Loral-EchoStar Satellite Deal May Involve Services to China

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  Space News Business

Loral-EchoStar Satellite Deal May Involve Services to China

By PETER B. de SELDING
Space News Staff Writer
posted: 05 July 2006
01:09 pm ET


Space Systems/Loral announced June 30 that it had booked a new telecommunications satellite order from EchoStar in a deal industry officials said is likely the CMBStar satellite for mobile video services to hand-held devices that China wants available in time for the 2008 summer Olympics.

John McCarthy, a spokesman for Space Systems/Loral’s New York-based parent company, Loral Space and Communications, declined to provide details on the order. EchoStar spokeswoman Kathie Gonzalez declined to discuss the Loral contract, and also said she could not comment on CMBStar.

Industry officials have said that Englewood, Colo.-based EchoStar Communications Corp., through an affiliate company, will own and operate the CMBStar satellite .

A U.S. company owning and operating a satellite serving China would not need to secure technology-export licenses under the U.S. International Traffic in Arms Regulations (ITAR), which govern satellite-related exports.

Current ITAR restrictions would severely limit any Chinese customer’s access to technical details of a U.S.-built satellite, and also would prevent the satellite from being launched on China’s Long March rocket. Having EchoStar as the owner and operator would avoid most of those issues.

EchoStar told the U.S. Securities and Exchange Commission (SEC) in April that one of its subsidiaries had made an initial down payment of $34 million on a “non-U.S. satellite services project,” and that up to $115 million in additional EchoStar funding would be made available, pending project milestones.

“Most of the initial funding and contingent commitment is expected to be used to fund a portion of the construction costs of a satellite to be used by the project,” EchoStar said in its SEC filing. “EchoStar also has the right but not the obligation to provide substantial additional financing to the project to fund its future capital expenditures and working capital requirements.”

One industry official who attended a recent telecommunications show in Singapore said Loral had distributed a brochure referring to CMBStar as a firm contract. McCarthy said he was not aware of the brochure and could not confirm Loral’s involvement in CMBStar.

Space Systems/Loral of Palo Alto, Calif., built the MBSat satellite for Mobile Broadcasting Corp. of Tokyo, with the beams providing mobile video service in Japan and South Korea. The satellite entered service in October 2004. China and South Korea have since signed cooperation agreements on digital mobile broadcasting.

One industry official said the CMBStar idea was presented to several Asian satellite operators but that none was willing to invest. “To my knowledge they do not yet have a cellular network operator on board, so this thing would have to be considered a very speculative investment,” this official said. “Other than that, the project appears real, and SARFT wants it operational in time for the Olympics.”

SARFT, or State Administration of Radio, Film and Television, is China’s broadcast regulator.

Alticast, a Seoul, South Korea-based interactive television provider, is one of several Korean digital mobile broadcasting (DMB) service companies that hosted a SARFT delegation in April.

“China is the world’s largest mobile telecommunication market, with over 300 million mobile users, and [is] expected to show a skyrocketing increase in demand for satellite DMB service,” Alticast said in announcing the SARFT visit.

TU Media Corp. of Seoul, a unit of SK Telecom, reported in March that its satellite DMB subscriber base had grown from 430,000 to 500,000 following the service’s broadcast of Korean baseball games. The company said it could add as many as 500,000 new subscribers this year, in part by broadcasting World Cup soccer matches.

Comments: pdeselding@compuserve.com