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

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

DeWitt said SpaceSystems/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 oursenators and congressmen to know: You're buying billions of dollars [ofproducts] from a company that is a violator of U.S. policy," DeWitt saidduring a presentation here at the Satellite 2008 conference. "China can offer rockets that are two-thirds the price" of competing vehicles. "Thatdoes 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 1990shas 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 belaunched by a Chinese rocket.

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

Some industry officialsbelieve China ultimately will be a major player in the commercial satellitetelecommunications market. China already has begun offering its own satellitedesign 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 largestcommercial satellite-fleet operators, SES of Luxembourg and Intelsat of Bermudaand Washington, both have said they would like to have the option of using Chineserockets as a way of diversifying their supply base of launch serviceproviders. Both companies faced delays in 2007 following the failures of two ofthe 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, aredenied the use of Chinese vehicles because the satellites they build have U.S. components.

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

"We are notpromoting one launcher," Sourisse said. "We are inviting ourcustomers to select among a range of launchers. We are a satellite system supplierand we are not specifically interested in one launcher more than another one."

Thales Group reporteddoing $1.3 billion in U.S. government business in 2007, mainly in contractswith the U.S. Defense Department. Loral and Evry, France-based Arianespace wantthe U.S. government to use its leverage with Thales to stop the company fromusing Chinese rockets.

Orbital Sciences Corp. ofDulles, Va., regularly competes with Thales Alenia Space but is not overlyconcerned with the European company's Chinese connection, said ChristopherRichmond, Orbital's senior vice president for global communications.

"Our satellites aretoo small" to be launched by Chinese rockets, Richmond said during themeeting.

DeWitt agreed that SpaceSystems/Loral, in approaching U.S. congressional and government authoritiesabout the Chinese rocket, had two possible lines of attack: that the ban on theuse of the LongMarch vehicle should be lifted for all, or that Thales Alenia Space'saccess to the rocket should be stopped. "I have taken the secondalternative," DeWitt said.

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