PARIS — Alcatel Space signed a $145 million contract June 11 to build a large direct-broadcast television satellite for a Chinese customer — a deal that represents just the latest example of a European company profiting from U.S. government technology-transfer restrictions.
Signed in the presence of Chinese Vice Premier Zeng Peiyan and French Prime Minister Jean-Pierre Raffarin, the contract with China Satellite Communications Corp. calls for Alcatel Space to deliver the Chinasat 9 spacecraft in late 2006 for launch on a Chinese Long March rocket. The satellite, expected to weigh 4,500 kilograms at launch, is an Alcatel Spacebus 4000 C1 platform that will carry 18 36-megahertz Ku-band transponders and four 54-megahertz Ku-band transponders.
Alcatel spokeswoman Sandrine Bielecki said June 11 that the contract includes no options for further satellites. Bielecki said Alcatel is responsible for the in-orbit delivery of Chinasat 9 but that Chinasat is financing the launch separately.
Since 1998, U.S. government restrictions on satellite sales to China have tightened into a de facto refusal by the U.S. government to permit satellites with U.S. components from delivering to Chinese organizations if the satellites are to be launched on a Chinese Long March rocket.
These restrictions made it all but impossible for any U.S. contractor to bid on the Chinasat contract. The same restrictions would have made it difficult for Alcatel Space’s chief European competitor, EADS Astrium, to bid. Astrium uses U.S. components in its satellites.
In an unrelated development, Alcatel Space is also expected to announce June 14 that it has won a contract to provide PanAmSat Corp. with a telecommunications satellite called Galaxy 17 in 2006 to bolster PanAmSat’s in-orbit fleet.
Alcatel Space, whose corporate parent, Alcatel, has a strong telecommunications presence in China, has made it company policy since around 2002 to be able to offer satellites that are "ITAR-free," meaning they contain no components subject to the U.S. International Traffic in Arms regulations.
The China Satellite Communication Corp., Chinasat, of Beijing has already paid dearly to learn about U.S. State Department restrictions on satellite exports in general, and to China in particular.
Loral Space and Communications of New York has been trying for nearly six years to receive U.S. government approval to deliver the Chinasat 8 satellite, without success. The satellite, which was completed in December 1998, has been in storage at Loral’s Palo Alto, Calif., satellite plant ever since.
Loral, in Chapter 11 bankruptcy proceedings since mid-2003, recently agreed with Chinasat and with the China Great Wall Industry Corp. of Beijing — China's launch services supplier — to free Loral from a contract to launch Chinasat 8 aboard a Long March rocket.
Loral’s proposal will permit Chinasat to apply a previous launch deposit for Chinasat 8 to another satellite. Alcatel Space’s Chinasat 9 is the most likely candidate.
In statements to the New York bankruptcy court handling Loral’s Chapter 11 proceedings, Loral said it hopes the removal of a Chinese rocket from the equation will make it easier to obtain an export license for Chinasat 8.
The U.S. State Department’s refusal to permit the export of Chinasat 8 "has been caused in part by [Loral’s] use of a Chinese launch agency," Loral told the court. The new arrangement "will allow the approval process to proceed more readily," Loral said.
A court hearing on Loral’s proposal on Chinasat 8 is scheduled for June 23.
Loral is also asking the bankruptcy court to approve a $105 million contract with PanAmSat to provide the Galaxy 16 satellite for launch in late 2005.
PanAmSat, as part of an unusual deal between Loral and PanAmSat’s former owner, DirecTV Group, paid Loral a $25 million deposit for the satellite to assure prompt delivery by Loral of the DirecTV 7S satellite earlier this year. That satellite has since been launched.
DirecTV Group also paid nonrefundable $25 million deposits for each of the DirecTV satellites to be built by Loral, the DirecTV 8 and DirecTV 9S.
Galaxy 16 is expected to carry 48 C- and Ku-band transponders. The contract’s terms permit PanAmSat to order an identical satellite, for the same price, up to 12 months following the launch of Galaxy 16.
The contract also permits PanAmSat to terminate the Galaxy 16 work up to six months after the contract becomes effective. While it was signed in late April, the contract does not enter into effect until it is approved by the bankruptcy judge.
A hearing on the matter is scheduled for June 16.
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