Prospective S-Band Bidders Annoyed by European Pre-Selection Process

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  Space News Business

Prospective S-Band Bidders Annoyed by European Pre-Selection Process

By PETER B. de SELDING
Space News Staff Writer
posted: 06 April 2008
09:30 am ET







PARIS
— European Union governments are expected to decide by June how best to select candidates to provide mobile satellite services in the 30 megahertz of S- band spectrum that is being made available. Prospective bidders, however, already are saying the procedure demands more from them than they can provide.

As it stands now, none of the prospective bidders have threatened to walk away from the process. Officials of Inmarsat, TerreStar Global, ICO Global and the newly formed EutelsatSES joint venture, Solaris Mobile Ltd., all said�� they remain interested in taking part in the selection process. However,��� some of the requirements being debated by the European Parliament and the European Union’s executive commission, if adopted, would require a substantial financial commitment on the part of candidates well before a license was received.

“It’s a bit of an unusual process,” said Andy Sukawaty, chief executive of London-based Inmarsat. “You’re being asked to spend a great deal of money for a license you may not get on terms that have yet to be defined. I’ve gotta say that in this environment, that is a tough set of conditions.”

Inmarsat
is weighing whether to expand its current global L- band service by adding an S- band capability for mobile video. Nonetheless, Sukawaty said March 18 during the Mobile Satellite Forum in
London
organized by Euroconsult: “We intend to be a candidate for the license.”

One unknown in the European process is how many licenses will be granted. Depending on how bidders intend to use the available spectrum, the 30 megahertz that is being made available likely will be able to handle at least two systems, maybe more. European authorities have decided against an auction, electing instead for what is often called a “beauty contest” in which bidders try to sell the merits of their particular business models.

The degree of pan-European coverage, overall consumer benefit and public-interest services are among the criteria the European Commission and the European Parliament’s Committee on Industry, Research and Energy will review as they weigh the different bids.

“The European Union allocation will be unique,” said Robert H. Brumley, chief executive of TerreStar Corp. of
Reston
,
Va.
, which has established subsidiaries in
and signed a study contract with
Europe
‘s Astrium Satellites spacecraft manufacturer to bolster its European bid.

Brumley
agreed that
‘s S-band allocation may include selection criteria that are difficult to weigh with precision. The European Parliament has proposed that meeting European public policy objectives should count for 30 percent of the score given to bidders. Satisfying consumer and competitive benefits would account for 20 percent of the final score.

“We think providing emergency communications and rural broadband will be part of the selection criteria,” Brumley said, adding that the milestones also include having a satellite construction and launch agreement. “We can only ask that the licenses that are given whether the spectrum be divided in half, or in thirds or differently be structured so that everybody has a chance to build a business case.”

One European Parliament proposal is that licensees agree to launch their satellites and begin providing service within 22 months of the receipt of the license, meaning that the satellite would need to be under construction well before the license was granted.

ICO Global of Reston, Va., is alone among the bidders in arguing that its satellite the lone medium-Earth orbit spacecraft ICO launched as part of a constellation that has never been launched should give the company an advantage in the competition. ICO has 10 satellites in various stages of completion stored in
California
warehouses, but some European government officials question whether ICO’s orbiting satellite should be counted among the S- band contenders.

‘s two largest commercial satellite-fleet operators, SES of Luxembourg and Eutelsat of Paris, have created the Solaris Mobile Ltd. joint venture to manage an S-band service to be provided on Eutelsat’s W2A satellite, to be launched in early 2009.

The two companies have said the European licensing process includes too many unknowns to permit them to invest separately. They also have said that adding an S-band antenna to Eutelsat’s already-planned W2A telecommunications satellite already represents an investment of 130 million euros ($201�� million), and that even these two cash-rich companies dare go no further without regulatory certainty.

Both companies have argued that the European Union licensing process is not fully coordinated with the international licensing procedures managed by the International Telecommunication Union of Geneva, a United Nations affiliate. They�� also have urged regulators in
Europe
to take into consideration�� the investment already made in the Solaris venture.

Steve Maine, chief executive of Solaris, said the company offers European regulators “a high degree of confidence that our part of the jigsaw puzzle will be delivered. I am standing here today with a fully funded business plan.”