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S U M M I T R I D G E G R O U P . C O M

Unofficial Notes:

Euroconsult’s World Satellite Business Week Conference

September 11-15, 2017 Paris, France

NOTICE: These notes were taken live at the 2017 Euroconsult World Satellite Business Week in Paris, France from September 11th to 15th 2017. They are a good faith representation of our impressions of the events and what was said by participants. However, we cannot guarantee the accuracy of any specific comment. These notes are not endorsed by Euroconsult in any way. This document is not a recommendation to buy or sell any security. Please consult with appropriate professional advisors before making significant business decisions. Corrections are welcome.

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Executive Summary Presenters at this year’s conference were more positive than last year. They consistently painted a picture that the worst in terms of declining FSS revenue may be behind us. At the same time, most of the planned HTS capacity ordered in the past few years has not yet entered service. The compelling (sic) logic seems to be that FSS industry revenue declined in each of the last two years due to HTS overcapacity, therefore, greatly increased amounts of HTS capacity coming on line will increase future revenue. (Armand’s comment: this logic escapes me, perhaps because I’m not a Millennial.) Participants I spoke to privately, however, are not seeing any evidence of market prices stabilizing or demand increasing outside of mobility applications. There is even a growing acceptance that LEOs will eventually play a large part in the communications segment of the industry, even displacing GEO demand. Not to be outdone by the FSS sector logic, marketing executives from the major satellite manufacturers boldly proclaimed that the number of satellites they sell is no longer an important metric! (Armand’s comment: I can’t make-up this stuff). There is a point to be made that given the wider range of satellites being ordered, the number of satellites ordered is less of an indicator of revenue. But sales usually still matter. While their market people may have given-up, the operating folks at the manufacturers are busy responding to industry pressure and declining orders with 3-D printing, automated manufacturing, flexible digital payloads, etc. This is reducing both cycle time and costs. Cycle times for standard satellites are down from 36 months to closer to 24 months and can get much lower if long-lead items are ordered in advance. Satellites are increasingly ordered in batches under the same umbrella design to get economies of scale. There is movement towards in-house manufacturing (OneWeb and ViaSat), but it is unclear if that level of vertical integration will become a trend.

In-flight broadband remains a hot spot (pun intended) for growth in the satellite sector. But the business model remains unclear. Airlines face pressure from customers to make it happen and are leaning on suppliers to pay retrofitting costs. This is hard for the fragmented IFS sector, where most players have thin balance sheets. The search for alternative revenue streams from passenger data, etc. to close the gap continues. Euroconsult’s Earth Observation conference highlighted new advances in analytics, and satellite technology. But the sector seems to be plagued with the same challenges of commoditization of raw satellite data, difficulty growing commercial demand, and dealing with government restrictions. As the value chain moves increasingly towards data analytics, as opposed to satellite infrastructure, the number of new entrants has tapered. Some aspiring entrants are dropping infrastructure plans and refocusing on data analytics.

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Contents EXECUTIVESUMMARY......................................................................................................................................2I.DAYONE:MONDAYSEPTEMBER11,2017.............................................................................................5A.09:00:OPENINGREMARKS................................................................................................................................................5B.09:15OPENINGPRESENTATION-STATEOFPLAYANDCHALLENGESFORTHESATELLITE.....................................5CONNECTIVITYMARKET...........................................................................................................................................................5C.SMARTPLANEMARKETPRESENTATION(INAIGLONSALON)........................................................................................5D.09:30OUTLOOKFORTHESATELLITESECTOR:INSIGHTSFROMINVESTMENTBANKERS.........................................6E.10:45MORNINGCOFFEEBREAK–MEETINGWITHYOELGAT/SATIXFY...................................................................8F.11:15SATELLITEOPERATORS–DEFININGBUSINESSMODELSFORTHENEWSATELLITEENVIRONMENT..........9G.12:30OFFICIALLUNCHHOSTEDBYAIRBUS(TWOSHORTTALKS)...........................................................................11H.14:30CONSTELLATIONSINTHEECOSYSTEM:MORESLICESORABIGGERPIE?....................................................12I.16:00HOWTOPROVIDEAPERSONALIZEDCUSTOMEREXPERIENCEINFLIGHT?....................................................14J.16:15THENEWGOLDRUSHFORSERVICEPROVIDERS?............................................................................................15K.17:30FINSPACECOCKTAILRECEPTION.....................................................................................................................16L.EVENINGEVENTS...............................................................................................................................................................17

II.DAYTWO:TUESDAYSEPTEMBER12,2017.......................................................................................19A.NSR’SANNUALBREAKFASTBRIEFING:EMERGINGSPACE:DISTRACTION,THREAT,OROPPORTUNITY?...........19B.09:00VENTURECAPITAL–FUELINGBOTHSATELLITESYSTEMSANDAPPLICATIONS..........................................19C.9:45KEYSTAKESFORDEFENSE.....................................................................................................................................20D.10:30NEWLAUNCHSOLUTIONSFORADIVERSIFYINGMARKET..............................................................................21E.11:15NEXTGENERATIONSATELLITEINFRASTRUCTUREANDSERVICES.................................................................22F.12:30OFFICIALLUNCHHOSTEDBYEUTELSAT...........................................................................................................25G.14:30GLOBALSATELLITEOPERATORS:PAVINGTHEWAYTHROUGHPARTNERSHIPS.........................................25H.16:15ESTABLISHEDPLAYERSMOVINGTOTHERHYTHMOFACHANGINGLAUNCHMARKET.............................28H.EVENINGEVENTS..............................................................................................................................................................28

III.DAYTHREE:WEDNESDAY,SEPTEMBER13,2017........................................................................29A.09:005GANDTHEFUTUREOFCOMMUNICATIONNETWORKS.................................................................................29B.09:15SPECTRUMANDREGULATION-THEWAYFORWARDFOR5GROLLOUT.....................................................29C.09:30SATELLITEMANUFACTURERS:NEWPRODUCTS&NEWCLIENTSTOREMAINATTHECUTTINGEDGE...30D.NEWSHORTSESSION-PORTUGAL..........................................................................................................................33E.11:15INDISCUSSIONWITHEXPORTCREDITAGENCIES............................................................................................33F.11:45IOT&M2M–OPENINGNEWMARKETSFORSATELLITE?...........................................................................34H.14:30NEWTECHNOLOGYTRANSFORMINGVIDEODISTRIBUTION...........................................................................37I.16:00REGIONALOPERATORS:STRENGTHENINGTHEIRSATELLITELEADERSHIP...................................................39J.CLOSINGREMARKS–THANKYOU....................................................................................................................................42K.EVENINGEVENTS...............................................................................................................................................................42

IV.DAYFOUR:MARKETFORECASTS-THURSDAYSEPTEMBER14,2017....................................43A.9:00EUROCONSULT'SVIEWSONTHESTATEOFPLAYANDPROSPECTSFORTHESATCOMMARKET...................43B.09:15OPERATORSSTRATEGYEXECUTIVESLOOKATFUTUREMARKETS................................................................43C.10:45WHAT'SNEXTFORSATELLITEMANUFACTURING(CONTRIBUTIONBYELIZABETHTWEEDIE)................46D.11:45WHATOPERATORSWANT:VIEWFROMTHEIRCTOS...................................................................................50E.12:45CLOSINGREMARKS...............................................................................................................................................50

V.DAYFOUR:SUMMITONEARTHOBSERVATION-THURSDAYSEPTEMBER14,2017..........51

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A.9:00OPENINGREMARKS.................................................................................................................................................51B.9:15INTRODUCTION:STATEOFPLAYANDPROSPECTSFORTHEEOSECTOR..........................................................51C.09:30LEADINGOPERATORS:ADAPTINGSTRUCTURESANDSOLUTIONSFORSUSTAINEDGROWTH....................51D.11:30REMOTESENSINGORGANIZATIONS:ENRICHINGSOLUTIONSFORLOCALBENEFITS..................................52E.OFFICIALLUNCHHOSTEDBYAIRBUS.............................................................................................................................53F.14:30GEOSPATIALSOLUTIONS:NEWNEEDS,NEWSOLUTIONS..............................................................................54G.16:00MANUFACTURERS:BUILDINGTOMORROW'SCAPABILITIES...........................................................................56

VI.DAYFIVE:SUMMITONEARTHOBSERVATION:FRIDAYSEPTEMBER15,2017...................59A.8:30CONSTELLATIONS:MANAGINGDISRUPTION,FINANCINGANDMONETIZATION.............................................59

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I. Day One: Monday September 11, 2017 A. 09:00: Opening Remarks Lorraine Whitfield, Chief Events & Marketing Officer, Euroconsult

• Welcome everyone

B. 09:15 Opening Presentation - State of Play and Challenges for the Satellite Connectivity Market Pacôme Révillon, CEO, Euroconsult

• Update on Euroconsult - expanding capabilities, etc. • Several trends in the sector - lots of things happening • Horizontal and vertical integration

o Some completed, some not • Revenues of wholesale satellite operators are down again

o Somewhat offset by more service business revenue o Pure infrastructure operators declined a bit faster o Expect slight erosion to stabilizing before return to growth o Structural decrease in price combined with disruption

• Decline in satellite orders • CapX to revenue ratio has been stable, to going up, if you account for decline in

revenue • Could be up to 60 companies operating satellites by 2020

o More fragmentation in the industry • Lots more HTS capacity will be coming to market • Largest part of HTS is about to join the market • IoT is an opportunity for connectivity • Expect demand to increase but pricing decline

o Pricing decline will slow down o Need to increase demand more rapidly to get there

C. SmartPlane Market Presentation (in Aiglon Salon) Florent Rizzo, Consultant, Euroconsult

• 6,500 connected aircraft o 3,900 via satellite o 2,600 via ATG

• 71 Airlines o 10 more airlines to be added in the next several months

• 22% penetration

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o Backlog of 4,000 aircraft at April 2017 • Big airlines not connected are Asian Airlines and some low-cost carriers and some mid-

sized airlines (under 200 airplanes) • 2017 was intense competition

o New entrants and shift focus to Europe and Asia § US market is well served and mature

o More mature § More airlines are going direct

• Ground trends o Web pages are growing by 3x in last 5 years o Mobile traffic to grow 25x in 5 years

• Aircraft Trends o Expect 24,000 aircraft connected in 2026 o 200 Gb/plane/month now o 1.6 Tb/plan/month in 2026 o Estimate 5,000 aircraft connected in 2016 o Growth in NA – 6% (2016-2026) o EU – 26% (2016-2026) o New ATG Ground Networks

D. 09:30 Outlook for the Satellite Sector: Insights from Investment Bankers Moderator: Peter Nesgos, Partner, Milbank Tweed Fred J. Turpin, Global Head of Media & Communications IB, JP Morgan Chase & Co. Justin Cadman, Senior Vice President, Investment Banking, Raymond James John T. Apostolides, Managing Director, Technology, Media and Telecom Investment Banking, Macquarie Capital (United States) Inc. James C. Murray, Partner, PJT Partners Malcolm Morris, Senior Managing Director, Guggenheim Securities Peter Nesgos, Milbank

• Lots of industry consolidation – S3/Sealaunch, DGI/Radiant, ViaSat/Arconix, Speedcast/Haris CapRock, PlantLabs/Terra ella, MDA/DGI, SiriusXM/Automated Labs, Speedcast/AltiSat, High Terra/NorSat, Globecomm take over

Fred Turpin, JP Morgan • Some companies in sector are balance sheet stretched • Capital markets historically supportive of satellite sector

o But many bondholders did not want to take a discount today to facilitate a better outcome for someone else

o Further sign of activity in the sector to get economies of scale

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• Wholesaling vs distribution requires different management skills • Investors are now more selective

o It’s been a positive 18 months § $7-$8 billion raised – would not have happened two years ago

o Due diligence is much more granular now o Asking about detailed revenue streams

• Prices are higher now than they were before • Hard to get deals done if there is no consensus on what assets are worth

o Valuations are stabilizing for public companies and more rational on a relative basis

o Helps facilitate transaction

John Apostolides, Macquarie • New pockets of capital coming into the industry – Silicon Valley etc. • More vertical integration

o Argument to be made that satellite industry should get closer to the customer o But separation between infrastructure and specialized applications also makes

sense • Neutrality issue for industry – do you align with a carrier or stay neutral

o Similar issues face data centers • Investors are getting deeper and deeper into due diligence

o Now asking “What is the company going to do with the money?”

Jim Murray, PJT Partners • No real consensus on impact of demand increase versus supply increase and impact on

pricing o May take time to shake out (24-36 months)

• Trend of companies taking responsibility for making their own satellites o OneWeb (Armand’s Comment: ViaSat as well)

• Value added services o Nothing more valuable than controlling your own data

§ Most satellite operator do now own their data § Likely to be an area of increased interest in the future

• Over last 12 months, cost per Mbps is coming down dramatically and rapidly o 3-4 years – 70% decline in cost per mb/sec over next three years

• Growing sense of confidence that o NGSO players are going to play a major role in the sector o Organizations like Softbank will inject lots of money in the sector o Lots of uncertainty around how different people will be impacted

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§ This is why Intelsat/Softbank deal did not happen • Cost of capital in the sector has been artificially reduced due to ECA funds

o Helps increase returns to equity o ECA funds are getting a bit tighter

§ But raising early stage equity is now harder and deals are smaller

Malcom Morris, Guggenheim Securities • Government involvement and long-term contracts make satellite industry a bit unique in

telecom sector • Need to work with multiple partners • Opportunities to move debt around to manage liability

o Benefits everyone • Pricing in other aspects of telecom infrastructure has become very aggressive • Cars will throw-off hundreds of gigabit’s of data a month

o Meter reading, etc. will be a “side show”

General • Satellite operators are going through evolution • New launch providers are much needed solution • New operators are in a bubble • Space mining is fool’s gold • IOT will be big – but John A. is not convinced • Unclear if GEO are in a short or long-term decline

E. 10:45 Morning Coffee Break – Meeting with Yoel Gat/SatixFy

• Notable in that I ran into Yoal Gat and he gave me a signed copy of his book o He is now running company, SatixFy, with a CPE chipset for beam hopping

technology implementation § One of many technologies that are positioned to increase effective usable

satellite bandwidth and increase satellite flexibility

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o I guess he has forgiven me for my coverage of his former company, Gilat

Satellite Networks, as a Wall Street analyst (see: http://www.satellitetoday.com/publications/st/feature/2002/09/25/gilat-sees-almost-30-percent-fall-in-revenues/ )

F. 11:15 Satellite Operators – Defining Business Models for the New Satellite Environment Moderator: Stéphane Chenard, Senior Associate Consultant, Euroconsult Cenk Sen, CEO, Turksat Maxim Zayakov, CEO, BulgariaSat Saif Al-Khaldi, VP Corporate & Strategy, Es'hailSat Huang Baozhong, Vice President, APT Satellite Huang Baozhong, APT

• New satellites are doing well o Looking at HTS

§ JV in China for 50 Gbps and in Asia Pacific at 178 Gbps § Also supports some broadcasting

• APT helps offload capacity and can absorb the loss of a satellite • Many operators in Asia are selling below cost of replacement

o Pricing often below $1,000 MHz/month

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• Prices will stabilize and poorer operators will be going out of business o Reputation and image will play a role at being able to maintain prices o Customers want long-term partnerships and not only focused on price

§ Includes mobile for maritime etc. • Does not see how OTT is a threat to satellite operators

o See an opportunity to get into OTT themselves § Can do it for under $2/subscriber/month § OTT is a complementary business for satellite operators

Cenk Sen, Turksat • Three satellites are on-line

o Operates in three areas • Investing more in HTS capacity • Satellite demand is increasing

o Increased income by 12% in 2016 • Are putting plans in place for business continuity • Need to be part of a partnership as you need to provide customers everywhere they

might want it o Already partnered with Inmarsat o (Armand’s Comment: Seems like real consolidation pressure)

• Turkish government is setting-up satellite manufacturing business o Wants to be more than an operator o Opportunities in nearby and related countries o Most of the STAN countries have satellites already o Pushed back on idea that Turkish satellite program was not intended to make

money • OTT is an issue for Turksat as well. Turkey has been aggressively rolling-out fiber

capacity o Satellite is a back-up for OTT services

• Planning to sign contracts for next satellites soon – money is an issue for the government – some frequencies expire in 2021

Maxim Zayakov, BulgariaSat • Launched in June 23, 2017 • Core markets include their own DTH affiliate • Admits these are difficult times but lots of opportunity for those that are innovative as

opposed to destructive • Caught in middle of downturn • DTH has been consolidating a bit globally, partially as a result of OTT

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o Broadband will grow from 40% of homes to 60% over next 5-10 years, but will never hit 100% – still lots of room of DTH

• Thinks OTT will be an opportunity due to limited fiber networks, but it’s not an increasing market as fiber is rolled-out

• Looking at international cooperation agreement • Much of Turkey market is controlled by Turksat, but others are there as well

Saif Ai-Khaldi, Es'hailSat • 1st satellite was JV with Intelsat

o Major application is DTH and government • 2nd satellite is JV with Arabsat

o DTH and government ku and ka-band • Want to grow beyond MENA – more than just DTH and data • Not clear if it is worth it to invest in new satellites after the 2nd and 3rd

o Lucky to have anchor customers on satellites o Looking at opportunities to invest in in-flight

• Need to be a global operator to serve flights – We will need partnerships • Looking at Indonesia – have a govt plan for increased connectivity of islands • Al Jazeera is growing HD

Stephane Chenard, Euroconsult (Moderator) • Two satellites failed (SES and an Indonesian operator) due to something hitting them, a

possible trend?

G. 12:30 Official Lunch Hosted by Airbus (two short talks)

• Commercial Market o Reducing costs

§ Electric propulsion, 3D printing o Flexible payloads o Digital payloads o New connected mobile platform – cars, planes, etc. will be sources of growth

• Gov’t. Market o Security is center of mindsets today o Growing demand for connectivity o Service business is growing in Govt maket o Brexit and NATO commitment in Europe is large

§ Change to IP communications § 5G opportunity

o Gov’t needs IOT as well

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o Laser communications

H. 14:30 Constellations in the Ecosystem: More Slices or a Bigger Pie? Moderator: Sima Fishman, Managing Director, Euroconsult USA Matthew Desch, CEO, Iridium Steve Collar, CEO, SES Networks Mark Rigolle, CEO, LeoSat Samer Halawi, COO, OneWeb Matt Desch, Iridium

• 20 satellites launched in 2nd generation • IOT is our fastest growing business, represents about ½ of our customers today • Considers Iridium a specialty broadband provider

o Offers differentiated solutions that may complement other provider’s offerings • LEOs are now more credible in the industry • Iridium is in L-band – allows for cheaper antennas • Want to complement other services – not GEO vs LEO • Market will likely finance a number of LEO systems closer to 1 than 5 • Overcapacity won’t be a problem because financial markets won’t support many LEO

systems • Lots of work to great distribution partners around the world • Important for end-user terminal to be viable and at right price point with the right

distributors • Arion is a $1 billion-dollar opportunity (Armand’s comment: We’ll see…)

Steve Collar, SES Networks • 2/3 of SES business is broadcast; 1/3 is data • Wants to double size of business over next 4-5 years

o Going to deliver terabits of capacity with new system “O3B M-power” o Growing O3B at close to 50% a year

• Lots of things are best over GEO o Constellations are not good for delivering video o Data networks need

§ Economics that close customers’ business case § Need right network performance § Need to address ubiquity and tailor to customer § Need to scale to be relevant

o O3B can do all of the above • LEO adds lots of cost and complexity that the market might not want to pay for • More disruption over last three years than the last 30 year

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• Industry has not taken end-to-end solutions – needs to change o SES has good distribution channels and will work to be closer to a service

provider o Targeting aero markets

• Total cost of ownership is what is critical o Never lost a sale due to cost of terminals as we bundle it into the price (Armand’s

comment: With lower cost terminals, I am sure they could offer lower bundled pricing and target new markets – not many users can afford dual tracking antennas no matter how that is “bundled.”)

• The more you get into scale, the more important distribution becomes • Limited utility for LEO in video

Mark Rigolle, LeoSat • 8 MOUs signed and 1 take or pay contract

o Final constellation design not finalized o Service commencing in 2021 o Full constellation by end of 2022 o JSAT is a strategic partner

§ Looking to add another strategic investor • Industry tends to think technically – rather we think like a data networking company

o Will take market share from undersea cables, fiber networks etc. o Will take little market share from existing satellite operators o We can offer seamless 5G service over our network o Have 1.6 Tbps of capacity

§ We will be unique with respect to latency, security etc. • Market can support many non-competing LEO systems • Commoditized markets allow competing to reduce markets

o A non-commodity won’t create commoditization • Don’t need lots of customers, but there are fulfillment issue – will use distributors • Got a “gap filler” for people who can’t afford or don’t have connectivity available

o Gap Fillers are “lead detection” for terrestrial operators • Focused on funding now - $3 to $4 billion project

o Doing a $100M Series A round – JSAT is lead investor o Need customers signed-up early in advance o Our systems is unique and won’t be seen as a commodity

Samer Halawi, OneWeb • Interesting developments in business model • OneWeb will work together with their shareholder Intelsat

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o Customers need different types of capacity for different purposes • Not an issue of oversupply, but undersupply

o Demand is higher than capability/capacity o Not really concerned about oversupply

§ 2 million schools and 34 million people in US are unconnected o Offering something that does not exist in many larger cities

• Closed $1.2B Series-A round this year • New facility in Florida will be able to produce 3 satellites/day!

o We are bringing scale to the industry to bring costs down across all areas of the network

(Armand’s comment: There was no discussion of Kymeta and their rumored technical challenges. Low-cost phased array antennas are critical to growing the NGSO broadband industry – not everyone can afford dual-tracking antennas.)

I. 16:00 How to Provide a Personalized Customer Experience in Flight? Moderator: Susan Irwin, Principal Advisor, Euroconsult Max Coppin, Partnership Development Manager, Google Quentin Couturier, Senior Manager – Fleet Development, Etihad Airways (Note: Short panel – 15 Minutes) Max Coppin, Google

• Leisure and business travel are different in terms of what they will pay for • Airlines need to learn how to add value with their passenger wi-fi offerings

o Flight connection/transfer info, etc. • Everyone wants to own the customer data

o Users will usually agree to share data if they get something for it and it’s clear o Harder with multiple levels of partners etc.

Quentin Courturier, Etihad Airways • Everything is personalized in an airplane

o Very hard to change anything on a plane • Trying to figure out how to pay for connectivity

o Will partner with 3rd parties (Armand’s comment: Sounds like they will be leaning on resellers to pay capX for installation)

• Won’t be free for a while o Can be profitable for them o Need to remove hassle of the situation

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J. 16:15 The New Gold Rush for Service Providers? Moderator: Brent Prokosh, Senior Consultant, Euroconsult Jon Norris, Senior Director – Corporate Sales & Marketing, Panasonic Avionics Corporation Anand Chari, EVP & CTO, Gogo Ryan Stone, President, SmartSky Networks Frederik van Essen, SVP Strategy & Business Development, Inmarsat Aviation Josh Marks, EVP Connectivity, Global Eagle Jerry Thomas, Marketing Director, Thales Inflyt Experience Jon Norris

• Rollout is heavily airline dependent • Use of phone different in different parts of the world • Expect consolidation in the sector • Seatback screen aren’t going away – no reduction in demand

o But we may interact with them differently • Can get more revenue from a thick seatback system than a mobile device • Coverage and capacity are important, but don’t usually buy a whole payload

o Not fixed on GEO satellite – will look at earth to ground systems

Anand Chari, Gogo • US and Europe going through an upgrade cycle • Larger carrier pioneered it • Need to find ways to get valuable data • Some people will stream video if it is available • Just introduced a new modem

o Need to innovate in every part of the ecosystem o Can only be done with open architecture (Armand’s comment: Not sure ViaSat

and Hughes would agree) o Satellite antenna is the hardest to install

Ryan Stone, President, SmartSky Networks • High speed broadband to airplane from the ground

o Can reuse terrestrial spectrum in the air without interfering o VC backed, but not yet live

• Won’t be one set model of how airlines do it • Buying spectrum is not efficient for aviation use – they use 60 MHz (uses price example

from AWS03) o Electronics has evolved so cost of systems is $250 million

§ Leveraging cell towers and backhaul • Only need a small percentage of the market to be cash flow positive

Frederik van Essen, SVP Strategy & Business Development, Inmarsat Aviation

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• Environment is getting better and better for aviation as prices fall and solutions get better

• People in the plane are individuals with different needs and wants • Have global capacity and are adding capacity where it is needed most • Not really that much capacity

o Intelsat + SES can’t meet Air France’s capacity needs over N. Europe (Armand’s comment: Intelsat is not a big operator in Europe)

• Will be successful due to long history, global coverage, also got an approval for transoceanic use

Josh Marks, EVP Connectivity, Global Eagle • 1,000 planes and 1,000 ships and 3,000 land-based locations • Proprietary teleports • Need to find the right partners and revenue opportunities beyond connectivity • Need to become “underwriters” to make money in a commodity business • Most of the seatbacks operate in areas with simplified media licensing rules

o Not going away • Look at LEOs to get large amounts of data to ships – 500 Mbps • Underlying business remains strong – see 8Ks for more details • Need to make money from things other than a customer payment

Jerry Thomas, Marketing Director, Thales Inflyt Experience • Demand for streaming also depends on flight length and other factors • Believe in managed service approach

o Bought SES-17 § Worked with SES so they understood aviation routes etc.

• We know how to deal with airline installs and the like and ways to monetize information General

• Wide range opinions about average data rate per plane o CODEX are getting better and better

• Agreement that more capacity will be needed everywhere • Expect electronically steered flat panel by 2020, but may need some materials testing to

be sure • Most expect take rate in 5 years to be over 50%

K. 17:30 FinSpace Cocktail Reception

• A cocktail reception bringing together start-ups, investors and decision makers to encourage exchanges and promote the conclusion of partnerships.

• A selection of start-ups will be invited to compete to be selected among the five most

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promising (selected by an independent jury) to pitch their project in front of potential suppliers, customers and, most importantly, investors.

• FinSpace is an initiative developed by Euroconsult with the support of Communications Smart

L. Evening Events (Armand’s comment: Evening events seems to have been focused on Monday this year)

• Bird and Bird/Sheppard Mullen Cocktail Party at Nomu o (Armand’s comment: A growing event)

• ILS Dinner • SpaceX Party

o Understand SpaceX’s event was more modest than in prior years o (Armand’s comment: Now that SpaceX has “arrived,” with over 50% market

share this year, they may feel less of a need to show-off with creative parties – a real loss for their guests J)

• Thales Party at Musea Cernuschi (an Asian Art Museum) • (Armand’s comment: This is usually a very good event. I was not invited this year.

Maybe senior management at Thales is upset at not being invited to my dinner (see Section II.H of these notes)? As a peace offering, a photo of their event is attached below)

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II. DAY TWO: TUESDAY SEPTEMBER 12, 2017 A. NSR’s Annual Breakfast Briefing: Emerging Space: Distraction, Threat, or Opportunity?

• Not affiliated with the Euroconsult event • Held at the fancy Hotel Meurice (Armand’s comment: Too rich for my blood – nightly

hotel rooms for the price of a house)

B. 09:00 Venture capital – Fueling both Satellite Systems and Applications Moderator: Dara Panahy, Partner, Milbank Will Porteous, General Partner and COO, RRE Ventures Mike Collett, Founder, Managing Partner, Promus Ventures Will Porteous, General Partner and COO, RRE Ventures

• NY-based – Spire and Spaceflight • Mainstream venture community is starting to take space seriously • Need to look at satellite through the lens of other communications investments

o Unpack the risks, etc. o Understand burn rates, scale, etc.

• Basic infrastructure will continue to drive lots of value due to increased use o More emphasis on creating value by using data to solve customer problems

• Venture dollars are picking up where research dollars are slowing down o Capital will line-up behind a few leaders during these waves hof development o Durations of 7-9 years in many cases

• Technology is rarely the hardest part o Need great leadership and capital

§ Want to understand financing potential down the line § Market risk is large – how long will it be until customers are ready to buy

• Can’t build strategic valuation exits into initial valuation – too hard to predict o Need to look at valuation based on businesses

• Major LEO projects are awesome in scope but major venture successes are usually small niche initiatives

o Large LEO systems are complex and subject to corporate inertia o Mega-constellations help supply chain for smaller operators

• Companies pay large premiums if they see it as an enabler to other areas of their business

o We don’t wake-up trying to get strategic multiples • Leverage of satellite platforms has hurt their ability to invest and operate • Outside performance in venture portfolio is driven by one or two investments that drive

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70% of the performance o One company makes it through insertion point and becomes industry leader o Many people thought Facebook had a crazy value at $500 million

Mike Collett, Founder, Managing Partner, Promus Ventures • Chicago-based – invested in RocketLab • We like satellite as a contrarian investment

o People have long memories of Iridium, etc. o See lots of movement in the sector

§ Look for investments that do things others don’t • See everything through the lens of software – must throw-off data • Data must be unique to the industry or be able to do it better • All cubesat companies will have data analytics on them • Banks don’t do WIP financing unless firm has a large balance sheet

o VC’s move in packs to lower risk § Risk is high and not many IPOs

• Technology usually works o Supply chain is important to understand o Liquidity is hard – IPO window is closing o Will be buyers if company is throwing off lots of money

• Ubiquitous broadband is good for smaller companies, but can’t build a business model based on what someone else might do

• When things line-up and a large strategic player need something, they pounce o Hard to predict as it may be based on strategic player’s plan that they don’t share

C. 9:45 Key Stakes for Defense Moderator: Pacôme Révillon, CEO, Euroconsult Evert Dudok, EVP, Communications, Intelligence and Security, Airbus Defence and Space

Evert Dudok, Airbus • Many investments

o One year of performance on laser communications o OneWeb production facility has been automated o Investments in high altitude platforms, cyber security, drones

• Perspective of “independent Europe” is driving increased investment • Communications moving to IP • Changes in budget and how data is used drives changes in architecture • Today is anticipation of communications needs – both sovereign and hybrid, with

security, ubiquity, reliability, etc.

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• Big drive to commercial capabilities will help government users as well o Will also drive innovation for government tools o Allows capacity for government applications as well

• Need dedicated bandwidth for government users in emergencies o Very complicated to have bandwidth available and devices interoperable

• Will be some sovereign needs, but I am convinced that secure connectivity needs to work over commercial capacity

o Need to rethink architecture to make it more resilient through the whole end-to-end link

o Lot’s of emphasis at Airbus on cyber resilience • Copernicus satellite can provide 50% more data

D. 10:30 New Launch Solutions for a Diversifying Market Moderator: Maxime Puteaux , Senior Consultant, Euroconsult Clay Mowry, VP Sales Marketing & Customer Experience, Blue Origin Dan Hart, President & CEO, Virgin Orbit Clay Mowry, Blue Origin

• Looking forward 20-40 years – Need to move heavy industry out of earth to space and re-zone Earth for residential and light industry (Armand’s comment: Talk about ambitious…)

• 1200 employees • 3-stage version of New Glen is over 100 meters • Going straight to 7-meter fairing from 1st flight due to customer interest

o Good for LEOs that are more constrained by volume than mass • 2x volume of largest 5m fairing today (Armand’s comment: This may come in handy for

moving all that heavy industry into space J) • Use LNG for fuel – provides over 550k lbs of thrust • 750k sq ft facility • Using New Sheppard to teach how to reuse a launch vehicle

o Want to reuse, more like an airplane o Will be transferable to New Glenn vehicle

• VE3 engine is deeply throttleable, can lower it to 5 mph at landing o Sub orbital human space is an exciting part of the business and a way to move to

getting millions of people living and working in space • Want to serve all aspects of the commercial market

o LEO, GEO and beyond • Two kids in a dorm can’t innovate in space due to costs of entry

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o Want to change this • Model not dependent on NASA funding

o Funded entirely by Jeff Bezos – put $2.5 billion into it over the last 17 years

Dan Hart, Virgin • Richard Branson’s company – looking to do good on earth by advancing space • See ourselves as lowering the bar to getting to orbit • Virgin Galactic

o Found need to pull the human part from the satellite side § Different challenges

• Want to do smaller launches (1,2,4 satellites) into a specific slot to fill-in needs for larger constellations

o Complements Blue Origin • NASA provides support as one of 1st launch customers – this helps us

o We also do technology development work with NASA

E. 11:15 Next Generation Satellite Infrastructure and Services Moderator: Nathan de Ruiter, Managing Director, Euroconsult Canada Mark Dankberg, Chairman & CEO, Viasat Inc. Pierre-Jean Beylier, CEO, Speedcast Pradman P. Kaul, President & CEO, Hughes Network Systems Kevin Steen, CEO, iDirect Technologies Luigi Pasquali, CEO, Telespazio Mark Dankberg, ViaSat

• 560 commercial aircraft in service and another 900 in backlog • Flexibility is valuable, especially in the mobile market as geographic density of demand

is variable • Customers across the board want video • People want bandwidth – latency is least thing they will pay for • Aircraft market is probably a $1 to $2 billion opportunity • Community hotspot is a huge market opportunity – many times larger

o In developing countries, people are more likely on pre-paid plans where people are more price sensitive

o Need to be compete with terrestrial technologies • Cheap Iinternet is not a hard sell • Not hard to stimulate demand for internet in rural markets if the value proposition is

good • Data is enormously more efficient on a cost/bit than voice and in rural areas people

appreciate that value

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• Connected car will be a good market when we know what the applications are – but at this point we don’t know

o Entertainment, driving, etc. • Interoperability is good, but should not come at the expense of performance

o We’re working on it – Eutelsat, NBN, etc. (Armand comment: He did not mention Inmarsat, perhaps those discussions are not going as well?)

• ViaSat-3 will be very important to manage traffic load • Latency is the performance dimension customer care least about • People will spend $0.01 to $0.02/minute for voice which is the equivalent to thousands

of dollars per gigabit o So there is a value proposition to offer

Pierre-Jean Beylie, Speedcast • Do not own satellites and don’t want to own them

o We are technology agnostic • Largest in energy due to Harris CapRock – should come back soon • Large in cruise market • Announced acquisition of Ultisat (for the US government work)

o Also allows entry into aviation – manned and unmanned • GEOs are evolutionary, LEOs are revolutionary • Going after harder markets to service – oil rigs, etc.

o Over 3-5 years the main issue will still be affordability for consumer markets o Need universal service obligation funds to justify

• Still in early stage in aviation – fierce competition to get on board aircraft • Doing deals at prices that don’t make sense but is attractive in the long-term • Agree with Mark D on connected car, but unclear what role satellite will play • No intent to sell Speedcast – bad rumor in the press (Armand’s comment: Some of us

might have reason to believe differently J) • Verticals are worried about more than bandwidth – don’t think operators will try to

compete there – only SES does this in maritime o they don’t have capabilities

• As new HTS satellites are launched, satellite performance barrier is less about available bandwidth and more on the modem side – also smaller and cheaper antennas

Pradman P. Kaul, Hughes Network Systems • Want to be market leader in every area we operate • International markets doing well • Jupiter-3 ordered – focused on where there are customers • 1.1 million U.S. subscribers

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• Filling-up beams now and demand is higher than supply, no need to worry about flexibility

• Entered Brazil last year – now almost 70k subs – now expanding in Latin America o Telesat-19 on hosted payload will cover Chile, Columbia, and other countries o Jupiter-2 covers U.S., Canada, Mexico and some Caribbean countries including

Cuba, Panama and Costa Rica • Going on their own in larger Latin American markets (85% of subs) – best way to avoid

not giving-up margin o For some smaller countries, it is hard to get retail distribution and they need

partners • 85% of subs come from retail, 10%-15% are from wholesale • Jupiter-3 will be more flexible, but that isn’t as important as it will fill-up anyway

Kevin Steen, iDirect • Leader ground equipment

o Introducing new technology such as new ASIC • Supporting Kymeta phased array antenna

o Industry is all about interoperability and open architecture o Leverage telecom architecture and standards o Believe in open architecture and using “best of breed” o User terminal should be able to seamlessly roam from LEO to GEO and 5G o Asks Hughes and ViaSat to let them use some of their technology (Armand’s

comment: Very bold move) • Small cell is a challenge – not as lucrative on the whole as wireless operators are trying

to keep costs down after paying for multiple upgrades • A raging debate about the size of the connected car market and what will be delivered

o Sheer number of rolling wheels, including the military, is huge • Interoperability will come with maturity and 5G standards that will make it easier

o Service provider focuses on quality of end-to-end connectivity o It’s all about the modem and antenna

Luigi Pasquali, Telespazio • We are focused on satellite communication as well as earth observation, geoinformation

and analytics • Also have some ground infrastructure to support customers • Satellite pricing getting to the point it can complement terrestrial technology

o Focusing on this in regions we are active o Opened a Ka-band B2B offering in Brazil

• Customers are progressively asking for more and more

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• Growing demand from government markets, including civilian o Very complicated

• NSGO constellations are complimentary to GEO o Ground systems are becoming the place for seamless integration of different

satellite systems o Latency goes away more and more when you get to “big bandwidth”

• Lots of developments in the satellite industry o Electrical propulsion is important o User terminals is hardest to solve

General • Most expect LEO broadband constellations to have the largest impact on the sector

(Armand’s comment: I think this is very significant as it suggests greater industry buy-in than I’ve seen before)

o Flat panel technology is also important as it will drive-down the end-to-end cost of providing service

• Division about whether lower-cost capacity or new markets are more important for growing the sector (Armand’s comment: For consumer-focused providers lower cost bandwidth seems most important, but for enterprise-focused providers, new applications are needed to drive demand – of course I don’t know which ones)

F. 12:30 Official Lunch Hosted by Eutelsat G. 14:30 Global Satellite Operators: Paving the Way Through Partnerships Moderator: Pacôme Révillon, CEO, Euroconsult Karim Michel Sabbagh, President & CEO, SES Rodolphe Belmer, CEO, Eutelsat Daniel Goldberg, President & CEO, Telesat Daniel Goldberg, Telesat

• No launches recently, but busy o Two satellites launching 1H 2018

§ 1 replacement and 1 new with some HTS o Launching LEO prototype for LEO Ka-band constellation

§ PSLV was going to launch another, but have a delay • 1/3 of revenue is from Canada

o Deep at work to improve broadband for rural Canada § More developments later this year § One of new satellites being launched has HTS beams for far north of

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Canada • Lots of supply coming on line

o Demand for broadband is growing dramatically § Challenge is to bring forward architecture to meet client needs and future

demands o Some headwinds in Latin America, oil sector etc.

§ Now some stability on pricing in some markets § Continued price pressure in others § Need to offer differentiated services

• To make money on VHTS systems, you need to understand the market and differentiate your offerings

• Spectrum is lifeblood of new services o New projects may have enormous value o Need to prevent spectrum warehousing o But need flexibility for broadband systems to accommodate the technical

complexity of their deployment • Growth in industry is around broadband and in NGSO/LEO

o Manufacturers will make a few large GEOs and lots of NSGO/LEO smaller ones § For consumers you need a cheap antenna that doesn’t yet exist

o Manufacturers are getting more vertically integrated – ViaSat building their own payloads adding a wrinkle

Rodolphe Belmer, Eutelsat • New strategy announced last year

o Stock price has increased from 15 euro to about 25 euro • Adapting strategy to slow growth

o Shrinking investment to increase cash flow o Cash flow has increase 60% to over 400m (euro)/yr o Slow top-line growth until 2020

• Impact of OTT, etc., business is barely impacted and can continue to grow o IP TV will react alongside IP Video

• Growth is at the corner in the industry • Need to bring high capacity for lowest price – all in

o But don’t want to be a mobile backhauling company § Telcos will eventually add fiber to cell site

o Need to consider terminal cost - $350 now – and that’s too expensive outsider the U.S., Canada and Western Europe

• Satellite will be only assets to provide broadband to planes

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o This is an area telcos won’t go for at least 10 years’ time • Returns in the industry have been bad, but are getting better

o Distribution partners are necessary • Competition in WRC-19 for spectrum with telcos • Industry will be much more conscious of capX utilization over the next few years

o We are in transition • Sees increased telcom interest in the satellite sector

Karim Michel Sabbagh, SES • Want to be sure what we offer is scalable • FSS markets are distinct

o Question is how to develop new revenue streams so they are viable in the future o Need to change the model from what worked in the past

• Video - it’s a stable business with pockets of growth – stable to single digit growth o Some growth in integrated video services – multiple formats

• Fixed Data – most significant transition o Demand for data is increasing but client demands are more complex

§ Growth with managed services • Mobility – dynamics are different • International government is also growing

o Resilient data networks with satellite at the center will be the network of the future

• Need to bring cost of delivery down significantly (Armand’s comment: This was a constant refrain at the conference)

o Lowering cost of service down is accretive to revenue in most tech markets • To make a return on VTHS, you need a network in each market • Need to get close to your client

o Can do it by working with your partner o Deliver not just to be big screen, but in 140 different formats

• Already delivering 150 Mbps backhaul to a cell tower o Need to be able to scale-up

• In periods of transition, there is speculative investment o You want spectrum policy that ensures it will be used as of a certain period o But you don’t want spectrum policy so restrictive that it stifles investment

• Started as an industry by procuring one satellite at a time o Then ordered under a standardized umbrella – creates economies of scale o Now ordering satellite with vertical integration of other parts of the value chain

and negotiating component ordering, sequencing, working capital etc.,

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• Sees telecom interest in the sector, but less than last year

General • View of the future is not too bad • There will be some additional vertical integration

H. 16:15 Established Players Moving to the Rhythm of a Changing Launch Market Moderator: Rachel Villain, Principal Advisor, Euroconsult Stéphane Israël, CEO, Arianespace Gwynne Shotwell, President & COO, SpaceX Kirk Pysher, President, ILS Tory Bruno, President & CEO, ULA Gao Ruofei, Executive Vice President, CGWIC Ko Ogasawara, VP & Director, Space Systems Business Development Department, MHI (Armand’s comment: I had to miss most of this panel as I went to a meeting) Gwynne Shotwell, SpaceX

• The good • 13 successful launches since last year’s Amos-6 failure • Recovered 10 of 10 • Commercial side of the business is slow • The bad • Commercial side is slow

H. Evening Events

• The industry’s elite mingled over an uber-exclusive dinner party at Alain Ducasse’s bistro, Aux Lyonnais (see: http://www.auxlyonnais.com/en ). Some attendees even decided to attend the conference while in town for the dinner.

o Sponsored by Summit Ridge Group, ManSat and Hunter Communications o (Armand’s comment: No apologies for unashamedly plugging my own event, it’s

one of the few fringe benefits of publishing these notes J) • Arianespace and Milbank Tweed also hosted dinners (Armand’s comment: Reviews are

welcome)

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III. DAY Three: Wednesday, September 13, 2017 A. 09:00 5G and the Future of Communication Networks François Rancy, BR Director, ITU

• Oversees process of how satellite operators get access to spectrum o Will talk about 5G and satellites

• 5G seeks to connect the world o Will need spectrum

• ITU Wants 30 GHz – more than 15x what they have now o ITU wants harmonized bands

§ Satellite and broadcasting bands are already harmonized o ITU looking at bands beyond 24 GHz

§ Needs 100x the cell sites as 2 GHz • Will not be used for coverage, but rather capacity in urban areas

o Cooperation is needed to make this happen • Broadband mobile will cover all areas of the world

o Will need some satellite capacity in rural areas • (Armand’s comment: Subtext seemed to be that the satellite industry should cooperative

with spectrum sharing because the wireless carriers will get it anyway, and that there is some upside to the satellite industry)

• Q&A o Don’t see 28 GHz used in much of the world except the US and Korea

B. 09:15 Spectrum and Regulation - The Way Forward for 5G Rollout Gilles Brégant, General Director, ANFR

• Spectrum is used in lots of businesses – even agriculture – it’s an important resource • Need to take bets as a spectrum manager – is 5G the place to put a large bet? • 5G will be used by massive IoT – “massive” means “indoor” • Huge momentum with 5G • Most of 5G is terrestrial, so development will be incremental

o Won’t be like SkyBridge – a big project that never happened (Armand’s comment: A real slam on the satellite industry)

• C-band will be pioneer band for 5Ghz o Need for higher bands for 5G

• Before 2020 we need o 3.4-3.8 GHz o 26 GHz o Europe supports 28 GHz

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o Interest in higher bands 40.5 – 43.5 GHz and 66 – 71 GHz • Expect

o CEPT and RU 5G harmonization for the 3.4-3.8 GHz band o WRC-19 – follow-up and select spectrum above 24 GHz o 2020 – deadline for making 700 MHz available o 2025 – all urban areas and major terrestrial areas covered with 5G

• Satellite will help make 5G a reality • Europeans seem to think 26 GHz is more future proof than 28 GHz the US FCC is

focused on

C. 09:30 Satellite Manufacturers: New Products & New Clients to Remain at the Cutting Edge Moderator: Steve Bochinger, COO, Euroconsult Jean-Loïc Galle, President & CEO, Thales Alenia Space Dario Zamarian, President, SS/L Arnaud de Rosnay, SVP Telecommunications Satellites, Space Systems, Airbus Defence and Space Mark Spiwak, President, Boeing Satellite Systems International Inc Lisa Callahan, Vice President and General Manager, Commercial Civil Space, Lockheed Martin Space Systems Company Frank Culbertson, President, Space Systems Group, Orbital ATK Jean-Loïc Galle, Thales

• 2017 is a challenging market o People want faster production, lower price, etc. o Challenges on the solution side as opposed to the market side

• Maybe 10-15 satellite orders per year in the future, no longer 15-20 as in the past o Number of satellites is not the real issue

• Border between large and small satellites is blurry • $3.5 million/GHz before is now $1.0 million to 1.5 million/GHz • 24-36 months’ production was normal 2-3 years ago • 12-18 months’ production is possible and will soon be standard

o Need to pre-order long-lead items and configurability of payload • Ground segment is also important • Hard to draw line between realm of small satellites and other satellites • Satellite industry needs more clarity between the relationship between satellite

operators and their distributors

Dario Zamarian, SS/L • Industry is uncertain but promising

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o More of the satellite industry will be part of the telecom ecosystem than in the past

• Servicing satellites in space is important o Looking for different form factors for satellites

• Cost per bit cannot be taken in isolation of where customers are o Need to find lowest cost/bit over high density areas o Earth is full of areas that are not attractive from a revenue perspective

• Governments welcome standardization with commercial business • Small sats are a third pillar of our business • If we agree on some common element, we can reduce cycle times significantly

Arnaud de Rosnay, Airbus • Business has been uncertain in the past

o Market is slow on the contract side, but busy in the company due to production backlog and innovation, including on payload

• Number of satellites is not relevant o Working on bringing solutions to demands

• Operators are looking at a wider range of satellites • In middle of OneWeb constellation now • Advances

o Using virtual reality for design and manufacturing o Using 3D printing o Looking at artificial intelligence for cell-testing o Automated manufacturing o Factory of the future is the factory of the present

• Agree with faster production times on big satellites (per M. Galle) o Also asked to do similar with smaller satellites

• We expect lots of automation, but not a fully automated satellite production o Going the last step does not yield cost benefits

Mark Spiwak, Boeing • Challenge is how can we differentiate ourselves

o Very innovative time – Apple just announced LTE watches o Things are promising in markets where there are inflection points -– optimistic

• The capability and flexibility we are providing customers is what is important, not the price/Gb

o Number of GEO orders is not best metric for industry’s health o No one single metric to measure

• What government and military needs in terms of capability, is the same as commercial

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need – connectivity, etc. • Large vs. small satellites depend on business plan

o Need to look at suite products and figure out what makes most sense • Operational innovation is exciting

o Boeing is working hard to streamline production o Taking the best operational practices across the company and implementing in

the satellite manufacturing business o Easier to test digital components o Testing equipment is getting more complex – looking at ways to test the test

equipment • Want satellites cheaper and quicker

Lisa Callahan, Lockheed • Market is uncertain, but promising • Looking to drive to as much commonality as possible to keep costs down and use

uniqueness to drive custom client solutions • Number of satellites is not a relevant market indicator • Government and commercial sides of the business are blurring • Likely to have different layers of satellites (GEO, MEO, LEO) – it’s an issue of closing

the business case • Family of solutions supported by vertical integration • Invested in (nanosat company) Terran Orbital to share technology • Digital tapestry has been used for 10 years

o Using it with vendors to do pre-testing o Looking hard at data analytics to improve reliability, etc.

• The more agreement on commonality and scale, the faster the production cycles o Looking for satellites that are programmable

Frank Culbertson, Orbital ATK • Market environment is challenging but has upside

o Pushed hard by customers to innovate o Lots of pressure on price makes it hard to keep supply chain as robust as it

needs to be o Technology change creates some uncertainty o Market will move more positive in next 12 months

• Will deliver 54 satellites of several different types o Medium sized constellations will likely be most effective and will drive changes in

GEO • Gov’t not willing to pay high prices any more

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o But moving to commercial use will help industry • Hard not to think of these large constellations as space debris • We have lots of products that can be adapted to customer’s individual needs • Drawing board to finished product is getting quicker

o Reflects developments in society • A bit skeptical regarding 3D printing • If customers can accept standardization, we can build quicker • The 50 satellites are mostly Iridium, 3 GEOs and some gov’t

D. NEW SHORT SESSION - Portugal • (Armand’s comment: This addition seemed a bit out of place) • New space for technology-based business ventures

o A global pilot action in the Atlantic § International research center for job creation and technologies § Organizing conferences to integrate space and ocean data

• Azores as headquarters for Atlantic Research Center o Vision is seamless integration of autonomous platforms o May add a spaceport

• Particularly trying to provide network of international business ventures

E. 11:15 In Discussion with Export Credit Agencies Moderator: Sima Fishman, Managing Director, Euroconsult USA Frédérique Gournail, Head of Unit for Space, Telecommunications, Energy & Project Finance, Bpifrance Tushar Handiekar, Director, Infrastructure & Industrials, Structured and Project Finance, Export Development Canada Frédérique Gournail, Bpifrance

• Management of state guarantee has been transferred to BPI in December 2016 o Teams have been transferred o Decisions-making process is the same

• Need to follow the flow and stick with where the demand is o Lots of deals in satellite sector o Maybe more structured financed

• Don’t do loans, only guarantees • BPI manages portfolio and satellites are not the largest

o Intended to help exporters and French industry • Take market risk

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• Portfolio doesn’t reflect the market as we need to evaluate risk and guarantees

Tushar Handiekar, Export Development Canada • Heads infrastructure finance group as EDC

o Satellite is a big portion of communications infrastructure • Mandate is to promote exports and financial investment

o Raises money in the private market o Has a liberal view of how to implement strategy o Has a range of products including equity investment

• Lots of project finance and telecom is a large part of that • Role of ECA is evolving

o Industry has gone through cycles – banks are less involved in direct lending and replaced by ECAs

o Many new players entering the sectors including NGSO • Have internal boundaries on how much we can lend and to where – by industry and

country o In satellite sector, size is not a problem o Need to make it work for everyone

• From an EDC perspective, we look at overall risk and don’t look at it as subsidizing the equity

• Look at risk across the project – not afraid of taking market risk • Portfolio expands across all sub-sectors in the satellite sector

o If deals are well structured the appropriate returns for everyone can be preserved

F. 11:45 IOT & M2M – Opening New Markets for Satellite? Moderator: David Hartshorn, Secretary General, GVF Mike Mulica, CEO, Actility Mina Mitry, CEO, Kepler Communications Bryan McGuirk, CCO, Globecomm Mike Mulica, Actility

• Actility is Paris-based o Large marketshare in LPWA o Deal with Inmarsat

• Most IoT applications are fixed and don’t move o Small amounts of money from each point, so you need to have an efficient

business model • IoT is a complex ecosystem that is both local and global

o Devices made to global standards, but local distribution etc

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• Local companies can have global impact o New Zealand is a big leaders in agricultural verticals o Service providers can take advantage of both local and global opportunities

• Gas companies in Japan used IoT to be able to turn off gas lines within 10 seconds of an earthquake warning per gov’t requirement

o May see similar things in the US • Inmarsat uses our software platform that allows them to enter the market in an

immediate way o Connects sensors that are integrated to satellite network o LTE and LoRa sensors o Data stored in the cloud

§ Value is not in the connectivity, but in the cloud • Metric for value is not payload, but getting synthesized versions of events so they can

take action • No 5G ecosystem yet

o LTE-M and 5G distance is not far • Unlicensed spectrum is critical to avoid roaming agreements

o Can use peering • Customer demand growth seems to be organic

Bryan McGuirk, Globecomm • Globecomm – just under 400 people – about ½ are engineers

o Many projects have satellites connected to another technology o Scaled VSAT network – 24 beams – covers everything but the poles o Global fiber network connected to 29 HOPS

§ Have dark fiber and do own provisioning o Tier 1 telco reseller including L-band satellite operators o Satellite partner of AT&T

• IoT is less than 10%, but it is a fast growing area – maybe a 12% CAGR o Looking to “lean-in” to the market

• Maritime is core market for Globecomm, but IoT is focused on heavy industrials, including oil and gas and utilities

o Equipment and geographies that go beyond typical cellular areas • Cheaper hardware has enabled broader deployment • Globecomm is a partner with Inmarsat

o Platform is designed to homogenize call data from different providers and allow if to be used easily

o Have own VSAT network

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• Have terrestrial switch that covers lots of the countries o Working on integrating new cheap devices into 4G o 5G is a question mark – depends on whether customers want it

§ Now about LTE and Cat-M • Hand to hand sales effort is needed to get stuff done

Mina Mitry, Kepler • IoT is part of a broader market

o Using some technologies that will be repurposed for space • Working on deployment of global network

o Finding customers who need it and don’t have other options o Equipment walking off-site is a customer use case

• Completing satellite, expect deliver soon; plan to get 140 by 2020 o Well financed through initial constellation o Not at the point to talk about financing of larger constellation

• Comparing themselves to terrestrial rather than satellites o Does it work? as opposed to payload specs is the important metric

• Customers not always aware there is even a solution to their issues

G. 12:30 Official Lunch Hosted by Boeing

• Mark Spiwak is retiring after 34 years • Lunch included pineapple carpaccio (see below)

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H. 14:30 New Technology Transforming Video Distribution Moderator: Susan Irwin, Principal Advisor, Euroconsult Philippe Bernard, Chairman & CEO, Globecast David Crawford, Managing Director Satellite & Media, Arqiva Chris Walters, CEO, Encompass Roger Franklin, President & CEO, Crystal Philippe Bernard, Globecast

• Cloud is process, storage and distribution • Satellite needs to focus to be complementary to terrestrial distribution • OTT is the cause of new channels not increasing • Satellite need to clarify relationship with resellers • Cloud provides ability to get remote production • Satellite industry needs to innovate

David Crawford, Arqiva • Our model is “you provide the content; we do the rest” but this is getting increasingly

complicated • Video caching will also be important as it can reduce distribution costs • If satellite cycle times can improve, it has a fighting chance • Service providers need to be genuine service providers to provide seamless processing

of their content and not be in “reseller mode” as that is not a long-term solution • Satellite sector needs to be sure it can reduce pricing at the same proportion as

terrestrial technology and complement terrestrial technology Chris Walters, Encompass

• Encompass supports captures, processes, and delivers content anywhere on any platform

• Make things simple for clients – gives economies of scale o Will have greater impact in the future

• Internet delivery is critical to meeting consumer demand • Personalization will be important in the future • Most UHD is not commercially viable

o Need to totally reengineer value chain from the cameras on • Broadcasters are focused on whether they try to deliver to market directly • Business leaders are more focused on the cloud – but many don’t fully understand the

complexities • Need to constantly experiment to keep clients happy • Adding redundancies to our system that also help reliability on the cloud • Netflix, etc. can be aggressive in content investment as no one seems to expect them to

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be cash flow positive • Flexibility of economic models is critical

o Need to align economics of clients and supplies

Roger Franklin, Crystal • Crystal automates workflows and allows them to see whole network, insert adds protect

data etc. • Satellite is good for wide distribution broadcast, but it’s hard to personalize

o Can’t stream the Super Bowl 100 million times • UHD will be good for consumers, but the upgrade might not be worth it for consumers

o Outside of sports, it’s likely just an extra cost at this point o No incredibly strong demand

• UHD is not likely to change viewing habits • Decrease in new channels • Personalization with satellite needs to be done on the ground • Rights management is getting to be a bigger deal especially with new distribution

channels • Don't want to mess-up the core video business • Need to go to clients and give them new ideas about distribution and not just do what

they ask for • Broadcast is important for sports

o Amazon, Netflix are platforms – content is still king • Need to personalize content

General • All agreed internet-based television is most important impact on transformation of TV

distribution • DVR broke peoples viewing habits and allowed time-shifting behavior to develop • Technologies that drive added revenue will be the biggest disrupters • Most increase in DTH is Latin America and Southeast Asia • Satellite service needs to complement – needs to focus on mass high quality distribution

o More narrow distribution can be done on internet • General agreements that contract lengths are getting shorter, now 5 to 10 years max

o Uncertain about the amount of bandwidth requirement and pricing • General belief there will be some consolidation as it is an economy of scale business

Susan Irwin • 50% decrease in new channels delivered by satellite globally (Armand’s comment: This

trend seems to be a continuation of data from last year went the number of new DTH platforms declined)

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I. 16:00 Regional Operators: Strengthening their Satellite Leadership Moderator: Nathan de Ruiter, Managing Director, Euroconsult Canada Lincoln Oliveira, General Director, Star One Andrew Jordan, CEO, AsiaSat Tom Choi, CEO, ABS Massod M. Sharif Mahmood, CEO, Yahsat Massod M. Sharif Mahmood, Yahsat

• Economy in Brazil recovering • Sub-Sahara Africa shows some signs of recovery and some measures of growth, but

slower than Brazil • Better picture than in 2016 due to macroeconomic conditions • Broadband use won’t be enough to close business model for in-flight Wi-Fi

o Too much capX o Airlines have lots of bargaining power and not incentivized to spend anything

more on their planes in current downturn o Everyone wants in-flight coverage, but no one knows how to make it work

• Government side depends on the situation in the region • Subject to the same pressures as everyone on the DTH side • Industry challenges are caused by multiple factors and no single fix • Life extension won’t move the needle

o Cost benefit on life extension is not financially viable with current proposals o May help extend a satellite a bit, but not a strategy to serve customers

Andrew Jordan, AsiaSat • Six satellites in orbit • Don’t agree that linear TV is dead or even sick • Working towards HTS solution as customers want HTS pricing • Video has a strong future in Asia

o Won’t see economic development that supports terrestrial video distribution in most countries

o 55 countries in Asia – most are developing • Revenue declining by low single digits for each of last five years – even when industry

was growing o Needed to revamp sales efforts

• As been a transition to HD - about 20% o UHD is likely to be very slow in Asia

• Satellite technology is developing rapidly and not optimistic about life extension

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• Our in-flight business is doing well – but admits it’s mostly in China, a closed market • Can update cars at petrol stations with Wi-Fi • Launching an OTT platform for free-to-air customers as a complementary service

o A revenue protection program, so they don’t do it elsewhere and take revenue from us

Tom Choi, APT • Six satellites in operation • ABS 2A – 2nd of electric satellite committed to three years ago • Modest revenue and EBITDA growth this year • Similar to 2016

o Lots of competition and price erosion despite new contracts signed • 3 satellites in last three years

o New DTH platforms o Expect to see growth in 2018

• Bullish on video and DTH – now more than 50% of revenue • Mobile industry did not take-off until standardization and roaming took off • Room to standardize VSAT equipment

o Under $100 or $200 will really grow the equipment • Bandwidth is only 20-30% of the cost proposition • FSS industry is not doing enough to focus on video business

o Close to 100 countries without DTH platforms o Try to make those businesses come alive o 95% of constellations will not return what is anticipated due to terrestrial technical

advances § Satellites won’t have enough bandwidth to be relevant

• Only 5% of earth is where people live o Fish and birds don’t create traffic o Spotbeams where there are no people makes bandwidth more expensive

• Need to think outside the box a bit • Thailand company can build C-band set-top box and antenna for $30

o Sold 19 million of them o Small family owned business o Now all families have TV with access to 400 channels

§ This model can be replicated • Life extension could make sense on some satellites if it could be done at low costs

o Does not make sense on consumer data applications • LEO/NGSO have no future – 95% won’t get launched

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• Millions of capX for each plane o Not sure how the business model works o Makes no sense for regional operators to chase this business

§ Global operators are going after it, so too much supply • Once the VSAT goes to a public place, you have all kinds of issues such as protecting it

from looting/theft etc. o Need ground-based business model figured out

• Satellite industry has built very high quality satellites – this makes them viable for refueling

o Concerned with cheap new systems that aren’t tested as well o If they break, the new systems will interfere with all GEOs

§ Why are they allowed to launch and threaten industry when spending almost no money on quality or testing

• HTS may make sense for last mile o Need to focus on how it competes with terrestrial technology, not other satellite

systems o Hard to manage pubic VSAT terminals for non-technical reasons

§ Security, power etc. § But large potential upside if business model can be figured out

• Too much capacity is focused on aero market • OneWeb has 95% of capacity where there are no people

o Only 5% of 350 Gbps where there are people o Can serve 350 cell phone towers for $120k/month each – makes no sense

Lincoln Oliveira, Star One • Nine satellites – controlled in Rio de Janeiro • Moving towards 60-70Gbps capacity • For operators like Star-One, things like life extension will be useful • C-band will be around for a long time

o Ka-band will supplement C-band • Agree that Aero IFC does not make sense for regional operators, except perhaps as a

complement • Wi-Fi hotspots make sense in some areas to mitigate cellular system overload

o May be good application for satellite • Want to see if you can deliver OTT services over satellite – don’t need a DTH service • Satellites can be considered part of content network distribution – at the borders etc.

o OTT can be next business • Existence of MEV may make operators more comfortable if it is affordable and it works

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• Public hot spots over satellite could help wireless operators mitigate overload

General • Divided if cheaper capacity or new markets are needed to grow the sector • Aero and community Wi-Fi have most upside potential • Concern that connected cars are over-hyped – no one excited about it

J. Closing Remarks – Thank You K. Evening Events

• (Armand’s comment: Evening events were light on Wednesday)

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IV. Day Four: Market Forecasts - Thursday September 14, 2017 A. 9:00 Euroconsult's Views on the State of Play and Prospects for the SatCom market Brent Prokosh, Senior Consultant, Euroconsult

• FSS market is stabilizing. Revenues has fallen two years in a row o Macro-economic issues developing countries o HTS and falling prices

• Infrastructure growth is starting o Data-oriented growth is driving industry, not video o Now dominated by N. America, but headed elsewhere

• HTS accelerating with terabit scale systems o HTS supply to expand to 9 TBbps by 2022 o 30 operators will have HTS by 2022

• Fill rates under 40% expected o HTS cost per unit of capacity is falling o But need to consider flexibility, capX etc.

• LEO well-suited for data applications • Video in developed markets will have marginal decline, but growth expected in

developing counties • HTS growth

o Community Wi-Fi hotspots are growth opportunity o Cellular backhaul and trunking o Mobility growth is strong o More supply aimed at key traffic routes

B. 09:15 Operators Strategy Executives Look at Future Markets Moderator: Brent Prokosh, Senior Consultant, Euroconsult Jean-Hubert Lenotte, Chief Strategy and Strategic Marketing Officer, Eutelsat Barrie Woolston, AsiaSat Frabio Alencar, Star One Jean-Hubert Lenotte, Eutelsat

• Eutelsat has seen slowdown in revenue and will see for a few more years at an industry level

o Pressure on revenue on core business of video, data, etc. will stay o But the right kind of HTS capacity will compensate when deployed

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• Vertical integration – need to have a balance o Profitability of most service providers is very low

§ Need to make sure integration will result in higher utilization of capacity § Look at all verticals/regions, etc. for vertical integration opportunities, but

opportunities are not all there § In video, vertical integration can preserve long-term satellite

competitiveness • Spent lots of time comparing cost competitiveness of various technologies

o Broadband satellite can be cost competitive in many markets – even where there is 4G and 5G

§ For relatively small percent of total market § In developing markets, the infrastructure is often not in place

o Backhaul will be good for a few years, but in long-run telcos will try to have their own technologies to do backhaul

§ Scale economies of broadband are very important • Even largest satellite operators don't realize full economies of

scale yet – need over 500k+ subs • Price is a key point for customer decision makers

o Cost efficiency is based on low cost and flexibility § Ka-band is cheaper than Ku-band by a factor of 2.5 § GEO is well placed to capture the bulk of the long-term growth in the

market • Scale gains on broadband are not reached

o Believe there will be 30% to 50% reduction in cost of CPE - $150 would be a good target

• Some markets don’t need subsidize and others do • Double transition will cause revenue to eventually increase due to HTS

o Need to look at each vertical to see if that is the case § Some markets (such as internet access) that have been lost may slowly

come back

Barrie Woolston, AsiaSat • 70% of our revenue is video • Have some opportunities not available to global operators • Service provider market is difficult

o Hard for operators to enter and make money o Want to be closer to customers, but try to do it by talking to them, understanding

their businesses, and building needed capabilities into infrastructure

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• Asia is a large land mass that is not blessed with lots of terrestrial infrastructure outside major markets

o Looking at where to make the leap to HTS o Need to make sure we have enough flexibility as markets can change

§ Don’t want fixed beams based in areas where market can chance • This is what operators should do as opposed to service

provisioning § Have access to China – HTS will be based on that

• Subject to the complexity of that market • Not enthusiastic about the LEO market

Frabio Alencar, Star One • Growing due to new capacity • Strong video market • Some pressure due to OTT, but not a major threat

o About to announce a new satellite o Adding hybrid satellites – need to keep core business

• Have been doing service business for a while with Embratel o Now trying to work closer with Embratel

• Hard to plan 5 years ahead for service providers, but operators need that insight • Hughes has been successful with consumer broadband in Brazil – I am a customer in

house one hour outside Rio o Not sure consumer broadband is the way to go

§ Tax in Brazil takes ½ revenue • Will expand over Latin America

o Agrees that flexibility is very important due to time to market issues § Argentina may open, for example, or it may not § Don’t want to fix capacity over specific regions

• LEO may expand the market for low latency applications o Think GEO will dominate their markets

§ Can deal with latency with caching, etc. o Constellations will take a longer time our region (Latin America) o LEOs are good for manufacturers, consumer awareness, etc., but not so much

for us § May help LEO’s distribute if it makes sense

• Need to get consumer broadband below $100 for CPE and easy installation o Took 12 hours to install in my house!

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C. 10:45 What's Next for Satellite Manufacturing (Contribution by Elizabeth Tweedie) Moderator: Maxime Puteaux, Senior Consultant, Euroconsult Richard Currier, SVP, Business Development, SS/L Bruce Chesley, Senior Director Strategy, Boeing Satellite Systems Jean-François Charrier, Head of Institutional Business, Markets and Telecom Systems, Airbus Defence and Space Sami Ben-Amor, Marketing Director, Thales Alenia Space Erik Daehler, Direct, Commercial Development, Lockheed Martin Space Systems Company (Armand’s comment: I went to the Earth Observation sessions that were running simultaneously and missed most of this panel. Elizabeth Tweedie, president of Definitive Directions, graciously contributed most of the summary for this section) Richard Currier, SS/L

• The value our industry brings to our customers is shifting o Growth is now in data centric and inflight applications vs. consumer BB o We need to get bits to where market/customer is located.

• First UHD (Ultra high density) satellite ordered – Jupiter 3 – this has a good alignment of capacity to users

• Need to make satellites last longer, so better ROI, therefore going to go into in-orbit servicing for GEO and LEO

• Earth Observation is important for the Industry in general – demand expanding on government side, so we’ve been expanding in this area

• Market trends o Data centric applications – will need great level of interoperability between GEO

MEO and LEO and between 4G and 5G and satellite o Satellite is a $15 billion per year business – telecom is a $1.3 trillion business so

we have to be able to integrate o Most market forecasts are for a rebound to 10-14 GEO satellite orders a year

• Key metric is cost per usable bit. To help reduce this: o Standardization o Greater efficiency o Miniaturization of electronics o Software defined satellites

• Change in volume is as important for suppliers to manage as it is for us • We keep them informed so they can prepare and adjust as we do • SES said 80% of their traffic is not latency sensitive, 20% is – so operators was a mix of

LEO, MEO GEO

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Bruce Chesley, Boeing • Launched 6 satellites including 5 commercial satellites in 2017, 13 since beginning of

2016 o New GEO orders from SkyPerfect and Jsat – Ka band to service 20 countries o mPower – manifestation of layered architecture, integrating GEO and MEO

• Decrease in orders this year due to market uncertainty, leading to a pause in purchasing behavior of some of operators

o Attribute this to the shifting nature of demand to data centric applications and integrated media.

• Demand for bandwidth is explosive – partly fueled by technology advances that have lowered the cost per usable bit, this will lead to fewer larger satellites

o Increased need for NGSOs to provide global capacity o Hope to see 10-14 GEOs in total this year o Will tailor our digital solutions to their needs o There is an enduring need for GEOs

• We have digital payload technology that allows us to put (spot) beams where people are o We will continue to improve capacity density to drive up ability to deliver bits into

very dense areas • We built Mexsat-2 which has helped in recovery efforts following the recent earthquake

o Realtime uninterrupted coverage for emergency services • Foresee boom and bust cycle – huge orders then lull in between

o We’ll all have to adjust to new normal

Jean-François Charrier, Airbus • 12 sats being manufactured – plus OneWeb LEOs

o First full electric HP satellite – Eutelsat 172B o 11 reflectors and can fit lower place on Ariane 5 o Now on way to final orbit – 4 months to get there

• 5 other electric propulsion satellites under construction o 2 contracts for satellites with large digital payloads o 6 under construction (Elizabeth’s note: Didn’t get chance to ask him to explain

this – guessing it means that they already had four under construction and got orders for another two this year)

o Also got government contracts • OneWeb – it was an unprecedented challenge – but the design has been approved and

assembly line designed. Assembly line was inaugurated in June o Designing for this also helped our GEO business – and we will also derive a very

efficient LEO product

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o Tremendous market transformation taking place o Forecast – confident because of video demand in GEO and NGSO o Significant replacement needed – 100 GEOs coming to end of life between 2020

and 2025 o We believe that 50% of these will be replaced

• Expect 10-20 GEO orders per year again o But more variety in the types of satellites ordered o Mid value of satellites will increase 1/3 of mkt will be huge sats >15Kw power.

• In order to prosper we need: o Shorter production cycles o End-to-end optimization o Increased capacity and flexibility

Sami Ben-Amor, Thales • Going into a replacement cycle – 100 satellite reaching end of life from 2020 to 2025

o Expect 50% of market will be replacement • SES 17 and Inmarsat GX ordered – very different connectivity solution • No one flavor so we need to address our offer to customer needs • 40 launches this year – 26 done – many of which were Iridium – totally smooth

integration into existing system • Full design team on LeoSat • Bought Ruag Opto-electronics needed the capabilities for inter-satellite links in the

future • Market trends

o Flat video service market o Classical data growing – slow growth in other data segments o None of these new manufacturing technologies have proven themselves except

for electric propulsion o Deep valley in orders this year, expect market to pick up, we have seen several

orders over $300M o Changing market, will see more smaller satellites and more larger satellites –

fewer in the middle o More standardized digital satellites o Adapting

• SES order biggest by far o SMK HTS – 3 latest HTS contracts

• Need to change ourselves – we’ve hired 700 young engineers in the last few years o We need to work with suppliers to adjust peaks and lows

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o Need suppliers’ innovation to be up to date

Erik Daehler, Lockheed • Excited about next generation satellites

o Delivering 3 in next year – customization of products to suit regions. o SaudiGeoSat1 o We’re investing in new Denver factory that will be able to produce 5 large

satellites at the same time • Digital processor – phone best example, but real value is in the apps on the phone

o That’s where the future is going; we need to follow o Has frequency hopping to avoid interference

• Not business as usual – don’t expect the market to be stable and look the same in five years

General • Move to digital payloads and electric propulsion was a big topic • Digital payloads provide flexibility and electric propulsion provides lower launch

mass/cost

Q&A • Is there room for a satellite on the shelf?

o Rich – Very important goal for us § Digital payloads and software defined satellites are key for us § The payload is customized, the bus can be standardized § On the payload side, we’re shifting to software defined

o Bruce – Driving to goal of allowing a satellite to be a fungible asset o JF – There is a challenge for scalability and adaptability o Sami – Different shelves with different satellites; it doesn’t work for constellations o Erik – Commoditized satellite is a very important part of a stable market – e.g.,

DTH • Lessons learnt from Electric Propulsion?

o Rich - Technology has been performing well – more recent enhancements to EP are to extend it to earlier part of the missions, get higher performing payload for same mass

o Airbus - first EP 2003 worked very well § Different challenge to use it for orbit raising – it won’t always be suitable

o Sami – Now accepted as mainstream, now just a customers’ choice on speed to market

• Are there any synergies between airplane and satellites?

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o Eric – Efficiencies from aircraft can be brought across to satellite (e.g. solar array plant fully automated)

o JF – With OneWeb we worked very closely with aircraft colleagues to set up production

o Bruce – Final assembly of 747 takes 11 days – we have a lot to learn § We are using 3D printing § Working in close partnership with end-user is where we can add most

value – therefore new markets and growth areas give opportunities for innovation and where we can add most value – not as easy as in established markets – e.g., DTH

o Rich – Get cost per bit per year down; in-orbit servicing and SD system are elements

o Erik – Tech cycle changes so quickly don’t want to refresh on orbit o Sami – Going towards fungible satellites – so definitely value to longer life

§ As long as it costs $50M to get it up there, then refreshing technology on a shorter cycle makes less sense

D. 11:45 What Operators Want: View from Their CTOs Moderator: Rachel Villain, Principal Advisor, Euroconsult Yohann Leroy, CTO, Eutelsat Marcus Vilaca, CTO, Yahsat Ken Betaharon, CTO, ABS (Armand’s comment: I attended these panels intermittently as the Earth Observation sessions were scheduled simultaneously in a different room) E. 12:45 Closing Remarks

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V. Day Four: Summit On Earth Observation - Thursday September 14, 2017 (Armand’s comment: I attended these panels intermittently as the Market Forecast sessions were scheduled simultaneously in a different room) A. 9:00 Opening Remarks Lorraine Whitfield, Chief Events & Marketing Officer, Euroconsult

B. 9:15 Introduction: State of play and prospects for the EO sector Pacôme Révillon, CEO, Euroconsult

• EO Satellite manufacturing costs declining o $95M/satellite (2007-2016) o $55M/Satellite (2017-2026 est.)

• Increase in number of satellites o ~180 satellites (2007-2016) o ~600 satellites (2017-2026)

• More smaller satellites • More in-house manufacturing • Non-US Defense is largest growth driver 10% CAGR (2011-2016) • Increase in tasked data volume

o Close to 1 PB for commercial systems • Rise of civilian RPAS (Remotely Piloted Aircraft Systems)

o 25% N. America o 38% Europe o 32% APAC o <1% MEA o 4% LATM

• Value-added services reached $3.5 billion in 2016

C. 09:30 Leading Operators: Adapting Structures and Solutions for Sustained Growth Moderator: Pacôme Révillon, CEO, Euroconsult Jeff Tarr, CEO, DigitalGlobe François Lombard, SVP, Head of Intelligence Business, Airbus Massimo Claudio Comparini, CEO, e-GEOS David Belton, General Manager, MDA Geospatial Services Noam Segal, CEO, ImageSat International

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• Expect new services large part of revenue in 2022 o Room for more data that is being revolutionized by AI and cloud

• Industry is tied to traditional defense contractors that make things expensive • Innovative companies can build satellites cheaper – my biggest worry • Regulatory restrictions are a challenge for some US operators

o Shortwave infrared – want relief for 1st responders etc § Moves slow

o Forces at play to add new regulations § Will get solutions to new problems

• Digital Globe won’t talk about Woldview Legion’s data relay capability o Can buy data by sq kilometer, but minute (for defense) and other methods

• 30 cm resolution at Airbus is native, not resampling • e-GEOS – All technology is based on combining optical with radar • MDA – Still no answer with respect to ability to sell certain data on Radarsat

o Hope to have role with new satellites • ImageSat – more satellites in orbit by 2022 • General comment

o Demand for operation people is a challenge o Sector is fragmenting – no clear path to rationalization o Major problem is not enough capacity o Not much belief in hyperspectral imaging growth o Major challenge is connecting with new clients and pricing of upcoming services

NOTE • Regulatory barriers are a real issue for US operators • Licenses are custom and proprietary •

D. 11:30 Remote Sensing Organizations: Enriching Solutions for Local Benefits Moderator: Steve Bochinger, COO, Euroconsult Christophe Dekeyne, General Director, IGN France International Foster Mensah, Executive Director, CERSGIS, Ghana Abd-Alla Gad, EU-SUDSOE Project Coordinator, Environmental Studies & Land Use, National Authority for Remote and Space Science (NARSS), Egypt Dekeyne, IGN France International

• More and more data is available; May not progress at same rate in all areas but generally progressing quickly

o Usability can be an issue

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o Need advances in ability to take advantage of technology

Abd-Alla Gad, EU-SUDSOE • Want to promote peaceful uses of earth observation • Eight thematic divisions in company • Funded by various government agencies • Have newsletter, training, etc. • Shortage is in hyperspectral imaging

o Need more calibration with ground systems o Need to build training

Foster Mensah, CERSGIS • Helps potential customers use data • Tries to maximize use of land • Clients sometimes have expectations that are too high and need to be managed

o They accept solution if it is timely and cost effective • Lots of data is available

o Landsat archive was opened-up o Have not even explored the information in the data sets

• Having own satellite is a two-edged knife o Good to have your own resources

• Temporal resolution to look at landscape is OK, but not great o Need best of both spatial and temporal resolution

E. Official Lunch Hosted by Airbus

• Got some nice chocolates (see photo below)

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F. 14:30 Geospatial Solutions: New Needs, New Solutions Moderator: Sanjay Kumar, CEO, Geospatial Media & Communications Ted Lamboo, SVP, Reality Modeling, Bentley Systems Ahmed Belaidi, Head of Geospatal Solutions France, Harris Geospatial Lily Xu, CEO, Beijing Space View Technology Christian Weise, Market Manager, Trimble Ted Lamboo, Bentley Systems

• Digital twin to allow inspections, etc., to allow people to stay at their desk • Can use it as a geometric description of the city

o Available in Helsinki • Reality model is capable of detailed analysis of bridges, etc. that is available to all

citizens • Federation of Data – SAP and Google

o Put data in same system so it can be organized o Google knows how to index data and gets to the same place o Big data doesn't always know where data is, but you can combine it with location

analysis to make it more valuable • Looking at “outcome as a service” – being able to give customer the answer they are

looking for • Siemens invested in Bentley because they are also in IoT as Bentley is involved with

Federated Data o Can use Bentley as a way to bridge data over time with images

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o Can do better data handoff and workflow

Lily Xu, Beijing Space Systems • Spaceview is a new operator in the space • 16 50cm satellites + 4 high performance optic + 4 hyperspectral

o Revisit gives better than 50 cm • Also reseller for Comsat, Damos, etc. in China • Have a good processing team, but face the challenge of integrating other non-satellite

data o Combine UAV and satellite data o Not always easy

• Two types of markets o Professionals who want raw data – want classical model – improve time, quality,

etc. o Non-professional wants results and need applications, etc.

Christian Weise,Trimble • Offer solutions of data and connectivity • Trimble has offices globally and more partners • Lower prices have created customer interest as have cloud technologies • Try to offer easy access and use solutions • Links between GPS and earth observation work together well in agriculture

o Optimize fertilizer use, etc. (Armand’s comment – I heard that example from Trimble 20 years ago – what’s new? Maybe the industry is evolving slower that I thought J)

• Agree that outcome as a service makes sense

Ahmed Belaidi, Harris Geospatial • Geospatial market is a rapidly moving domain

o Lots of innovation and initiatives o For large players, the innovation will require them to evolve as Harris has done o Need to develop new applications

• Harris wants to be an end-to-end solutions provider o Work on all parts of the value chain – from the sensor to web services to give

end users the correct information o E.g. services and analytics – work a lot of fusion and integration – some

disruptive and innovative solutions • Challenges in combining data is in analytics

o How do you find the right data? o Data and content management issues?

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o End user has their own data – that might be very valuable to them and different from what we might provide

§ Need to take into account their data, processes, regulation and quality control

§ Analytics with deep learning is important • Geospatial and space is about 1/3 of Harris

o We invested a lot at Harris in technologies and can adapt disruptive technologies to the market

o Can use defense market technology for commercial market

Moderator o Convergence of satellite and non-satellite data is a way forward for the sector

(Armand’s comment – This hasn’t changed much in 20 years) o Over 100 geospatial companies have been acquired by the majors o Large recognition of geospatial imagery of broader market

§ Economic measurement in US is $75 billion – similar proportional numbers around the world

• Creating a very efficient operating system for customers G. 16:00 Manufacturers: Building Tomorrow's Capabilities Moderator: Rachel Villain, Principal Advisor, Euroconsult Mathilde Royer Germain, Senior Vice President, Earth Observation, Navigation & Science, Airbus Debra Facktor Lepore, VP & General Manager, Strategic Operations, Ball Aerospace Donato Amoroso, Deputy CEO & SEVP Observation, Exploration Navigation Domain, Thales Alenia Space Italy Matteo Genna, Chief Technology Officer, SS/L Erik Daehler, Director for Commercial Satellite Capture, Lockheed Martin Space Systems Mathilde Royer Germain, Airbus

• EU looks for o Operation and maintenance costs of platforms; and o Ground stations that can answer as many needs as possible

• Big Data will be a game changer and make the word a better place • Consolidation not likely in Europe • Supply chain is absolutely critical • Delivering satellite faster to the customer

o Recently delivered one in 24 months • Just integrated OneWeb manufacturing facility in Toulouse

Debra Facktor Lepore, Ball

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• Lots going on • Phased array antennas • Working with Spire and others on the analytics side • Do a lot of business with the US gov’t

o Gov’t provides investment in exquisite systems o Now government questions whether they should just buy it off the internet

• Need to build a lot of cubesats to get the revenue of a bigger satellite o Cubesats won’t be our focus but may be a way to test something

• We will see some synergistic consolidation – vertical integration • Drone data will integrate into remote sensing data analysis

Donato Amoroso, Thales • Successes

o Lots of launches o Getting a lot of investment in our footprint

• Progress on meteorology is significant o Government is a customer at many levels o Defense, environmental monitoring

• Government may be changing business model and we need to see this as an opportunity

Matteo Genna, SS/L • More a commercial operator and not directly a government customer

o But many customers serve the government o So don’t build “exquisite” satellites, but ones that are disruptive

• Less activity to build satellites now o Some are not panning out o Some going into services o Still some customers looking to go forward

§ But VCs have become more selective § Maybe a bit of inflation (as opposed to a bubble) that is now coming down

• Some suppliers are good, others aren’t o As a commercial operator, we have a lot of experience working with small

companies – some are innovative, some don’t have economies of scale • Need to be flexible to use the best new products, etc.; some new small suppliers • Build space robotics

Erik Daehler, Lockheed • For four+ year have been trying to diversify, including into remote sensing • Won Norwegian contact for a series of satellites

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• Want to try to restore one of the Landsat assets • Worldview-4 launched in November 2016

o Best imagery from a commercial product o Has real-time data possibility to observe storms

§ Will likely impact weather prediction software • Will always have enthusiasm for new startups

o The issue is whether the business models make sense o A new wave of business plans coming behind current wave that is looking at

problems in a new way • Will see some vertical integration consolidation • Have reviewed many business plans, some were fun • Lots of ideas from innovative suppliers, but need to closely check to make sure te

understand the process • Invest in people to create opportunities – merge civil and military areas to allow team to

have more depth and grow • Hard to clean-up space debris after the fact

General • No consensus about who will be the first beneficiaries of “big data” (Armand’s comment:

Isn’t “big data” several years old? Reminds of the Eagles 1995 song “The Girl from Yesterday”)

• All have seen lots of business plans, some were fun, some were serious

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VI. Day Five: Summit On Earth Observation: Friday September 15, 2017 A. 8:30 Constellations: Managing Disruption, Financing and Monetization Moderator: Matt O'Connell, President, MOC Partners Wade Larson, President & CEO, Urthecast Andy Wild, Chief Revenue Officer, Planet Labs Jason Andrews, Founder & CEO, BlackSky Global Payam Banazadeh, CEO, Capella Space Bobby Machinski, Founder & CEO, HERA Systems Emiliano Kargieman, CEO, Satellogic

Wade Larson, Urthecast

• Urthecast is up to 250 employees and two satellites – Deimos 1 and 2 • Industry is expanding, but the vast majority of tech startups fail • Have $100m invested and patented world’s first fully digital SAR that’s capable of

acquiring pure SAR imagery that can produce colorized SAR images • MDA has deep pockets and has been in the business a long time

o Need to take them seriously o Their entry validates the business

• Not building their satellites or digital platform o Use best of breed

§ Cooperate with largest satellite operators § Harder to partner with some new space companies

• Want end-to-end pricing and satellites that last 10 years o Launch costs are coming down, but not dropping by orders of magnitude

• Give data to humanitarian use o Sponsor a refugee family

• Being publically traded means you are always for sale o Access to capital is hard in Canada that forces Canadian tech companies to go

public early § Creates good discipline for running the company and being accountable

o Signed a contract for over $100 M Canadian and another contract that requires export approval

• Need partners to work in some countries Andy Wild, Plant Labs

• Launched 88 satellites in February and 47 two months ago • Acquired Terra Bella from Google • At 500 people • Need long-play investors

o Not a quick flip

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o Not an R&D project – now designed around real financial metrics • Can build satellites quickly (25 a week), but need to address customer problems • Will speak at Underwriters Association of America as Keynote

o Think there is opportunity to improve risk models with satellite data • Need to pay attention and make sure we execute well • Real pivot to analytics

o Skybox put up constellation to get data for analytics o Focus on high revisit rates

• Work with some independent people to solve customer issues o Have a platform where you can bring you own tools o Much more open source o Adding 15 application developer per month

• US Gov’t and NGA has been positive o Unclear if their budget is growing or not

• Talent is the answer to many problems o Need to get new people into the industry o Average age at Planet is 27-28 o Having a purpose is important for this age group o Give data to schools to build the next generation

• Three groups in the company (I came from outside the industry): o People in company are industry people o Some people are subject matter experts in verticals o Some skilled enterprise salespeople to solve “last mile” issues

• Don’t have a right to commercial market, need to solve problems o Currently 70% commercial

• Grow internationally both organically and with partnership Jason Andrews, Blacksky Global

• Acquired OpenWhere • Have constellation fully financed – relationship with Thales • If we don’t grow the market, the industry won’t support the number of players

o Moving from map-based to being a monitoring sector o Need to sell insights

• Need to engage with customers – they may not even know that geospatial data is there • Developed social media technology to identify when events happen

o News events may be able tell you when events are happening that need focus • How can a guy on his phone pull-up an image in 90 minutes for $90

o Need to do it ourselves as opposed to waiting for the government

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• There is demand if we execute o Reliability must be there, esp. for the US Gov’t

§ Need infrastructure, etc. to make that happen o Recently signed a contract for data analytics

• Launches are still delayed – took 1 ½ years for last one due to a number of issues o Need more launch options o Rideshare business has been great, but can’t control your destiny o Need to build and modernize launch sector to maximize the sector

• While we are enamored with our hardware, we are a software company going forward o Partnering with Thales to produce constellation o Moved to downtown Seattle to get better talent

Payam Banazadeh, Capella

• Plan to launch SARS satellites o 1st in 6 months, goal of 30 satellites o Fully funded through 1st main phase in 2019

• Market is growing – but very little commercial business in SAR o Customers don’t care about SAR, they care about the quality of the data

• Need a constellation of 30+ satellites to provide quality timely data • Need to focus on the commercial world and how to get them answers • We are dependent on each other

o Need to work together at some level o No persistence or consistency in SAR data

• It’s not about satellites, it’s about the software o Need to be careful and integrate software correctly into the satellites so that the

resulting information is new and differentiated • Cheaper and quicker to build in-house and you know it well

o Can incorporate customer feedback quicker • Hopeful that launch industry will improve • Hard to recruit people from major Silicon Valley companies • Malaysian Airlines was motivation to start company

o We will give data to academics – (where many of us in the company came from) • All made in-house

Bobby Machinski, HERA • Closed Series B and offering a Series C to fund constellation of 50-60 satellites • Look for machine readable color SAR data

o It is about deep user engagement and data quality o Need to get as many apps on board as possible

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• Smallest 1M platform in the industry o Can move to 0.5M instantaneously

• Not just imagery for pretty maps, but for useful business information • Need to really get the costs down using small sats • Seeing lots of changes in launch technology

o Moore’s law will do a lot of the work o Satellites and launchers are going down in size

§ Can do in 3-6 months what used to take 3-4 years • 27-28 years is the average experience level (vs 27-28 years old) at HERA Systems • Build custom payload in-house but will partner with a manufacturer • Cost of running analytics are coming down and will open-up commercial markets

o Currently about 50% commercial

Emiliano Kargieman, Satellogic

• Six satellites in-orbit; two more awaiting launch this year and plan to launch another 12 satellites next year

o Want to remap planet at 1M resolution daily within four years o See China as a key market

• Bet is that is you can dramatically reduce price and increase quality, you can open-up new markets – want to lower price by an order of magnitude

o Can’t dramatically lower price by hiring people who have done it the old way for years

• Small satellite and easier access to space and machine reading converge to allow this to happen

o But we could be five years off and we won’t be here o Question is how long it will take to grow the business 100x

• Looking at a different set of customers today than in prior years • We build everything that goes into our satellites • We build our own analytics because we can do it so that it is good enough for our

customers • More optimistic about launch costs • People move from job to job too quickly in some areas, and that is not good for the

business • We have a group that tries to figure out how to put imagery to good social use

o Hyperspectral EO data available for humanitarian and science use • Hope to qualify as a Chinese company, due to parts, so we can qualify for Chinese

market entry, but not sure • Mostly focused outside the US

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Matt O’Connell (Moderator)

• Industry is now doing a better job at cooperating

• Need to stop selling what you have and start selling what they want

o This is opposite of the way many satellite companies work

• Before SpaceX, there was no choice for US operators

• Pet insurance was last new benefit plan added at GeoEye

• Lots of GeoEye people came from cell phone industry

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