Satellite broadband company OneWeb and French satellite operator Eutelsat, which is already an investor in the company, have proposed a $3 billion-plus merger that will help OneWeb better compete with Elon Musk’s Starlink in the satellite broadband space.

The companies are branding the deal as “creating a genuine global leader in satellite connectivity, future-proofing the company and the U.K.’s asset in a highly competitive market where there is considerable consolidation.”

The deal is subject to regulatory approval and includes both U.S. and European licenses.

They suggested the urge to merge was critical to their future success. “The space industry is moving towards consolidation, and we have acted to ensure we have the right scale, funding and business proposition to enhance our long-term future,” the companies said. “We are guaranteeing the development of our Gen2 satellite network and our ability to go head-to-head with the biggest players across new markets, working with customers and governments in new geographies.”

The all-stock transaction would see shareholders of both companies holding 50% of the newly combined operators under the Eutelsat name.

Eutelsat said it will provide funding to expand OneWeb's low Earth orbit (LEO) constellation of broadband satellites.

Eutelsat initially invested in OneWeb in April 2021. 

The Federal Communications Commission approved OneWeb’s satellite broadband service in 2017, one of several such companies, including SpaceX’s Starlink service, that the FCC hopes will provide competition to terrestrial broadband operators.

OneWeb filed for bankruptcy in March 2020 but reorganized later in the year with help from the British government, which took a 33% stake. ■

Eutelsat, one of the satellite operators using the C-Band to deliver network programming to broadcasters and cable operators, has told the FCC that it should limit any payments to the U.S. treasury from sales of the spectrum for 5G, whether the commission does so via a market-based approach or an FCC auction, to make sure there is enough to cover transition costs for satellite operators and their broadcast and cable clients. 

Eutelsat was formerly a member of the C-Band Alliance, comprising the major satellite operators in the band, but split off to make its individual case, though it might return under the right circumstances.

In meetings with FCC officials, according to a document filed with the FCC, Julie Burguburu, group general counsel, and Wladimir Bocquet, director of regulatory affairs, spectrum management and policy, for Eutelsat said the company supported the CBA proposal of a market-based reallocation rather than FCC auction, and is OK with CBA overseeing that free-market process. As expected, it also signaled it is willing for 300 MHz of spectrum to be reclaimed, a third again more than the CBA proposal had indicated, though CBA is likely amenable to giving up more.

Related: C-Band Constituents Jockey As FCC Saddles Up for Decision 

They also wanted to make sure the FCC had a sense of all the satellite operator and client costs and expenses--they, not surprisingly, want the FCC to use a broad definition of reimbursable costs--should be covered before there is any money handed over to the treasury as part of the transactions, with limits on that Treasury payout so satellite operators got more money. 

They said reclaiming any of the band for 5G "would constitute a fundamental change to satellite operator authorizations because it would render useless satellite transponders using reallocated frequencies to provide service and would result in a deprivation of substantial investment in satellites and transponders." 

Eutelsat execs said that whatever the FCC does--FCC Chairman Ajit Pai has signaled a decision by this fall--it "should provide all satellite industry stakeholders with appropriate compensation and sufficient incentives to facilitate a rapid, consensus-driven transition of this spectrum and minimize the risk of litigation and delay." 

That "litigation" reference is not by accident. One of the concerns of legislators at a spectrum oversight hearing last week was that the litigation risks of a free-market vs. FCC auction approach to reallocating spectrum were a real concern. CBA has argued that free market negotiations between satellite carriers and wireless carriers is the fastest way to get the spectrum to 5G market, but not, said some legislators, if it is tied up in endless court challenges. Some argue that the FCC is not authorized to allow those free-market deals. 

Another likely key to any FCC C-Band clearing plan is providing some of the proceeds to the Treasury, since the auction route could mean tens of billions for the government coffers. 

Eutelsat concedes that, but said if the FCC does so, satellite operator customers--the cable operators and broadcasters maintaining earth stations to receive the network feeds, should first get money for the costs of equipment modification or replacement and additional payments to "provide sufficient additional compensation to incentivize completing the transition quickly and cooperatively." 

Then if there is any left over, the government should only get half that, with the other half available to compensate satellite operators--like Eutelsat--to cover things like "satellite depreciation costs, capital return, and reasonable expectations of future earnings" they are foregoing by allowing some of their spectrum to be reclaimed.

After shining a light on the management structure for its new U.S. satellite TV service that quietly soft-launched earlier this year, Orby TV Friday released more details regarding its technical execution.

The company is teaming with Eutelsat Americas for capacity on the Eutelsat 117 West A satellite. Outlining the arrangement at the IBC Show in Amsterdam, the companies are referring to their deal as a “multi-year, multi-transponder” agreement.

Related: Start-up Orby TV Beams into U.S. Satellite TV Biz with Pre-Pay Play

Speaking to Light Reading, Orby TV CEO Michael Thornton said the company is launching the new pre-paid, $40-a-month service largely off existing third-party spectrum and delivery platforms. For set-top receivers, the company has contacted Kaon to deliver boxes that receive both satellite and over-the-air signals.

Burbank, California-based Orby TV is delivering a base package of around 44 basic cable channels, which includes the big WarnerMedia, Viacom, AMC Networks and Discovery Networks entertainment-themed channels, but little in the way of live sports outside of, say, TNT. Local broadcast stations are delivered via OTA, eliminating retrans considerations from the price point.

The U.S. satellite business has, of course, been in free-fall, with AT&T warning investors yesterday to expect even more DirecTV subscriber attribution in its upcoming Q3 report. This warning came two days after a hedge fund with $3.2 billion worth of skin in AT&T’s game demanded that the telecom sell DirecTV.

For its part, Orby TV believes that satellite remains a reliable, cost-effective way to deliver pay TV, particularly in rural areas with less access to broadband. And it believes it can undercut DirecTV and Dish Network in this market.

“This groundbreaking deal showcases the important role satellite continues to play in TV distribution, even in well-established markets. We look forward to supporting Orby TV as their innovative business and offerings continue to grow,” said Mike Antonovich, CEO of Eutelsat Americas, in Friday’s IBC announcement. 

Eutelsat said it’s going with Thales Alenia Space on a new high-capacity broadband satellite that replaces a joint investment Eutelsat had with Viasat for a satellite that was to cover Europe, Africa and the Middle East.  

The new order is for a next-gen satellite system called Konnect VHTS (Very High Throughput Satellite) that will deliver fixed broadband and in-flight connectivity but isn’t slated to enter service until 2021. The new 6.3 ton satellite will support Ka-band capacity of 500 Gbps, they said.  

RELATED: Broadband’s Space Race Heats Up  

Thales is also on board to develop a satellite and ground segment to support the new satellite.  

Tied in, the project will come with a multi-year distribution commitment from Orange and Thales, including a retail partnership with Orange for Europe’s fixed broadband market, and one with Thales that’s focused on the government services market.  

The new agreement replaces a joint investment with Viasat for a ViaSat-3 satellite for that portion of the world. Eutelsat noted that its investment in Konnect VHTS is covered by its capex plan that averages €420 million (US$514.71 million) per annum.  

ViaSat, which has launched services on its new ViaSat-2 satellite, has already started the construction phase on a new system of three satellites (collectively referred to as ViaSat-3) that will give the company global coverage and access to more than 1 Tbps of network capacity per satellite. Under that plan, the first ViaSat-3 satellite is slated for a 2020 launch and to enhance coverage in the Americas, with a second one, for the EMEA region, to be launched about six months later. A third is planned for coverage in the Asia Pacific region.  

RELATED: Viasat Launches 100 Mbps ‘Platinum’ Tier with Unlimited Data 

In a statement, Viasat president and COO Rick Baldridge confirmed that it will not be moving forward with Eutelsat on a deal for use of the ViaSat-3 satellite, citing Eutelsat’s “decision to pursue a local market alternative.”

“As we commented previously, negotiations on the ViaSat-3 deal were highly complex,” Baldridge added. “While we had hoped to reach an agreement on new capacity over Europe, Middle East and Africa (EMEA), we were never able to get over some of the fundamental principles. “  

Viasat, he said, “remains excited about its ViaSat-3 program for EMEA, which is well underway on track,” adding that the company believes there’s “significant interest in the program from prospective regional partners.”  

He added that the news involving ViaSat-3 has “no direct impact on existing contracts,” as the joint venture, which has been in operation for more than a year, will continue to be governed under the existing agreements. Additionally, Viasat’s joint ownership of the KA-SAT satellite is currently serving Viasat’s commercial aviation and government customers as well as direct-to-home residential subscribers throughout Europe.  

Baldridge also noted that there was no binding agreement with Eutelsat for the ViaSat-3 EMEA satellite, and that Viasat’s capital plan is not depending on Eutelsat’s participation to proceed with the ViaSat-3 program.  

Viasat shares dropped $3.29 (4.91%) Thursday, closing at $63.75 each.   

Eutelsat Communications said it has tapped Tyvak International to build a low earth orbit (LEO) satellite that’s designed to support Internet of Things-focused apps and services.

The resulting Eutelsat LEO for Objects, or ELO (not to be confused with this ELO) service, will be used to assess the performance of LEO satellites in providing narrowband connectivity.

Eutelsat said it will also work with Sigfox, which runs a global narrowband network dedicated to IoT.  Part of that work will include the analysis of spectrum used by the satellite in ISM Industrial, Scientific and Medical) frequency bands. ELO will also test connectivity in other bands.

Eutelsat said low earth orbit is well-suited for narrowband connectivity for IoT, noting that the satellite will be located on a sun-synchronous orbit at an altitude of between 500 km to 600 km.

RELATED: Broadband's Space Race Heats Up

Eutelsat expects ELO to launch in 2019 and backhaul information from objects located in areas that are not served by terrestrial networks and to offer a redundancy for existing terrestrial network coverage. The plan is also for ELO to collect data twice a day from IoT objects like connected vehicles, with data downloaded to a ground station in Svalbard, a Norwegian archipelago in the Arctic Ocean, for collection and analysis.

“With the expansion of the Internet of Things, new services are being developed in a wide range of sectors including smart cities, the mining industry, agriculture and logistics,” Jean-Hubert Lenotte, Eutelsat’s chief strategy officer, said in a statement.

Dish Network is also getting a fix on narrowband IoT, announcing last month that it will spend $1 billion on the first phase of such a wireless buildout using licensed spectrum.