Satellite Telecom | SSL Chasing Satellite Orders Unaffected by ViaSat Patent Case

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PARIS — MDA Corp. of Canada on May 1 said 90 percent of the bids for commercial telecommunications satellites that its Space Systems/Loral (SSL) division is chasing are unaffected by the patent-infringement litigation between SSL and its former customer, ViaSat Inc.

The 10 percent that may be affected because of their relevance to the three patents ViaSat said SSL has misappropriated are being “worked with design solutions that eliminate any potential issues,” MDA Chief Executive Daniel E. Friedmann said.

ViaSat has won an initial jury award against SSL of $283 million in damages for patent infringement related to high-throughput broadband technologies used on satellites. SSL and its former owner, Loral Space and Communications of New York, are appealing the verdict.

ViaSat said that in addition to the damages award, it is asking for a court ruling that would prohibit SSL from continuing work on satellites under construction that ViaSat alleges use patented technologies.

In a May 1 conference call with investors, Friedmann said MDA and SSL have studied the possible consequences of the ViaSat patents on their current and future work to determine design modifications to SSL satellites that may be incorporated to avoid patent liability.

“As far as [satellites in SSL’s factory], if there’s an issue and it’s material, there will be a press release,” Friedmann said. “At this moment there is no press release.”

MDA purchased SSL in November 2012. Under the purchase agreement, Loral Space and Communications agreed to take control of SSL’s defense against the ViaSat allegations, and to indemnify MDA for costs related to an adverse ruling.

The ViaSat lawsuit has had little noticeable effect on SSL’s business. The Palo Alto, California-based company booked four commercial telecommunications satellite contracts in April alone, ending a months-long dry spell that MDA has said was industry-wide and had nothing to do with the ViaSat issue.

Well before the SSL purchase, MDA began to position itself as a customer for emerging nations that want their own satellite capacity. The company lost a communications satellite award in Brazil to rival Thales Alenia Space of Europe, but is now in competition for a fresh Brazilian satellite award.

MDA on April 29 said it had won a contract, valued at more than 30 million Canadian dollars ($27.4 million) to provide an X-band payload for what is designed to be Turkey’s first domestically produced telecommunications satellite, Turksat 6A.

The MDA award is with Aselsan Electronic Industries of Turkey, which is prime contractor for Turksat 6A’s X-band payload. Turksat 6A, to carry a Ku-band payload in addition to X-band, is scheduled for launch in 2018.

Friedmann said the commercial telecommunications satellite sector continues to show high demand, with multiple bids from SSL, MDA and their competitors expected to be decided in the coming months.

MDA had estimated earlier this year that SSL had $2 billion in satellite bids in competition. During the conference call, Friedmann said that even after removing the four SSL wins in April, the company still has slightly more than $2 billion in bids being evaluated. New competitions have more than made up for the four satellite orders already booked.

SSL is adding a new thermal-vacuum test chamber to its Palo Alto plant to speed the construction and testing of satellites there.

Satellites are tested in thermal-vacuum chambers for weeks at a time. Any bottlenecks that slow one satellite’s completion of testing will delay subsequent satellites.

“It’s a significant issue for us,” Friedmann said of the new test chamber, which should be operational by the end of the year. “We will be able to test three satellites at a time instead of one. This is a pacing item in our factory and often leads to liquidated damages because we fall a couple of weeks behind.”

In a document submitted to the Toronto Stock Exchange, MDA said the competitive environment among satellite builders is getting rougher, putting pressure on prices and margins. The new investments in Palo Alto will help increase throughput and thus profitability as well, Friedmann said.

In addition to telecommunications satellites, MDA operates a surveillance and intelligence business that sells Radarsat radar Earth observation imagery and builds ground stations for optical and radar Earth imaging satellites.

The company is a regular customer for DigitalGlobe of Longmont, Colorado, the largest U.S. geospatial satellite data provider, which operates a fleet of optical reconnaissance satellites for commercial and government markets.

Friedmann said the U.S. government remains a large customer for MDAs’ radar satellite imagery and is currently managing a competitive bid process with a potential value of “hundreds of millions” of dollars. MDA, which up to now has been a subcontractor to others for much U.S. radar satellite work, will be a prime contractor for the business if its bid is selected, Friedmann said.

“That decision is pending,” Friedmann said. “But in general the appetite in the U.S. continues to be strong, especially for radar data.”

 

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