The GX Flex program will fill in coverage and capacity for Inmarsat’s Global Xpress network of four, and soon to be five, satellites. Credit: Inmarsat

UPDATE May 30: Inmarsat confirms its “long-term strategic partnership” with Airbus Defence and Space, announcing an initial order of three Ka-band GX satellites using Airbus’s new Onesat platform. The first satellite is scheduled for delivery in H1 2023.

WASHINGTON — Mobile satellite services operator Inmarsat has selected Airbus Defence and Space to build Inmarsat’s GX Flex fleet with an initial order for two satellites and the promise of more to come, industry officials said.

The contract, which Inmarsat has been working on for a year, is expected to be announced in the coming weeks, officials said. Inmarsat spokesman Jonathan Sinnatt said May 6 that no decision had been made on GX Flex.

GX Flex is one of three satellite procurements — the two others being managed by SES and Intelsat — whose winner-take-all features have the potential to reshape the commercial satellite prime contracting landscape.

SES and Intelsat, as the biggest members of the C-Band Alliance, have said they will together order eight C-band satellites if the U.S. Federal Communications Commission (FCC) accepts the alliance’s proposed private auction of 200 MHz of C-band spectrum over the United States.

“A provisional contract is close to final with one manufacturer,” the CBA told the FCC, adding that it has also received proposals from other builders. The requirement to launch the satellites within 36 months of an FCC order may force SES and Intelsat to divide the work despite the likely cost advantages of a single contractor, although these are relatively modest spacecraft.

Separately, SES for months has been working on what it calls its GEO Next program featuring software-defined radio technologies allowing maximum reconfiguration in orbit. A common satellite bus would be ordered form a single prime contractor that would be assured of a series in return for unit-price discounts.

Manufacturers of commercial geostationary-orbit satellites have been struggling for more than three years with an industry slump. Some of them can maintain production lines thanks to government business; others will need to rethink their place in the market.

With Inmarsat having selected Airbus, the three separate procurements will result in awards to at least to manufacturers since SES and Intelsat have promised that their joint eight-satellite order would be only with U.S. companies. That leaves Airbus and Europe’s other satellite prime contractors, Thales Alenia Space and OHB SE; and Japan’s Mitsubishi Electric, out of the bidding.

A scenario in which three of the largest geostationary-satellite fleet operators settle into long-term relationships with two builders, while the rest of the industry remains in a slump, could mean that the decision by Maxar Technologies to pare its SSL division’s geostationary-satellite  business, which is being kept but with a lower cost basis, is the first of several.

Maxar and the other satellite primes are directing their efforts toward smaller satellites, either by modifying their production capacity or investing in new facilities.

Inmarsat Chief Executive Rupert Pearce has described GX Flex in much the same way as SES talks about GEO Next: software-defined, with maximum flexibility to change frequency plans after launch, a lower cost per delivered megabit to customers, a lower capex profile and shorter time between contract and launch.

If that sounds too good to be true, some manufacturers say it is. They are already operating at low profit margins.

Whether SES or Inmarsat will agree to invest in their suppliers’ work, or ease the orbital-incentives provisions embedded in many geostationary-orbit satellite contracts, is unclear.

Inmarsat’s first application for GX Flex is to add capacity to the in-orbit Global Xpress satellites, which carry military and civil Ka-band frequencies to deliver broadband to aeronautical, maritime and land-mobile users.

Inmarsat contracted with Boeing Satellite Systems International for four GX satellites in a deal that includes a take-or-pay provision obliging Boeing sell GX capacity to the U.S. government in certain annual volumes or pay Inmarsat the difference.

A fifth GX satellite is under construction by Thales Alenia Space of France and Italy. Inmarsat has also ordered two large mainly L-band satellites from Airbus, to be delivered in 2020 and 2021.

SES’s most recent order, also with Boeing, is for seven O3b mPower medium-Earth-orbit Ka-band broadband satellites, to launch starting in 2021. For this deal, Boeing agreed to forego payment by SES until the satellites’ delivery, at which point SES will decide on a purchase or lease of the spacecraft.

Inmarsat’s Pearce told investors May 1 that the GX Flex announcement  was “very imminent. The tender began at the beginning of the year. We are right at the end of the process to go under contract shortly, which means in the next few weeks.

“We believe we remain on track for material step change in capability for next-in our agility and ability in next-generation broadband allow s to follow customers for service coverage, while meaningfully moderating our infrastructure capex, which would be an extraordinary achievement, when you think about it as we move to a new model for global mobile broadband.”

That was in the morning. Later that day, Inmarsat’s board met and decided on Airbus, one industry official said. Airbus will now be tasked with producing a best and final offer for Inmarsat, and detailed negotiations will occur. It is possible, but unlikely, that the choice of Airbus will be derailed during this process.