Eutelsat joins ViaSat, throws down gauntlet to Inmarsat aero play
February 9, 2017
PARIS — Satellite fleet operator Eutelsat on Feb. 9 said it would finalize a broadband joint venture with ViaSat Inc. of the United States “within days” and would be co-financing a terabit-per-second ViaSat-3 satellite to operate over Europe, the Middle East and Africa.
The decision sets up a head-on battle with London-based Inmarsat for the slice of the broadband market dedicated to in-flight connectivity for commercial aircraft.
Eutelsat aligned with ViaSat versus Inmarsat’s ATG
Eutelsat and ViaSat are now expected to to arm-in-arm to European regulators questioning Inmarsat’s use of S-band satellite spectrum for Inmarsat’s essentially ground-based European Aviation Network.
Inmarsat has an S-band payload scheduled for launch this year, but it’s the several hundred Earth stations providing air-to-ground connectivity that will provide most of the capacity for Europe’s densely packed air corridors.
Eutelsat Chief Executive Rodolphe Belmer did not even refer to Inmarsat’s network as a satellite system.
“It’s true we have a competitor in the ground network, with Inmarsat, which as of today has not been launched and has not been authorized,” Belmer said in an investor call on Eutelsat’s half-year results. “There are some questions about the licenses on the ground segment.”
In a Jan. 24 address to the European Commission, which has licensed Inmarsat’s network, Belmer questioned whether spectrum reserved for satellite services should be diverted from solving digital-divide issues to “a kind of monopoly with ATG, a very niche usage.”
The decision to proceed wth ViaSat ended several months’ hesitation during which Paris-based Eutelsat appeared to be toggling between ViaSat and an all-European option that has not materialized. Eutelsat plans to own 51 percent of the joint venture’s infrastructure business, with ViaSat taking 49 percent.
For the retail satellite broadband part of the business, ViaSat will have 51 percent and Eutelsat, 49 percent.
Carlsbad, California-based ViaSat will pay Eutelsat 132.5 million euros ($139 million) for the 49 percent share of Eutelsat’s existing broadband business.
Eutelsat said it will turn around and invest that sum, plus additional monies from its current Ka-Sat Ka-band broadband business, to finance 50 percent of the $650 million ViaSat-3 satellite. An additional investment will be made to pay about 50 percent of the ground infrastructure to be deployed on behalf of ViaSat-3.
Two ViaSat-3 satellites are under construction, with the payloads being built by ViaSat and the platforms by Boeing Satellite Systems. The first is to buttress ViaSat’s existing consumer broadband business in North America, with the second to launch over Europe around 2020.
Infrastructure cost of 1 million euros per Gbps
Belmer said Eutelsat conducted an internal review of the ViaSat-3 business case and concluded that it could do what it’s designed to do: reach up to 5 million European homes and small businesses with throughput providing a nearly fiber-like service.
“VHTS [very-high-throughput satellite] technology will be a game changer in addressing these markets thanks to the provision of fiber-like service with speeds above 30 megabits per second and up to 100 megabits per second,” Belmer said.
Total ViaSat-3 infrastructure cost, he said, should be less than 1 million euros per gigabit-per-second of throughput, a milestone the company has said in the past was needed to compete with terrestrial broadband.
Teaming with ViaSat gives Eutelsat and ViaSat a first-mover advantage providing VHTS in Europe and the surrounding region, especially since no European VHTS alternative appears on the horizon. The ViaSat agreement also allows Eutelsat to finance its 50 percent stake in ViaSat-3 without exceeding its planned capex ceiling of 420 million euros per year.
ViaSat has said that part of the efficiencies and performance it can wring out of its satellites is due to their integration with the ViaSat-built ground network and user terminals.
Eutelsat has been one of several companies urging European governments to act, before it’s too late, to prevent a scenario in which Europe’s digital divide is bridged by a U.S. company selling hundreds of thousands of U.S.-provided user terminals connected to a U.S.-built satellite.
These governments did not act, making that scenario all the more likely now.
Peter B. de Selding