Loral Urges U.S. To Block Thales Alenia Use of Chinese Launcher

Satellite manufacturer Space Systems/Loral is asking the U.S. government to block a competitor — Thales Alenia Space — from offering China's Long March rocket in commercial competitions because China's low-priced launch vehicles give the French-Italian company a competitive advantage, Space Systems/Loral Chief Executive Patrick DeWitt said Feb. 27.

DeWitt said Space Systems/Loral, based in Palo Alto, Calif., is lobbying the U.S. Congress, arguing that Thales Alenia's parent company does "billions of dollars" of business with the U.S. government and should not be allowed to be both a U.S. government customer and a partner with China in commercial satellite competitions.

"We want our senators and congressmen to know: You're buying billions of dollars [of products] from a company that is a violator of U.S. policy," DeWitt said during a presentation here at the Satellite 2008 conference. "China can offer rockets that are two-thirds the price" of competing vehicles. "That does give us a major competitive disadvantage. We want a level playing field."

The U.S. government, protesting alleged Chinese missile-technology proliferation, since the late 1990s has barred the export of U.S. satellites and most satellite components to China, even if the hardware is sent to China embedded in a completed satellite designed to be launched by a Chinese rocket.

To win business with China and other customers, Thales Alenia Space has developed a commercial satellite product that does not use U.S. parts that are subject to U.S. export controls, which consistently have been used to block the export of U.S.-built satellites and satellite parts for launch aboard China's Long March rocket. In 2007, Thales Alenia Space teamed with China's launch services company to win a bid for a commercial telecommunications satellite from an Indonesian satellite-fleet operator, besting a competing offer by Loral and Europe's Arianespace launch consortium.

Some industry officials believe China ultimately will be a major player in the commercial satellite telecommunications market. China already has begun offering its own satellite design on the export market. DeWitt said he, too, believes that China's rockets one day will be permitted to launch U.S. satellites.

The world's two largest commercial satellite-fleet operators, SES of Luxembourg and Intelsat of Bermuda and Washington, both have said they would like to have the option of using Chinese rockets as a way of diversifying their supply base of launch service providers. Both companies faced delays in 2007 following the failures of two of the world's three principal commercial lines of rockets.

In the meantime, all U.S. satellite builders, and Astrium Satellites, the other major European satellite builder, are denied the use of Chinese vehicles because the satellites they build have U.S. components.

Thales Alenia Space Chief Executive Pascale Sourisse said the company has informed U.S. government authorities about what it is doing, and is violating no U.S. or European laws.

"We are not promoting one launcher," Sourisse said. "We are inviting our customers to select among a range of launchers. We are a satellite system supplier and we are not specifically interested in one launcher more than another one."

Thales Group reported doing $1.3 billion in U.S. government business in 2007, mainly in contracts with the U.S. Defense Department. Loral and Evry, France-based Arianespace want the U.S. government to use its leverage with Thales to stop the company from using Chinese rockets.

Orbital Sciences Corp. of Dulles, Va., regularly competes with Thales Alenia Space but is not overly concerned with the European company's Chinese connection, said Christopher Richmond, Orbital's senior vice president for global communications.

"Our satellites are too small" to be launched by Chinese rockets, Richmond said during the meeting.

DeWitt agreed that Space Systems/Loral, in approaching U.S. congressional and government authorities about the Chinese rocket, had two possible lines of attack: that the ban on the use of the Long March vehicle should be lifted for all, or that Thales Alenia Space's access to the rocket should be stopped. "I have taken the second alternative," DeWitt said.