Summer is coming and for one year only, the SATELLITE show moves from its customary March position in the calendar to the start of May. It promises to be an event rich in discussion, as the industry looks to position itself for a prosperous future.
One of the rising stars in the industry, and member of Via Satellite’s Advisory Board, Natalya Bailey, CEO, Accion Systems believes constellations “for sure” will be one of the main talking points this year. “I suspect a lot of people will be talking about Amazon and Jeff Bezos’ plans with respect to smallsats. Project Kuiper sounds very intriguing and I wish them well. Another topic could be the situation regarding the missing satellites from the Dec. 3 SSO-A SmallSat Express. As smallsat launches become easier and more prevalent, this is a good opportunity to think through the implications of that mission,” she says.
Khalid Balkheyour, CEO, Arabsat and a recent Via Satellite Executive of the Year, told Via Satellite that he expects to see a lot of discussions on the nervousness surrounding major capex investments and its impact on the various value chains. “We will continue to see discussion around various new technologies supporting mobility services. We will also note also the surge of ideas on Internet of Things (IoT)/Machine to Machine (M2M) new models, applications and relation with Low Earth Orbit (LEO) constellations,” he says.
One of the key segments at SATELLITE 2019 will undoubtedly be the launch sector, as low-cost access to space becomes more of a commercial reality. The number of launchers has increased significantly in recent years, and a key player is Mitsubishi Heavy Industries (MHI). Ko Ogasawara, Vice President (VP) and General Manager (GM), MHI, believes space environment protection and space debris issue could be one of the main discussion topics at SATELLITE 2019. “A recently conducted anti-satellite weapon test is rather a big concern for space users. Additionally, as formation of constellations of a huge number of satellites becomes more real, there is an increasing concern over collisions of orbiting satellites,” he says. “As well as prevention of space debris generation being discussed by the International Organization of Standards (ISO), building an international framework of space traffic management is also an important topic to discuss. I expect SATELLITE 2019 will be even more fruitful if commercial space companies could raise awareness on these issues and eventually, as the entire space commercial industry, issue a joint statement on how to protect the space environment.”
Tim Farrar, President, TMF Associates, SATELLITE show veteran and an outspoken analyst in the industry. He believes the key question at this year’s SATELLITE is not whether we can build the new proposed satellite constellations and launch vehicles, but whether the market is big enough to justify doing so.
Has the industry reached a key inflection point? Farrar says we are in a period of huge change in terms of technological innovation. What is still to be seen is whether the market opportunities will measure up to the amount of money being invested. “This is similar to the late 1990s, when there were expectations that systems like Iridium and Teledesic would completely transform the satellite industry. However, in the end, the markets themselves changed a lot less than expected, and, in contrast to the success of satellite Direct-to-Home (DTH) TV, those new satellite voice and data services didn’t become a true alternative to terrestrial solutions.”
Farrar believes the industry is facing a loss of confidence in the major incumbent operators. This is combined with irrational exuberance about the potential of some new entrants, which gives rise to a perception of high uncertainty. “In the next five years, it is likely that new entrants will be less disruptive than many expect, just like Iridium and Teledesic didn’t fundamentally change the satellite industry 20 years ago, so in that sense the uncertainty is probably overblown.”
Balkheyour also agrees that we are at an inflection point in the industry, saying that this can be seen clearly in the financial results of the various satellite verticals, the heightened activities in the mergers and acquisitions front and the major strategic reviews being undertaken. “The industry needs to change and reinvent itself once again to survive and thrive. The coming period will be painful for some but an opportune time for those who survive and come stronger,” he adds.
Balkheyour also believes that the industry is in the midst of an uncertain period. “This is due to an abundance of in-orbit capacities which is putting a lot of pressure on prices; increased reliability and longevity of satellites; and high capital cost of new space assets. However, the satellite industry has proven over and over again that it is a resilient industry which offers certain advantages that no other means of communication can. This industry might get sick but it will never die,” he says.
However, while the industry might be entering an uncertain period, most are optimistic that despite the threats and challenges, the industry will ride the storm and come out of the other side in better shape than ever. Bailey says, “With the possible exception of earth observation, I don’t feel that we have quite seen all the possible benefits satellites in space can provide. Internet constellations, for example, haven’t reached peak activity yet. I estimate another 5-7 years for that market before some inevitable declines. On the government side, I still think things are still very early on before any huge changes take place. Government agencies are also getting more and more comfortable partnering and working with private companies and new technologies.”
Bailey also disagrees with Balkheyour that the industry is entering into an uncertain period right now. She says she thinks there is a great deal of certainty in the industry these days. “We’ve learned a lot over the past fifteen years or so and many of those plans and hypothesis are starting to take shape. Governments are getting more active, commercial space efforts hit some big milestones recently. It’s an exciting time to be in NewSpace.” she adds.
Ogasawara also believes that the space industry is going through a period of huge change, particularly in terms of space use or applications. “As humans start using the space for many different applications (such as LEO constellations, satellites of new concept, and next generation launch vehicles), resulting in much more diverse use of the space, it is inevitable for the industry to adapt to those change,” he says.
GEO Orders: Long Term Trend or Cyclical Event?
One of the big questions at SATELLITE will be around the way satellites are acquired. Over the last two years, we have seen a dramatic fall in the number of Geostationary Orbit (GEO) satellites being ordered. With video revenues on the decline, is this now becoming a more permanent trend? Ogasawara says, “I predict the lack of orders of large GEO communication satellites will not last for long. It seems like satellite operators want to wait and see how these constellations go. However, sooner or later, some of them will face the need to replace their satellites due to their satellite lifetime coming to the end. Moreover, there should be markets where it is advantageous to lower cost per bit by large satellites with high capacity, which will eventually result in a gradual increase in the number of orders. That being said, I doubt that it will recover to the number of 10 years ago.”
Balkheyour admits that the industry is in a special period of prolonged ‘low’ which could drag for longer than usual, but he believes the industry will rebound. He says, “The million-dollar question is when the rebound comes, which satellite manufacturers will remain standing. I expect to see major divestments and/or mergers in the satellite manufacturing front. This should be healthy for the industry but the real worry is whether the various equipment manufacturers and suppliers can survive these lean times. Unfortunately, we don't see any serious discussion on how manufacturers could optimize their ‘abstract’ cost beyond cost/MB metrics where you have to invest grand amounts in big satellites. We are still waiting for them to be creative around the lifetime, and production cycle.”
Farrar adds that GEO orders have always been cyclical, and this time, a natural trough in the cycle has coincided with growing interest in non-GEO alternatives. He adds that the business plans for those constellations are still to be proven, and many GEO satellites will still need to be replaced, especially if life extension services don’t become as important as some hope. “We will definitely see a rebound in GEO orders, at least back into the double digits per year, it just won’t go back to the 20 plus orders per year that we saw a few years ago,” he says.
SATELLITE 2019: What Will We Get Out of it?
Accion Systems had a big year in 2018, and this year Bailey is looking forward to talking about more deployments for 2019 and beyond. Additionally, Balkeyour wants more talk around innovation and game-changing ideas in the satellite manufacturing industry, faster evolution of ground equipment technologies especially Flat Panel Antennas (FPAs), and more unity among operators in defending and protecting spectrum as we approach WRC-19.
Ogasawara is looking forward to learning about how we can make diverse space applications happen. “I also hope to hear what the end users of those new space applications expect from the space industry to make them happen,” he says.
Farrar says he is looking forward to the conference because the antics of a few billionaires mean a lot more media attention is now being given to satellites and space. “That’s quite a change from the widespread perception a few years ago that this was a boring, staid sector without much of a future. It raises the level of debate and makes SATELLITE 2019 a must attend event for everyone in the industry,” he adds. VS