Latin American Satellite Communications Market Heating Up

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  Space News Business

Latin American Satellite Communications Market Heating Up

By PETER B. de SELDING
Space News Staff Writer
posted: 25 July 2005
03:05 pm ET


The already crowded South American satellite communications market now has a new competitor with the arrival of an aging EchoStar satellite into a Mexican orbital slot.

Another prospective competitor, from Argentina, appears ready to enter the business, and the large Satmex 6 satellite appears to be moving closer to launch after two years in storage.

QuetzSat, S. de R.L. de C.V., which has SES Global of Luxembourg as a minority owner, opened for business when the EchoStar 4 satellite reached its destination at 77 degrees west longitude just in time to meet a July 10 regulatory deadline.

QuetzSat has lots of company: About a dozen satellite-fleet operators are active in South America. Competition is brutal, prices have been falling and the situation may become more, not less, competitive in the near future.

Satelites Mexicanos S.A. de C.V., which filed for bankruptcy protection in Mexico and may be forced to file for Chapter 11 bankruptcy protection in the United States, has reached a broad agreement with its shareholder and supplier, Loral Space and Communications of New York, on the launch of the Satmex 6 satellite.

Some Satmex creditors dropped their initial objections to the Loral-Satmex agreement July 19 when Satmex and Loral modified the accord, according to documents Satmex creditors filed with a New York bankruptcy court. Loral and Satmex say their agreement could permit Satmex 6 to be launched by early 2006.

The Venezuelan government has been negotiating with China Great Wall Industry Corp. of Beijing for delivery of a telecommunications satellite.

Venezuelan Science Minister Yadira C�rdova said in a July 18 statement that the satellite, to be named Simon Bolivar once it is in orbit, could be launched 29 months after the contract is signed with China Great Wall. Venezuela is demanding substantial technology transfer from China as part of the agreement.

Echoing remarks made on several occasions by Venezuelan President Hugo Chavez, C�rdova said the satellite, to weigh nearly 6,000 kilograms at launch, would free Venezuela from dependence on companies based “in other latitudes,” meaning, above all, the United States.

Whether these developments will cool QuetzSat’s backers on the idea of financing a new satellite is unclear. SES spokesman Yves Feltes said the QuetzSat business plan was drawn up on the assumption that Satmex would remain a viable regional player.

EchoStar 4 is an aging satellite that EchoStar had declared a total loss for insurance purposes. It had been providing backup programming from its 157 degrees west position.

Littleton, Colo.-based EchoStar had been blocked from moving the satellite to the Mexican slot by the U.S. Federal Communications Commission (FCC), which initially rejected the move by saying it did not serve the public interest.

With the July 10 deadline approaching, EchoStar received FCC approval to begin moving EchoStar 4 across the geostationary orbital arc starting June 17. EchoStar agreed that if the FCC continued to oppose the move to the Mexican slot, then EchoStar would continue its drift until it arrived at EchoStar’s orbital location at 61.5 degrees west.

The FCC reversed its earlier decision July 6 and permitted EchoStar 4 to take up residence at Mexico’s QuetzSat-registered position at 77 degrees west.

SES and its QuetzSat partners now have enough breathing room to evaluate the market for direct-broadcast satellite television in Mexico, and also the market for Spanish-language television broadcasts in the southern United States.

QuetzSat’s coverage obligations under its Mexican license, including providing a portion of its capacity for the Mexican government, make it impossible for EchoStar 4 to cover the entire continental United States from its new position. But it will be able to provide programming to a large section of the southern United States, according to EchoStar.

Feltes said the QuetzSat partners would give themselves at least several months before deciding whether to order a new QuetzSat-dedicated satellite.

“EchoStar 4 is a place-holder,” Feltes said. “The important thing is that we now have a satellite in place at the Mexican slot, and that we met the regulatory deadline.” The deadline of July 10 had been issued by the International Telecommunication Union of Geneva, a United Nations affiliate that regulates satellite orbital slots and broadcast frequencies.