Tag Archive for: C-Band

The most recent satellite required by Intelsat to complete its C-band spectrum clearing and secure almost $5 billion in proceeds is performing well following its launch on August 3rd by a Falcon 9 rocket. Maxar Technologies, the manufacturer of the satellite named Galaxy-37/Horizons-4, reported that the satellite has successfully initiated communication with ground teams and efficiently deployed its solar arrays after separating from the rocket. The launch took place at 1:00 a.m. Eastern from Cape Canaveral Space Force Station in Florida.

It is projected that the chemically powered spacecraft will take approximately three weeks to reach its designated orbital position at 127 degrees West. Jean-Luc Froeliger, Intelsat’s Senior Vice President of Space Systems, revealed that the satellite, weighing five metric tons, is expected to commence operational service by the end of September. This timeline accounts for final health assessments once the satellite reaches its designated geostationary orbit.

The satellite serves two primary purposes. The Galaxy-37 payload operates in C-band and caters to Intelsat’s broadcast clients across the continental United States. Meanwhile, the Horizons-4 payload is a joint venture with Japan’s JSAT International, providing Ku-band connectivity services over the Pacific Ocean and the United States.

Froeliger affirmed that the other six satellites launched by Intelsat within the past ten months, all aimed at transitioning broadcast clients to a narrower section of the C-band spectrum, are now in position and functioning smoothly. This transition facilitates the allocation of more frequencies for terrestrial 5G services across the United States.

With the successful deployment of Galaxy 37, Intelsat is making significant progress towards receiving a total of $4.9 billion from the Federal Communications Commission (FCC) as part of the C-band spectrum clearing process. This progress puts Intelsat on track to vacate the frequencies by December 5th.

In contrast, competitor SES has already completed all the necessary tasks for C-band clearing, aided by the launch of its final two replacement spacecraft by SpaceX in March. SES is expected to receive nearly $4 billion in spectrum-clearing proceeds from the FCC. However, a legal dispute persists between SES and Intelsat regarding the distribution of these funds.

To achieve its C-band clearing strategy, SES acquired a total of six satellites, including a ground spare. The expenses for these replacement satellites and associated costs are being reimbursed by the FCC. The FCC generated over $80 billion through the auctioning of the C-band spectrum to telecommunications companies like Verizon, AT&T, and T-Mobile.

Unlike Intelsat’s previous replacement C-band satellites, Galaxy-37 was launched individually. As a result, SpaceX was able to position the satellite in a high-energy orbit, reducing the amount of fuel it needs to reach its intended orbit.

Jean-Luc Froeliger explained that this unique orbiting position should grant Galaxy-37 an additional three years of operational life compared to the 15-year design life assigned to the other C-band replacement satellites. It’s worth noting that many satellites often continue to function well beyond their initial design life. For instance, Galaxy-13, the satellite that Galaxy-37 is set to replace, was designed for a 15-year life span but has been operational for 20 years.

Notably, Galaxy-13, initially developed by Boeing, marked Intelsat’s first partnership involving a C-band/Ku-band hybrid satellite with JSAT, which contributed a payload named Horizon-1 to the spacecraft.

Additionally, the launch date of Galaxy-37 coincided with the 40th anniversary of Galaxy-1, which was ordered by a company that later merged with Intelsat.

Intelsat employs the Galaxy label for its satellites operating over North America, which primarily cater to media clients. Presently, the company possesses a fleet of over 50 satellites, of which 18 are under the Galaxy brand.

In the span of the last 10 months, Intelsat has successfully launched eight geostationary satellites, including the IS-40e communications satellite launched in April. This achievement is deemed a new milestone in the commercial satellite industry. Notably, the majority of these launches were facilitated by Falcon 9 rockets from SpaceX, highlighting the prominence of SpaceX’s Falcon 9 as a go-to choice for satellite launches.

Jean-Luc Froeliger highlighted that in 1997, Intelsat launched 10 satellites, a feat achieved six years before SpaceX initiated its first launch. However, during that period, Intelsat utilized a broader range of rockets, including Arianespace’s Ariane 4, Lockheed Martin’s Atlas 2, and Russia’s Proton. This historical context emphasizes the evolution of satellite launch technologies and providers over time.

Eutelsat headquarters in Paris, France. Photo: Eutelsat

Eutelsat headquarters in Paris, France. Photo: Eutelsat Eutelsat withdrew from the C-Band Alliance

Eutelsat withdrew from the C-Band Alliance (CBA). The CBA saw major satellite companies’ SES, Intelsat, Eutelsat and Telesat join forces to ensure satellite companies play an active role in the developing 5G ecosystem in North America.

A source at Eutelsat told Via Satellite that the operator was not aligned with other members and the CBA leadership team on certain matters. In this context, leaving the CBA would be the best way to have direct involvement and to represent the interests of Eutelsat and its stakeholders in the C-band process and in the C-band process. We cannot be more specific, the source said.

Eutelsat will continue to support a market-based approach to make a portion of C-band satellite spectrum available for the mobile industry in the framework of the development of 5G. Eutelsat remains committed to protect the quality and reliability of the extensive services provided to U.S. broadcasters, media, and data companies. “We believe that the best approach which to succeed is to take into account and to balance the legitimate interests of all the stakeholders — i.e. the earth-station operators, SSO, customers, content providers, etc.,” Via Satellite’s Eutelsat source said. Eutelsat withdrew from the C-Band Alliance

The CBA responded to Eutelsat’s withdrawal, in an official statement which read: “The CBA remains committed to delivering its expeditious, market-based proposal and the departure of Eutelsat does not impact the CBA’s ability to do so. The remaining members of the CBA, which represent approximately 95 percent of the affected revenues of the US C-band market, are aligned and committed to the process of engaging with the FCC on the proposal of rapidly clearing C-band spectrum to support the deployment of 5G services in the U.S.”

Giles Thorne, a satellite equity analyst at Jefferies said in a research note issued today that  he interprets this latest move as brinkmanship on Eutelsat’s part: “Given the materiality (we include c.€400m / €1.7 per share in our Eutelsat SoTP) and the maturity (the C-band process is now into its 26th month and on the cusp of the ‘fall’ period signalled by the Ajit Pai as to when an Order could be forthcoming) of the C-band process, our instinct is to interpret Eutelsat’s actions as protectionist brinkmanship. This is the second time in the past year we have seen Eutelsat showing such zeal (the first being the creation of its PPP for European Broadbands). The acquiescent language re: ‘taking a direct active part’ suggests that it wants to realize its original goals, but outside the CBA structure, in turn potentially giving it leverage to extract better terms from the CBA,” he said.

Thorne does not expect this to derail the C-band process. He adds, “On the one hand, the forces of fate are far too powerful for Eutelsat’s brinkmanship to disrupt them (i.e. at root, this entire process is about US national interests) but on the other hand, what makes the CBA proposal so politically palatable (and therefore the C-band trade so investable) is that the CBA is the only stakeholder that can clear this critical band quickly and studiously (i.e. while protecting the incumbent use case) because the four CBA operators own the assets and the spectrum and have elected to work voluntarily and in cooperation – with today’s news, that cooperation point is diminished.”

The CBA is an organization that aims to facilitate safely and efficiently the clearing and repurposing of C-band spectrum, speeding U.S. leadership in 5G deployment and innovation. The alliance wants to engage in secondary market-based transactions to expand the use of C-band. This aims to position service providers to deliver 5G services to consumers throughout America, in cities and non-urban areas.

SES offices with antennas. Photo: SES

Berenberg Satellite Equity Analyst Sarah Simon released a comprehensive report on SES and went into detail on how she sees the C-band situation in the United States directly impacting the company’s prospects. While it might be driving the share price right now, Simon takes a more cautious approach when analyzing what might happen. She believes there are multiple reasons, in Berenberg view, as to why the satellite operators are unlikely to walk away with a significant bounty. “Moreover, it will be several years before any monetization is actually realized. The market is currently pricing in around $6.93 (6 euros) per share of value for SES for C-band, on our estimates, which already seems optimistic, in our view,” she added. “While we, therefore, think that there could be some risk to this assumption, until the spectrum repacking is complete, the stock should benefit from the dangling carrot effect, and is likely to be well supported. We reiterate our ‘Hold’ rating, but increase our price target to 23.11 (20 euros).”

Simon brought up a number of pertinent points about the C-band issue and raises a number of questions. She asked, for example, whether the Trump administration would allow a cash windfall to go to Luxembourg-domiciled countries. She also asked what the U.S. Federal Communications Commission (FCC) will charge for mobile spectrum rights (versus satellite rights), and whether the tax will be payable. She also questions how strong the demand will be, given possible industry consolidation and other sources of mid-band spectrum. “We will not have more concrete information until Quarter Two (Q2) 2019, but in the meantime, the C-band spectrum windfall carrot should sustain the shares,” she added.

The political standpoint is an interesting one. Simon said that given President Trump’s general aversion for money to leave America and benefit non-American jurisdictions, she thinks it is politically unlikely that there will be a huge windfall granted to two companies that are Luxembourg-domiciled, a French group, and a Canadian one. “It is not as if SES and Intelsat — the two main beneficiaries — can argue that the proceeds will be reinvested in the U.S. economy: demand for satellite capacity for video in the U.S. is falling, by both companies’ admission, and data is largely delivered using fiber. So, there is not an obvious reinvestment opportunity in the domestic United States. At the very least, we assume U.S. taxes would be levied on any money received by the satellite operators, although Intelsat has huge tax losses so it would likely pay no tax at all,” she said.

She believes it is unlikely that the FCC will forego the opportunity to generate money that can go to the federal deficit. “The FCC’s authority to run auctions is enshrined in a number of budget acts, and the revenue raised from auctions is clearly seen as an important point by the FCC, as indicated in the annual spectrum auction reports submitted by the commission, which confirm that the money raised from spectrum auctions is used for ‘broader government use and deficit reduction’. Given that the U.S. budget deficit is now just under $900 billion and forecast to be $985 billion for fiscal 2019, it seems likely that receipts from spectrum auctions would be welcomed by the U.S. government. We note recent comments by Chairman Pai that ‘the auctions to come will … raise billions of dollars of non-tax revenue for our nation,” she said.

While satellite operators have proposed that 100 Megahertz should be made available in C-band, that is unlikely to be enough for the FCC and wireless players, who will want more. Simon “The FCC is looking for considerably more than this — Commissioner Michael O’Rielly has suggested that 200-300 MHz would be required, while the wireless industry association says that the FCC should free up the bulk of the spectrum, while Ericsson says at least 100MHz per carrier is required, i.e. 400 MHz,” she added. “In this regard, we note that SES management has said that it does not believe it would be possible to re-farm any more than 200 MHz, while Eutelsat has said that going beyond 100MHz simply is not viable. More recently, Intelsat management has noted that, whereas clearly, 100 MHz would not require a major ‘re-architecting of the band,’ relinquishing more capacity would create more difficulties in serving TV broadcasters and other customers.”

It will be interesting to see how this situation plays out despite the fact that Simon views the consortium’s proposal as an attempt to be on the front foot rather than waiting for the FCC to propose potentially more “draconian measures which may come at a financial penalty.” Simon pointed out that it should not be forgotten that prior to this, the question of C-band spectrum, or rather whether the satellite industry should be allowed to keep it all, has been a perennial issue in U.S. telecommunications. She added that mobile operators have been lobbying for shared access to the C-band for years, and in the run-up to WRC-15, she talked of a “palpable nervousness” in the satellite industry that their interests might be sacrificed in favor of the mobile operators — for the C-band spectrum is not owned by the satellite operators, but licensed by the FCC, on finite agreements (many of which expire in the mid-2020s). “At the end of those license periods, it could be possible for the satellite operators to lose all of the C-band spectrum, without any compensation. While it is generally agreed that the C-band spectrum is wanted earlier than this, and that this would not be the optimal approach, the fact that the satellite operators were so worried suggests that the threat of losing those rights in space was very real,” she concluded.