News From Satellite 2005, Washington

Delays Cloud Ariane 5 Dual-Launch Manifest

DirecTV Group’s Spaceway-2 Ka-band satellite likely will be one of the two payloads to be launched late this spring aboard the first fully commercial flight of the Ariane 5 ECA vehicle, Arianespace Chief Executive Officer Jean-Yves Le Gall said March 23.

Evry, France-based Arianespace is juggling two launches, involving different Ariane 5 variants, to occur by this summer.

Tentative plans call for launching the French Syracuse 3 military communications satellite along with the Telcom-2 satellite owned by PT Telecom of Indonesia first aboard a standard-version Ariane 5. Syracuse 3, previously slated to launch in late 2004 or early 2005, has encountered new delays and now won’t be available until late May at the earliest.

Spaceway-2 would then be launched with an as-yet unidentified payload aboard the enhanced Ariane 5 ECA, which will be making its second flight since it failed in its December 2002 debut. The vehicle, designed to launch two large telecommunications satellites at once, successfully returned to flight in February in a European government-sponsored mission.

Arianespace is considering several candidate payloads to launch along with Spaceway-2, which is facing a regulatory deadline to be in service by mid-year. Spaceway-1 is scheduled for launch in April aboard a Sea Launch vehicle.

But Le Gall said Arianespace remains unclear of what rocket will carry what payload because of satellite-delivery delays, a regular problem for Arianespace’s dual-launch capability. For example, if Syracuse 3 is delayed further, Spaceway-2 could switch rockets and launch along with Telcom-2 aboard the standard Ariane 5. That would leave the Ariane 5 ECA without a firm payload because French defense officials are leery of using that vehicle, French Defense Ministry officials said.

Also unclear is the insurance premium rate that underwriters will set for launching Spaceway-2 aboard the Ariane 5 ECA.

Meanwhile, Le Gall and Sea Launch President Jim Maser announced that they had signed their fourth launcher-backup agreement in the two years since the companies formed their partnership with Mitsubishi Heavy Industries of Japan, which markets the Japanese H-2A vehicle.

In the latest agreement, Paradigm Secure Communications of Britain has booked a launch-backup deal for a British Skynet 5 military telecommunications satellite for late 2006. Two Skynet 5 satellites are under construction at EADS Astrium, and both are slated to launch on Ariane 5 rockets.

Satellite Operators Put Insurers in the Hot Seat

Satellite-fleet operators on March 23 criticized the global space-insurance market for continued high-premium rates that they say are out of line with the industry’s risks.

Speaking at the Satellite 2005 conference in Washington, the operators said they would increasingly self-insure their in-orbit hardware in response to the high prices.

“The insurance industry has gone haywire,” said Bernard L. Schwartz, chairman of Loral Space and Communications of New York. “Market forces have not disciplined the insurance suppliers in their prices.”

Schwartz said insurance rates for a satellite, its launch vehicle and one year’s in-orbit performance are now anywhere from 21 percent to 29 percent. Insuring satellites in orbit after that initial period costs between 2.5 and 3.5 percent of the insured value per year.

Andy Sukawaty, chief executive of Inmarsat Ltd. of London, said Inmarsat had little choice but to insure the recent launch of its Inmarsat 4 satellite. But he said the insurance market “will have to correct itself by people taking on more risk for themselves.”

Several large satellite-fleet operators, including Bermuda-based Intelsat and PanAmSat of Wilton, Conn., have reduced their insurance costs by providing in-orbit backup for their fleets in lieu of purchasing in-orbit coverage. Others, including SES Global of Luxembourg, insure their satellites for only 70 or 80 percent of their book value.

Giuliano Berretta, chief executive of Eutelsat S.A. of Paris, said rates are even higher than they appear, because most satellite owners insure their insurance premiums as well. In this way, he said, a 22 percent premium covering a launch plus one year in orbit can rise to 28 percent.

“At 2.5 to 3.5 percent per year, and even 4 percent in some cases, in-orbit insurance coverage ends up being more expensive even than launch insurance coverage,” Berretta said. “I hope Intelsat’s decision to stop insuring in-orbit will perhaps send an alarm.”

Intelsat announced earlier this month that it would not renew coverage for its in-orbit fleet. Company officials said the decision would save $10 million to $15 million per year.

Orbital Drops Protest of Bsat-3 Contract Award

Orbital Sciences Corp. has ended its protest that Broadcast Satellite System Corp. (Bsat) of Japan had unfairly judged Orbital’s bid to build the Bsat-3 satellite but will not be awarded the contract, according to the president of Orbital’s satellite-manufacturing division.

Ali Atia said March 24 that a review of the Bsat-3 contract competition, won by Lockheed Martin Corp., confirmed Orbital’s view that the original evaluation contained errors. “The board has concluded that the evaluation was somewhat flawed,” Atia said. “They have validated the technical quality of our proposal.”

The loss of the Bsat-3 contract was particularly painful for Orbital because the company has hit a dry spell. It won no commercial satellite contracts in 2004. Company officials now say they are optimistic that Orbital’s Star geostationary-orbit satellite platform will be selected for three commercial programs in 2005.

Industry officials say Orbital is a likely winner of a one-satellite contract from PanAmSat Corp. of Wilton, Conn., this year.

Orbital’s decision to protest the Bsat-3 award was based on the way Japanese satellite operators run their procurements in accordance with the 1990 U.S.-Japan Satellite Procurement Agreement. In particular, these procurements specify that losing bidders be given specific reasons for the decision if their offers were not substantially more expensive than that of the winner.

“It’s almost like a government contract,” Atia said. “You are allowed to protest the decision. We have exonerated our technical solution, and the hope was to reverse the decision. They didn’t go that far, and they didn’t say why.”

Government Role is Key To SES, Former Exec Says

The former president of SES Americom said parent company SES Global’s ownership is not so different from that of its competitors, many recently purchased by private-equity investors, except in one crucial aspect.

“The only real difference is the Luxembourg government,” said Dean Olmstead, who now heads a satellite development consultancy. He said the only other major shareholder in Luxembourg-based SES Global is GE Capital, whose goals are not dissimilar to those of private-equity houses. While publicly traded, SES Global ownership is controlled by the Luxembourg government and GE Capital.

“Is GE a PE?” Olmstead asked, referring to private-equity investors. “This is GE Capital,” he said. “Because of the Luxembourg government participation, SES has had the luxury of looking at the market more strategically.”

Olmstead said Eutelsat S.A. of Paris, whose biggest owners are investment companies led by Eurazeo of Paris, also is in a special situation. “It’s the French and their manifest ways,” he said.

EIB Loan to Help Finance French Guiana Soyuz Pad

The European Investment Bank (EIB) has agreed to a low-interest loan of 121 million euros ($161 million) to the Arianespace launch consortium to help finance the installation of launch-pad accommodations for Russia’s Soyuz rocket at Europe’s Guiana Space Center in French Guiana, the bank announced March 21.

The loan, which had been expected, has been guaranteed by the French government.

EIB Vice President Philippe de Fontaine Vive said the loan is part of the bank’s efforts to stimulate research and development spending in Europe and to support financially needy regions including French Guiana. He said it also will strengthen the technology partnership between Russia and Europe.

The first launch of a Soyuz rocket from the French Guiana site has slipped to 2008 from late 2007. Operated from the equatorial facility, Soyuz will be able to place satellites weighing up to 3,000 kilograms into geostationary transfer orbit, the destination of most telecommunications satellites. The vehicle is viewed as complementing the heavy-lift Ariane 5 rocket, operated by Arianespace, and the Vega small-satellite launcher, now in development.

In addition to the 121 million-euro loan, the Soyuz development in French Guiana is receiving European Space Agency funding and is likely to receive funding from the European Union as well.

SES Americom Exercises Lockheed Satellite Option

SES Global’s SES Americom subsidiary of Princeton, N.J., has exercised a procurement option with Lockheed Martin to complete construction of the AMC-18 satellite, which will be launched aboard an Ariane 5 rocket in mid-2006, SES Global announced.

It is the first of four satellite procurements expected from SES Americom this year, with the other three to be booked as new contracts following open competitions. SES Astra of Luxembourg, SES Global’s other principal subsidiary, is expected to order one satellite this year, tentatively named Astra 1M.

SES Global’s board of directors is scheduled to meet in early April to decide whether to order the Astra 1M. The board also may decide on a new chief executive officer for Americom, a position that was vacated in mid-2004 with the abrupt departure of Dean Olmstead and has been filled temporarily by SES Global Chairman Romain Bausch.

AMC-18 originally had been intended as a ground spare for the AMC-10 and AMC-11 satellites, which were successfully launched in 2004.

AMC-18 will be located at 105 degrees west longitude and deliver cable-television programming to North and Central America. The satellite, a Lockheed Martin A2100 model, will carry 24 36-megahertz C-band transponders. SES Global recently purchased rights to C-band transmissions at that orbital slot from New Skies Satellites of The Netherlands.

Boeing Retires 376 Series, Modifies 702 Commercial Satellite Product Line

Boeing is discontinuing production of its venerable 376 satellite design, a spin-stabilized, canister-shaped spacecraft ill-equipped for the higher-power telecommunications applications that are in vogue today, according to Dave Ryan, president of Boeing’s Satellite Systems International of El Segundo, Calif.

The 376 has been marketed since the 1970s and its last model, the Eutelsat S.A. e-Bird, was launched in 2003. In its heyday, it set the industry standard for reliability and was the first standardized commercial satellite product line.

Boeing also is modifying its top-of-the-line 702 satellite platform to make it more modular in design, capable of supporting between 7 and 20 kilowatts of power. The new model, called the 702-B, will feature far fewer Boeing-built components as part of the company’s strategy of reducing its focus to core competencies.

Ryan, in an interview here during the Satellite 2005 conference, said the 702-B satellite platform will carry 60-70 percent non-Boeing components. “It used to be 80 percent in-house,” Ryan said.

Ryan said Boeing is sticking to its strategy of not bidding for many commercial satellites whose design calls for classic bent-pipe communications payloads because such products have become commoditized, with competitions won mainly on price.

Instead, Boeing will focus on satellite programs that call for payloads that are reconfigurable in orbit, with electronically steered antennas that allow owners to revamp their business plans and coverage areas even after the satellite is launched .

The 702-B is intended gradually to replace Boeing’s current 601 satellite line , which was introduced in the early 1990s.

The contrast between the 376 and the 601 — a three-axis-stabilized satellite design — went deeper than appearance and power characteristics. Just as the 376 became a showcase for reliability, the 601 became a symbol of the dangers of insufficient testing of components before launching them.

The 601 platform in the past decade has been the subject of more than $1 billion in insurance claims for failures of its on-board control and electric-power systems.

The first 702 models, launched starting in 2000, also had defects that resulted in hundreds of millions of dollars in insurance claims. But the more recent 702s have performed well in orbit.

Now, in an effort to reduce the number of product lines offered to a still-weak commercial market, Boeing is widening the reach of the 702 to cover ground formerly covered by the 601.

“It was time for the 702 to evolve,” Ryan said. “We’re not doing a radical departure but we want to make it more modular, moving up in power and down in power depending on the application. The smaller versions would be bi-propellant; we would take the XIPS off for operators that want bi-propellant for orbit-raising.”

Boeing’s 601 and 702 models have customarily used the xenon-ion propulsion system (XIPS) , an electric-propulsion module which is more efficient than conventional chemical bi-propellant systems but requires two months to raise a satellite from its post-launch transfer orbit to its final operating position.

The 702-B also will feature digital channelizers, similar to those on board the DirecTV Spaceway satellites to be launched this year. The avionics also will be upgraded for the 702-B.

Alcatel Will Continue Using U.S. Components

Alcatel Space has no immediate plans to standardize the design of a recently built telecommunications satellite that is completely free of U.S.-built components, said Pascale Sourisse, the company’s president .

The Apstar 6 satellite built by Paris-based Alcatel is scheduled for launch in April aboard a Chinese Long March vehicle. Such a launch would be impossible if the satellite had any U.S. parts given the U.S. government’s de facto ban on exporting satellite components to China. The ban was imposed in 1998-1999 under the reinforced U.S. International Traffic in Arms Regulations (ITAR).

Alcatel’s Aptstar 6 customer, APT Satellite Holdings of Hong Kong, had insisted on the right to launch the Spacebus 4000-model satellite aboard a Chinese rocket. That forced Alcatel to modify its usual Spacebus component-supplier arrangements to assure that the satellite could be delivered even without the blessing of the U.S. State Department.

Alcatel is positioning its new Spacebus 4000 platform as its primary offering to the commercial and government telecommunications market. SES Americom’s AMC-12 satellite, which recently completed in-orbit testing and is now ready for service, is the first Spacebus 4000 in orbit. That satellite is not ITAR-free.

Sourisse said the Apstar 6 component mix, which includes Russian-built batteries and other components to replace the gear that on AMC-12 was built in the United States, will not be adopted as standard practice at Alcatel Space.

“Would we systematically go to an Apstar 6 product? Not necessarily,” Sourisse said. “We always try to find ways of reducing costs of our overall system and sometimes there is a cost advantage in using U.S. components. We will maintain both product lines.”

Sourisse, whose company recently completed a merger with the space divisions of Italy’s Finmeccanica — Alenia Spazio and Telespazio — also said the combined hardware-manufacturing company will be less reliant on the commercial market than Alcatel Space was as a stand-alone company.

Less than 40 percent of Alcatel Alenia Space revenues are from commercial contracts, with the rest coming from civil and military government business. Alenia has been more reliant on government work than Alcatel Space, and the merger had the effect of diluting the commercial exposure of Alcatel Space.

Turksat Shopping for Replacement Satellite

Turkey’s national satellite operator, Turksat, expects to issue bid requests this year for one or two satellites to replace the aging Turksat 1C spacecraft, Turksat President Omar Dur said.

Dur also is president of Eurasiasat of Ankara, the former Monaco-based company that owns the Eurasiasat-1 satellite in which Alcatel Space is a 25 percent stakeholder. Eurasiasat was placed under Turksat’s umbrella when its business plan failed to materialize as expected.

Dur and Senol Gulgonul, Turksat’s chief technical officer, said relocating Eurasiasat’s sales staff to Turkey and focusing on sales to domestic broadcasters and other customers within the nation has turned Eurasiasat around.

“Eurasiasat is now 60 percent full. We have found new customers simply by pounding the pavement in Turkey and dealing with markets that we know,” Gulgonul said.

Eurasiasat and Turksat now operate as a single organization that is owned by the Turkish government but regarded as independent of Turk Telecom, the national telecommunications provider.

Turksat 1B is operated in an inclined orbit. The younger Turksat 1C is booked full, with about half of its annual revenues coming from Turk Telecom and the rest from Turkish television broadcasters. The Turkish diaspora in Central and Southern Asia, and in Europe, is a key market for Eurasiasat and Turksat. Turksat 1C is expected to be retired in 2007 or 2008.

Dur said Eurasiasat, which industry observers had speculated would be sold to another satellite-fleet operator, increased its revenues from just $7 million in 2003 to $21 million in 2004.

Eutelsat CEO Defends Chinese Contract Move

Eutelsat S.A. Chief Executive Officer Giuliano Berretta said his company had never buckled to political pressure from the Chinese or any other government over what programming to broadcast over its satellites and would stick to its policy of open access.

Paris-based Eutelsat in the past year has been forced to address issues of whether content offensive to the French government from Middle Eastern broadcasters could be broadcast by a French-registered satellite operator. French law prohibits the public expression of racial hatred, and some of the broadcasts carried by Eutelsat were deemed anti-Semitic.

More recently, Eutelsat canceled its contract with a Chinese-language broadcaster, New Tang Dynasty TV, whose programming carried via Eutelsat’s W5 satellite has long been a thorn in the side of the Chinese government. Fifty-eight members of the European Parliament, and the International Federation of Journalists, have protested Eutelsat’s decision. New Tang officials have lobbied European Union officials to block the decision, saying Eutelsat was simply trying to appease the Chinese government.

Berretta said that with 1,500 television channels carried by Eutelsat’s satellite fleet, the company is unable to monitor all programming content. He also said the decision on New Tang was based on Eutelsat’s broader market positioning in Asia. The New Tang channel, he said, is a small customer on the W5 satellite’s spot beam, which was being repositioned for business reasons unrelated to Chinese government concerns about New Tang.

“As far as China, we have never in our history interrupted a channel,” Berretta said. “We never obey injunctions from this or that state on our programming. On W5, we have four transponders on a steerable beam that generates $80 million in revenue, and we reserve the right to decide to repoint the beam and to end all contracts [when they come up for renewal]. We never discriminate against anyone — first because we are not experts in evaluating content of all our customers, and second because it would be against our charter.”

Comments: Peter B. de Selding,