Solaris Mobile Struggles To Overcome Defective Antenna, Meet License Requirements

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PARIS — The company created by Europe’s two biggest satellite fleet operators to establish a business selling satellite links for mobile television, digital radio and emergency services is trying to stitch together a viable business model despite a major anomaly on its satellite’s antenna and a European regulatory regime that is not making its life easier.

Steve Maine, chief executive of Dublin, Ireland-based Solaris Mobile, concedes that, had he been able to predict the obstacles that the startup company would face, he might have decided on another career path.

For now, Maine and a stripped-down Solaris Mobile team are trying to use their satellite’s defective S-band antenna as best they can, with digital radio pilot projects in selected European cities.

The antenna defect on the satellite, which was launched in April 2009, means Solaris cannot provide all the services in the full territory required by its European Commission license.

The license stipulates, among other requirements, that the services cover 60 percent of European Union territory by May 2011. “If we had had a correctly functioning antenna, we could provide services to almost 100 percent coverage,” Maine said.

Solaris’ sponsors, satellite operators Eutelsat of Paris and SES of Luxembourg, have collected an insurance payment of about 130 million euros ($160 million) because of the antenna defect, but have given no sign of a willingness to invest in a replacement capability, especially since what was envisioned as the primary S-band application — mobile TV — is no longer viewed as having near-term potential.

In a June 18 interview, Maine said Solaris has reduced its cash outlays and has sufficient liquidity to survive to early 2011.

The other winner of the European Union’s competition to provide S-band mobile satellite services, Inmarsat of London, has neither an S-band satellite in orbit nor one in construction. Inmarsat officials have made clear that they will not invest in one without partners, who apparently have not been found.

European Commission officials who might have been willing to modify the rules to permit Solaris to survive have been made hesitant by a lawsuit filed by one of the losing S-band license applicants, ICO Global of Reston, Va. ICO is challenging the commission over the way the licenses were awarded.

ICO’s lawsuit is now part of a package of assets held by ICO that include proceeds from a lawsuit against Boeing relating to an ICO satellite constellation that Boeing started to build but never finished.

ICO’s North American arm, DBSD North America, is in Chapter 11 bankruptcy reorganization, and ICO has no other business.

European Commission officials have said ICO’s lawsuit could take many months to resolve. In the meantime, Solaris cannot fully develop because it is not sure it will have an operating license beyond the May 2011 deadline for covering 60 percent of European Union territory, a deadline it cannot meet. With no satellite under construction, Inmarsat too will be unable to meet that deadline.

Similarly, regulators are reluctant to permit the Inmarsat and Solaris Mobile projects to merge while a lawsuit challenging the licensing procedure is ongoing.

A second milestone requirement of the S-band licenses is that the mobile satellite services must cover at least 60 percent of the national territory of each of the European Union’s 27 members by May 2014.

“Even if our antenna had operated as designed, we would have had trouble with this requirement, and we would have been forced to finance a second payload,” Maine said.

Digital radio, emergency communications and mobile broadband are now the three markets that Solaris is looking to develop, if it is given the authorizations from European regulators and if it is able to secure financing. Without a sign from regulators that Solaris will be permitted to operate under new milestone requirements, it will be difficult for the company to raise cash from strategic investors, Maine said. But the effort continues.