Editorial: An Industry Rebounds

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  Space News Business

Editorial: An Industry Rebounds

posted: 08 June 2007
10:04 am ET










Don’t look now, but the satellite telecommunications industry appears to be rebounding strongly from the slump it experienced during the early part of the decade.



Satellite operators are enjoying strong sales and profit margins, with many planning new capital expenditures that would have been hard to imagine just a few years ago. The decline in demand for traditional fixed satellite services is being more than offset by emerging applications such as




high-definition television and mobile broadband data services




, and s




atellite transponder fill rates have increased from 58 percent in 2004 to 70 percent in 2007, according to statistics compiled by the Satellite Industry Association.

Even the operators of low Earth orbit mobile telephony and messaging constellations – which came to symbolize what some




call the irrational exuberance of the satellite telecom boom years of the 1990s – are investing in replenishment systems. Satellite companies, largely shunned by investors in the wake of the Iridium, Globalstar and Orbcomm bankruptcies, are once again attractive to Wall Street.

All this has had a ripple effect on the manufacturing side. The shakeout among satellite makers that so many experts saw as desirable and inevitable at the beginning of the decade has not happened; while Boeing Co., once dominant in the commercial market, now chases only a few select programs, Orbital Sciences Corp. has emerged as a major player specializing in relatively small- to medium-sized platforms. Orbital’s success has other companies – including some that had not been very active commercially – seeking a piece of this market niche.

In launch services, meanwhile, there is a squeeze in supply that is reminiscent of the situation in the mid-1990s that prompted a flurry of huge investments in new rockets. Today, Orbital Sciences, whose small rockets cater almost exclusively to U.S. government customers, is contemplating just such an investment, while Lockheed Martin has recently booked commercial business for its Atlas 5 rocket.

There is also good news on the ground systems front in the form of an order from consumer satellite broadband provider WildBlue Communications for $200 million in user terminals from ViaSat Inc.

All this is not to say that the satellite industry is on the cusp of a spending spree like what took place in the 1990s; anyone with common sense and a halfway decent memory knows that would invite disaster. Nor is it to say that all of the investments being made in new satellite systems and services will pay off; all business ventures entail risk, and space is no exception to that rule.

But the current trend demonstrates beyond any doubt is that this is at once a dynamic and robust industry. The current good fortune is due to a variety of factors, among them the perseverance, adaptability and creativity of the industry’s leaders. The balance they strike between prudence and boldness will determine in large part how long the run can last.