Heavyweight SES Leans on Europe To Meet SpaceX Launch Prices


PARIS — Satellite fleet operator SES on June 25 told investors it is flexing its muscles to assure that a European commercial electric-satellite product is developed to compete with Boeing and other U.S. providers, and to force Europe’s launch vehicle industry to cut prices to keep up with SpaceX.

In a series of presentations, SES management said the company will be using its influence as the operator of a 55-satellite fleet to continue to drive down the cost of delivering a megahertz of satellite bandwidth to its customers.

Luxembourg-based SES was the first large commercial satellite operator to use the Space Exploration Technologies Corp. Falcon 9 v1.1 rocket, whose low prices are already having an effect on commercial industry leader Arianespace.

SES Chief Executive Karim Michel Sabbagh said that while Europe’s launcher industry appears to have begun to move in the direction of lower-cost rockets, SES would be keeping up the pressure.

“If we at SES, with our global market leadership, don’t say, ‘This is what a good launcher program looks like,’ then no one is going to do it,” Sabbagh said, adding that the company would be acting “across all facets of the industry — the launcher, the satellites, the integration of MEO [medium Earth orbit] and GEO [geostationary orbit] assets, and the applications and ground segment.”

SES has agreed to make a modest early investment in design work as part of a European Space Agency program called Electra, whose goal is to produce an all-electric-powered commercial telecommunications satellite to compete with El Segundo, California-based Boeing Space and Intelligence Systems’ 702SP product.

SES Chief Technology Officer Martin Halliwell said SES’s next satellite order would be an all-electric design. He did not say whether it would come from Boeing or some other source.

Halliwell said a satellite weighing 7,500 kilograms using conventional chemical propulsion would weigh 5,200 kilograms using electric propulsion, allowing it to be launched on the SpaceX Falcon 9.

Forcing the use of commercial off-the-shelf products, embracing electric propulsion to keep launch costs down and pressuring launch service providers to cut prices across the board should permit SES to reduce satellite procurement costs by 20 percent by 2018, Halliwell said.

SES Chief Financial Officer Padraig McCarthy said the company’s satellite costs have already dropped by about 5 percent, mainly because of the drop in launch prices and also because of substantial declines in the cost of satellite insurance. The price drop should continue as more electric propulsion is added to future SES satellites, he said.

McCarthy said that in addition to the three satellites SES now has on order and scheduled for launch in the next two years, the company is about to issue bid requests on three spacecraft to open up new markets, and will order three more satellites to replace aging spacecraft in the fleet.

Assuming an a 15-year service life — SES still uses this as a measure even though most of its satellites last longer than that — SES needs to purchase three or four satellites per year, on average, just to maintain its current fleet strength.

That, plus the fact that SES is continuing to grow as it expands into emerging market such as Latin America, gives the company considerable weight, and it is now less reluctant to throw it around.

“The idea of the Electra is to have a European counterpart” to Boeing and other U.S. satellite builders about to introduce all-electric designs, Halliwell said. “Basically it is to push back against the American manufacturers and get European industry focused on this, to work on these types of platforms.”

Halliwell said SES has made clear to the European and French space agencies that their way of developing rockets will need to change — and quickly.

One of the reasons rocket hardware builder Airbus Defence and Space and rocket-engine builder Safran agreed to form a joint venture in launch vehicles and to propose a new next-generation Ariane 6 design was SES pressure, Halliwell said.

The Airbus-Safran proposal in large measure scraps an Ariane 6 architecture that European governments had been working on since late 2012.

“The designs they have put forward, and the price points they have put forward, are a little lacking in ambition, we believe,” Halliwell said. “They will not get us where we need to go in the time scale we require.”

In a comparison that has been debated before in Europe, Halliwell pointed to the expected approval by European governments in December of a new Ariane 5 upper stage to increase the vehicle’s power and flexibility.

ESA is asking for 1.2 billion euros [$1.6 billion] just to complete the Vinci engine,” Halliwell said, referring to the upper stage propulsion system that will power the new Ariane 5 version, called Ariane 5 ME. “It has taken 12 years to complete that engine — the time since SpaceX has existed. SpaceX was zero and it has now built an entire launch system and they will now continue with a far more advanced system.

“Europe has to change gears, and get going,” Halliwell said. “I think they are now, finally, getting the message. They have to step back and make this thing happen. This Airbus and Safran move is the first real reaction. They are saying, ‘Look, we’re not going to survive if we stay like this.’”