Arabsat, Inmarsat Order Dual-purpose Satellite

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PARIS — Satellite fleet operators Inmarsat of London and Arabsat of Saudi Arabia on June 5 said they have contracted with manufacturer Thales Alenia Space for a satellite carrying a mainly Ku-band satellite-television payload for Arabsat and an S-band mobile communications payload for Inmarsat.

The satellite, which Inmarsat calls EuropaSat and Arabsat calls Hellas-sat 3 — it will be located at 39 degrees east longitude for the Arabsat-owned Hellas-sat satellite operator of Greece — will be launched in late 2016 aboard a vehicle that Inmarsat has yet to select formally.

One industry official said Space Exploration Technologies Corp.’s Falcon Heavy rocket, whose inaugural flight is scheduled to occur from Cape Canaveral Air Force Station, Florida, sometime in 2015, appears to be the favored rocket over the Lockheed Martin Atlas 5, the European Ariane 5, the Russian Proton and the Sea Launch AG Zenit-3SL vehicles.

The satellite is one of four now being negotiated by Riyadh-based Arabsat. A Hellas-sat 4 spacecraft for Hellas-sat is one of the remaining three to be ordered, as are two satellites to be used to expand Arabsat’s own fleet.

In a June 5 conference call with investors, Inmarsat Chief Executive Rupert Pearce said Inmarsat — five years after receiving a European Union license to operate a satellite- and terrestrial-based S-band mobile network — has decided to move forward based on the success of the Gogo Inc. air-to-ground airline passenger connectivity service in the United States, and the savings afforded by sharing satellite costs with Arabsat.

Pearce said Inmarsat expects that the construction, launch, insurance and operations of the EuropaSat satellite will cost Inmarsat slightly more than $200 million over four years, or about half of what it would cost as a standalone project financed by Inmarsat alone.

Building some 300 terrestrial towers throughout the 28-nation European Union and financing the related services will cost an additional $200 million to $250 million, an investment to be spread over six years, Pearce said.

While Inmarsat has a license from the European Commission, it must now seek individual authorizations from the 28 European Union member states. It remains unclear whether all 28 nations will adopt the same licensing policy, notably with respect to fees.

Pearce declined to address this point specifically, but said he expects that these nations will understand the startup nature of the business and that it will take substantial early investment and several years before the investment generates a return.

The principal market for the EuropaSat system is airline passenger connectivity in Europe. Pearce said the market has reached a “tipping point” that has been proved in the United States by Gogo and could be even larger in Europe.

AT&T Inc. and Honeywell International in late April announced that they would offer a passenger connectivity service to compete with Gogo starting in late 2015.

Inmarsat said it is in advanced discussions with British Airways to be a launch customer for the service. British Airways Product and Service Manager Kate Thornton, in a statement accompanying the Inmarsat announcement, confirmed that the airline is interested in using “Europe’s first ground-based 4G broadband network giving our customers the internet access they expect on the ground while in the air.”

Pearce said the EuropaSat terrestrial network will be able to deliver more than 40 gigabits per second of bandwidth throughout the European Union at a cost-per-megabit that is more than 50 times cheaper than what Inmarsat can provide from its Global Xpress Ka-band satellite network, now in development.

Pearce said Inmarsat does not fear cannibalization between Global Xpress and EuropaSat. The two systems, he said, “are highly synergistic,” with EuropaSat offering high-throughput in its coverage area and Global Xpress supplying capacity in areas not reached by EuropaSat.

Pearce said Inmarsat is open to teaming arrangements with Gogo or AT&T to provide seamless connectivity to passengers on aircraft traversing the Atlantic.

The European Commission, the executive arm of the European Union, issued S-band licenses in 2009 to both Inmarsat and Solaris Mobile Ltd. of Ireland, a joint venture of satellite fleet operators SES of Luxembourg and Eutelsat of Paris.

Despite being two of the most cash-rich satellite companies in the world, SES and Eutelsat were unable to win commitments from ground network operators. Solaris was left to wither until it was purchased, in January, by EchoStar Corp. of Englewood, Colorado, for about $43 million.

EchoStar said it would use the large TerreStar-2 satellite, under construction and purchased along with its bankrupt owner, TerreStar Networks, to restart the European S-band service under EchoStar ownership.

The 6,900-kilogram TerreStar-2 satellite is scheduled for launch in late 2015 or early 2016 aboard an International Launch Services Proton rocket.

EchoStar officials have not disclosed the status of their European business plan beyond the satellite itself.

Itasa, Illinois-based Gogo reported service revenue of $72.5 million for the three months ending March 31, up 31 percent from the same period a year ago. The company said that for this three-month period, 6.9 percent of all passengers on flights with Gogo connectivity used the service, up from 6.2 percent a year ago. Per-passenger revenue averaged $10.55 per flight, the company said in a filing to the U.S. Securities and Exchange Commission.

For Arabsat and Hellas-sat, the Hellas-sat 3 satellite will provide service continuity and growth opportunity from the 39 degrees east orbital slot. Based on Thales Alenia Space’s Spacebus 4000C4 platform, Hellas-sat 3 will carry 44 Ku-band transponders for use by Hellas-sat in addition to the S-band payload for Inmarsat. Inmarsat and Hellas-sat will share the use of a Ka-band transponder.