Germany Insists Controversial ‘Space Protocol’ Protects Startups

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PARIS — The German Justice Ministry is defending its backing for a new legal regime covering space assets that has been sharply criticized by many satellite builders and operators, saying it is intended to help small space companies obtain financing.

As some 175 nations meet Oct. 20-Nov. 7 in Busan, South Korea, to set strategy for the United Nations’ International Telecommunication Union (ITU), which regulates satellite orbital slots and broadcast frequencies, and will discuss the proposed legal regime, the Justice Ministry said the structure will do no harm to satellite owners who choose not to use it.

For startup operators, especially in less-developed nations, the ministry said, the so-called Space Protocol offers the hope of lower prices for space access, much as a similar protocol in existence for aircraft equipment has reduced the cost of aircraft financing by as much as 30 percent.

In email responses to SpaceNews inquiries, the Justice Ministry outlined why Germany maintains its backing for the Space Protocol despite its being the only developed nation to have endorsed it. The other three initial signatories are Burkina Faso, Saudi Arabia and Zimbabwe.

The 21-nation Arabsat fleet operator has opposed the Space Protocol, as have many large satellite fleet operators, investment banks and satellite hardware builders.

The Space Protocol is backed by the Unidroit, the International Institute for the Unification of Private Law, a Rome-based organization that wants to apply rules developed for rail and aircraft commerce to the space sector.

The Space Protocol, formally known as the Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Space Assets, “was initiated by the relevant industry,” the Justice Ministry said.

“The Space Protocol was continuously discussed and drafted together with industry, especially with [satellite] operators, [and] successfully adopted in 2012,” it said.

According to the ministry, the opposition to the protocol by satellite operators and others collapsed after 25 of 40 nations attending a 2012 meeting in Berlin signed initial approval. Since then, the ministry said, the protocol “receives constructive support by operators.”

“Irrespective of criticism by operators in the past, the Space Protocol is widely supported by the relevant industry in Germany, especially by German banks, which already enjoy the benefits of the Aircraft Protocol in practice,” the ministry said. “Any operator who is sufficiently established and who may not need a new form of financing is not forced to a new system and can continue the former financing. … In particular, small- and medium-sized operators, especially in developing countries, will benefit from the implementation of the Space Protocol. In summary, there are no disadvantages resulting from additional possibilities of financing methods regarding space assets.”

The ITU Plenipotentiary Conference in South Korea will not decide whether to adopt the Space Protocol, which in any event must be ratified by each nation, with a minimum of 10 nations needed. Instead, the conference will discuss whether ITU should become the protocol’s Supervisory Authority.

Among other topics, ITU members will discuss the estimated cost of overseeing the protocol through maintenance of an international registration system for space assets.

The opposition of the satellite industry members centers on concerns that the Space Protocol seeks to solve a problem — access to financing by startup ventures — that does not exist, at the price of establishing a legal regime that inevitably will add costs.