WASHINGTON — Eutelsat Communications says it no longer intends to buy a reimbursable C-band replacement satellite for the U.S. market, having concluded it can make do with less spectrum by rationalizing capacity on its current geostationary fleet.
Paris-based Eutelsat told the U.S. Federal Communications Commission in June that the agency’s decision to auction 300 megahertz of C-band spectrum would limit Eutelsat’s bandwidth supply to the point of needing an additional satellite. However, in a revised “transition plan” filed Aug. 17, Eutelsat said it has enough bandwidth to redistribute affected customers across other satellites.
“Eutelsat now expects that prudent management of capacity and demand for C-band satellite services during and after the transition will allow it to provide ‘substantially the same or better service to incumbent earth station operators’ without launching any new C-band satellites,” Eutelsat wrote.
The company will move C-band customers, mainly broadcasters, into unused capacity on three satellites — Eutelsat 117 West A, Eutelsat 115 West B and Eutelsat-172B — and will retire Eutelsat 113 West A in 2023 without a replacement. The process shouldn’t require new signal compression equipment, Eutelsat said.
The change means Eutelsat anticipates having only $14.9 million in clearing costs to move its customers into the 200 megahertz of C-band still allocated for satellite use after the FCC’s December spectrum auction. The company’s June estimate was $172 million, of which $150 million was for the manufacture and launch of a new satellite.
The FCC is requiring successful auction bidders to cover the cost of satellite operators leaving C-band, including replacement satellites, signal compression technology and other infrastructure, so the bidders can use the spectrum for 5G wireless services. The agency estimated those costs will likely range between $3.3 billion and $5.2 billion. Those costs are separate from the $9.7 billion in accelerated clearing payments available to Intelsat, SES, Eutelsat, Telesat and Claro (formerly Embratel Star One), if they can clear the spectrum they use by early December 2023 instead of early December 2025.
Of the five operators, only Eutelsat has revised down the number of satellites in its transition plan. Fleet operator SES affirmed to the FCC Aug. 14 need for the six satellites it already ordered this summer at an average cost of $144.8 million to build ($869 million in total).
Intelsat has ordered six satellites and expects to order a seventh in September for an average manufacturing cost of $112.9 million per satellite ($790 million in total).
Intelsat and SES each expect to spend nearly $1.7 billion on their C-band transitions, inclusive of satellite manufacturing, launch and insurance, plus new teleport infrastructure, signal compression technology and other costs.
Telesat and Claro said they never required replacement C-band satellites to comply with the FCC’s new spectrum rules.
Eutelsat used its revised plan as an opportunity to launch a thinly veiled criticism of SES and Intelsat’s transition plans, saying that “Launching an excessive number of new satellites” is out of step with the FCC’s requirement to “complete this transition in a careful, fair, and cost-effective manner.”
Eutelsat argues that reimbursable satellites should be C-band only, should only serve the continental United States, and should not be spares — terms not agreed to by other C-band satellite operators.
Intelsat said it already has satellites in production with capacity in other frequencies, and that it can easily split the cost of those payloads so that only the C-band portion is reimbursed. SES ordered C-band-only satellites, but said it has contractual obligations to some customers to restore service in days in the event of a satellite failure, thus necessitating an in-orbit spare. Two of SES’s six satellites under contract are ground spares in the event of a launch failure.
Eutelsat has gained Inmarsat and Hughes as allies in its arguments. Neither operator has C-band capacity, but both worry that the FCC’s auction could inadvertently make Intelsat and SES considerably stronger competitors by excessively subsidizing new capacity.