More European Satcomm Companies Looking to Crack U.S. Defense Market

PARIS
— The competition to market satellite communications to the
U.S.
government using satellites with frequencies widely used by defense forces is likely to become more heated in 2009 as two European companies and a U.S.-European joint venture fight to establish relations with the world’s biggest satellite communications customer.

Paradigm Secure Communications of Britain, a unit of Astrium Services, and Telespazio of Italy approach the
U.S.
market from different bases, but there are similarities in their approaches. The third company, Xtar LLC of Rockville, Md., is a joint venture between Loral of New York and the Spanish Hisdesat consortium.

Paradigm, using the resources available inside Astrium, the space division of the EADS aerospace conglomerate, owns the British Skynet fleet of satellites, whose principal customer is the British Ministry of Defence. The three new-generation Skynet 5 satellites were built by Astrium Satellites as part of a services contract with the British government that runs to 2020.

The first Skynet 5 satellite was launched in March 2007. The third launched in June 2008.

Paradigm guarantees British authorities a certain amount of capacity and then is free to sell the excess to other customers. With the British government, it has signed a long-term agreement with the NATO alliance for Skynet services, with smaller contracts approved with other governments.

Telespazio’s
entry into direct competition with Paradigm and Astrium Services is more recent. Part of the Space Alliance between Finmeccanica of Italy and Thales of France, Telespazio does not own its satellite assets. But because it invested in the Italian Defense Ministry’s Sicral 1B satellite scheduled for launch by Sea Launch Co. in February, the company has ownership rights to about one-third of Sicral 1B capacity.

For turnkey contracts calling for satellites and services, Telespazio can bundle its offer with that of satellite manufacturer ThalesAlenia Space, much as Astrium Services can do with Astrium Satellites.

Telespazio
is likely to benefit if, as expected, ThalesAlenia Space signs a contract this year with the Italian and French defense ministries to build a Sicral 2 telecommunications satellite carrying both French and Italian defense payloads. French and Italian officials have said this satellite could be procured as part of an effort that is wholly or partly financed by the private sector the Paradigm model or with the private sector as a minority shareholder, in a model similar to that of Sicral 1B.

Recent contracts signed by both Paradigm/Astrium Services and with Telespazio give an idea of the evolution of the coming competition. In May, Intelsat General of
Bethesda
,
Md.
, a unit of satellite fleet operator Intelsat of Bermuda and
Washington
,
signed a one-year contract with DRS Technologies of
Parsippany
,
N.J.
, to provide X-band communications to the
U.S.
government. The $6.5 million contract includes options that could increase its value to $48 million over three years, Intelsat General announced. Paradigm Secure Communications is providing the 155-megabits-per-second satellite link.

In October, Telespazio’s principal shareholder, Finmeccanica, purchased DRS Technologies for $5.2 billion with a view to securing greater access to
U.S.
government markets. In December, Telespazio announced a contract with DRS to provide Sicral 1B capacity. The 12-year contract is valued at 30 million euros ($40 million) over 12 years. Telespazio also is providing satellite-uplink services to DRS from its
Fucino
Space
Center
facility in
Italy
under a separate contract valued at 4 million euros over seven years.

“The signing of these agreements makes Telespazio a preferred supplier of satellite services to DRS Technologies and will provide a platform for further growth in the
U.S.
market in the military communications and global network communications sectors,” Telespazio said in announcing the contract. “The agreement also increases DRS Technologies’ opportunities to provide
U.S.
defense forces with connectivity services in theatres of operations via the use of ground infrastructure (global communications at the
Fucino
Space
Center
) and satellite capacity made available by the Finmeccanica Group.”

Telespazio’s
success in entering the
U.S.
market assumes the successful deployment of Sicral 1B and over the longer term depends on a successful partnership between
France
and
Italy
, and perhaps other nations in
Europe
, on military telecommunications.

French and Italian military officials say Sicral 2 is scheduled for launch by 2012, but a contract has not been signed. The satellite is scheduled to be operated from 5 degrees west. The two French military-owned and -operated
Syracuse
3 satellites are in service at 47 degrees and 37 degrees east.

Capt. Giovanni Battista Durando of the Italian navy said Sicral 2, which is needed to provide additional service to NATO as well as five SHF- and one UHF-frequency channel to French defense forces, is not in doubt. Sicral 2 will employ the same anti-jamming antenna on board the
Syracuse
3 satellites, according to French defense officials.

Meanwhile, Xtar officials say that despite their early difficulties in winning U.S. Defense Department contracts, the company is now more confident of making its case in
Washington
, Xtar Chief Operating Officer Denis Curtin said. Xtar owns and operate the Xtar-Eur satellite at 29 degrees east, and owns part of the capacity on the Spainsat satellite, at 30 degrees west, for which Spanish military authorities are the anchor customer.