The New, Holistic View of Space
Falling orders for large commercial GEO satellites have given rise to new business models, with manufacturers changing the way they see the industry.
Double-digit growth is a big deal, especially when it comes after several years of decline. But in the case of orders for large commercial satellites, the double-digit growth recorded in the second half of 2019 isn’t enough to shift expectations that Geostationary Orbit (GEO) orders will never return to the historic levels of about ten years ago.
Last year, satellite operators ordered 12 large commercial GEO satellites, marking a much stronger year than 2018, when just five satellites were ordered. The year 2017 was only marginally better than 2018, with seven satellite orders placed. Seven, five and even 12 – it’s all underwhelming when compared to the 20 to 25 annual satellite orders that manufacturers were previously accustomed to. While double-digit growth spurs some optimism, most are not rushing out to bet on a full GEO market recovery.
How have satellite manufacturers transitioned to lower expectations of GEO orders? How have their business models changed? To begin with, it has to be understood that large GEO satellite orders are no longer indicative of the industry’s health, and players need to change the metric to include all types of satellites and orbits.
A more holistic view of space is needed, one that abandons the typical question of how many GEO satellites were ordered, to include hybrid and Low-Earth Orbit (LEO) constellations, says Guy Beutelschies, Lockheed Martin Space vice president of Communication Satellite Solutions.
“We are entering an exciting new period in space where there are new entrants, changing market dynamics and rapid development of technologies that are constantly disrupting the status quo. We will see an integration of GEO, Medium-Earth Orbit (MEO), and LEO, that may change the way we look at the market. In our view, the market is still strong, with lots of opportunities for commercial manufacturers,” Beutelschies says.
Lockheed Martin sees strong demand from both commercial and government verticals for communications satellites. The manufacturer also notes steady demand for LM 2100-class satellites performing traditional communications missions, as well as increasing demand for smaller satellites.
Lockheed Martin has been working to transform the LM 2100 bus to share a common design, reportedly bringing down the cost of its entire product line, and improving efficiencies with its production line across commercial and military customers.
Beutelschies describes the two trends relating to satellite manufacturing in the industry over the past year. “The first has buyers driving to the lowest cost per bit, resulting in Very High Throughput Satellites (VHTS) with Capital Expenditures (CAPEX) of hundreds of millions of dollars. The other trend has operators looking at smaller CAPEX plays to augment their existing fleets, test new markets or accelerate technologies. Both trends are also appearing in the government user community,” he says.
Responding to DTH and Data Trends
Manufacturers are adapting to the transition taking place within the satellite operator segment of the value chain, explains François Gaullier, head of telecom satellites at Airbus. The video market Direct-to-Home (DTH), which fueled the growth of big GEO satellite orders in the past, is now mature, and today, as has been the case for several years, there is a major shift towards High Throughput Satellites (HTS), and an explosion of data usage and demand. Capacity price has reduced with Kbps becoming ever cheaper.
Then there is the development of LEO constellations, and the growth of home internet usage, particularly viewing on demand, which has created hesitation and uncertainty for the manufacturers’ customers, Gaullier adds.
“In this context, satellite manufacturers are adapting to this via innovation, and the development of new ways to manufacture satellites in order to constantly propose efficient and cutting-edge solutions. Improved flexibility in space systems solutions appears to be key to supporting our customers and the market,” Gaullier says.
Achieving this flexibility requires working with customers, which enables manufacturers to offer a new level of customization and optimization. Doing this resulted in Airbus’ creation of OneSat: a fully flexible, on-orbit reconfigurable satellite. It also resulted in Airbus winning a deal with Inmarsat last year for three of these satellites.
Gaullier doesn’t expect the satellite video market to grow further, but there is still the need to renew or improve fleets, he says, noting an order a year ago for two Hotbird satellites to replace three in orbit. In parallel, demand for broadband is increasing exponentially, especially with 5G. Therefore, Airbus is expecting to see orders for big customized and optimized GEO satellites offering higher capacity, much like the case of Eurostar Neo, which is able to reach up to 30kW and more than 1Tbps.
“We should also see a maturation of the LEO market and constellations,” Gaullier says. “In between, we have seen strong interest for what we call medium satellites — neither small LEO, nor big GEO, but new types of satellites designed to lower the total cost of ownership in orbit. There is demand for generic products with flexible payloads able to change the satellite mission in orbit in order to ensure business cases to close, and secure coexistence of GEO with constellations and new business cases.”
According to Gaullier, fully tailored, large 30kW and 1Tbps GEO satellites, such as Eurostar Neo, are unbeatable and will remain so in terms of dollar-per-Gigabit, and efficiency for some kinds of missions. In this increasingly digital-dependent world, these satellites will not disappear.
“We still see a future and a market for big satellites in GEO,” Gaullier says. “We anticipate a balanced split between big customized and optimized GEO satellites; the smaller, cheaper, quickly accessible and flexible GEO satellites; and the mini satellites designed for LEO constellations.”
The New Normal
Manufacturers see a future for GEO, but the volume will not be the same as it was in the past. The number of satellites ordered in 2019 is likely the new normal, which comes doused in diversification. This diversification is not only in size. Looking beyond the size of satellites ordered, ranging from small and very small to giant birds, there is also a range in missions: payloads combining connectivity and video, replacing the call for pure video; digitized payloads with a couple wide beam analog satellites, with the former unsurprisingly making up the majority of orders in this regard; and fully software-defined satellites.
Very small GEO satellites, weighing less than 500kg, will remain somewhat of a niche market, serving customers with very specific business cases, or those looking for an interim solution, explains Pascal Homsy, Thales Alenia Space executive vice president of Telecommunications. Bigger satellites with electrical propulsion, ranging between 1.5 to 3 tons, are however a segment that will stay, as it enables several business opportunities, including national satellite coverage and more established markets such as video or connectivity.
Thales expects to continue seeing larger satellites, weighing between four to six tons or more, flown by operators typically combining video and connectivity missions in order to tap different markets within their regions. The largest satellites are likely to be VHTS serving connectivity markets to offer the very best cost per bit, Homsy adds.
The diversity in GEO satellite orders reflects customers’ needs. To answer this need, the industry must develop different solutions. The speed bump here is that the rate of innovation as well as innovation adoption is accelerating, making it challenging for a company to address all market segments.
“We need to define flexible solutions and building blocks that will bring very different satellites into the market, while limiting the development efforts. We also have to choose which segment will be our priority, and which we need to address differently, such as via partners,” Homsy says.
In order to adapt to changing market dynamics, Thales Alenia Space revised its entire portfolio in recent years. The manufacturer retained its chemical satellites, but added the Spacebus Neo electrical platform to extend its range to very large satellites. Its new family of on-board processors, currently its fifth-generation Digital Transparent Processor (DTP), has reportedly proven successful in the market, with capabilities to process the full Ka band and enable digitalized Terabyte-class satellites for best price per bit and maximal mission flexibility.
Capitalizing on Neo and the processor pillars, Thales Alenia recently launched its Space Inspire family of fully software-defined satellites. With Inspire, the company has a complete range of solutions in size, payload power and propulsion with digital processing as a mainstream solution.
“A direct consequence of this evolution is the growth in the importance of software both on the satellite and on the ground. Satellite manufacturers now need to also become software companies, and this is a move that we started several years ago,” Homsy says.
The emergence of software-defined satellites has solved an industry conundrum, explains Homsy. “Faster, cheaper, and better” has become something of a customer mantra within the industry. The key to cheaper and faster delivery is standardization and off-the-shelf solutions. But this was long impossible as nearly every contract required a different payload and satellite so that customers could meet their different business needs. Now with software-defined satellites, entirely configurable coverage and capacity is enabled, and with it, the ability to provide broadcast, broadband, and mobile services simultaneously anywhere at any time.
“Such design standardization opens the door to batch production, and production automation and streamlined tests enables a very significantly lower price and schedules around 18 months when established,” Homsy says.
Because Thales Alenia had anticipated the digital transformation, Homsy says, the company could proactively innovate the solutions necessary to serve the market with increased demand for connectivity and mobility.
The company’s Spacebus Neo product line embarking VTHS missions enhanced by its DTP resulted in Thales Alenia winning a contract in 2019 for Eutelsat 10B and one this year for Amazonas NEXUS, he says.
A Look at Large Commercial GEO Orders in 2019
The embers of optimism for large commercial GEO satellite has been stoked, but not enough to ignite flames. Last year recorded double-digit growth, a significant change from the stifling that has been going on since 2016. But satellite manufacturers say that the 12 commercial orders placed in 2019 are not an indicator that the market is on its way back to historical levels of 20 to 25 per year, but rather the new normal. The number 12, which sits between the 10 to 15 industry leaders, is not only expected to stay, but will comprise of a range of sizes and missions.
So what was ordered last year and by whom? Here is a recap of events: Malaysian satellite operator Measat is replacing the Measat-3 and Measat-3a spacecraft with a single satellite, the Measat-3d. The operator selected Airbus Defence and Space to build the multi-mission bird, carrying C- and Ku-band payloads for Direct-to-Home (DTH) and telecommunications services, as well as a high-throughput Ka-band payload sporting multiple user spot beams optimized for delivery of high-speed broadband communications for Internet connectivity across Malaysia. Additionally, Measat-3d will also carry an L-band navigation payload for South Korean KT-SAT as part of the Korea Augmentation Satellite System (KASS).
British satellite telecommunications company Inmarsat ordered three reprogrammable high-throughput Ka-band satellites to expand its Global Xpress network, recording another win for Airbus Defence and Space.
California-based American communications company Viasat ordered the ViaSat-3, intended to serve the Asia Pacific region, marking the company’s ability to offer true global Ka-band coverage. Boeing was awarded the contract.
Indonesian satellite operator Pasifik Satelit Nusantara (PSN) is expanding the country’s fleet with the full Ka-band SATRIA satellite. PSN awarded Thales Alenia Space a contract to design and manufacture the Very High Throughput Satellite (VHTS) based on Thales Alenia’s Spacebus Neo full electric platform, and fitted with a fifth-generation digital processor. SATRIA satellite will carry more than 150 Gbps over Indonesian territory.
Space Norway, in co-operation with Inmarsat and the Norwegian Ministry of Defence, awarded U.S.-based global security company Northrop Grumman Corporation to design, manufacture and integrate two Arctic Satellite Broadband Mission (ASBM) satellites. The two birds will carry multiple hosted payloads, including a Ka-band payload for Inmarsat. The satellites will be based on the Northrop Grumman’s GEOStar platform, offering mobile broadband coverage to both civilian and military users in the Arctic.
Eutelsat ordered the all-electric Eutelsat 10B communications satellite from Thales Alenia Space, intended to provide in-flight and maritime connectivity. Built on the Spacebus Neo platform, the satellite will carry two multi-beam High Throughput Satellite (HTS) Ku-band payloads, and two widebeam C- and Ku-band payloads, totaling 32 to ensure continuity of Eutelsat 10A in the end in 2023.
Egyptian telecommunications satellite operator Nilesat ordered the Nilesat 301 from Thales Alenia. Built on the Spacebus-4000B2 platform, the satellite will operate in Ku- and Ka- bands to deliver DTH, radio and data-transmissions services in the Middle East and North Africa.
Maxar Technologies announced in November last year that it had been awarded a contract by an undisclosed customer (now confirmed as Intelsat) to build a GEO communications satellite. The company also finalized a contract by Ovzon for a GEO satellite, the Ovzon 3, in July last year, although the manufacturer had been selected in 2018. The Ovzon 3 satellite is intended to provide versatile mobile broadband communications for small vehicles, aircraft and users on-the-move. It will be based on the mid-size Legion-class platform, formerly called the SSL-500, and is expected to be launched by SpaceX in 2021. VS