ContactMEO Pays $5 Million Bond To Secure FCC Authorization

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  Space News Business

ContactMEO Pays $5 Million Bond To Secure FCC Authorization

By PETER B. de SELDING
Space News Staff Writer
posted: 30 May 2006
02:47 pm ET


EchoStar and WildBlue co-founder David Drucker’s contactMEO Communications LLC has paid a $5 million bond to secure its new regulatory authority to build a seven-satellite Ka-band constellation to provide broadband links to rural areas in the world.

Sedalia, Colo.-based contactMEO has received U.S. Federal Communications Commission (FCC) permission to build and launch three satellites in highly elliptical orbits and four satellites in geostationary orbit.

The FCC authorization, granted April 14, came with the usual caveats. The first is a requirement that the company post a $5 million bond to secure its authorization. The bond is then refunded in $1 million slices as the company demonstrates it has met each of five milestone deadlines to prove that it is actually moving forward with construction and deployment of the satellite system.

The bond was posted May 14.

The next series of deadlines for contactMEO will test whether the company is capable of raising the several billion dollars needed to build and launch its system. The first deadline is April 15, 2007. By that date, the company must have signed a firm contract for the construction of the spacecraft.

Critical design review for the system must be completed a year later, and actual construction of the satellites must begin by Oct. 15, 2008. The first of the satellites must be launched by Oct. 15, 2009, and the system must be fully operational by April 2012.

Two satellite-fleet operators, EchoStar Communications Corp. and SES Americom, had sought to block the contactMEO system, claiming the contactMEO satellites in highly elliptical orbit could interfere with satellites in geostationary orbit.

In addition, EchoStar has argued in its filings that contactMEO bent FCC rules by adding geostationary satellites to a system whose previous design was 16 elliptical-orbit satellites.

Two of the four geostationary positions that contactMEO plans to use had been reserved by EchoStar for that company’s planned broadband system. The FCC subsequently rejected EchoStar’s application on grounds unrelated to contactMEO.

The four contactMEO geostationary positions are at 83 degrees and 121 degrees west longitude, and at 34 degrees and 130 degrees east longitude.

Armand Musey, president of contactMEO’s financial advise r, Near Earth LLC of New York, said May 26 that contactMEO’s business plan is likely to call for a small, single satellite to be launched over North America first. The other satellites would follow once the business model has been proved with the first satellite.

“There is a tremendous interest among prospective investors today in bandwidth,” Musey said. “The FCC authorization for contactMEO is a huge amount of spectrum, and we think that will be attractive to potential strategic investors.”

Northrop Grumman and contactMEO are the only two remaining active applicants for Ka-band constellation licenses at the FCC. At the height of the late-1990s Internet boom, 16 different systems were competing for spectrum at the FCC. The list eventually narrowed to six applicants, four of which subsequently withdrew their proposals.

Northrup Grumman has not yet received its license, but contactMEO told the FCC that the two systems would not interfere with each other once operational.

Contact: pdeselding@compuserve.com