EchoStar Moves Into Chinese, Korean Mobile Video Markets

WASHINGTON — U.S. satellite-television broadcaster EchoStar Communications Corp., in what appears to be a major expansion of its business, confirmed that it is providing an S-band mobile video satellite through a Chinese subsidiary to be launched in time for the Beijing Olympics in August 2008, and partnering with an already successful satellite mobile video business in South Korea.

In separate announcements Feb. 21 and Feb. 22, Englewood, Colo.-based EchoStar said it is investing $40 million in TU Media of South Korea, which in late 2006 passed the million-customer milestone for its satellite mobile video service. EchoStar also said that its Chinese subsidiary, China Mobile Broadcasting Satellite Ltd., or CMBSat, had won Chinese regulatory approval to launch a similar project in China.

The announcements followed a separate declaration by International Launch Services (ILS) that EchoStar had signed a contract to launch an unnamed satellite aboard an ILS-provided Proton-M rocket in 2008.

The CMBSat satellite has been under construction at Space Systems/Loral for about a year, although industry officials have questioned whether the spacecraft can be made ready, and then launched, in time for operational service by August 2008.

CMBSat Chief Executive Dave Shull said Feb. 23 that the company would decline comment on the business.

Timetable aside, the disclosure that China’s State Administration of Radio, Film and TV (SARFT) had selected CMBSat for S-band mobile video services means all the pieces are now in place for EchoStar to enter a market that has long held promise worldwide — using S-band frequencies to deliver video to hand-held devices — but has been proved as a successful business only in South Korea. A similar business in Japan, using the same Loral-built satellite that TU Media uses in South Korea, has met with less success for a number of regulatory reasons.

Europe’s two biggest satellite-fleet operators, SES Global and Eutelsat, have joined forces to build an S-band satellite to deploy such services in Europe, with backing from Alcatel and early financial support from the French government. EchoStar is by far SES Global’s biggest customer and partner in North America, and the China deal is the latest example of EchoStar positioning itself to compete with SES Global when the opportunity arises.

EchoStar told the U.S. Securities and Exchange Commission (SEC) in April 2006 that it had invested $36 million in a non-U.S. satellite project that could require an additional $115 million from EchoStar.

But this capital investment of up to $151 million will not be enough to build, launch and insure the CMBSat satellite. EchoStar ha s not disclosed whether a Chinese cellular -network operator or other Chinese or South Korean business has agreed to co-invest in the CMBSat project. A TU Media spokesman declined to comment Feb. 23 about the company’s involvement in the CMBSat venture. But Ki-Han Park, vice president of TU Media, said in a statement that EchoStar’s $40 million investment in the company will help “further expand our mobile video business in Korea and worldwide.”

Because of U.S. technology-transfer prohibitions regarding China, EchoStar and its partners will not be able to use a less-expensive Chinese Long March rocket for CMBSat.

Industry officials said they have been surprised by SARFT’s flexibility on this issue. One official said that in early negotiations with potential satellite suppliers, SARFT went as far as to suggest that the CMBSat satellite be advertised as too large to fit under a Chinese Long March vehicle’s fairing — a way of diffusing the politically sensitive issue that a Chinese flagship technology project will not use China’s successful rocket series.

Officials said there are also political sensitivities in Washington that needed to be handled with care. One satellite manufacturer said his company would not bid on the CMBSat work because it treads too closely on technology-transfer limits placed on U.S.-Chinese cooperative efforts by the U.S. International Traffic in Arms regulatory regime. Those restrictions mean that Chinese officials likely will be prohibited from setting foot in Space Systems/Loral’s Palo Alto, Calif., satellite plant, and they may even be barred from attending the launch of the satellite from Russia’s Baikonur Cosmodrome in Kazakhstan out of concern that they could learn something of technological interest there.

The regulatory approval in China was issued by China Satellite Mobile Broadcast Limited, which was created by SARFT to manage China’s mobile-video rollout.

In a Feb. 22 statement, Li Zhi, chairman of China Satellite Mobile Broadcast and director-general of the SARFT Administrative Bureau of Radio Stations, said: “China will launch a mobile video solution before the Beijing 2008 Olympics. Building an S-band satellite capable of delivering a national service across all of China is a challenging technical endeavor. CMBSat’s team has both the technical and project management skills, and the commitment to the … mobile video standard developed by [Chinese regulators] that we deem essential in our partners.”

SARFT selected the STiMi technical transmission standard in October for transmission of mobile video.