LONDON — A ruling expected this spring by the European Commission will go a long way to determining whether plans to provide mobile television and two-way data links via satellite will win a fast-track approval in Brussels or face the years-long trench warfare associated with seeking nation-by-nation licenses.
At least two industrial groups — a joint venture between SES Global and Eutelsat, and TerreStar Global Ltd. — are bidding for as big a slice as they can get of the available S-band spectrum over Europe, which is 30 megahertz in both uplink and downlink.
Many regulatory and business-model issues remain before such services are rolled out, including the cost of the ground-based signal transmitters needed to provide service in areas unreachable by satellite, such as inside buildings. But among the first questions to be answered is whether individual European nations will insist on retaining the rights to allocate the spectrum, regardless of what happens elsewhere in Europe.
How many competitors can comfortably fit within the 30-megahertz allocation is unclear. But the companies in question say any more than three will render the services difficult to deliver.
“Each nation decides how to split the spectrum and the number of players to be admitted,” said Rolf Olofsson, co-head of the telecom, media and technology group at the law firm of White & Case. “The European Commission is expected to issue a proposal by late spring to try to harmonize the 2-gigahertz [S-band] frequencies, but that would need council approval,” he said, referring to the European council of ministers. “There is some sign they [the European Commission] may be successful in harmonizing the assignment.”
Addressing the Mobile Satellite 2007 conference organized by Euroconsult here March 20, Olofsson said questions about the regulatory regime adopted for these services in Europe remains one of the key risk factors hanging over S-band business plans.
Also unclear is whether individual nations might choose to auction the S-band spectrum in their national territories, a development that could upend the financial assumptions on which the proposed businesses are based.
Regulatory questions have already slowed the creation of the SES Global-Eutelsat joint venture on S-band announced in October. SES Global of Luxembourg and Paris-based Eutelsat still have not filed anti-trust documentation on the joint venture to the European Commission, in part because the commission was uncertain about whether it had the authority to judge the issue.
SES Global Chief Executive Romain Bausch and Antonio Arcidiancono, director of innovation at Eutelsat, said the commission recently concluded that it does in fact have the authority to make an anti-trust ruling on the joint-venture company. The application for the creation of the joint venture would be completed within days, they said.
SES Global and Eutelsat, which are normally direct competitors, have agreed to invest a combined 130 million euros ($173 million) to equip Eutelsat’s W2A satellite, already under construction, with an unfurlable S-band antenna. The satellite is scheduled for launch in early 2009. Both operators have said the business is too risky for either of them to invest on their own.
SES Global and Eutelsat have at least one announced competitor for S-band in TerreStar Global, created in 2005 in Bermuda as a spinoff of TerreStar North America, which is building two S-band satellites for North American coverage.
Robert H. Brumley, chief executive of TerreStar Global, said European authorities are conducting what he called a “combined milestone and beauty-contest” process to determine who gets an S-band allocation.
Brumley said the milestone deadlines, which resemble the system used by the U.S. Federal Communications Commission, require operators to enter into definitive contracts for their satellites’ construction and launch, and for some Earth station construction, by the end of 2008.
At the same time, Brumley said, in the event there are too many applicants for the available S-band spectrum, European regulators will judge proposals by whether they offer the best use of the spectrum, whether they meet European Union policy objectives, provide pan-European coverage and offer benefits to consumers.
As it is in the United States, TerreStar Global in Europe is targeting homeland security services and underserved rural communities as key target markets.
ICO Global, which had attempted to secure an S-band license in Europe based on the launch of a satellite already in medium-Earth orbit but not in active use, also is expected to be among the companies seeking an S-band authorization from European governments.