SpaceX Undercut Competition To Clinch Head-turning Iridium Deal
PARIS — Startup launch services provider Space Exploration Technologies (), which has made a habit of turning heads in the industry since it was created in 2002, did so again on June 16, announcing a firm $492 million contract with mobile satellite services operator Communications to launch Iridium’s second-generation constellation of 72 satellites.
The implied price — $6.8 million for each 800-kilogram Iridium satellite launched into a 780-kilometer orbit — is at a level not seen in the launch industry since Russian and Ukrainian rockets were first introduced into the commercial market in the mid-1990s. These vehicles’ prices have since risen sharply.
“Clearly this is a great deal,” Iridium Chief Executive Matt Desch said in a June 16 interview. “That’s why we wanted to lock in prices as quickly as we could.” McLean, Va.-based Iridium in March made a $19 million payment to SpaceX to guarantee the prices in advance of the full contract.
To put SpaceX’s declared intentions in context, an official with one non-U.S. company planning a telecommunications satellite intended for geostationary orbit 36,000 kilometers over the equator said he recently sought price quotes from SpaceX, the Indian Space Research Organisation and China Great Wall Industry Corp. SpaceX, he said, was the least expensive of the three.
Iridium’s satellites are being built by a contracting team led byof France. But the spacecraft will be assembled, integrated and tested in the United States and will include U.S. hardware, meaning they would not be allowed for launch aboard Indian or Chinese rockets under current U.S. regulations.
In a June 16 conference call, SpaceX Chief Executive Elon Musk said the company’s early success in winning customers will mean that for the first time in more than a decade, a U.S.-built rocket is capable of succeeding on the global commercial market.
While U.S. Atlas androckets have a demonstrated reliability, their owners — Lockheed Martin and Boeing, respectively — have been unable or unwilling to offer prices to compete with the competition from Europe, Russia and elsewhere. Instead, they have focused on U.S. government business through their joint venture.
Musk offered several reasons for how SpaceX, whose Falcon vehicles he said are nearly 100 percent U.S.-built, has been able to offer such low prices. Several of the reasons revolved around the company’s decision to make and assemble most Falcon parts on its own.
At some other U.S. rocket builders, he said, “you need to go to the third level down on the subcontracting chain before you see anybody actually cutting metal.”
SpaceX’s progress toward operational credibility, punctuated by the successful June 4 inaugural launch of the Falcon 9, is being watched closely in Europe, whose Ariane family of vehicles has dominated the commercial market for more than 20 years.
Jean-Jacques Dordain, director-general of the 18-nation European Space Agency (), said during a June 8 press briefing in Berlin that Europe needed to learn from what SpaceX is doing. He acknowledged that part of the company’s recipe — a single manufacturing and production facility — would be difficult to replicate in Europe because each ESA member nation wants work for its own industry in return for helping finance the Ariane system.
SpaceX and Iridium avoided direct answers to questions of how many Falcon 9 rockets, and how many Iridium satellites, were covered by the contract, which foresees launches occurring over a two-year period starting in early 2015.
But Musk made clear that Iridium had selected SpaceX for just about all its launches. Desch said Iridium had settled on SpaceX for the constellation but continues to negotiate a launch deal with at least one other company.
Industry officials said the contract calls for eight Falcon 9 rockets, each carrying nine 800-kilogram Iridium satellites, to launch the Iridium constellation.
In addition to providing the launches, SpaceX will incur additional charges to develop a satellite dispenser to carry the group of Iridium satellites under the Falcon 9 fairing and then release them in orbit.
The launches will occur from Vandenberg Air Force Base in California, where SpaceX will refurbish a launch pad used by Lockheed Martin’s Titan 4 rocket, which has been retired. Falcon 9 operations at Cape Canaveral Air Force Station, Fla., also use a former Titan 4 launch complex.