The European S-band service provider Solaris Mobile has re-confirmed that it is going forward with plans for a new payload, and that its joint shareholders SES and Eutelsat have confirmed their support to move forward with the procurement.
Solaris CEO…
The European S-band service provider Solaris Mobile has re-confirmed that it is going forward with plans for a new payload, and that its joint shareholders SES and Eutelsat have confirmed their support to move forward with the procurement.
Solaris CEO Steve Maine told SatelliteFinance: “We’re moving towards placing a contract for a new satellite. I won’t define it in terms of weeks or months, but we’re making solid progress.”
Although Maine would not specify a definitive timeframe, he did say that he anticipated that the procurement would go ahead by the end of Q3 2010.
Solaris’ first S-Band payload suffered a malfunction soon after its launch on Eutelsat’s W2A satellite in April 2009. The satellite retained a limited amount of capacity that Solaris has utilised to offer reduced services, including a mobile broadcast network in France.
According to Maine, this capacity has been immensely beneficial towards Solaris meeting the milestones laid down by the European Commission for the utilisation of the 15 GHz S-Band capacity it was allocated back in 2008.
Furthermore, Solaris would always have needed to launch a second payload in order to satisfy the coverage commitments it made to the Commission.
Maine said: “Our view, and this has been accepted by the Commission, is that we’ve met the early stage commitments we’ve made under the spectrum process. We will obviously need to accelerate the procurement of the second satellite, which we always needed anyway, to make sure that we can meet the remaining commitments we’ve made.
“So, I don’t think we’re that far off-track, even though we have a severely damaged satellite.”
There has still been no final decision made as to what form the new payload will take, but Maine said that there was nothing to suggest it would be a like-for-like duplication of the first one.
“We can’t just take specs we had last time and say we’ll have another of those,” he said. “That was a piggy-back payload – we have other options to look at this time, including stand-alone satellites. We’ve got timescale issues to think about, in terms of commitments we’ve made to the Commission to extend the coverage we can achieve with our existing payload and of course satellite technology’s moved on as well.”
Maine said that a stand-alone satellite was still an option despite the fact that it would likely be more expensive than the first S-Band payload, meaning that the insurance return on W2A would not wholly cover the cost of the new spacecraft.
Any additional financing for a new satellite will be taken out through Solaris Mobile itself. The arrangement for the W2A satellite was that the two shareholders invested the necessary capital in Solaris, and Solaris subsequently took out a contract with Eutelsat for ownership of the S-Band payload.
“We envisage that the contract for the next piece of space segment, however it’s designed and procured, will be with Solaris Mobile and the money will come from us, with the money coming to Solaris Mobile from our shareholders,” said Maine.
The Solaris CEO did not rule out the possibility of Solaris seeking debt financing or export credit backing to fund its second payload.
Solaris widens service range
Solaris made a commitment to setting up three service networks by the end of the year. The first, a Paris-based mobile broadcast network operated in partnership with Towercast and Alcatel-Lucent, has just been extended to cover Rennes and Nancy.
Solaris has been in discussions with other member states about being granted operating licences, and will make an announcement on that over the next month.
This network is developed enough that last month Solaris was able to offer a multi-channel service offer to a group of French broadcasters.
We believe we could support, on a fully commercial basis, the delivery of long-term service in France using this hybrid network,” said Maine.
However, the Solaris boss acknowledged that across Europe the appetite for streamed mobile TV is limited. Solaris has noted there is some interest in France but very little anywhere else in the continent.
This is not necessarily a major blow for the company, as the two other service networks it plans to roll out reflect the range of services it can provide, many of which are likely to be much more lucrative than mobile TV.
These two networks are centred on satellite radio and a hybrid broadcast/interactive broadband application respectively.
Maine said: “The next one will be for satellite radio services delivered to cars, a Sirius XM-like service which will be established initially in one country then made available for most of that European coverage area and will be up and running by the end of this year. We have a service provider and Complimentary Ground Component (CGC) partners for that.”
This service will be accessible via satellite across whole of Europe. A number of countries will have service delivery infrastructure in place and there will be CGC available in at least one country by the end of the year.
Maine would not divulge the identity of the service provider Solaris has partnered with for the delivery of satellite radio, but said it was a company that can facilitate the delivery of content and the necessary vehicle technology. This company is one that has had ambitions in this sector for some time.
In speculating as to this partner’s identity, the two parties that leap first to mind are Ondas Media and Liberty Satellite Radio, both of which have long-held designs on launching satellite radio in Europe.
The third network is still in the early stage of planning. Maine was keen to point out that it has a lot of potential for public sector business. He cited the TETRA networks that many European countries use for their emergency services as something that could be augmented by Solaris coverage.
“We’ve found a lot of strong interest from operators of those networks to offer any data capability, let alone high-speed data,” he said. “Existing TETRA networks are pretty well limited to voice.”
Solaris has also invested in a number of contracts “in the low single-digit millions” in order to develop its terrestrial capability. These include deals with the Italian antenna manufacturer Calearo and the French chipset developer DiBcom.
In order to work around the current lack of S-Band capable handsets, Solaris has partnered with the Finnish wireless solutions provider Elektrobit to develop a pocket gateway, a device that effectively generates a mobile S-band hub.
The malfunction of the W2A payload caused Solaris to redraw its revenue profile across the board. With the introduction of its new networks this year, which display the range of services it can offer, it is now in a position to set new revenue expectations.
Steve Maine sees these expectations as “not too significant to start with, but growing steadily.”
“When you start to think about the real scale opportunities for the company, they will only kick in when we have our next satellite in place” he said. “Even if we place the contract for the new payload tomorrow ,it wouldn’t be available for 36 months, unless we came up with some non-standard procurement process.
“On those circumstances we will plan for a step up in our revenue potential to kick in from around 2013 onwards.”
The lack of a clearly defined market for S-Band applications in Europe has led to speculation as to how far SES will pursue this endeavour. The two companies have not committed any further funding to Solaris since start-up, although in fairness their original intent was to inject only as much capital as was necessary to sustain the business until it becomes cash flow positive.
Maine insists that the two shareholders continue to be very supportive. “I’m full of admiration for my shareholders,” he said. Referring to their initial founding of Solaris, he stated: “Given what they did when they did it I think it was a very bold step.”
The relative inaction of Inmarsat, the other holder of European S-Band spectrum, has also contributed to doubts over the potential for applications in this frequency.
Inmarsat was awarded an equivalent amount of spectrum along with Solaris in May 2008 but has yet to make any move towards developing a service.
Its provisional plan is based on a project named EuropaSat, but Inmarsat has stated it will not move forward unless investment partners can be found and certain licensing hurdles overcome.
“Inmarsat’s position does not make dealing with the Commission and member states any easier,” said Maine. “If both of us were running at this full tilt together, those parties would be saying: ‘obviously this is a good thing.’
“If only one does so, it makes them think ‘did we do this right?’ They listen to the other guys talking about the financial difficulties in bringing the spectrum into play, but those issues were not raised in the original application.”
