Orbcomm Plans Different Orbit for Next-Generation Satellites

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PARIS — Satellite two-way messaging and machine-to-machine (M2M) services provider Orbcomm will send its second-generation constellation of satellites into a different orbit from the first generation to provide better coverage of Canada, northern Europe and other high-latitude regions, Orbcomm Chief Executive Marc J. Eisenberg told investors.

The Fort Lee, N.J.-based company, whose 18 second-generation satellites are scheduled to be launched starting this year, will be seeking permission from U.S. regulators for the change in its satellite-deployment scheme, Orbcomm said in a filing with the U.S. Securities and Exchange Commission (SEC).

“Based on changed circumstances relating, inter alia, to launch vehicle availability, we have recently revised our next-generation satellite deployment plan,” Orbcomm said in the SEC filing, noting it would seek a license modification from the U.S. Federal Communications Commission.

Orbcomm’s second-generation satellites are being built by Sierra Nevada Corp. of Sparks, Nev. The satellites were initially scheduled to be delivered in 2010, but Orbcomm asked for a modification to permit the spacecraft to accommodate “an additional payload-to-bus interface,” Orbcomm said in the March 16 filing to the SEC.

In a conference call that day, Eisenberg said the company will be placing the second-generation fleet into orbit aboard Falcon 9 rockets operated by Space Exploration Technologies of Hawthorne, Calif.

The first two Orbcomm satellites are scheduled for launch as secondary passengers aboard a Falcon 9 rocket carrying an unmanned cargo vessel to the international space station. The station flies in an orbit with an inclination of 51.6 degrees.

Assuming a successful launch, now tentatively scheduled for this summer, a second Falcon 9, this time carrying at least eight Orbcomm satellites as the main payload, would be launched nine months later.

A third Falcon 9 rocket carrying the remaining satellites in the constellation would then occur later in 2012.

Orbcomm’s 27 current-generation satellites operate for the most part in an 825-kilometer orbit inclined 45 degrees relative to the equator. Eisenberg said the second generation would be placed into a 52 degree inclination, an orbit that gives better coverage of northern latitudes and will broaden Orbcomm’s offer to the automatic identification system (AIS) maritime surveillance market.

AIS terminals send data on a ship’s identity, cargo, location, speed and heading. They are mandatory for all ships weighing 300 metric tons or more. A satellite-based AIS system allows coastal authorities to extend the reach of ground-based AIS receivers.

Orbcomm was under contract to the U.S. Coast Guard to test such a service before the company’s AIS-payloads, all launched in 2008 on defective Russian-built satellites, failed in orbit.

The last of these so-called “Quick Launch” satellites failed in late 2010, effectively shutting down Orbcomm’s AIS revenue stream.

In the conference call, Orbcomm Chief Financial Officer Robert G. Costantini said the company had been generating about $2 million a year in AIS revenue before the last of the AIS-equipped spacecraft failed.

The six Quick Launch satellites were provided to Orbcomm by OHB Technology of Bremen, Germany. As part of the compensation OHB agreed to following the satellites’ failure, OHB’s LuxSpace subsidiary in Luxembourg is building two small satellites with AIS terminals to put Orbcomm back in the AIS business before the second-generation Orbcomm satellites are in service.

The two LuxSpace-built satellites are scheduled for launch this year aboard India’s Polar Satellite Launch Vehicle.

Orbcomm is in a race to be first to market with a global AIS service. Canada’s Com Dev and several government agencies in Europe are developing competing systems.

“Our business plan assumes a rapidly growing revenue base for AIS data service,” Orbcomm said in its SEC filing.

The company is also facing increased competition in the M2M market from companies including Iridium of McLean, Va., which like Orbcomm operates a fleet of low-orbiting satellites; and Inmarsat of London, which operates mobile communications satellites in higher, geostationary orbit.

“We believe that a minimum of five years and significant investments in time and resources would be required for another satellite-based M2M data communications service provider to develop the capability to offer comparable services,” Orbcomm said.

Orbcomm’s current satellites were launched between 1997 and 1999 and expected to operate for nine to 12 years. Orbcomm said that while the batteries on these satellites have lost some of their original power, the total performance degradation has been less than 3 percent over the past five years.

Orbcomm said it posted an operating loss of $1.2 million — one-half the loss of 2000 — in 2010, on revenue of $36.7 million. Excluding a one-time payment for AIS service, revenue was up 11.6 percent from 2009. Orbcomm’s subscriber count was 575,000 as of Dec. 31, up more than 11 percent from a year earlier.

Orbcomm said its purchase, for $18.5 million in cash and stock, of StarTrak Systems, owned by Alanco of Morris Plains, N.J., would broaden Orbcomm’s product portfolio for companies transporting goods by rail and road. StarTrak specializes in tracking and monitoring refrigerated goods. The purchase is expected to close in May.