a Nov. 27-28 meeting of ESA ministers in Seville, Spain.
It is because of these development support programs that Ranzo could say:
“The Vega anomaly does not change our medium- and long-term growth plans.”
For the nine months ending Sept. 30, Avio reported revenue of 270.3 million euros, up 3% from the same period in 2018, and EBITDA of 23.5 million euros, up 5% from a year earlier.
Avio said the revenue increase “is primarily driven by the development activities of Vega-C and the new P120C that will equip the next-generation launchers Ariane 6 and Vega-C.”

Viasat: Consumer broadband ARPU up 17%; in-flight connectivity revenue could be $3 billion a year by 2028

Credit: Viasat
LONDON — Satellite broadband hardware and service provider Viasat Inc. asked investors to picture a world where Viasat’s current 29% share of the in-flight connectivity market in U.S. narrow body aircraft is extended worldwide while the global aircraft fleet doubles and passenger traffic increases by 2.3x.
And the percent of IFC-enabled aircraft rises considerably from today’s 30%.
“It’s a very big addressable market,” Viasat Chief Executive Mark D. Dankberg said. “IFC alone can be a multibillion-dollar annual business during the life of Viasat 3,” the company’s three-satellite 1-Tbps-per-satellite program scheduled to launch in 2021 and 2022 for global coverage. “At 30% globally, 2028 revenue would be $2 billion to $4 billion annually.”
Viasat said its U.S. narrow body market share was 21% a year ago and just 10% in September 2016, making it the only one of the four established IFC providers to have increased market share in the past three years.
Viasat’s comparison is with Gogo, still the market leader but now with less than 50% of the installed base; Global Eagle Entertainment (GEE) and Panasonic Avionics.
Including 85 Boeing 737 MAX aircraft, which have been grounded as regulators evaluate its safety, Viasat has 1,438 aircraft fitted with its IFC system, with another 700 under contract. That’s a 51% increase from a year ago.
Credit: Viasat
In addition to its own satellites, the company uses capacity provided by partners in Europe and the Asia-Pacific in advance of the Viasat-3 arrival.
IFC is inside Viasat’s Satellite Services division, which includes fixed consumer broadband and the company’s expanding business providing Wi-Fi hotspots in emerging markets.
Viasat said that as of Sept. 30, its U.S. consumer broadband business counted 587,000 subscribers, a figure that hasn’t grown much in the past couple of years but is expected to return to growth when the first Viasat 3 satellite, to be stationed over the Americas, arrives in 2021.
But while the subscriber count has languished, Viasat has been increasing its per-subscriber yield. As of Sept. 30, monthly subscriber revenue was $86.94, up 17% from a year ago.
In a Nov. 7 investor call, Dankberg said Viasat has been able to transfer some Viasat-2 capacity from lower-demand regions to regions where it is more likely to find the high-dollar subscriber that Viasat prefers.
Although some bandwidth is lost in the process, he said the trade is favorable given the appetite subscribers in high-demand areas for the premium service.
Viasat has not disclosed what orbital slots it will use for the Viasat 3 satellites over Europe, the Middle East and Africa; and the Asia-Pacific.
Industry officials said Viasat has been leasing a satellite from Avanti Communications of London to occupy different orbital positions for the regulatory minimum period before moving to another position to perform the same function.
But beyond the company’s current partnerships with Telebras of Brazil, NBN in Australia and China Satcom, Viasat is going it alone for Viasat 3 in these new regions. The company’s consumer and IFC broadband partnership with fleet operator Eutelsat is winding down. Eutelsat ordered its own high-throughput satellite instead of sharing a Viasat 3.
“We are in a temporarily stable situation,” Dankberg said of the Eutelsat relationship. “We have an accommodation with them. They use our network, we use their satellite. It’s probably not the long-term solution. We are working with them on what the end state will be.”
More generally, he said the plan for the global Viasat 3 network is “to bring the satellites to market ourselves,” with regional partnerships.
Viasat did not discuss any implications for its IFC business with China Satcom of the loss of the Chinasat 18 satellite earlier this year: http://bit.ly/345bhpb

C-Band Alliance warns of legal action against any FCC-led auction, says Eutelsat is on board

Credit: C-Band Alliance
LONDON — The C-Band Alliance of satellite operators seeking U.S. regulatory approval for a CBA-managed auction of satellite spectrum told the U.S. Congress that an FCC-run auction — an alternative some CBA opponents have proposed — would face legal challenge from many quarters, starting with the CBA itself.
In a Nov. 7 letter to the U.S. House Subcommittee on Communications and Technology, the CBA it doubted whether the U.S. Federal Communications Commission (FCC) had the authority to reclaim spectrum licensed to satellite operators and distribute it to 5G terrestrial wireless operators.
“Several parties, including the CBA, have raised concerns that the FCC lacks the authority to confiscate C-band spectrum without compensating the satellite operators that currently use the spectrum.”
Signed by CBA Executive Vice President Peter Pitsch, the letter said proceeds from an FCC-managed auction to 5G bidders would by law go directly to the U.S. Treasury.
That being the case, the auction winners “would likely need to directly negotiate and fund [spectrum] clearing with the multiple C-band operators and thousands of Earth stations.”
The letter’s was ostensibly intended to correct what CBA said were inaccurate statements made by witnesses at an Oct. 29 subcommittee hearing. It reasserts its previous message that China is advancing quickly in 5G and could overtake the United States if U.S. regulators did not act quickly. 
The letter also addressed the “holdout problem” that results from the fact that any auction would need to compensate all eligible C-band spectrum license holders, since the licenses grant each of them access to the full 500 MHz of spectrum, 3.7-4.2 GHz, covered by their operating licenses.
That means all eligible satellite operators with C-band licenses in the United States need to be compensated.
The CBA now has three members — Intelsat, SES and Telesat. Fleet operator Eutelsat has left the alliance, raising the issue of whether Eutelsat could itself constitute a “holdout” and complicate a CBA-managed auction.
But while Eutelsat has quit the alliance, seeking a larger share of the CBA-led auction proceeds, it has not challenged the CBA’s position.
In an Oct. 3 letter to the FCC, Eutelsat said its chief executive, Rodolphe Belmer,  “stressed the legitimacy of the CBA to act as the transition facilitator and would therefore agree to rejoin for the transition stage of the process.”
While Eutelsat has questioned CBA’s offer of a “voluntary contribution” to the U.S. Treasury of a share of the proceeds — and has said any contribution should not exceed 50% of the proceeds net of costs to transition customers to a small slice of the C-band spectrum — it is not opposed to it.
“Mr. Belmer clearly expressed his agreement to a significant contribution,” the Eutelsat letter to the FCC said.
Intelsat has said it has no idea where Eutelsat came up with the 50% figure, and has warned Eutelsat that staying out of the CBA could compromise its rights to the eventual auction proceeds: http://bit.ly/2pnHecE
Credit: C-Band Alliance
Intelsat said the CBA’s latest proposal of clearing 300 of the 500 MHz, including a 20-MHz guard band, would cost the satellite operators about $3 billion to modify broadcast customers’ Earth stations and launch eight new satellites — four each from Intelsat and SES as part of a planned joint procurement by the two companies.
Aside from launching satellites to allow current C-band customers to continue their current programing with 40% less spectrum, CBA said it would need to design and install some 100,000 filters for 35,000 antennas in the continental United States and implement new-generation signal-compression technologies.
There is no other scenario, including an FCC-managed auction, that would assure this investment would be made, CBA said.

EchoStar smallsat launch to secure global S-band rights; Hughes reports 192,000 non-U.S. subscribers

Anders N. Johnson. Credit: EchoStar
LONDON — Charlie Ergen’s S-band satellite strategy, which has featured terrestrial-spectrum-intended cash going in and little revenue coming out, now seems within sight of a business case with the purchase of Helios Wire Corp. of Canada and its Australian subsidiary, Sirion Global Pty.
Sirion, which like most other S-band satellite ventures has had more setbacks than successes, has global rights to S-band spectrum following a July decision by International Telecommunication Union (ITU) regulators to give Sirion a two-year extension, to April 2021, to start using is S-band spectrum reservation: http://bit.ly/32OapEz
The Ergen-owned EchoStar Corp. purchased Helios Wire for $26 million and is now investing what the company said is less than $10 million to launch a small S-band satellite in 2020 to “bring into use,” in ITU parlance, the Sirion-registered spectrum rights.
Sirion had planned a constellation of 28 satellites in low Earth orbit for IoT applications including the monitoring of livestock in Australia and fixed assets worldwide.
EchoStar is now picking up that business and will complement the smallsat constellation with the S-band payloads in geostationary orbit operated by EchoStar Mobile in Europe and Dish Network in the United States.
Ergen owns both EchoStar and Dish. Dish purchased an S-band satellite company called DBSD out of bankruptcy in 2011. Since then, the satellite has done little except depreciate.
In a Nov. 7 investor call, Anders N. Johnson, president of EchoStar Services and EchoStar’s chief strategy officer, whose main satellite capacity-lease business has been languishing for years, said EchoStar’s intention is to create a global S-band play with the Sirion, EchoStar and Dish assets.
“Sirion is another piece in the mosaic,” Johnson said, adding that the Australian company will allow EchoStar “to fill in gaps for a global solution in the [S-] band.”
Longer term, Johnson said the goal is to integrate the satellite S-band assets into the terrestrial 5G ecosystem. EchoStar added another piece to its S-band network by purchasing, for around 150 million Mexican pesos ($7.8 million).
Johnson said EchoStar already has a mobile satellite services license in Mexico and that the auction gives EchoStar rights to develop a terrestrial network in the same frequencies. EchoStar’s S-band assets in the United States and Europe also came with certain ground-based communications rights. U.S. and European regulators were persuaded that they could not get the private sector to operate an S-band satellite system without also offering a terrestrial wireless license, which is where the money is.
Whether EchoStar still views S-band only as a wedge into terrestrial play is uncertain. Johnson suggested the company believes that the IoT market has evolved to the point where a global satellite network, with ground sensors feeding data indiscriminately to GEO and LEO satellites, is a good business on its own.
“Helios gives us full [global] coverage from an MSS standpoint,” Johnson said. “CGC [complementary ground components, also known as ancillary terrestrial components] is an opportunity, but it is not the focus of our acquisition. The focus is a satellite network for GEO and NGSO,” or non-geostationary orbit.
The Siren S-band business will be run under the name of EchoStar Global Australia.
Hughes hit with Indian tax ruling that affects many telecom operators in India
EchoStar’s Hughes Network Systems, where EchoStar’s growth and profitability resides, reported revenue of $463.7 million for the three months ending Sept. 30,  up 4.2% from the same period a year ago.
Hughes EBITDA, at $155.9 million or 34% of revenue, was down from 37% a year ago in part because of an adverse Indian tax ruling that is affecting many telecommunications operators with business in India.
EchoStar Chief Financial Officer David J. Rayner said that the tax authority’s decision, which was validated by India’s Supreme Court, has an aggregate $13 billion impact on India’s telecommunications sector. The matter has now been taken up by a government cabinet committee that may decide to soften the impact.
This is not a new issue in India. Satellite operators the world over have been battling what they view as unusually harsh Indian regulatory decisions on what constitutes revenue taxable in India.
Hughes: Consumer satellite broadband subs up 5.6% since January; international now counts 192,000 subscribers
Outside the Indian tax issue, Hughes President Pradman P. Kaul said the company’s international consumer broadband business — meaning outside the United States and Canada — counted 192,000 subscribers as of Sept. 30.
With many of its beams now filled, Hughes’s consumer broadband growth in the United States will remain flat until the 2021 launch of the Jupiter 3 Ka-band broadband satellite, under construction by Maxar Technologies.
Hughes said its total consumer broadband subscriber count was 1.437 million as of Sept. 30, up a net 22,000 from June 30 and up 76,000 since Jan. 1.
For the moment, Hughes does not include rural Wi-Fi hotspot users in its subscriber count. Hughes has said that each Wi-Fi hotspot generates, on average, revenue equivalent to two U.S. subscribers: http://bit.ly/2kz7wXa
Kaul said Hughes is delivering gateway Earth stations for the OneWeb global broadband satellite constellation at “full pace.” The first few gateways have been delivered and “the technical performance is excellent,” Kaul said.
Hughes is operating under two OneWeb contracts with a total value of $300 million. Hughes invested around $50 million in OneWeb equity during OneWeb’s first round of fund-raising in June 2015.

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