Isle of Man Caters to Satellite Industry

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  Space News Business

Isle of Man Caters to Satellite Industry

By PETER B. de SELDING
Space News Staff Writer
posted: 02 September 2008
04:57 pm ET






PARIS
— A British Crown territory long known as a tax haven has carved out a specialty in satellite telecommunications-related services and is attracting business from satellite fleet operators and launch services providers.

The
Isle of Man
, through ManSat Ltd., a company that began operations in 2000, now is developing a reputation for aggressive defense of companies that register their satellite plans on the island and is attempting to draw industrial space activity to the island to complement its tax-home status.

Companies including satellite fleet operators Telesat
Canada
, SES of
Luxembourg
, Inmarsat of London; and launch services
provider
Sea
Launch
Co.
of
Long Beach
,
Calif.
, have registered businesses in the Isle of Man. More recently ViaSat Corp. of
Carlsbad
,
Calif.
, registered its ViaSat-1 Ka-band broadband satellite there.

These companies are among the businesses whose presence on the island have generated more than 25 million British pounds ($46.3 million) in royalty fees and employment-related tax receipts to the government in the past three years, the Isle of Man government estimated in an Aug. 21 assessment of its space-related activity.

Christopher Stott, chief executive of ManSat, said the 25 million-pound figure represents the revenue paid to the government as a result of space activities. It includes income taxes paid by employees of space-related companies, royalty and licensing fees, and sales taxes on capital assets, Stott said in an Aug. 28 interview.

The
Isle of Man
forecasts that in the next three years, 14 million British pounds in sales taxes will be earned on the island from space activities only.

Stott said ManSat, with the blessing of the
Isle of Man
government, is attempting to position the locale as more than just a place to register satellites or launch services and thus benefit from the 0 percent corporate income tax.

In addition, some 80 graduates of programs offered by the
Strasbourg
, France-based
International
Space
University
, now are residents of the
Isle of Man
, generating a pool of space expertise. CVI MellesGriot, a company with an expertise in space optics that provided gear for NASA’s Phoenix Mars mission, has its European headquarters on the island and employs some 50 people there.

“It’s not just the tax benefits, it’s also a highly developed transport and communications infrastructure,” said Helmut Kessler, director of CVI MellesGriot’s technical optics division, which builds satellite optical systems on the Isle of Man.

“At first glance it appears an expensive place to live, but they have many benefits for families that more than compensate. Also, how many places in the world can you just pick up the phone and talk to the minister of industry? Here you can,” Kessler said in an Aug. 29 interview.

For a satellite fleet operator, the Isle of Man acts as a registrant for orbital slots and frequencies that are sent, via the British government, to international frequency and satellite slot regulators at the International Telecommunication Union (ITU), a Geneva-based United Nations affiliate.

SES has registered several of its recent satellites there through its SES Satellite Leasing Ltd. affiliate, including the AMC-21 satellite launched in August. SES officials have said they expect well over $1 billion in business to be registered at the
Isle of Man
, a figure that represents the amount of capital expenditure on satellites registered to the ITU at the Isle of Man.

London-based mobile satellite services provider Inmarsat has registered its launch service procurement through the
Isle of Man
, including the recent launch by International Launch Services of Reston, Va., of the Inmarsat 4 F3 satellite.

New York-based Loral Space and Communications’ former Skynet satellite telecommunications division was the first ManSat customer, signing on in 2001.

Loral’s Skynet fleet has since been transferred to Telesat Canada as part of Loral’s purchase of Telesat, and the original satellite orbital slot registered at the Isle of Man for 96.5 degrees west over the Americas remains on the island’s registry.

In an unusual development, another British territory known for its tax-haven status,
Bermuda
, the legal home of Washington-based Intelsat, sought to overturn a ruling by
Britain
‘s telecommunications regulator, Ofcom, to register the 96.5 degree slot at the ITU.


Bermuda
argued that the satellite to be launched into the specific slot would interfere with a pre-existing frequency assignment related to
Bermuda
,” the
Isle of Man
government said in its Aug. 21 statement on satellite activity. Ofcom disagreed, and
Bermuda
sought to overturn the Ofcom ruling at the High Court in
London
.

On Aug. 13, the court ruled in favor of Ofcom, “awarding costs to both Ofcom and the Isle of Man and refusing Bermuda permission to appeal,” according to the Isle of Man government statement.

Telesat
has yet to decide whether to build a satellite for the 96.5 degree position, but Stott said the
Isle of Man
‘s decision to defend the filing over the years extended to providing a legal fund of 500,000 British pounds to help Loral, then in bankruptcy proceedings in the
United States
, retain its ITU priority.

“When Loral was in Chapter 11 [part of the U.S. Bankruptcy Code] we flew to
New York
and asked them how we could help,” Stott said. “We agreed to set up the legal defense fund for Loral on behalf of their satellite registration with us. This is what we do. We defend our customers.”