WASHINGTON — Hughes Network Systems and Inmarsat are asking the U.S. Federal Communications Commission to amend its C-band auction rules to avoid giving Intelsat and SES an unfair competitive advantage in other spectrum bands and neighboring markets.
In a letter to the FCC released June 29, the companies warned that competitors, particularly Intelsat and SES, could use the FCC’s upcoming C-band auction to subsidize satellite capacity in other bands and in geographies outside the continental United States.
“Under the framework in the [FCC’s Report and Order], a C-band operator might submit for reimbursement costs associated with design, construction, and launch of new satellites operating in bands outside the C-band,” Hughes and Inmarsat wrote. “This is contrary to the stated intention of the commission in the Order, and not a logical outgrowth from any previous proposal in the record.”
Hughes and Inmarsat have no C-band satellites, but the operators are asking the FCC to avoid unintentionally reshaping the commercial satcom market to favor the two largest geostationary satellite fleet operators in the world.
Eutelsat, the world’s third largest geostationary operator, has made similar arguments to the FCC even as it prepares to order a single C-band replacement satellite eligible for reimbursement under the FCC’s auction plans.
The FCC, under the rules governing a spectrum auction set for December, is requiring winning bidders to cover the costs of satellite operators vacating 300 megahertz of the band, an amount estimated to total as much as $5.2 billion for new spacecraft, launches and ground infrastructure that will mainly go to Intelsat and SES.
Hughes and Inmarsat, echoing comments Eutelsat made to the FCC in May, are urging the commission to “take steps to ensure that reimbursement payments are not used to subsidize the cost of deploying new satellite capacity in frequency bands besides C-band, or C-band or other satellite capacity that serves areas outside the contiguous United States.”
Hughes and Inmarsat, like Eutelsat, also want the FCC to “condition the acceptance of reimbursement payments on a commitment that the C-band satellite capacity will be used only to serve the United States throughout its useful life.”
Resistance from Intelsat, SES
Intelsat and SES sent separate letters to the FCC this month claiming that even if a satellite has capacity in other frequencies, operators and manufacturers are well versed in identifying the costs of each and could easily limit reimbursement costs to C-band.
Intelsat has already signed contracts for six satellites, some or all of which will have more than C-band payloads, the company said in a letter released June 29.
“Intelsat has already entered into contractual commitments for the manufacture of several hybrid replacement satellites that are necessary to effectuate an accelerated transition, so abrupt adoption of such a misguided policy at this stage of the relocation framework would be punitive, untimely and unworkable,” the company wrote.
If the FCC stipulates reimbursable satellites carry only C-band payloads, Intelsat wrote, that requirement could nearly double the number of satellites over North America, complicating the use of orbital slots along the geostationary arc.
“Requiring satellite operators to procure and launch two different satellites with different payloads at a single location for operations in different frequency bands to replace a single hybrid satellite would be highly inefficient, more costly and have the potential to delay the overall clearing schedule,” Intelsat wrote.
All four replacement satellites SES recently ordered with the expectation of reimbursement will only carry C-band payloads, according to the company.
However, SES takes issue with the geographic limitations that Eulelsat, Hughes and Inmarsat want the FCC to impose on reimbursement, saying they would prevent it from using its new satellites to cover Alaska, Hawaii and other parts of the U.S. that aren’t part of its contiguous 48 states.
SES and Intelsat described Eutelsat’s conditions for subsidized satellites as “thinly veiled” attempts to complicate cost reimbursement for its competitors.
Intelsat expects to order one more C-band replacement satellite this year, bringing its total to seven satellites. SES plans to order two more, bringing its C-band replacement total to six. Eutelsat, meanwhile, has yet to announce a contract for the single C-band replacement satellite it says it needs to continue serving the U.S. market after the auction.
Telesat and Claro (formerly Embratel Star One) say they can clear their proportionally smaller number of customers from the reassigned spectrum without new satellites.