cnes confidential

CNES Confidential

CNES Confidential

Content

• Context and stakes• Overview of Agora• Risk mitigation approach

CNES Confidential

Some elements of recent historyof CNES initiative

• Directive RESO / 2007 high rate Internet access for all in 2007

• Request from CIADT to CNES - 3 sept 2003 CNES to propose and assess thefeasibility of a project that would improve the satellite offer for e-divide.

• Intitial approach proposed by CNES internal studies and technical approach

• Involvement of Alcatel and Astrium check and validate the technical feasibility, the timescale and the cost / benefit analysis

• Deep exchange with european main satellite operators : understand their strategyand constraints and try to establish the conditions for a private investment.

• Initial discussions with EC, ESA, DLR exchange views on interest of major institutional european players for this approach

• Todays priority : elaborate jointly the global framework of for a sustainableapproach to close the digital divide in Europe via satellites

CNES Confidential

ADSL Coverage of households in France 2003 - 2008

Résultats établis sur la base d’une évolution de la portée du service DSL de 2003 à 2008

M énages /couverture 2003 2 004 2005 2 006 2007 2 008 Couverture sans distinction total/partiel (nbre m énages) 20247324 21 564 335 22 734 289 23 086 574 23 394 008 23 665 156 Couverture sans distinction total/partiel (% m énages) 84% 89% 93% 94% 95% 96%Couverture avec distinction total/partiel (nbre m énages) 19585447 21 072 275 22 495 966 22 894 127 23 220 851 23 510 209 Couverture avec distinction total/partiel (% m énages) 81% 87% 92% 94% 95% 96%Eligibilité 128 kbps (nbre m énages) 18637645 19 747 374 21 260 527 21 707 893 22 045 619 22 435 916

E lig ibilité 128 kbps (% m énages) 77% 81% 87% 89% 90% 91%Eligibilité 512 kbps (nbre m énages) 17305182 18 297 755 19 771 019 20 445 711 20 972 666 21 615 262

E lig ibilité 512 kbps (% m énages) 72% 75% 81% 84% 86% 88%Eligibilité 1024 kbps (nbre m énages) 13572899 14 367 149 15 538 017 16 075 612 16 496 115 17 080 463

E lig ibilité 1024 kbps (% m énages) 56% 59% 64% 66% 67% 69%

As soon as 2005, 93% of house holds could depend on « ADSLized » switch ( 87% of thelines are eligibles) ; in 2008 those ratios reach respectively 96 et 91%.

Around 9% of the residential lines would remain without DSL for a very long time.

CNES Confidential

French companies uncovered at 128 kbps 2003 - 2008

total établissements privés (sièges+secondaires) non couverts 2003 2 004 2005 2 006 2007 2 008 0 salarié 746 570 640 143 504 113 457 345 421 145 380 623 1 à 5 salariés 231 251 188 183 127 645 112 631 102 144 89 493 6 à 9 salariés 34 818 27 386 17 379 14 982 13 386 11 443 10 à 19 salariés 25 670 19 896 12 520 10 792 9 672 8 266 20 à 49 salariés 19 157 14 772 9 016 7 674 6 814 5 745 50 à 249 salariés 13 515 10 325 6 011 5 021 4 428 3 689 250 à 500 salariés 3 933 3 102 1 920 1 650 1 492 1 295 Plus de 500 salariés 13 567 10 648 6 150 5 266 4 760 4 084 Total 1 088 480 914 455 684 755 615 362 563 840 504 637

% établissements privés (sièges+secondaires) non couverts 2003 2 004 2005 2 006 2007 2 008 0 salarié 36% 31% 24% 22% 20% 18%1 à 5 salariés 22% 18% 12% 11% 10% 9%6 à 9 salariés 19% 15% 10% 8% 7% 6%10 à 19 salariés 18% 14% 9% 8% 7% 6%20 à 49 salariés 17% 13% 8% 7% 6% 5%50 à 249 salariés 15% 11% 7% 5% 5% 4%250 à 500 salariés 14% 11% 7% 6% 5% 5%Plus de 500 salariés 12% 9% 5% 5% 4% 4%Total 29% 24% 18% 16% 15% 13%

•The coverage rate is lower than for households .•By 2005, 18% of sites will not be covered. By 2008 this ratio is 13 %•Uncovered sites are mainly SoHo’s and Very Small Enterprises.

CNES Confidential

France - Couverture ADSL entreprises inéligibles à 128 kbps - 2003 à 2008

Couverture : total partielle sans distinctiontotal établissements (sièges + secondaires) non couverts 2003 2 004 2005 2 006 2007 2 008 < 500 habitants 67% 57% 48% 40% 33% 27%500 à 1000 habitants 58% 46% 36% 29% 24% 20%1000 à 2000 habitants 49% 30% 11% 11% 11% 11%2000 à 5000 habitants 22% 12% 3% 3% 3% 3%5000 à 20 000 habitants 1% 0% 0% 0% 0% 0%20 000 à 50 000 habitants 0% 0% 0% 0% 0% 0%Plus de 50 000 habitants 0% 0% 0% 0% 0% 0%Total 21% 16% 11% 9% 8% 7%

Couverture : éligibilité à 128total établissements (sièges + secondaires) non couverts 2003 2 004 2005 2 006 2007 2 008 < 500 habitants 82% 77% 71% 65% 60% 55%500 à 1000 habitants 74% 65% 58% 51% 46% 42%1000 à 2000 habitants 63% 46% 28% 26% 25% 23%2000 à 5000 habitants 32% 22% 10% 8% 7% 4%5000 à 20 000 habitants 5% 4% 1% 0% 0% 0%20 000 à 50 000 habitants 2% 2% 0% 0% 0% 0%Plus de 50 000 habitants 2% 2% 0% 0% 0% 0%Total 29% 24% 18% 16% 15% 13%

• 67 to 82% of company sites located in small villages (less than 500 inhabitants) are uncovered. • For cities larger than 5000 inhabitants this ratio is less than 5%.

CNES Confidential

satellite access today : a competing technology

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S a t e l l i t e E 2 ESource : Alcatel Group study ,based on today’s prices

• The unique technology offering uniform/ ubiquitous access ( when visible)• Easy to hybrid with terrestrial technologies like Wi-Fi and PLC • Tomorrow’s satellite access market share will highly depend on few key

factors of success:

cost competitiveness & QOS Time to market & distribution network

CNES Confidential

Our concern for the future :

Major Influence of satellite bandwidth pricing on ISP business plan Corporate Market - ISP Business Plan

Current price for bandwidth ($3950 MHz/Month)

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Corporate Market - ISP Business Plan Reduced price for bandwidth ($1000 MHz/Month)

Increased Efficiency

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… 1.7 M€ / 36 MHz / year

No sustainable Satellite business For ISP

undercurrent pricing conditions

0.4 M€ / 36 MHz / yearIs a level of pricing authorisingCompetitive corporate offers

It requires a drastic change

CNES Confidential

Need for a strong & quick reaction from space actors

CNES Contribution :

AGORA

Accès Garanti et Optimisé pour les Régions contribuant à l’Aménagement du territoire

----------Affordable and Garanteed Offer for Regional Acces / or Rural Areas …

CNES Confidential

Which services for which users ?Objectives of the initiative

A single architecture to offer high rate access services for :

- professionals (SME), local collectivities and access points

- tele-workers & Soho

- residential ( bundled with TV )

More robust approach to various market segment ramp up

The step by step approach conducted since years proves limited success ( SMEs only)

the virtuous circle ignition requires an ambitious goal targeting residential market

CNES Confidential

Main principles of the AGORA System:• Enhanced communication system (DVB S2 adaptive standard)

– increased spectral efficiency• Low cost terminals

– More affordable solutions – Shared access between users when suitable via terrestrial technologies

• Use of high gain spacecraft antennas ( narrow spots)– gain in satellite power ( factor 10)– lower power ground terminals ( cheaper )

• Frequency reuse – Increased capacity ( factor 4 to 10 via multispots)

• Lighter Architecture of repeaters – Wider transparent channels ( 2 to 4 times more data rate per hardware element )– Assemblies of individual functions >> cheaper payload– Lower power amplification per channel (more channels possible)

New Ground network:ISD 2005

New Space segment: ISD 2007

global optimisation for max. efficiency

CNES Confidential

Phased approach of our nominal scenario (*)2004 2005 2006 2007 2008 2009 2010 2011 2012

Satisfy demand with existing satellitesIntroduce improved ground equipmentsEfforts to expand satellite customers base

Step 1

Agora exploitationStep 2 : devDevelop and launch the first optimised satellitePromote new & very attractive offers

European e-divide( based on @bus ) Step 3 : dev exploitation

Expand the capacity, redundancy and coverage of the system for fully operational capability.Potential upgrade of service ( mesh through some processed channels….)

(*) This ambitious scenario will demand consolidation with ESA and EC

CNES Confidential

Agora Early design features• Simple transparent payload• Ka Band Baseline• Off The Shelf platform for early bird (time to market)• @bus candidate for increased capacity (cost efficiency)

==> typical 10-15 Gb/s for early bird==> typical 25 Gb/s for second bird==> availability in Europe of the required technology

(including double sourcing) ==> good confidence in schedule

CNES Confidential

Typical example of Agora coverage european with 32 spots

System optimisation requires a wide coverage

CNES Confidential

Major trade offs Status

Baseline choice Open points Ka Band Sub band selection DVB RCS/S2, Polarisation scheme Beam width : 0.7° Coverage and spot beams

number Full transparent channels Limited number of Processed

channels

CNES Confidential

The DSL in the Sky solution leverages 2 standards

– Network architecture, management of operations: same as xDSL– Satellite layer based on DVB-S2 / DVB-RCS standard

"DSL in the Sky"

Alcatel 9780Satellite Terminal Alcatel 9780

Satellite Gateway

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InternetISPRouter

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CNES Confidential

Repeater block diagram

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Outboundchannels IMUX

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CNES Confidential

Candidate Satellites 1 and 2 overview

CNES Confidential

Accomodation analyses

• Internal Layout on @ bus Compatibility with Ariane 5 / ATLAS

CNES Confidential

Economical Performance of Agora project

CAPEX * in k€ for 1 Mbit/s transmitted

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Transmission through Ka band multi-beam antennas

Gain factor 4/ 5:change of payload concept

Scale effect of the satellite

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4 kW 9 kW 12 kW 15 kW 18 kW Payloadpower

(*) cost of satellite + launch + insurance without ground segment

CNES Confidential

What can Space Agencies and Governments offer?

• focus R&D efforts on operators needs enabling fast development and extensive validation

• contribute to federate institutional users • promote those applications through wide application

demonstrations in Europe

• different partnership schemes are to be explored for the financial set up and the transfer of the assets to private sector

CNES Confidential

• Risk is the main concern of private investors :

Need for a Robust Risk mitigation approach

CNES Confidential

Techno risk : industry does not start from scratch

• Technological preparation through on going ‘almost completed) R&D actions (national, ESA).

• Around 50/ 100 M € in FR in R&D since 2000

• Equivalent effort in major European countries

CNES Confidential

AGORA 1 vs past and on going Astrium programmes.

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CNES Confidential

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System risk : End to end validation before integration

CNES Confidential

Market risk : Step 1 ramp up mandatory

• A window of opportunity does exist today • Waiting 3 years until 2007 would affect the global market

share of satellite• Current pricing for bandwidth and terminals weaken

severely the viability of service providers and compress the growth perspectives

• A strong public intervention in conjunction with operators could accelerate the take off of this market

• ESA “DDSO target 1” should reach a high momentum quickly.

CNES Confidential

Financial risk

• Private operators are reluctant to carry all the risks associated with these novel architectures and offers

• Our baseline proposal is to procure the satellites, conceived to be operational which should be sold to the private sector at “market price” immediately after having been developed

• This implies that all generic non recurring developments will have been supported by R&D funds

• The baseline proposal may be amended to cope with specific interests or contributions of operators

• An initial support from the EC would be highly beneficial to the sustainability of the market on the long term

• Obviously, the financing set-up retained, must comply with the EC rules

CNES Confidential

The next step :

• CNES will pursue the technical work with industry

• while proposing – cooperation framework with ESA and national

Agencies– partnership schemes with operators– institutional add on missions with French MOD