PRAGUE, Czech Republic — Satellite messaging services provider Orbcomm has contracted with one of its former satellite builders, OHB Technology, to use OHB satellites already in development for ship tracking and monitoring, a deal that likely will end Orbcomm’s claims against OHB for defective Orbcomm satellites launched in 2008, Orbcomm announced Sept. 28.
The contract gives Ft. Lee, N.J.-based Orbcomm a hedge in the event its next-generation constellation of 18 satellites is not launched as scheduled in early 2011. Orbcomm is betting that providing Automatic Identification System (AIS) services to coastal authorities worldwide will be a major new business opportunity. All of its second-generation satellites will be equipped with AIS terminals.
Space-based AIS is shaping up to be a highly competitive market, with Orbcomm and Com Dev of Canada, through its exactEarth subsidiary, racing to put AIS capacity in orbit and line up customers. On a separate track, the 18-nation European Space Agency (ESA) appears to be readying its own government-sponsored AIS service, placing competing AIS terminals on the international space station. OHB, through different affiliates, is active in the ESA program as well.
Under the agreement disclosed to the U.S. Securities and Exchange Commission (SEC) Sept. 28, Orbcomm will pay OHB $2 million, with milestone payments starting immediately, for exclusive use of two small satellites being built by OHB’s LuxSpace affiliate in Luxembourg and scheduled for launch in May and June 2011. Once the satellites’ performance has been validated in orbit, Orbcomm will pay OHB another $546,000 over 36 months for use of their AIS capacity.
The exclusive-use arrangement will then expire unless Orbcomm exercises an option to continue the contract with payments of $6,250 per month, Orbcomm said in the SEC filing.
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Bremen, Germany-based OHB has rights under the agreement to a credit of $500,000 to offset future license fees OHB would pay to Orbcomm for the resale of Orbcomm’s AIS data. OHB, which is an Orbcomm shareholder, is weighing whether to market the service in one or more regions.
Orbcomm announced separately that it is taking a $7 million impairment charge against its third-quarter earnings for a satellite that already has been built and was to have been launched with Orbcomm’s second-generation constellation of low-orbiting satellites. This spacecraft was built by OHB as prime contractor using a platform, developed by Polyot of Russia, that is identical to the six satellites launched in 2008.
Five of these satellites have failed in orbit, and Orbcomm in late 2009 received a $44.25 million insurance settlement.
Despite the insurance settlement, Orbcomm had potential claims against OHB resulting from the satellites’ failure. Orbcomm Chief Executive Marc Eisenberg said in a Sept. 28 e-mail that the agreement with OHB “most likely” will end Orbcomm’s claims, but that “it’s complicated.”
OHB, in response to Space News inquiries, issued a statement Sept. 29 saying the company has secured a launch of one of the two LuxSpace-built satellites on an Indian PSLV rocket and is in final negotiations for the launch of the second on an Indian or Chinese rocket. The company said the agreement “ends all Orbcomm claims against OHB, subject to certain exceptions.”
The company further said that its LuxSpace subsidiary is weighing its future relationship with Orbcomm’s AIS service but that no decisions have been made.
Orbcomm said the two satellites to be provided by OHB “will provide additional coverage and AIS data in the polar and equatorial regions and will supplement” Orbcomm’s second-generation constellation. The satellites will not be in the same orbital planes as the Orbcomm constellation, and will use separate Earth stations to provide the AIS service, Eisenberg said.
LuxSpace launched its first satellite, the AIS-equipped Pathfinder 2, in September 2009. The 8-kilogram spacecraft was a piggyback passenger aboard an Indian Polar Satellite Launch Vehicle rocket. It also has provided an AIS terminal that has been installed on ESA’s section of the international space station and will be operated starting in October. The LuxSpace unit and a similar Norwegian terminal will alternate the use of a single antenna placed outside Europe’s Columbus space station laboratory for a period of two years as part of ESA’s Vessel ID program.
