Satellite giants go to war over European Aviation Network

ViaSat has hijacked rival Inmarsat’s Q4 earnings announcement with an attack on its use of the 2 GHz band for aeronautical, rather than terrestrial, coverage.

This row has been smouldering for a while as Inmarsat was granted a 2 GHz license years ago but, according to ViaSat, just for things like rural and emergency services connectivity. Inmarsat is now using it to set up the European Aviation Network on partnership with DT and ViaSat reckons that’s anticompetitive as that use-case wasn’t on the table when the license was granted.

“ViaSat believes Inmarsat violated Pan-European government authority by seeking to substitute its own judgement for that of the European authorities and, in effect, unilaterally re-write the original license it was granted under the ‘MSS Decision’,” said Rick Baldridge, ViaSat President and COO. “Allowing Inmarsat to keep this valuable spectrum resource for their European Aviation Network terrestrial service results in a massive public subsidy to one company; which gives Inmarsat a natural monopoly with major Pan-European business advantages based on unfair competition.

“ViaSat believes Inmarsat’s illegal actions will do long-term damage to free competition across Europe – especially in the in-flight wifi market. The lack of competition will trickle down to affect consumer wallets; choice and broadband experiences: where an absence of industry competition encourages consumer price gouging and a lack of innovation and technological advancement.

“Currently, ViaSat and others have done all they can to alert the relevant regulators and parties as to what we believe is a misuse of a spectrum license granted to Inmarsat. The intent for the spectrum was to be used for satellite services; however, Inmarsat has used the license to create a terrestrial-based European Aviation Network. We’ve outlined our objections to Ofcom in the UK, and have done the same with the equivalent regulators in Germany and other Member States, after which there are four possible outcomes.

“The European Commission may issue a ruling to allow or deny Inmarsat to use the license in this manner, it may start the process again and reopen the tender process to include other vendors or the final option would be to defer to each individual member state and allow them to rule on the matter, although this would considerably devalue the license; as well as potentially create a ‘swiss cheese’ effect with mixed coverage across the continent.”

Inmarsat, inevitably, sees the situation somewhat differently. Here’s what an Inmarsat told Telecoms.com. “Inmarsat was awarded the spectrum by the EU and, in conjunction with our partner Deutsche Telekom, we are rolling out the European Aviation Network (EAN) to fulfil the mandate we have been given.

“We continue to operate in full compliance of the award granted to us and therefore the EU is fully supportive and all the member states have either issued or are in the process of issuing the relevant licenses, in accordance with the agreed procedure.

“We are on course to launch the EAN service in 2017, following the launch of our European-built EAN satellite on an Arianespace rocket in Q2.” You can see how Inmarsat positions the EAN in the video below.

If Inmarsat is operating within the parameters of the original license award then it’s hard to see where the problem is. However it’s also easy to have sympathy for its competitors if Inmarsat has effectively been granted a monopoly of European in-flight connectivity. What is unclear is how plausible this use was when the license was awarded and whether the circumstances of the award thus need reviewing.

Just to rub Viasat’s nose in it Inmarsat announced today that is has signed up International Airlines Group (IAG), the parent company of Aer Lingus, British Airways, Iberia and Vueling, as the launch partner of the EAN, so momentum definitely seems to be on its side. However the EU doesn’t like monopolies so maybe it will dig up some other spectrum to give Viasat and others a fighting chance.

There’s quite a lot of activity going in in the communications satellite space in general at the moment. ViaSat has successfully closed its European JV with Eutelsat (you have to have ‘sat’ at the end of your name if you’re in this game – them’s the rules), which was presumably created in part to combat the EAN competitive threat, although the official rationale only mentions terrestrial stuff.

And during MWC SoftBank-backed OneWeb announced it was merging with Intelsat and that SoftBank will continue to invest in the combined entity. Both companies seem to be more about rural connectivity, but it seems unlikely that any satellite player will be able to resist getting involved in the potentially lucrative in-flight wifi market.

“We are in the midst of a technological revolution and, provided we receive the necessary cooperation from Intelsat bondholders, we welcome the opportunity to support OneWeb as it creates the foundation for next-generation global internet services anywhere on the planet,” said Masayoshi Son, Chairman and CEO of SoftBank.

“This combination is consistent with SoftBank’s strategy of investing in disruptive, foundational technologies that are building the infrastructure for tomorrow, and this proposal offers a win-win opportunity to accelerate OneWeb’s mission while enhancing the Intelsat balance sheet.”