Inmarsat Orders Three Ka-band Satellites from Boeing
Inmarsat will buy three Ka-band satellites from Boeing as part of a $1.2 billion investment to develop a global network in the band, the companies said Friday. The new satellites are a major change from Inmarsat’s legacy as an L-band provider and is seen as an effort to take back mobile satellite market share lost in recent years to fixed satellite services operators in the Ku-band, such as Intelsat and SES, said industry executives. The FCC and other countries’ regulators are expected to take on new proceedings to define rules for mobile satellite services in the band, which is largely used by fixed satellite services, said an executive.
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The FCC may need a full proceeding to outline complete rules for mobile satellite services in the Ka-band, as was done in the Ku-band, said the executive. The proceeding would seek input from current users of the band on how Inmarsat’s and potentially others’ use of the band for MSS would affect current licensees, the person said. A change in the rules, if a change is required at all, is not expected to be controversial, said the executive. Similarly, other countries, which have varying degrees of complexity for regulatory processes, may also need to take up efforts to define the rules in the band, said the executive. Ka-band is a “relatively benign environment,” said Rupert Pearce, senior vice president of Inmarsat. The company has already applied for slots for the satellites with ITU and will likely begin discussions with regulatory officials soon on how best to proceed.
The new constellation, expected to begin service in 2014 and called Inmarsat-5 will support a Ka-band global very small aperture terminal service called Global Xpress. The VSAT service will be used to augment the company’s role in mobile service in maritime, energy and government sectors, said Inmarsat. Government, especially the U.S., is expected to be the largest user of the service, said Inmarsat CEO Andrew Sukawaty on a conference call with reporters. Government users are hoped to make up more than 40 percent, the portion of government users that make up the company’s L-band subscribers, said Sukawaty in an interview. There’s also further potential in the aeronautical sector, he said. Inmarsat said it has set a target of $500 million in annual Ka-band revenue five years after the service becomes operational. Cost of the satellites, ground infrastructure, product development, launch services and insurance will cost Inmarsat $1.2 billion over 4.5 years, it said. The company wouldn’t disclose the breakdown of exact costs. Inmarsat is pursuing financing support from the U.S. Export-Import Bank, the company said.
Boeing will build the satellites on its 702 HP platform with 89 Ka-band beams each and the contract gives Inmarsat the option for a fourth and fifth satellite from Boeing, the companies said. The first satellite is scheduled for delivery in 2013 with the other two following in six-month intervals, they said. The satellites will be compatible for launch by Arianespace, Sea Launch and International Launch Services, said Boeing. Inmarsat will choose the launch provider. In a separate agreement, Boeing said it will act as a distribution partner with Inmarsat to provide L- and Ka-band capacity to “key users within the U.S. government.” Boeing has committed to capacity purchases worth more than 10 percent of Inmarsat’s target Ka-band revenues in the first five years after the service becomes operational.
The new Ka-band system will offer Inmarsat increased flexibility in its offerings, said Sukawaty. The new service will allow users much higher data throughput, with speeds up to 50 Mbps to terminals from 20 to 60 centimeters in size, compared to the L-band, which is more reliable in terms of rain attenuation and other interference issues. The Ka-band is also much less crowded than L-band, also increasing throughput ability for Inmarsat. It will continue its L-band business, though putting off investment in replacement L-band satellites into the next decade, Sukawaty said.
Global Xpress will put Inmarsat in more direct competition with FSS operators by offering more bandwidth and smaller terminals, said President Tim Farrar of Telecom, Media and Finance Associates. Inmarsat will also be able to offer cheaper bandwidth than before due to the amount of open bandwidth currently available, he said. Intelsat in particular will look to fend off Inmarsat in this space because it doesn’t have the strength in TV services that the other operators have, he said. The Ka-band systems will be a good way to continue to defend Inmarsat’s business against operators in the Ku-band that have started to go after Inmarsat’s traditional base, including cruise ship and oil rigs. Among the biggest difficulties for the service will be to get ground terminals into the market on time, said Farrar.
The Ka-band system is also a logical next step because further expansion in the L-band wouldn’t allow for the kind of growth Inmarsat is looking for, he said. For instance, the company’s constellation upgrade from Inmarsat-3 to Inmarsat-4 offers significant capacity increase, something another generation of satellites in the L-band would be unlikely to offer, said Farrar.