SES and Eutelsat Reach Final Settlement of Long-running Spectrum Dispute

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TOULOUSE, France — The world’s second- and third-largest commercial satellite fleet operators, SES and Eutelsat, on Jan. 30 said their long-running dispute about rights to 500 megahertz of spectrum over the heart of Europe had been definitively concluded with an SES victory but a less-than-expected cost to Eutelsat.

Luxembourg-based SES will continue to have rights to the spectrum at 28.5 degrees east that it had taken from Paris-based Eutelsat in October following a German court ruling and pending a final settlement.

Eutelsat had challenged the SES claim to the spectrum at the International Chamber of Commerce in Paris in October 2012. That body had not yet issued a final ruling, but the Jan. 30 agreement between the two sides ends the arbitration in SES’s favor.

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With the dispute about who had access to the 500 megahertz of spectrum settled — Eutelsat will be leasing capacity from SES, rather than the other way around, which is how it was before October 2013 — the two sides were able to strike a second agreement.

Under this agreement, Eutelsat will lease 125 megahertz of capacity — eight small transponders — from SES under a long-term capacity agreement. This is the part of the 500 megahertz that had been the core of the dispute.

In addition to this, Eutelsat will lease an additional 250 megahertz — 12 transponders in this case — from SES starting late this year as Eutelsat moves the traffic off its own satellite, Eutelsat 28A. This will allow the satellite to move elsewhere and is one of the advantages Eutelsat takes away from the overall settlement. The company has not announced where it will place Eutelsat 28A.

Eutelsat has recently announced that another satellite it had at 28 degrees, the Eutelsat 28B, would be moving in February to 48 degrees east as part of a partnership agreement with the Afghan government.

The 12-transponder portion of the agreement includes capacity related to a French government regulatory filing and was not part of the SES-Eutelsat dispute, which centered on German regulatory filings for bandwidth to which SES said it had obtained rights.

A final agreement between the two operators deals with radio-frequency coordination for slots both use over Europe, the Middle East and Africa. It includes mutually agreed to power-level restrictions to avoid interference.

When the dispute first surfaced in October 2012, it appeared that Eutelsat would lose SES as a customer and then become a customer of SES, a turnaround that would have serious financial consequences for Eutelsat.  Eutelsat had forecast that the revenue impact of the new arrangement would be 20 million euros for the fiscal year ending June 30, 2014, and 25 million euros for each of the two following years.

Eutelsat has since revised sharply downward its assessment of the deal’s cost, saying it will take a hit of no more than 5 million euros in this fiscal year, with zero negative impact in the two following years.

Eutelsat Chief Executive Michel de Rosen and SES Chief Executive Romain Bausch issued statements Jan. 30 in which neither declared victory for anyone except European satellite customers, whose broadcasts will now be better protected from unintentional interference.

Eutelsat and SES have, in effect, a duopoly in the European satellite broadcast marketplace with respect to satellite television services despite successful smaller operators in Spain and Norway. The market they share is generally considered, in terms of annual satellite transponder-lease costs, to be the world’s most lucrative.

 

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