Inmarsat to ViaSat, Eutelsat: Euro S-band game over. Go home
March 10, 2017
Key takeaways from Inmarsat’s March 8 investor call:
— Capex to continue to keep GX Ka-band offer competitive in aero market.
— New air interface for current GX system to boost throughput to 300 mbps.
— The two Inmarsat-6 satellites’ Ka-band is 12x the four GX satellites and will best ViaSat-3.
— OneWeb-Intelsat linkup does not amount to much.
— Inmarsat has 26 of 28 CGC ground-network licenses needed in Europe.
WASHINGTON — Mobile satellite services provider Inmarsat on March 8 said efforts by competitors ViaSat and Eutelsat to block Inmarsat’s deployment of an S-band satellite-terrestrial aeronautical service in Europe is a rearguard action that regulators have already dismissed.
London-based Inmarsat said its European Aviation Network (EAN) is scheduled to enter service late this year, giving airline passengers a high-throughput connectivity option even in Europe’s dense air corridors thanks to a network of ground antennas called a Complementary Ground Component (CGC).
Paris-based Eutelsat and U.S.-based ViaSat have teamed to offer a competing in-flight-connectivity service using Ka-band spectrum. They argue that Inmarsat’s EAN violates the terms of the European Commission license because it’s mainly a terrestrial network coming in under the guise of a satellite spectrum license.
In a conference call with investors, Inmarsat Chief Executive Rupert Pearce, said EAN had secured all the mobile satellite service licenses among the 28 European Union nations and that 26 of them had also granted the CGC license.
“The game is over. It’s been going on for two years,” Pearce said. “And ViaSat was making mischief inside the hallways of every regulator. Every regulator listened respectfully to that argument, realized what lay behind the comments, and booted them into touch.”
GX + Inmarsat 6 + new capacity > ViaSat 3
It’s not the first time Pearce has been vexed to rhetorical flourish by ViaSat, whose terabit-per-second ViaSat 3 he labeled a “mythical beast.”
It’s no longer mythical. Two ViaSat-3 satellites are under construction and scheduled for launch in 2019 or 2020 — one over the Americas, one over Europe, the Middle East and Africa.
But Pearce said Inmarsat no longer fears it. In addition to its four Ka-band GX satellites — three in orbit, a fourth to launch this spring — Inmarsat has two Inmarsat-6 satellites under construction and scheduled for launch at about the same time as the ViaSat-3 spacecraft.
Inmarsat-6 will offer higher-throughput L-band for Inmarsat’s heritage maritime and aeronautical customers, but the two satellites together also carry 12 times the Ka-band throughput as the four GX spacecraft.
In addition, Pearce said Inmarsat stands ready to launch more Ka-band capacity to keep pace with whatever competitor arises.
“By the 2020s we will be able to outcompete ViaSat-3 with our customer base on price and capacity and capability,” Pearce said.
Like ViaSat, Eutelsat, Gogo, Global Eagle Entertainment, Panasonic Avionics and Thales Avionics, Inmarsat believes the in-flight-connectivity market will be large and that today’s intense competition among them will be settled within three years, with only a few survivors.
Inmarsat has 950 aircraft under contract for GX. The company has endorsed market forecasts saying that the 6,000 connected passenger jets today will grow to 15,000 in 2020 and 20,000 by 2025. During the period, average connectivity revenue per aircraft will rise from today’s $120,000 per year to $300,000 per year.
Future in-flight-connectivity gain, today’s capex pain
“Right now we need to invest quickly and decisively,” Pearce said of Inmarsat’s planned, but not announced, capital spending. The company said capex would be between $500 million and $600 million for each of the next two years.
“Capex cycles are going to shorten, and intensify,” Pearce said. “We can invest incrementally to maintain our competitiveness.”
The indirect costs of the airline connectivity market are rising fast at Inmarsat, from $22 million in 2015, to $42 million in 2016 and a planned $70 million in 2017. Inmarsat Chief Financial Officer Tony Bates said the company’s net investment in in-flight connectivity in 2016 was around $185 million.
Inmarsat said International Airlines Group, whose brands include British Airways, Iberia, Vueling and Aer Lingus, had contracted for EAN for its European routes. Pearce said IAG made a “hook, line and sinker” commitment to EAN.
To bolster its maritime GX broadband offer, Inmarsat is planning a new air interface that will increase its Fleet Xpress speeds to ships from 50 mbps today to 300 mbps and eventually 500 mbps.
For Pearce, that should be enough to assure that competitor Iridium Communications, which is launching its second-generation constellation of low-orbiting satellites this year, will not become more of a maritime threat.
OneWeb-Intelsat: Old Space strikes back
The proposed merger of startup Internet constellation OneWeb and established geostationary-satellite fleet operator Intelsat “doesn’t amount to much, except to demonstrate the weakness of Intelsat’s current financial position, which of course is not news,” Pearce said.
“If all this new technology is really so game-changing… then why are the New Space sponsors eager to give so much upside away to the Old Space incumbents merely to help fund or de-risk the constellation?” Pearce said.
He said neither OneWeb nor ViaSat intend to enter the maritime market with their high-throughput systems.
Peter B. de Selding