Details of S-Band Licenses Denial Not Likely To End Protests

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  Space News Business

Details of S-Band Licenses Denial Not Likely To End Protests

By PETER B. de SELDING
Space News Staff Writer
posted: 02 July 2009
04:24 pm ET





PARIS — The European Commission has published details about its denial of S-band mobile satellite service licenses sought by TerreSTAR Networks and ICO Global but the document is unlikely to persuade those two companies to drop their formal protest to the European Court of First Instance.

In what industry officials say is an unintended consequence, one of the two S-band license winners in the European competition, Inmarsat of London, is moving more slowly on its system development as it awaits a resolution of the ICO and TerreStar legal challenge.

A final legal ruling could take months. A spokeswoman for the Luxembourg-based court said June 24 that TerreStar has asked for an expedited appeals process, but that this request has not yet been approved. She said no hearing date has been set for either the ICO or the TerreStar appeal, and that court deliberations typically take six months under an expedited procedure, and up to 18 months under a normal procedure.

In a decision announced May 14 but not published until mid-June, the European Commission named Solaris Mobile of Dublin and Inmarsat of London as winners of the S-band licensing process. Each asked for, and has been granted, 15 megahertz of spectrum in uplink and downlink, pending the companies’ delivery on their promises of providing mobile services throughout the 27-nation European Union.

A European subsidiary of Reston, Va.-based ICO Global had challenged the entire selection process, saying a still operational, if little used, satellite it launched in 2001 should give ICO automatic priority. The commission rejected ICO’s reasoning.

TerreStar
, whose large S-band satellite for mobile satellite services over North America is scheduled for launch aboard a European Ariane 5 rocket July 1, said a second satellite, called TerreStar-2, is the satellite it placed into the European S-band competition.

TerreStar
ordered a TerreStar-2 satellite from Space Systems/Loral of Palo Alto, Calif., in August 2006. It was originally intended to fulfill a U.S. regulatory requirement that companies planning networks of ground-based signal boosters using the same frequencies as their satellites must have a spare satellite completed and on the ground ready for launch within a year of offering the hybrid satellite-terrestrial services commercially.

But as the roll-out date of TerreStar’s ground-based network has been delayed as TerreStar seeks partners to deploy the ground-based signal boosters, the company shifted TerreStar-2 into the European competition.

TerreStar
officials said after the European Commission ruling that the commission never fully understood that TerreStar-2, already contracted, had been redeployed to serve the company’s European license bid.

One European official who had followed the licensing competition said the European Commission was reluctant to accept TerreStar-2, which had been identified as a key element in a U.S. government-organized licensing process, as an equally key component of Europe’s government and commercial mobile communications infrastructure.

This official said there would always be the threat that if TerreStar develops as planned with U.S. emergency service and other government personnel as prime customers, the U.S. government would demand that TerreStar-2 be made available for the U.S. business.

In a publication dated June 12 in the Official Journal of the European Union, the commission does not explicitly say that this was why it denied TerreStar’s license request. But it does appear to confirm TerreStar claims that it did not evaluate TerreStar-2 in the way TerreStar intended.

In its ruling, the commission says TerreStar’s bid was rejected because it was never clear that TerreStarhad a “binding agreement” for the construction of the satellite, nor that it had completed a critical design review, a procedure that usually signals that hardware construction is imminent.

“The inconsistency between the information provided in the [TerreStar] application and the information in relation to the critical design review provided subsequently, and the lack of clear evidence of the completion of the critical design review for the satellite referred to in the satellite manufacturing agreement as included in the application, led the Commission to consider that [the design review and manufacturing contract proof] had not been satisfactorily completed by TerreStar Europe Limited.”

TerreStar
officials said after the decision that the commission did not take the trouble to seek a clarification from TerreStar, an omission TerreStar suspects may be due to a commission bias in favor of the two Europe-based bidders, Solaris and Inmarsat.

Solaris Mobile launched its S-band service hardware aboard the Eutelsat W2A telecommunications satellite in April. Solaris has since announced that the 12-meter-diameter S-band antenna has an anomaly that may force Solaris to offer services to fewer European Union regions than planned. Alternatively, the company may elect to retain the broad geographic coverage but at reduced power levels.

Inmarsat
meanwhile continues to seek investment partners for its EuropaSat S-band mobile satellite project. In a June 19 presentation to investors, Inmarsat Chief Executive Andrew Sukawaty said the company intends to spin off the EuropaSat assets, including the S-band license, into a separate company that would raise its own funds.

As in the United States, the European S-band systems will require substantial investment in terrestrial repeater antennas to assure coverage in urban canyons and other places out of direct line-of-sight view of the satellite.

Sukawaty
has said repeatedly that Inmarsat will not commit substantial funds to EuropaSat without financial or strategic partners. But the European Commission has set a 2011 deadline for licensees to begin commercial service.

In this sense, industry officials said, the TerreStar and ICO legal challenges may play into Inmarsat’s hands as they provide a legitimate excuse for Inmarsat to go slow on EuropaSat development.

Inmarsat
spokesman Chris McLaughlin said June 24 that the company is actively seeking EuropaSat partners. He declined to comment on the 2011 in-service date. Of the ICO and TerreStar appeals, he said: “The regulatory challenge adds an element of unwanted risk to the process that prospective partners are sure to want to look [at]” before making a commitment.