[Satellite TODAY 01-24-13] Arabsat has concluded a hosted payload deal on its BADR-7 satellite and will announce the customer at the SATELLITE 2013 conference in March. Arabsat CEO Khalid Balkheyour told SatelliteTODAY that the deal had been a long time in the making and gives a further shot in the arm to the hosted payload market.  

   “The customer is commercial and not government,” said Balkheyour. “The partner is not from the Middle East, however, they carry a significant amount of its business there, and in Africa too. Any deal is difficult unless a mutual benefit is obtained. The difficulty was mainly in designing the hosted payload in a way that could allow for mutual benefits of both partners and support the whole business case of the satellite. We cannot disclose at the time being who is the partner due to commercial sensitivities, but the order to start manufacturing the satellite was given at the beginning of October and the deal will be announced during SATELLITE 2013 in Washington.”

   The deal’s significance is that it is the first commercial type of hosted payload deal signed in the Middle East. Balkheyour says the deal strengthens Arabsat’s position as the first provider of Ka-band services in the Middle East and selected areas in Africa. The payload will be placed on the BADR-7 at the Arabsat hotspot at 26 degrees East to allow for a portion to support Arabsat’s video neighborhood at that location with broadband services over satellite on a two play or triple play fashion.

   Earlier this month, Arabsat announced that a consortium of Astrium and Thales Alenia Space would be jointly responsible for building the satellite and delivering it in orbit. Astrium will supply the Eurostar E3000 platform and integrate the satellites. Thales Alenia Space will design and build the communications payload.

   Hosted payload deals have proved notoriously difficult to nail down, as the needs of operators and partners form a delicate balancing act. “Overall, the difficulty comes usually on qualifying and hunting for the right partner who has certain needs to qualify for a hosted payload rather than waiting for somebody to be looking for a provider. You need more of a proactive approach. In the other hand, Arabsat is in talks with certain governmental entities for a hosted payload deal, but the problem always with governments is the stretched time lines and uncertainty of their accurate needs. Arabsat has been engaging in different exercises supporting such quests.”

   The deal, however, is a lucrative one for the company, and Balkheyour expects the company could even sign further hosted payload deals this year. “Arabsat wouldn’t have carried the payload unless its lucrative as a standalone deal and it supports the whole business case of the satellite. The key learning is patience. Hundred iterations in commercial and technical negotiations took place. We are looking for a further hosted payload of Ka-band for government needs. We hope that it will materialize in 2013.”

   While this deal has been done with a commercial customer, one interesting trend to watch is whether governments in the Middle East follow Australia’s lead and go down the hosted payload route to boost capacity at reduced costs. On this issue, Balkheyour added, “You need to be proactive in regard. Most governments have plans but get stuck with implementation. Hosted payload deals could be the way for those governments to establish national satellite initiatives without incurring full costs of manufacturing and launching their own satellites. Not to mention establishing a business case and providing the right spectrum and associated rights.”

   The company, like Yahsat, is keen to bring a lot of Ka-band capacity to the region, but Balkheyour admits, while the demand for the capacity is good, operators will need to be careful. “There is a risk of oversupply in the MENA in Ka-band. That is why we are always mitigating risk by securing considerable committed capacity before launching the satellite. We see many ‘Hopes & Prays’ satellites coming up in the near future,” he said.