Europe signs €10.6 billion Iris² satellite deal to compete with Elon Musk’s Starlink

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Europe has launched its most ambitious space program in a decade, signing a contract to build a €10.6 billion satellite network. EUR to compete with Elon Musk’s Starlink in providing high-speed connectivity to European governments and citizens.

The multi-orbit Iris² constellation is Europe’s third major space infrastructure project after the Galileo navigation system and Copernicus, the world’s largest Earth observation network. It was announced two years ago with the dual aim of providing sovereign, secure communications services to EU member states while reviving the bloc’s flagging space sector with a ground-breaking project.

The negotiations have been fraught with disagreements about the escalating costs and risks and how the work will be divided. On Monday, the European Commission set a price tag of DKK 10.6 billion. EUR on the program, with 61 percent publicly funded and the rest coming from the SpaceRise industrial consortium, led by Eutelsat, Hispasat and SES. The project was originally estimated to cost around €6bn.

Timo Pesonen, the Commission’s Director-General for Defence, Industry and Space, emphasized the strategic importance for Europe of having its own space-based communications network. Autonomous and secure connectivity was “imperative” for the EU, he said.

“Iris² supports our strategic autonomy and defense capabilities, advances our competitiveness and energizes public-private sector collaboration,” he added.

SpaceRisewhich includes European space and communications companies Airbus, Deutsche Telekom, Telespazio and Thales, among others, will have a 12-year concession to design, build and operate Iris².

The project will place 290 satellites in low and medium Earth orbits, with a goal of starting operations in early 2030. The majority of its capacity will be dedicated to a commercial broadband service that the satellite operators offer to businesses and households. But a significant portion will be dedicated to secure services supporting public applications such as surveillance and crisis management.

Eutelsat, the highly leveraged French satellite operator that has been counting on Iris² to help fund the development of its next-generation OneWeb satellites, is investing €2bn. EUR in the project as the largest single investor in the private sector.

Eva Berneke, CEO, said the investment was limited and would not be needed until 2028, when production starts. Still, OneWeb would be able to integrate technology developed for Iris² into its own new satellites sooner, she said.

“We are getting access, and maybe even faster access, to the technologies where the costs are very heavily financed by public funds,” she said.

The program should offer a pipeline of contracts for Europe’s space industry, which has struggled to adapt to a shift from large communications satellites in geostationary orbit about 36,000 km above Earth to mega-constellations of smaller spacecraft in low-Earth orbit — the region spaced up to an altitude of 2,000 km.

Thales and Airbus, Europe’s two biggest satellite makers, have announced thousands of job cuts in recent months to counter the decline in their traditional geostationary businesses.

In his report on European competitiveness published last September, former Italian Prime Minister Mario Draghi found that Musk’s Starlink satellite broadband service, with more than 6,000 spacecraft providing communications services to more than 100 countries, “disrupted European telecoms operators and manufacturers”.

Commercial and export sales in the sector had fallen to close to 2009 levels, and the EU was now “lagging behind the US in terms of rocket propulsion and mega-constellations for telecom and satellite receivers and applications, a market much larger than the other space segments”, Draghi found.

Josef Aschbacher, director general of the European Space Agency, said the program would “promote innovation in the European space industry, increase European competitiveness (and) create jobs”.

There are also hopes that Iris² can help heal some of the divisions threatening Franco-German cooperation as the EU tries to introduce competition in the procurement of space launch and cargo services. Earlier this year, Germany expressed concerns about costs and the likely division of labor in Iris², two people close to the matter confirmed to the Financial Times.

Philippe Baptiste, president of the French space agency CNES, insisted that there was no guarantee that French companies would dominate work on Iris², as the program would not award contracts on the basis of any nation’s investment.

Instead, the satellite operators leading the consortium will be allowed to choose the most competitive suppliers. “I would be happy to have a large workload in France, but there is no guarantee of that. If Thales or Airbus want a large share, they have to be very good and very competitive,” he told the FT.

Baptiste said Iris² would increase European competitiveness: “We used to be clear leaders in Europe for space-based telecommunications. But right now the market is clearly shifting to LEO (low Earth orbit).

“It is important not only for the strategic agenda in Europe, but also for companies to gain leadership in technology. It must be competitive, he added.