Orbcomm Chief Executive Marc J. Eisenberg

PARIS — Satellite machine-to-machine messaging service provider Orbcomm reported Nov. 8 a huge and unexpected increase in revenue from its maritime vessel satellite-monitoring service and said this revenue source could get five times bigger when the company’s second-generation satellites are in orbit.

The news on Orbcomm’s Automatic Identification Service (AIS) revenue for maritime surveillance came just two weeks before the 20-nation European Space Agency (ESA) will decide whether to spend more than $100 million to build and launch its own AIS satellite.

ESA officials have said their AIS system will not compete with Orbcomm or with exactEarth of Canada, which is commercializing a competing AIS service. Instead, ESA proposes a technology designed to capture ship data from highly concentrated maritime routes — something they say neither Orbcomm nor exactEarth will be able to accomplish to the satisfaction of civil and military authorities.

Fort Lee, N.J.-based Orbcomm, which as of Nov. 8 had been unable to reopen its headquarters following Hurricane Sandy, said its AIS revenue rose to $700,000 in the three months ending Sept. 30, up from $400,000 in the previous three-month period as the company booked more new AIS customers than it had forecast.

Orbcomm Chief Executive Marc J. Eisenberg said during a Nov. 8 conference call with investors that Orbcomm’s AIS is provided by just two microsatellites launched in October 2011 and January of this year.

A third AIS-equipped satellite, which was a prototype of Orbcomm’s second-generation constellation of spacecraft and also carried an AIS payload, was destroyed following a partial Oct. 7 launch failure on the Falcon 9 rocket operated by Space Exploration Technologies Corp. (SpaceX) of Hawthorne, Calif.

The satellite was placed into an orbit of 193 kilometers by 325 kilometers instead of the planned 325 kilometers by 750 kilometers as a consequence of the failure of one of the nine first-stage Falcon 9 engines.

Orbcomm and satellite prime contractor Sierra Nevada Corp. of Sparks, Nev., with an assist by Boeing, worked to raise the satellite’s orbit but could not. It fell back into the atmosphere and was destroyed just 53 hours after separating from the rocket.

Orbcomm is filing a $10 million insurance claim for the loss and expects to take an $11 million impairment charge in the fourth quarter because of the loss of the satellite.

Eisenberg said that once the 18 second-generation Orbcomm satellites are in orbit, the company will have a 20-satellite AIS system offering higher detection rates and less time between detections. The two-satellite system already provides data on 100,000 ships, he said.

“As we go from two to 20 satellites, we’re not growing revenue by 10x, but the business could grow by 4x or 5x,” Eisenberg said of the AIS potential. That would put the business at more than $11 million in annual revenue.

The second-generation constellation, under construction by Sierra Nevada, is scheduled for launch in 2013 and 2014 on two SpaceX Falcon 9 rockets.

The first of these launches will carry eight Orbcomm satellites, a launch on which Orbcomm will be the primary customer — unlike the October launch, whose principal mission, which succeeded, was to deliver a cargo carrier into orbit for delivery to the international space station.

In addition to continuing payments to Sierra Nevada and SpaceX for the upcoming second-generation satellite deployment, Orbcomm in early 2013 will be negotiating an insurance policy for the launches.

One of the goals of the launch of the second-generation prototype in October was to validate the Sierra Nevada design and the satellite’s in-orbit functioning.

In the conference call, Eisenberg insisted that much of this was accomplished despite the satellite’s destruction after just 53 hours in orbit.

“[T]he goal was to get comfort around the design of key components prior to launching the full constellation,” Eisenberg said. “It was imperative that the satellite could withstand the launch environment.

“Our satellite handled the force, vibration and temperature extremes of the launch event, and once it separated from the launch vehicle we were able to test various systems. These included establishing communication and command and control with the satellite, deploying the solar array and the antennas and verifying proper bus operation including attitude control and power.”

While AIS testing and the key mission goal of communicating with Orbcomm subscriber modules was not possible, the company believes it has sufficient information to move forward with the launch of the full constellation.

Eisenberg said two Falcon 9 rocket launches, including one with a new design for the main-stage engine, are scheduled to occur before the Orbcomm launch in mid-2013.

Orbcomm Chief Financial Officer Robert G. Costantini said it is too early to speculate on the cost of Orbcomm’s insurance package for the two launches, the information gleaned from the October launch should help keep rates down.

Aided by increased service revenue from a subscriber base that grew by a net 29,000 to reach 744,000, Orbcomm reported total revenue of $16.1 million in the three months ending Sept. 30, up 15 percent from a year earlier.

Peter B. de Selding was the Paris Bureau Chief for SpaceNews.