Mohammad Omran, an Arabsat board member and also chairman of Thuraya Satellite Telecommunications Co. of Abu Dhabi, said that while the bids from Lockheed Martin Commercial Space Systems and EADS Astrium were close in most other respects, the decisive factor was Arabsat concern about future difficulties related to U.S. technology-export law.
"It was the major reason" for the selection of EADS Astrium ahead of Lockheed Martin for the Arabsat 4A and 4B satellites, Omran said here Oct. 13 during the Telecom World 2003 show, organized by the International Telecommunication Union. "We have seen the U.S. set conditions that are very difficult for us, and this has caused reluctance to work with American manufacturers."
The U.S. regulations governing satellite sales to non-U.S. organizations became part of the International Traffic in Arms regulations following concerns in the U.S. Congress about U.S. satellite builders’ dealings with China. Since then, jurisdiction for the export of satellites and satellite components has been shifted from the U.S. Commerce Department to the U.S. State Department and are considered tantamount to arms exports. Even discussions with potential customers are strictly regulated.
U.S. satellite builders have complained that these rules slow down contract work, deny customers access to critical information and add legal and other costs to business that has no more high-technology content than commercial aircraft avionics or many other readily exportable electronics goods.
But despite warnings from satellite operators in Europe, Asia and Canada that the rules would affect U.S. sales, up to now no telecommunications satellite operator has laid a commercial decision directly at the feet of the export regime.
Ted Gavrilis, president of Lockheed Martin’s satellite manufacturing company, said his company spent two years working on the Arabsat bid and believed in its chances until the last minute. Gavrilis said he had been told by Arabsat that the technology-export regulations played a large part in the 21-nation organization’s decision. "We put everything we had into this bid," Gavrilis said Oct. 12 here.
Omran is well-placed to view the U.S. export regime from multiple angles. As a board member of Arabsat and chairman of Thuraya, he has witnessed how European and U.S. satellite manufacturers react in contract competitions, and how European and American firms react following hardware failures.
Two Arabsat satellites built by Alcatel Space of Paris have suffered major in-orbit defects, and Thuraya’s first satellite, built by Boeing Satellite Systems of El Segundo, Calif., has a solar-array problem that forced Thuraya to speed up its replacement — also a Boeing-built satellite — which was launched in June.
Also fueling Arabsat worries about tying their organization to U.S. technology was the company’s lease of PanAmSat Corp.’s PAS-5 satellite. To secure the use of the satellite at Arabsat’s orbital slot, Arabsat had to guarantee to U.S. authorities that certain governments would not be among the customers, Omran said.
Arabsat’s members include the governments of Libya, Syria and Sudan.
"Do other satellite operators face these restrictions? I don’t think so," Omran said. "This seemed unfair to us. We just want to be treated like any other international satellite operator."
A State Department official said Oct. 17 that the department had a number of discussions with the Arabsat consortium regarding the licensing of U.S. technology for use in the Arabsat satellite and addressed those requirements in a letter signed by Assistant Secretary of State Lincoln Bloomfield.
Arabsat, which was in dire need of new capacity following its satellite failures, agreed to the restrictions. The consortium subsequently leased a satellite from Eutelsat S.A. of Paris to bolster its capacity and now uses both PAS-5 and the Eutelsat satellite.
And during the recent competition for the Arabsat 4A and 4B satellites, U.S. authorities suggested to Arabsat that several Arabsat employees would be barred from access to technical data on the satellites.
"We asked them to tell us if any of them were terrorists or had other problems," Omran said. "But apparently it was just a problem of nationality. People in our satellite control center come from different member nations. We cannot simply dismiss them because of their nationality. That’s not fair. These are professionals and if there were a problem with the satellite in orbit obviously they would have to have a role in dealing with it."
Omran said Arabsat, concerned that it would not have free use of its hardware if it purchased U.S.
spacecraft, asked the U.S. State Department for a letter guaranteeing that Arabsat would receive the same treatment as other non-U.S. satellite operators. Omran said a letter eventually was delivered but that it did not address Arabsat’s concerns.
Omran said the price difference between the Lockheed Martin and Astrium bids was not huge, and that contract awards of this size — industry estimates are that the two satellites combined are worth up to $300 million — are made based on many factors. But the U.S. export situation, he said, is certain to weigh on the minds of any non-U.S. satellite owner as stories mount up about information blackouts, difficulties with insurance policies and other aspects of their business.
For example, he said, satellite operators ordering commercial Earth station antennas face little technology-export difficulties. But if the same contract is part of a satellite procurement, "it can take months to receive the hardware," Omran said.
