Space markets post strong growth, defy economic crisis
BY CRAIG COVAULT
Posted: November 7, 2009
Markets for commercial communications satellites, Earth observation spacecraft and their launchers, all remarkably unaffected by the global economic crisis, continue to soar toward yearly double digit growth, generating billions in annual revenues.
"No recession here," headlines a major Northern Sky Research assessment of commercial satellite supply and demand.
"Crisis, what crisis," Pacome Revillon, managing director of Euroconsult, said at a recent Paris conference on Earth imaging satellites. "There is no crisis in orbit," he proclaimed.
The latest payload numbers are being equaled on the launcher side. "The world market for expendable launch vehicles (ELVs) is [also] headed for a considerable market upturn," said John Edwards, senior analysts at Forecast International in comments about that firm's new payload forecast out to 2017.
American, European and Asian satellite and booster manufactures and their employees all have significant shares and a bright future in this growth.
But at Cape Canaveral and the Kennedy Space Center, very little of this new business will be launched from the world's foremost spaceport.
Without new Presidential direction on human space goals, KSC is seemingly "moon stuck," facing major layoffs as the shuttle program ends.
And the growth is also detouring around Cape Canaveral's expendable boosters because the United Launch Alliance Atlas 5 and Delta 4 largely priced themselves out of the commercial market, now better satisfied by Europe's Ariane, the Russian Proton and Chinese boosters in emerging markets.
One example of what has happened to the Cape commercial payload traffic is next week's scheduled launch of the Intelsat 14 communications satellite on an Atlas 5. Planned for liftoff November 14, the launch of the 6-ton spacecraft marks the first time Intelsat has returned to the Cape for a launch in 11 years.
The Atlas and Delta programs are blessed, however, with U.S. military payloads, a stable sector expected over the next 10 years to require 161 U.S. launchers worth about $18 billion spread between the Cape and Vandenberg AFB, Calif., says Forecast International. The U.S. Air Force has just awarded ULA a $927.7 million contract for Atlas 5 and Delta 4 launch vehicles, the first time a single contract has been awarded for the two rocket systems since Boeing and Lockheed Martin merged rocket operations in Dec. 2006.
The Cape, however, is preparing for the new commercial ELV activity that SpaceX will bring starting in 2010 with its Falcon launcher.
SpaceX CEO Elon Musk raised eyebrows in October at a major satcom conference in Kuala Lumpur, Malaysia, when he reminded satellite operators that his guaranteed launch service prices are openly published on the SpaceX web site. Such figures are held secret by competitors who use that secrecy to their advantage in deal making, an area where Musk wants far more openness than older entrenched companies desire.
Among three market areas surveyed, the civilian or dual civil/military use Earth-viewing satellite sector is experiencing the most dynamic growth. Thirty-four nations will be involved in satellite observation programs by 2018, compared with only eight in 1997.
Revenues have already reached a billion dollars in 2009 and could quadruple within a few years. "The sector is establishing itself as one of the principal boosts for re-launching global economic growth after the recession," says Euroconsult. About 260 new meteorological and terrestrial observation satellites will be launched in the next ten years. This is double the 128 satellites sent into orbit between 1998 and 2008. Growth to $27.4 billion is estimated for the decade to come, compared to the $20.4 billion in the last ten years. Profits of a billion dollars have been made from sales of data satellites alone in 2009 and the forecasts indicate that in 2018, profits deriving from the business in images will leap to $3.9 billion dollars, an increase of 16 percent every year.
This will also have an impact politically around the world where "green" related environmental monitoring and resource protection programs are increasingly important.
It is an encouraging situation that "reflects the development of a veritable commercial business based on terrestrial observation satellites, the growing number of governmental programmers concerned and an increase in investment in the programs already underway," comments Revillon at Euroconsult. "The growth in sales of commercial data will create earning opportunities for all the players involved: constructors, commercial operators, service providers and government agencies," says Euroconsult.
From the report it emerges that governments are the principal investors in the sector, with about 93 (non-meteorological) observation satellites from the world's principal space agencies headed to the launch pad in the near future. In the meantime, new players are also appearing on the scene.
"Governments have done the lion's share so far but from now on the number of projects either in the hands of private industry or as the result t of public-private partnerships will increase," claim Euroconsult specialists. In short, it is an attractive sector.
The images gathered by this huge number of satellites will find a wide variety of applications: primarily security and defense but also environmental applications, natural disaster management, climate change studies and virtual mapping.
In the communications satellite sector the picture is also bright.
Euroconsult expects the global market value of capacity used for the traditional fixed satellite service market to reach around $13.4 billion in 2018, or $16.8 billion including wholesale revenues from emerging BBS systems dedicated to satellite consumer broadband access. Industry consolidation, which will continue, will be offset by the emergence of new regional satellite systems backed by either private or public investors, says the firm.
Average revenue growth for "regular" capacity leasing of approximately 5 percent is still expected in the next five years, largely in line with previous forecasts as a slowdown in the economic cycle of the satellite sector was already anticipated due [not to the recession but rather] to the end of analog broadcasting in certain markets.
Futron, a U.S. based analysis firm finds with its new space competitiveness survey that the United States remains the leading space participant. But its advantages in all three major dimensions of space competitiveness—government, human capital, and industry—continue to narrow as other nations build their investments in space policy, expertise and infrastructure.
"The 2009 Space Competitiveness Index is a tool," said Futron Chief Operating Officer Peggy Slye. "It offers decision-makers an ongoing benchmark to continuously re-assess the competitive landscape of space activity—and to contemplate its implications for their respective governments, businesses and organizations."
For 2009 it has found that Asian space powers -- China, India and Japan -- are in close competition with one another, even as they challenge traditional leaders such as Europe, Russia and the U.S.
Japan posted the single largest gain in relative space competitiveness, due largely to new legislation and improved policy alignment.
Newer and smaller participants such as Brazil, Israel and South Korea maintain niche roles, but are joined -- and in some cases challenged -- by emerging space actors such as Australia, Iran, North Korea, Singapore, South Africa and others.
Japan posted the single largest gain in relative space competitiveness, in the Futron survey due largely to new legislation and improved policy alignment.
The market outlook in more specific areas of the communications, Earth imaging and launcher markets involve:
Current communications satellite production:
All analysts agreed that more than 30 large new satcoms worth a total of about $7.5 billion are in assembly presently with these missions sponsored by Intelsat, SES. Eutelsat and Telesat. Twenty new satellites have been launched in the last 18 months for terrestrial digital TV.
"Despite the economic crisis, the market in satellite data transmission from fixed networks intensified and grew by 10 percet in 2008," says Euroconsult. About 2,800 new satellite television channels appeared in 2008, bringing the total number of channels to 24,000. Above all, new markets such as Venezuela and Vietnam are emerging that led to a network increase of over 70 percent in 2008.
Overall ELV market:
Forecast International is projecting that over the next decade, launch vehicle providers worldwide will produce 636 expendable launch vehicles (ELVs) worth approximately $48 billion. The expendable launch vehicles to be produced will range in size from the smaller European Vega to the Heavy-Lift U.S. Evolved Expendable Launch Vehicles.
Revenues for commercial launches have risen steadily since 2005, with Europe's Ariane garnering the lion's share of the global market at a rate about 5 times more than U. S. launchers annually, the Forecast International data shows.
The analysis projects that in terms of the countries producing these ELVs, the United States is expected to account for 161 units; Russian, Ukrainian, and Chinese production through 2017 should amount to approximately 306 units.
However, even at a nearly double unit output, Russian, Ukrainian and Chinese value of production will account for $15.9 billion, whereas U.S. production of 145 fewer units is expected to be valued at $17.9 billion. This disparity can be attributed to high-ticket ELVs in the U.S. -- the Atlas 5 and Delta 4.
Production coming from India, Japan and Israel will total approximately 73 units, and Europe is expected to roll out 92 ELVs during the same period.
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