Satellite Insurers Urged To Embrace, Not Fear, New Technology

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DUBAI, United Arab Emirates — ViaSat Inc.’s ViaSat-1 Ka-band satellite, which with 140 gigabits per second of throughput dwarves other communications spacecraft in orbit, may soon look small as the industry moves to 200-gigabit satellites within the next year or two and then on to 400-gigabit models, Space Systems/Loral President John Celli said.

Similarly, he said, today’s high-definition television and its demand for satellite bandwidth is likely to be left in the dust by ultra-high-definition viewing, which provides 16 times the number of pixels needed for HDTV.

In a Feb. 28 presentation to the World Space Risk Forum, Celli urged insurance underwriters to consider new technology as an industry growth driver and not as a threat to satellite reliability.

Satellite reliability, he said, has steadily improved in the past 20 years even as spacecraft have become more and more powerful and complex. He was referring to commercial telecommunications satellites in general, not just those built by Palo Alto, Calif.-based Space Systems/Loral.

“This doesn’t happen by chance,” Celli said. “Ten years ago satellites were providing 8 kilowatts of power. Now we’re at 20 kilowatts and moving toward 25 to 30 kilowatts. That means more complexity, and new technology.”

Addressing underwriters, he said: “You need to discuss how you’re going to address the new technology that is going to be flooding the industry.”

Underwriters habitually fear new technology on satellites and rockets because they associate it with hardware failures. In a practice that has long been critiqued by satellite fleet operators, insurers often decline to issue or renew coverage for a component that is functioning well on the insured satellite but has failed on another satellite.

Maureen Offord, vice president of insurance for fleet operator SES of Luxembourg, said insurers need to be more discriminating when issuing “exclusions” in the policies that leave certain components uncovered. “This is one of the most frustrating” insurance practices as viewed by satellite operators, she said here Feb. 29.

Satellite in-orbit insurance policies typically are renewed each year. If in the interval a component on any insured satellite has failed, that component may be blacklisted by underwriters and denied coverage on all satellites when their policies come up for renewal.

Celli also asked underwriters to play a role in harmonizing the satellite test requirements imposed by operators on manufacturers. “We have 17 different customers in our factory now and they have 10 different testing requirements,” he said.

Noting that 40-50 percent of the components a satellite prime contractor uses are purchased from other companies, Celli said reducing the number of testing regimes — even if that means a stricter average industry standard — would enhance quality control. “We would prefer high-level requirements that are consistent from customer to customer,” he said.

The hesitation of underwriters to embrace new components and designs means that the phrase “new technology,” which is a selling point in consumer electronics, is something no satellite operator likes to advertise.

Steve Collar, chief executive of O3b Networks of Britain’s Channel Islands, went out of his way in a presentation here Feb. 29 to reassure underwriters.

“There are no new components in the O3b satellites,” Collar said. “It is all heritage technology. Innovation doesn’t have to mean risk in the satellite industry.”

O3b is scheduled to begin launching its satellite constellation, which now consists of 12 satellites, in groups of four in early 2013. The satellites will be positioned in an unusual equatorial medium Earth orbit to focus Ka-band bandwidth on the less-developed world.

Collar said O3b will be keeping some of the risk and insuring only what is left as a way to make underwriters more comfortable with the constellation. He said the constellation would need to lose three satellites to in-orbit failures before O3b’s insurance policy would permit a claim to be paid.

“That makes this a much fairer deal for all of the stakeholders involved,” Collar said, referring to O3b’s owners and the system’s insurers. “We have effectively bought into the risk ourselves, so we are not looking to insure everything.”

Collar said O3b has taken a close look at the reaction-wheel problem that has affected the second-generation Globalstar mobile communications constellation and concluded that O3b will not be affected by the problem. O3b and Globalstar are being built by prime contractor Thales Alenia Space using similar satellite platforms.