WASHINGTON — Intelsat CEO Stephen Spengler defended Intelsat’s joint proposal with Intel for ceeding certain satellite spectrum to the wireless industry for 5G services, telling investors Oct. 26 that the controversial C-band proposition is not intended as a solution for clearing congested airwaves outside the U.S.
In a quarterly earnings call with investors, Spengler said the proposal — one of around 80 now under review at the U.S. Federal Communications Commission — was forged with Intel out of recognition that the U.S. is moving with considerable momentum to repurpose the prized satellite spectrum and shows no sign of changing course.
Consequently, Intelsat sees its compromise as the best way for satellite interests to avoid getting “run over by the 5G train,” as then-FCC Chairman Tom Wheeler put it bluntly last year.
“We view this as a U.S.-specific situation, and a U.S. specific issue to be addressed, and that is how we are pursuing it,” Spengler explained. “We do not believe this is necessarily applicable globally.”
Intelsat’s proposal has so far received mixed responses, with the FCC saying it is of interest, and satellite operators either deferring opinions or expressing concern about the overarching ramifications. That other governments around the world will model their own individual solutions to the C-band conundrum on what the U.S. does is among operator concerns.
Spengler said other countries have more room to expand 4G and 5G networks without taking C-band away from satellite operators. Additionally, C-band plays a larger role in extending telecom networks internationally, compared to in the U.S. where it is primarily used for television content distribution, he said.
Spengler said Intelsat still views itself as a “vigorous defender of C-band globally,” and hasn’t broken ranks with the rest of the satellite industry on opposing simultaneous use of C-band by satellite and terrestrial operators. Such dual use would cause intolerable levels of interference, the satellite industry believes.
“That is the motivation for what we are doing. We think that as this is better understood, it will be appreciated that this is a proactive approach to avoid what could be a very unnattractive situation creating risk and interference into our media customer’s businesses and transmissions,” he said.
Epic revenues top $1 billion, but still growing slow
Discussing Intelsat’s financial performance for July, August and September, Spengler said the operator’s Epic high-throughput satellites have accumulated over $1 billion in customer commitments, though capacity sales on the second such satellite continue to progress slower than anticipated.
Spengler’s mention of Epic’s backlog provided a rare glimpse into the quantity of capacity sales for the U.S. and Luxembourg-based company. Intelsat doesn’t disclose the fill rate on Epic satellites, of which five are now in orbit constituting around 40 percent of the capacity in the company’s entire fleet of roughly 50 geostationary satellites. High-throughput satellites (HTS) use smaller beams and frequency reuse to increase the amount of capacity they can carry compared to traditional wide-beam satellites. Intelsat’s total backlog stood at $7.9 billion as of Sept. 30, down from $8.2 billion at the end of the previous quarter. Epic HTS customers now account for more than an eighth of Intelsat’s backlog.
The rest of Intelsat’s non-Epic fleet has an average fill rate of 78 percent.
Spengler said Epic is growing and gaining customers, but that the slower than desired rate of customer gain for Intelsat-33e continues to stem from mobile network operators with lengthy decision making.
“We don’t see this as a matter of losing business but as a matter of timing going forward,” he said.
Jacques Kerrest, Intelsat’s chief financial officer, said the company has gained $28 million so far from an insurance claim on Intelsat-33, which suffered two propulsion issues — one on the primary thruster to reach orbit and another with its station-keeping system. The company is seeking $78 million in insurance for the defects, which are projected to reduced the satellite’s intended service life by 3.5 years. “We continue to discuss this with the insurers,” he said.
Intelsat reported a net loss of $30.4 million on $538.8 million in third quarter revenue. Due to slow Epic capacity sales, the company anticipates generating hitting the low end of its revenue guidance for the full year, which forecasts between $2.15 billion and $2.18 billion.