Ottawa satellite company fights U.S. firm over the same orbit in space

A small Ottawa satellite company is fighting with a giant U.S. satellite broadcaster over access to the rich U.S. market.

Both Ciel Satellite Group of Ottawa and DirecTV Group of El Segundo, California, have big plans for the same orbit path over the Ontario-Manitoba border, the U.S. Midwest and Texas. The path is desirable because it can serve the whole continent.

In a war of words at the U.S. Federal Communications Commission, the two companies are accusing each other of threatening effective operation of broadcast satellites and undermining global industry rules. But behind the rhetoric is the deadly serious business of building investor confidence to finance satellites that cost $300 million each to construct, insure and launch.

Ciel is working with an undisclosed manufacturer on the Ciel 6 satellite, scheduled for launch in 2012.
DirecTV got FCC approval in July to launch the RB-2A satellite. Now called DirecTV-12, it was shipped earlier this month to Kazakhstan for launch in the near future.
Combined with two other DirecTV satellites, it will deliver 200 high-definition channels. The FCC said the new satellite “will stimulate competition in the United States and provide consumers more alternatives in choosing communication services.” The FCC must consider major issues in the dispute.

In theory, the two satellites can co-exist in the same orbit path. But that would involve technology compromises to avoid signal interference. The changes could limit the markets each seeks to tap.

With consumers and business demanding more bandwidth-hungry high-definition television, video and Internet services, the battle for spectrum and satellites to support the market is growing.

DirecTV is the biggest U.S. satellite direct-to-home service company with 18 million subscribers, plus another six million in Latin America.

It said recently that two-thirds of new subscribers signed up for high-definition TV and related hardware services in the September quarter, the highest level in company history.
DirecTV generated $5.47 billion U.S. in revenues in the September quarter, 10 per cent more than a year earlier.
Ciel has only one satellite in service but it has some powerful allies. Its investors include Borealis, an arm of the giant Ontario Municipal Employees Retirement System (OMERS), and SES Americom, one of the world’s biggest satellite operators.

It won its first Canadian licence in 2004 and launched its first satellite last year to serve an orbital slot off the coast of B.C. It is developing business plans for six more slots awarded by the federal government last year.

It also has a big customer in DISH Network, which is a direct competitor to Direct TV. Calian Technologies manages the Ciel satellite under a long-term contract.

Bernie Haughian, vice-president of market development at Ciel, said Friday that a decision by the FCC is expected in the first quarter of the new year. “These are exciting times for our company and our industry.” He said Ciel believes the FCC will make a decision that respects international satellite rules. It also believes the Canadian government is watching the debate closely.

But there appears little room for compromise in the public positions of the two sides.
DirecTV declined comment Friday.
In a letter to the FCC, DirecTV lawyer William Wiltshire Nov. 12 accused Ciel of getting a Canadian licence with the intention of serving only Canada, but now seeking a much bigger market.

It said the Ciel proposals will generate “regulatory confusion and uncertainty (that) would wreak havoc with an industry that depends upon long-range planning and investments of millions of dollars.” Ciel said that it has licence rights to Canada, the U.S., Mexico, Central and South American and Caribbean markets from the International Telecommunications Union (ITU) and the Canadian government.

It said the DirecTV has to recognize ITU rules based on the principle of “first come, first served” and ensure its satellite does not interfere with the Ciel communication traffic.
But DirecTV said a ITU licence “does not permit Ciel simply to ‘rain’ harmful interference throughout areas where it is not authorized to provide service.” Ciel vice-president Scott Gibson replied that DirecTV “is wrong on the facts and wrong on the law” and is engaging “in scare tactics.” As the arguments continue, Ciel’s crosstown rival in Ottawa, Telesat, is busily launching satellites to service Canadian and International customers. Nimiq 4 is serving Bell TV customers, Nimiq 5 will serve Echostar/DISH Network customers and a planned Nimiq 6 is aimed at more Bell services.

While other parts of the telecommunication industry were hurt by the recession, the satellite segment proved surprisingly resilient. When two new Telesat satellites went into service earlier this year, revenues jumped 25 per cent from a year ago.

Recently, it predicted that the launch of Nimiq 6 in 2011 will generate 30 per cent to 60 per cent more business than older, smaller satellites it replaces.

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