Component Crunch Slows Delivery of Ka-band Communications Sats

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PARIS — A severe shortage of a key component in high-powered telecommunications satellites intended for television and Internet services will slow satellite deliveries by several months for the foreseeable future, industry officials said.

The supply bottleneck for the component in question, the Ka-band traveling wave tube (TWT), is being exacerbated by the fact that there are only two companies deemed reliable providers, L3 Communications of New York and Thales of France.

Both companies are having trouble keeping up with demand for high-power Ka-band TWTs, industry officials said, adding that TWT manufacturing in Ka-band remains a skill that is not easily learned and remains in many respects reliant on handcrafting.

The global satellite market is entering a flat period after several years of growth in commercial satellite demand and, in the United States, government satellite programs. But Ka-band satellites — for broadband Internet delivery, local television broadcasts and military communications — are the fastest-growing niche within the communications satellite market.

Paris-based Euroconsult has found that 18 satellite operators out of about 40 worldwide have invested in Ka-band in the past 18 months.

But the supply chain has proved to be not immediately responsive to the increased demand, in part because of the difficulty of building Ka-band TWTs.

“You cannot just transfer someone making Ku- or C-band TWTs and have them work in Ka-band,” said one industry official familiar with the process. “And the fact is that while both providers have expanded production, there is a concern in the industry that we don’t want to relive 2002, which was very painful.”

Global telecommunications satellite demand fell abruptly in 2002, leaving companies with unused production facilities.

“It is very nice for satellite prime contractors and satellite operators to say that demand for Ka-band satellites is skyrocketing,” the industry official said. “But given how expensive it is to expand TWT production, it is only natural that the manufacturers think twice before doing so.”

As a consequence, satellite operators and prime contractors are scrambling to nail down long-term supply contracts, at fixed prices, with Thales and L3, a fact that means TWT prices are not rising as quickly as they might otherwise, given the spike in demand.

Stephen T. O’Neill, president of Boeing Satellite Systems International, said the bottleneck in TWT supply for Ka-band satellites is “the biggest constraint to reducing our [production] cycle. It is on the critical path. It is not so much a problem today as it is for satellites to be ordered.”

O’Neill said he did not mean to criticize either Thales or L3, whose quandary he said he understood.

Among the major satellite manufacturers, El Segundo, Calif.-based Boeing currently has perhaps the biggest stake in near-term Ka-band capacity. The company is building three large all-Ka-band satellites for Inmarsat of London, and is also prime contractor for the U.S. Air Force’s Wideband Global Satcom (WGS) military communications satellites, which use Ka-band as well as X-band.

Palo Alto, Calif.-based Space Systems/Loral also has a large stake in Ka-band satellites. Space Systems/Loral President John Celli said Sept. 14 that TWT supply “certainly is an issue.”

“Given the large volume of TWTs on today’s satellites, there is no alternative” to the two existing manufacturers, Celli said. “I don’t see anybody out there with the guts to start a TWT plant. It is extremely expensive. Demand has increased. There used to be 20 or 25 TWTs per satellite. Now you’re talking 90 to 95, even 105 per satellite. And particularly for Ka-band, producing these things is an art. It is difficult to find and train people, especially as we go up in power to 130 and 170 and toward 200 watts per TWT.”

Reynald Seznec, chief executive of satellite builder Thales Alenia Space of France and Italy, said satellite hardware manufacturers have reduced their delivery time and lowered their overhead to remain profitable in a tough market. Increasing production of a given component, in this case TWTs, is risky because of the capital expense required and the market’s uncertain future demand.

Evert Dudok, chief executive of Astrium Satellites of Europe, said: “I can confirm that TWT production is not the easiest business. L3 and Thales — all of us buy from both of them — need to be sure the demand will be there. If there is a risk that some other supplier — perhaps in India, perhaps in China — will emerge, they may find demand softening.”

One satellite fleet operator preparing to order a Ka-band satellite said the TWT issue alone will add three to six months to the manufacturing time.

Another operator said producing Ka-band TWTs is still a relatively new business line. This official said TWT manufacturers often need to reject more than 60 percent of their own tubes as not meeting quality standards.

“Obviously if you are rejecting more than 50 percent of your production, this adds stress to the system,” this operator said. “We can hope is that as the manufacturers move along the learning curve in Ka-band, this will ease.”

Michele Franci, vice president of planning at satellite fleet operator SES of Luxembourg, did not mention TWTs by name in Sept. 14 remarks here, but two officials said it was TWTs he was referring to when he said: “For a lot of [satellite] components, there are only two companies that produce them, or sometimes even only one company. It is hard to develop these competencies. It is a problem that is happening right now for some equipment as we all know, and it is slowing down delivery of some satellites.”

In addition to ordering high-powered Ka-band capacity on three satellites under construction for its core European market, SES is the biggest shareholder in a Ka-band constellation of eight satellites in medium Earth orbit called O3b. While O3b’s Ka-band TWTs are not as big as those needed for the satellites in higher geostationary orbit, the supply crunch is affecting O3b as well, according to one official.

O3b said on Sept. 19 that seven of eight flight sets of Ka-band TWTs for their constellation have been completed, and that the eighth set is expected to be completed in October, with no change to the planned 2012 launch date aboard two European Soyuz rockets from Europe’s Guiana Space Center spaceport.