The law, the facts and the table in Brussels

TerreStar-2

The EchoStar-21 satellite, formerly called TerreStar-2, is scheduled for launch in October and will be operated under a European Commission license. Credit: SSL

An old lawyers’ maxim: When the law is against you, argue the facts. When the facts are against you, argue the law. And when both the law and the facts are against you, pound the table.

The facts:

It is all but certain that Inmarsat will miss the December deadline set by the European Commission to bring into service its S-band satellite to offer mobile communications in Europe, which Inmarsat plans as part of a hybrid satellite-terrestrial European Aviation Network.

Inmarsat says the satellite is ready, but its SpaceX Falcon 9 launcher is not. Inmarsat hopes for a launch in the first half of 2017. The company has spent the time and money needed to start building a network of ground towers throughout the European Union, and to secure mobile satellite services and ground-infrastructure licenses in each of the 28 EU nations.

The other license holder, EchoStar, may miss the December deadline as well. EchoStar’s International Launch Services Proton launch has slipped to October as Proton’s builder examines an underperformance on a previous flight.

EchoStar has committed capital, notably with a launch contract, and says it will meet the requirements of the European Commission’s license. Maybe so, but EchoStar is likely to need two months of in-orbit testing before starting service, putting it right at the deadline, and maybe over it.

Now the law:

The Commission’s license is clear about the deadline, which has already been extended several times. Individual governments have the legal authority to revoke the licenses for the latest deadline misses and repurpose the S-band spectrum. Some may view this as a revenue opportunity if the spectrum is auctioned to terrestrial mobile network operators.

The Commission’s decision to jump into the business of assigning spectrum and determining license criteria was novel when it was announced. The process has not gone well.

Seeking at least two bids, the Commission ultimately could do no better than to accept a joint proposal by two of the best-capitalized satellite fleet operators, SES and Eutelsat. The Commission then set about looking for a second bidder and ultimately found Inmarsat.

Inmarsat, a publicly traded company, has been clear to its investors from the start that, deadlines or not, it would not commit substantial resources to the S-band mobile project without partners and a clear business case.

That accounted for some of the delays. The SES-Eutelsat venture, Solaris Mobile, was crippled from the outset when the satellite payload it launched was found to have a defective antenna that made it impossible to fulfill its license’s coverage and power requirements. EchoStar purchased Solaris for a pittance.

Inmarsat ultimately assembled a business case, securing fleet operator Arabsat of Saudi Arabia as a condosat partner to divide satellite assembly and launch costs, and Deutsche Telekom as a partner for the network’s ground infrastructure.

Those with long memories will recall that U.S. regulators have also struggled to ensure an all-territory, disaster-resistant mobile satellite S-band service. Both U.S. licensees ended up in bankruptcy.

Given the verifiable investment made by EchoStar and Inmarsat, a move by the Commission to impose stiff financial penalties on the licensees for being late would be unwise. Neither has control of its launch schedule.

Any attempt by individual EU governments to exploit the Commission’s current weakness by withdrawing the spectrum would be short sighted, to say the least. If any government attempts to do so, there are many tables in Brussels that should be pounded.

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SSL

The EchoStar-21 satellite, formerly called TerreStar-2, is scheduled for launch in October and will be operated under a European Commission license.