European Defence Agency Promoting Long-term Satellite Leases

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PARIS — Astrium Services and its customer, the European Defence Agency (EDA), have given themselves about 12 months to persuade European Union governments to pool their demand for commercial satellite telecommunications in return for the promise of substantial savings.

EDA officials have said the effort, called the European Satcom Procurement Cell, ultimately could save participating governments as much as 30 percent to 50 percent on what they are spending today purchasing satellite communications capacity on the spot market.

Rodolphe Paris, chairman of EDA’s Satcom Project Team, estimates that European governments today spend up to 50 million euros ($72 million) per year on mainly short-term satellite leases. Because these governments often cannot predict their future demand, they cannot sign lower-cost long-term contracts.

EDA’s Satcom Procurement Cell is designed to pool the demand through a central procurement body that would then be able to negotiate bloc buys with lower costs per megahertz.

EDA on Nov. 30 contracted with Astrium Services to create a catalog of available capacity and then to demonstrate its use to the European Union’s 27 governments in a series of road shows planned for 2010. The contract’s value is minuscule — about 130,000 euros — but its potential over the long term is one reason Telespazio of Italy, Orange of France and General Electric’s Satlynx of Germany competed in the bidding.

David Chegnion, vice president for business development at Astrium Services, said the company hopes to use its experience with the French Astel-S contract, in which Astrium Services provides C-, Ku-, UHF- and Ka-band fixed satellite services links to French defense forces, to show other governments what can be done.

“The idea behind this is best value for money,” Chegnion said Jan. 6. “Each government will be free to determine whether it wants to use the Satcom Cell based on the pricing benchmarks we will be able to show them once we establish the catalog.”

The Astrium-owned London Satellite Exchange, which for the past decade has established a business of matching satellite capacity buyers and sellers, will serve a similar function for the EDA Satcom Cell, as it does for the Astel-S contract. The exchange operates on a 24/7 basis and can pool demand based on transmissions frequency and geographic coverage area.

Astrium first won the Astel-S contract in 2005, and in June 2009 won a four-year renewal that expanded the arrangement to include UHF- and Ka-band satellite capacity. The new contract also includes the provision by Astrium of teleport services worldwide that link back to sites in France operated by the French Defense Ministry.

Chegnion said the EDA contract, once it becomes operational, could be expanded in a similar way, but that for now it is limited to pooling demand for mainly C- and Ku-band commercial capacity. The contract will not include X-band capacity that is available on the market from suppliers such as Astrium’s Paradigm Secure Communications in Britain and the U.S.-Spanish Xtar LLC.

Paris, a former French naval officer who was involved in creating the Astel-S service, said European government satcom use is set to increase as governments deploy unmanned aerial vehicles providing full-motion video of operations theaters to European command posts.

Paris said the Satcom Cell approach is similar to the U.S. Defense Department’s Defense Satellite Transmission Services-Global, or DSTS-G, contracts that provide satellite services for U.S. government agencies on an indefinite-delivery, indefinite-quantity basis through several private companies that secure the satellite capacity.

Five nations — Britain, France, Italy, the Netherlands and Poland — have subscribed to the Satcom Cell. These nations are among the European Union’s biggest buyers of government satellite capacity from commercial sources even though three of them — Britain, France and Italy — also have their own dedicated military telecommunications satellites in service.

As is the case with the U.S. Defense Department, these nations want to reserve their limited, encrypted defense satellite capacity for high-priority communications by using commercial capacity for less-crucial transmissions that do not require military-standard encryption.