Solaris Stymied by Antenna

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The S-band antenna aboard Eutelsat’s W2A satellite launched in April is so badly damaged that the firm formed to capitalize on its capability to deliver video and two-way communications to phones and other mobile devices will not be able to offer a commercially viable service, the company’s chief executive said Sept. 10.

Steve Maine, whose Dublin, Ireland-based Solaris Mobile is jointly owned by Europe’s two principal satellite fleet operators, Eutelsat of Paris and SES of Luxembourg, said the best Solaris can hope for is to conduct trials of the mobile satellite service using the antenna while it waits to see how its two shareholders want to proceed.

“There is little we can do with the existing payload that would be sustainable on a commercial basis,” Maine said here during the World Satellite Business Week, organized by Euroconsult. “We will be able to meet the early service and coverage requirements that we committed to, so it is hugely valuable from that perspective. But the payload cannot be used much commercially.”

Solaris is one of two companies granted licenses to deploy S-band mobile satellite services such as video to automobiles, digital radio and satellite-phone service to governments. The other company, Inmarsat of London, has contracted to build a satellite called Europasat but has declined to move forward on the project until it finds co-investors.

Industry officials said because the former enthusiasm over S-band mobile satellite services has disappeared, it is unlikely that Inmarsat or Solaris will develop the business in the near term. Both must now finance satellites or satellite payloads.

Maine said the European Commission, which organized the S-band licensing process, had explicitly ordered that the two bidders not merge. He declined to speculate on whether such a merger — which would give the combined company 30 megahertz of spectrum over Europe — would be permitted given the fact that the market has soured on S-band’s immediate prospects.

Industry officials said the logic of having Europe’s two S-band satellite projects merge is just as strong as having the two U.S. S-band companies — ICO North America, now called DBSD, and TerreStar Networks — form a single company.

DBSD is in Chapter 11 bankruptcy and TerreStar has cash enough to continue operations only through next spring. TerreStar Chief Executive Jeffrey Epstein acknowledged here Sept. 10 the appeal of a merger, but said it was up to TerreStar’s shareholders, including satellite-television provider EchoStar and hedge fund Harbinger, to decide the issue. EchoStar is also a creditor to DBSD, and Harbinger is a major shareholder of Inmarsat.

Industry officials said that if the European Commission refused to accept a Solaris-Europasat merger, the two companies could opt to invest jointly in a single new satellite and then operate competing services.

For the moment, SES and Eutelsat are waiting to receive their combined 130 million euros ($186 million) following their insurance claim filed when it became clear that Solaris’ in-orbit asset was badly damaged. They have not made plans to launch a replacement satellite for Solaris.

SES Chief Executive Romain Bausch told reporters Sept. 8 that the defective antenna, which is equipped with six spot beams, has a beam over Italy that was intended for somewhere else. There are other problems with it as well, he said.

Bausch said the Solaris’ operating license mandates that all 27 European Union nations must be covered by the service by late 2012. He said Solaris will spend the next few months exploring different business models — such as satellite radio — and sounding out potential strategic partners. Bausch said a possible “condo-sat” scheme with Inmarsat is one of the options on the table.

“We are assessing the market opportunity,” Bausch said. “What has changed since October 2006 [when SES and Eutelsat agreed to the joint venture in S-band] is that mobile TV, which was the main application we envisioned for it, since that time has proved to be more of a flop than a success,” Bausch said.