SES Global Considers Entering Mobile Services Market

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SES Global has begun a broad review of a future mobile satellite-services strategy that the company’s top executive said could include anything from an investment in Inmarsat Ltd. to an S-band play to take advantage of U.S. regulatory approval of satellite-aided ground-based communications networks.

In a wide-ranging assessment of Luxembourg-based SES Global’s future strategy here March 23 during the Satellite 2005 conference, Romain Bausch, chairman of the satellite-fleet operator, said he is considering an entry into the increasingly dynamic mobile-services sector. Nothing has been decided, he said.

The recent decision by the U.S. Federal Communications Commission (FCC) to permit ground-based signal amplifiers to augment mobile satellite services has whetted SES’s appetite, Bausch said. Mobile Satellite Ventures of Reston, Va., which currently operates two satellites for mobile services in the United States and Canada, plans to develop a second-generation satellite system, called TerraStar, to be used with the ground-based amplifiers, known as ancillary terrestrial component (ATC ) networks.

Mobile Satellite Ventures has been reviewing TerraStar proposals from EADS Astrium of France, Boeing Satellite Systems International of El Segundo, Calif., and Space Systems/Loral of Palo Alto, Calif. Two TerraStar satellites, featuring large deployable mesh antennas, would cost more than $500 million, according to industry officials.

London-based Inmarsat has said it too plans to take advantage of the FCC ruling to add its own ATC network to be used with its fleet of mobile communications satellites.

Bausch said an investment in Inmarsat, owned by two private-equity investors, is not out of the question. Inmarsat’s current owners, Bausch said, are likely to take the company public with an initial stock offering.

This event, he said, could provide an opening into Inmarsat’s share capital for a company like SES Global.

For Bausch, the new Inmarsat 4 satellites remain a wild card in the mobile satellite services equation because their ultimate potential is unclear. The first Inmarsat 4 was placed into orbit March 11. Its antennas are scheduled for deployment starting the week of March 28.

“What will be interesting to find out is: What exactly are the technical capabilities of the Inmarsat 4?” Bausch said. “What can you offer with these satellites?”

Other companies also are looking at a mobile satellite-services business in the United States. Among them is ICO Global Communications, which has contracted with Space Systems/Loral to perform initial design work on a system that would use one or two large satellites linked with ATCs operating in the 2-gigahertz section of the radio spectrum.

But Mobile Satellite Ventures, Inmarsat and ICO all face questions of how much money their backers are willing to invest in expensive new hardware, including the thousands of ATC nodes that will be needed to provide mobile services in urban areas.

Cash is not an SES Global problem, even after a planned share-repurchase program and an increase in its dividend payment expected to be approved by company shareholders in May.

Bausch also said the success of satellite-delivered radio in the United States should encourage development of a similar system in Europe despite the five separate language basins and shorter driving habits that would complicate such a business.

Alcatel Space of Paris has been studying a European satellite-radio service using L- and S-band frequencies licensed by the French government. Alcatel Space President Pascale Sourisse said here March 23 that the company remains interested in the project but that no operator has been found to aggregate content and funding for it.

A completed satellite owned by WorldSpace Inc. of Washington and originally intended to offer WorldSpace radio service in North America has been in storage in France for several years. Alcatel Space is the prime contractor for WorldSpace’s satellites and ground network. Alcatel and other companies in Europe have raised the possibility that this WorldSpace satellite could be launched to debut a limited satellite-radio service in Europe. Once the business case proves itself, follow-on satellites could be launched for full continental coverage.

Sourisse said this idea still appeals, but noted that the satellite is the property of WorldSpace, which has not decided what to do with it.

Bausch said mobile services are one area of possible expansion for SES Global, which operates a fleet of fixed satellite services satellites for television and data transmissions. “We are looking for specific applications like digital radio,” Bausch said. “Is it using existing frequencies such as those used by Inmarsat, or new frequencies like some of those being considered in the United States?”