As a satellite operator, what changes would you ask Launch Service Providers (LSPs) to make that would positively impact your business? Would you focus on lowering launch fees or creative payment terms? Maybe reliability, scheduling and flexibility top your list. What about teamwork? If something goes wrong, for example, do you want opportunities to brainstorm solutions with the LSP’s management or engineering staff?
When Via Satellite asked several satellite operators these questions, their responses were fairly consistent regardless of their geography or company size. Their top three requests focused on price, reliability and schedule assurance. But that represents only half their wish list. The other part is to constantly improve each of these areas, which will lead to more industry competition and reasonable choices for satellite operators.
One of the basic rules of economics is that competition leads to lower prices. Not surprisingly, satellite operators want more LSPs in the industry to drive down costs. “We would definitely like to see the number of launch service providers increase to drive down the cost of the launch vehicle itself,” says Roger Tong, VP of engineering and operations at AsiaSat. The company is building its ninth satellite, AsiaSat 9, which is scheduled for launch in late 2016 or early 2017.
Tong compares the number of major satellite manufacturers — Airbus, SSL, Thales Alenia Space, Boeing, Orbital ATK, Lockheed Martin — to “commercially viable” LSPs in the market today, such as SpaceX, ILS/Proton or Arianespace. Considering that the ratio of mainstream satellite manufacturers to LSPs is roughly two to one, he says that even if the amount of LSPs doubled today, it would not be excessive. He believes the market would become healthier as a result.
There is also one cost Tong would like LSPs to absorb that satellite operators have historically paid. “Right now, there’s no obligation for the launch service provider to pay for insurance,” Tong says. “Even if a LSP did the wrong thing or misinterpreted its calculations, it’s still our problem. And the entire industry pays for those mistakes, which drives insurance prices up.”
However, while price is always an issue. It does seem as though things are moving in a positive direction. “If you look at what Arianespace is offering today, there is almost up to 30 percent difference compared to what they were doing only several years ago,” says Ken Betaharon, chief technology officer (CTO) at Asia Broadcast Satellite (ABS). “Launch services people are very astute business people. They charge you what the market can cope with, which is not necessarily the best price. We now have good competitive options and the prices are getting more affordable.”
ABS is one of the most progressive new operators around. It was one of the first to acquire and launch electric satellites, for example. Betaharon says that operators like ABS are many times at the mercy of the LSPs and their schedule. He says LSPs will give delivery in orbit against certain pre-determined orbit parameters, but these parameters are in fact too rigid.
“If you look at the contractual documents that you sign with Arianespace, ILS, SpaceX, they are virtually the same and that means you have very limited flexibility. We would like to be able to negotiate the available launch vehicle performance at set parameters and get more out of these companies,” says Betaharon. “Nevertheless, I think they are getting better and improving. They have done a great job. Falcon 9 has been a great success; Ariane 5 has been a great success; Proton has had issues but seems to be getting back on track. Overall, we like the competitive environment.”
All LSPs operate a bit differently, which impact reliability. While Arianespace, for example, is accommodating, Tong says satellite operators are stuck with a dual launch that consists of one small and one large satellite. SpaceX, on the other hand, is standardizing its launch services, offering more flexibility on scheduling but less on the technical aspects of a launch. ILS is flexible and supportive of satellite operators, especially during emergencies, Tong says, but experiences the most launch problems. Still, he says, Proton had successfully launched multiple AsiaSat satellites and will be used again for AsiaSat 9.
“You don’t want to drive suppliers to the ground trying to get launch services as cheap as you can,” adds David Ball, CTO at NewSat, “LSPs have to be sustainable and you do want them to have that quality system in place. But at the same time, you don’t want to get totally ripped off on price. You want a fair price.”
Sometimes satellite manufacturers are overly optimistic with meeting production schedules. Other times, manufacturers of satellite components may experience a problem, delay shipment of needed parts and slow down the manufacturing process. The LSP expects a satellite to show up in March but it ends up being delivered in May. It’s like dominos, where one problem creates another — except no one wins at this game.
That is why it is also critical to provide satellite operators with a realistic idea of where spacecraft are in the launch queue, adds Wesley Wong, CTO at Azercosmos. “We need to get regular updates, even after signing the contract with the LSP,” he says. “Just having that setup of receiving more transparent information will help with the overall project and risk mitigation planning for a company like ours.”
What would also help operators are LSPs with multiple launch sites, such as SpaceX. They announced plans to build three sites with combined capacity that will probably exceed today’s commercial capacity. “When you have that much capacity, certainly the ability for delivering on schedule becomes a little bit easier,” Wong says, comparing multiple sites to highway lanes. “If you only have one lane, then you can only push so many cars through that lane as possible. But if you have multiple lanes or launch facilities for the same rocket, then you would have the flexibility to accommodate schedules and meet time commitments.”
Betaharon says there has not been much competition on the launch side until recently, and it was only with the introduction of SpaceX’s Falcon 9 that the equation to buy launch services has really changed. “We are in the process of procuring ABS 8, and we were pleasantly surprised that the launch service companies were keen to meet our near exact cost and schedule requirements, and we are not used to seeing that on the launch services side until recently. This is good for our industry,” he comments.
Launch failures occasionally happen, which prove disastrous for both satellite operators and LSPs. While LSPs certainly strive to avoid these situations, they are in the business of rocket science, which is not an easy trade.
“Some LSPs have their launch vehicle supply chain under total control and others don’t, which creates more opportunities for mistakes,” Ball says. “Nothing is 100 percent but it helps improve the odds for a successful launch.”
Tong believes there are two contributing factors to launch problems or failures: lack of discipline by manufacturers in adhering to quality control measures of the launch vehicle, and design/quality controls not vigorously analyzed by engineers or technicians.
“What we found is [that] using a big stick doesn’t really help,” says Tong, explaining that trying to include penalties for LSPs in their contracts is not beneficial. “What we do is work with them closely, early enough, and ensure continuous communication. We try to establish honesty, better relationships and work with them without any hidden agendas.”
Lincoln Oliveira, general director at Embratel Star One, adds that satellite operators can sometimes be at fault if price is their chief concern. “It doesn’t work to use cheap launching systems that sometimes fly and sometimes don’t,” he says.
In the near future, Oliveira adds that his company may be willing to accept slightly higher risks from LSPs regarding launching innovations or alternatives in return for a lower launch price. This will depend upon several factors, including the specific satellite mission and putting contingencies in place to help limit potential launch loss.
Meanwhile, he believes these strategies are simply part of a strong business plan. “Good visibility of the launch vehicle hardware activities can improve your confidence for the success of a mission,” says Oliveira. “This has helped us a lot to increase our confidence in the process.” VS
Carol Patton is an award-winning journalist who lives in Las Vegas, Nevada. She covers technology, business, education and healthcare.