Inmarsat hints at “GX Flex” next-gen satellite investment

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WASHINGTON — Inmarsat said May 2 that the company is drawing up new spacecraft for the early- to mid-2020s to bolster the two satellite constellations it operates today.

A program Inmarsat CEO Rupert Pearce called “GX Flex,” short for the Global Xpress name given to most of the operator’s recent spacecraft, is in the Request for Information stage.

“We’ve got to be able to lower our cost per bit, we’ve got to be able to raise our capacities to meet demand, and we’ve got to be able to do that in ways that are very agile, cost effective and which can take advantage on a rolling basis of new technology as it arrives,” Pearce said during a May 2 earnings call. “The era of very large, 10-year-separated monolithic investments is over.”

Pearce gave few additional details about GX Flex, saying only that the system will augment the operator’s low-data L-band and high-throughput Ka-band fleets with spacecraft that are less expensive. The driver for GX Flex is demand “across multiple geographies and verticals,” he said.

Inmarsat has three satellites under construction today — a Ka-band satellite dubbed GX-5 from Thales Alenia Space and two Inmarsat-6 satellites with L- and Ka-band capacity from Airbus Defence and Space. GX-5 launches in 2019 on an Ariane 5, and the Inmarsat-6 spacecraft launch in 2020 and 2021, with the first contracted for an H2A launch from Mitsubishi Heavy Industries.

While Pearce dismissed competitive pressure as the reason for GX Flex, several new Ka-band satellite systems are under development. So-called VHTS, or very-high-throughput satellites, equipped with numerous, tightly concentrated beams are on their way from SES, Eutelsat, Viasat, and others, as well as low-Earth-orbit constellations promising high-speed and low-latency broadband.

Pearce highlighted demand from aviation customers wanting satellite Wi-Fi on their aircraft as a driver for near-term improvements to the four satellite GX-4 fleet. Those upgrades should boost throughput per beam from between 50 and 100 Mbps today to 300 Mbps by 2019, and yield multiple Gbps with GX-5, he said.

EAN Struggles

Pearce avoided providing a service activation date for Inmarsat’s European Aviation Network (EAN), which was supposed to be last year, but said it remains on track for a timeline set with launch customer International Airlines Group. EAN uses an S-band satellite launched last year and a network of 300 cellular towers across 30 European countries called the complementary ground component, or CGC. EAN-partner Deutsche Telekom finished the CGC in February, at which point Inmarsat said service activation would start in the first half of this year.

Competitors Eutelsat of Paris and Viasat of Carlsbad, California, have sought to cripple the EAN system by overturning regulatory licenses on a nation-by-nation basis, arguing that Inmarsat is using an S-band license for satellite spectrum to field what is really mostly a terrestrial network. Viasat convinced Belgium to rescind its EAN license, and Eutelsat is taking France’s telecom regulator to court in hopes of a similar outcome.

“We believe we will rapidly get our license back in Belgium,” Pearce said. “Belgium has gone away to redo that license, this time giving their reasons, which is a very specific request by the court. And we have no reason to believe that the French license will be successfully attacked. After all, that license was granted by Arcep at a time when Viasat and Eutelsat’s claims were very well known.”

Inmarsat connects around 4,000 aircraft for L-band data services and has more than 1,300 aircraft under contract for Ka-band Global Xpress connectivity. Pearce said L-band revenue increased 50 percent during the first three months of 2018, and that the first commercial Ka-band inflight connectivity services “are starting to go live in the coming months.”

Not distressed by WGS

Pearce said the Inmarsat was surprised to see money for two additional Wideband Global Satcom satellites added to the U.S. Force’s budget by Congress in March, but the extension of the program doesn’t upset the company’s plans for government business.

“We are an organization that augments and extends the availability of WGS-like applications,” he said. “We can be picked up and put down in a very agile way by governments, and we can extend the reach of WGS to organizations inside [the Department of Defense] that wouldn’t normally have access to WGS because there’s just not enough of it, and I don’t think that will change materially with WGS-11 and 12.”

Many in the industry saw the two extra WGS satellites as a setback for the commercial sector, which has been trying for years to convince the Defense Department to make greater use of commercial satellite capacity. DoD has yet to reveal its post-WGS plans. WGS-10, formerly the final satellite, is scheduled to launch in 2019.

Buckling down on maritime

Something that did irritate Pearce was the loss of maritime customers at what he described as the less lucrative low end of the market.

“Maybe we’ve taken our eye a little off the ball there,” he said, adding that improved product offerings should bolster that portion of Inmarsat’s business over the course of the year.

McLean, Virginia-based Iridium, Inmarsat’s principal competitor in maritime, has been aggressively marketing new “Certus” maritime services as its new 66-satellite low-Earth-orbit constellation Iridium Next nears completion. Pearce said Inmarsat is not waging a price war with Iridium despite facing increased competitive pressure in the maritime market.

Pearce said Inmarsat’s current L-band satellites, the Inmarsat-4 fleet, already offer 8 to 9 Mbps for some government customers, well above Iridium Certus’ target speed of 1.4 Mbps. The Inmarsat-6 satellites will bring even more capacity to compete against Iridium Next, he added.

Inmarsat reported a 4.8 percent increase in quarterly revenue to $345 million and a net profit of $53.6 million.