PARIS – Launch service providers and satellite manufacturers voiced sharp disagreement over whether the commercial satellite market was about to go into a tailspin as the major fleet operators wind down their currently high capital spending programs.
All agree that the four biggest operators — Intelsat, SES, Eutelsat and Telesat — will end their unusually intense fleet replacement and expansion programs around 2012. Once completed, these companies, which together make up perhaps 70 percent of the global fixed satellite services market, will revert to annual investment that is between one-fifth and one-half of today’s levels, they have told their investors.
Running head-on into those trends are what appears to be an expansion of the supply of commercial satellites and commercial launch services.
On the satellite manufacturing side, Boeing and Lockheed Martin appear be paying more attention to the commercial market as their core U.S. Defense Department business decreases with lower defense spending.
In Japan, Mitsubishi Electric has designed a satellite platform that targets the commercial market and the company no longer feels inhibited in competing for export orders. China Aerospace Corp. has already demonstrated an ability to win business by bundling satellite construction and launch services contracts for nations that, up to now, have not owned satellites.
The Indian Space Research Organisation is developing a launch vehicle big enough to carry India’s telecommunications satellites into orbit, and has taken initial steps to enter the global satellite business through a joint venture with Astrium of Europe.
Sea Launch Co., now backed by Energia of Russia, appears ready to emerge from Chapter 11 bankruptcy and to return to the commercial market.
Set against the entry of these companies into a market that already counts four American and two or three European satellite prime contractors, are market forecasts that show annual commercial telecommunications satellite orders falling from 30 in 2009 and perhaps 25 in 2010 to 16-17 per year by the middle of the decade, according to a market forecast presented here Sept. 6 by Paula J. Hartley, vice president for commercial programs at Lockheed Martin Commercial Space Systems.
Addressing the World Satellite Business Week organized by Euroconsult Sept. 6-10, other satellite manufacturers estimated the market would fall to around 20 per year. Arnold Friedman, senior vice president for sales at Space Systems/Loral, which depends on the commercial market for its existence, said an average 21.5 satellites per year — not including captive-market orders placed without international competition — would be ordered for the foreseeable future.
On the high side stood Thales Alenia Space of France and Italy, which believes that the market will remain firm at around 25 geostationary-orbit commercial telecommunications satellites.
The two principal commercial launch providers also disagreed about what the market will look like in three years
Frank McKenna, president of International Launch Services (ILS) of Reston, Va., said a market downturn that could be as bad as what happened early in this decade could occur if the industry does not restrain itself from investing in overcapacity.
“It will certainly be less than 20,” McKenna said of the number of commercial satellites to be offered for launch per year by around 2015. “You are getting 13 to 15 satellites now from the top operators, and this will be more like seven or eight around 2014,” McKenna said. “Then you add the smaller operators to round out the total.”
“I don’t understand it,” McKenna said of the news that Sea Launch, which is exclusively devoted to the commercial market, is likely to return to operations.
Arianespace Chief Executive Jean-Yves Le Gall diverges from the ILS view in the same way that Thales Alenia Space rejects the Lockheed Martin forecast.
Le Gall said the commercial market that is open to competition has been between 20 and 25 satellites per year for a long time and will continue. He said that many of the satellites ordered in 2009 were previously contracted spacecraft that were switched from one launcher to another and therefore should not be counted as market growth.
Le Gall did not seek to dispute the capital spending plans of the major operators, but said that smaller players are now more important than ever in the market and many of them are growing.
“Of the nine launch contracts we have signed so far in 2010, only one was from one of the top-four operators,” Le Gall said in a Sept. 7 briefing, referring to Eutelsat’s W3B satellite. The others are satellites owned by rare market entrants, including Hughes Communications, the government of Argentina, start-up operator OverHorizon and Star One of Brazil.
“We are part of a sector that is still growing,” Le Gall said. “Mobile telephony, broadband, high-definition and 3D TV, mobile applications — these will sustain the market.
“Let me tell you a story,” Le Gall said. “I was recently speaking to an African head of state who told me his country was installing mobile phone networks so that women, when they walked five kilometers to get water, could remain in contact all along the route. That’s what is happening in these countries: They are investing in mobile communications before developing running water.”
