commercial space news commercial space news space technology investor number this is number twenty two in an irregular series on commercial space activities the commentaries included are my thoughts on these developments sigh as usual i ve gotten behind in getting this column written i can only plead the exigency of the current dynamics in the space biz this column is put together at lunch hour and after the house quiets down at night so data can quickly build up if there s a lot of other stuff going on i ve complied a lot of information and happenings since the last column so i m going to have to work to keep this one down to a readable length have fun contents us commercial space sales flatten in delta wins two key launch contracts commercial remote sensing venture gets doc go ahead investment firm calls gd s space biz still a good investment ariane predicts dip in launch demand ntsb investigates pegasus launch over aborted abort another pegasus competitor is announced georgia launch site dropped from planning spain s capricornia launcher still proceeding pacastro signs launch reservation with swedish space corp china and taiwan joint satellite venture reported south korea announces national move into space technologies space technology indexes through march final notes articles us commercial space sales flatten in the us department of commerce projects us commercial space sales will remain flat in with current data showing only a percent growth over as published in us industrial outlook which was released in january revenues from the us space business are currently projected to be about m in contrast to previous years when us commercial space sales had shown double digits growth rates this year s projected results are driven by the us satellite manufacturing industry where sales are projected to drop from satellites worth m in to satellites worth m in the us industrial outlook also projects u s commercial launchers faces flat demand in coming year and while predicting that revenues will increase percent to m future sales will be adversely affected by the downward revision in department of defense launch plans offsetting flat launch revenues and satellite deliveries revenues for fixed and mobile satellite services are projected to increase to m primarily driven by increased revenues from broadcast and cable tv networks similarly remote sensing products and sales are projected to increase to m in up us commercial space revenues r e commercial satellites satellite services fixed mobile satellite ground equip mobile equipment commercial launches remote sensing data and services private microgravity research lab total annual revenues r revised data for e estimated data for commentary this is the first look at how the us commercial space industry is expected to do in in general not a bad report with most of the bad news concentrated in the satellite manufacturing area there changes of only a few satellites worth m or so apiece can substantially influence the annual projection if we look forward over several years this market sector should retain strong sales as us firms have been very successful in regaining international market share in the satellite business furthermore sales of satellite ground equipment should go up in the next revision of this data expected to be released about mid year data on mobile satellite ground equipment sales including such items as gps receivers and portable satellite terminals appears to be missing from the january data set doc usually publishes a listing of space business indicators in mid year and the next revision of commercial space revenues should be released then i expect the revised revenues should easily top m if the mobile satellite ground equipment are added back into the numbers and the year should show about a overall market growth looking beyond this year s data future markets look quite promising the doc projects satellite service revenues could top m by if new mobile satellite services and direct broadcasting are implemented as planned and that mobile satellite station sales are expected to continue to growth at per year through the mid s my numbers are somewhat more pessimistic for near term market growth but i agree the trend should be for substantial growth in us commercial space sales over at least the next years my pessimism is due to more conservative assumptions on market capture and growth in leo communications and satellite direct broadcasting services i don t believe all of the current players in the yet to be born leo communications satellite market and in the yet to be proven direct broadcasting market will be financial successes nor that sales growth will be as explosive as currently projected it should also be noted this year s doc data is the first release to show revenues from privately funded microgravity research facilities the m shown in the janurary data is primarily for the spacehab module planned for launch in april on the space shuttle but also hidden in these numbers are the projected first sales from the comet orbital launch and recovery experiment module delta wins two key launch contracts mcdonnell douglas corporation which builds and markets the delta launch vehicle has won two important launch contracts motorola inc announced in mid february that it had selected the delta to launch most of the satellites in the satellite iridium leo communications constellation and in mid april mcdonnell douglas was awarded the usaf medium launch vehicle iii contract the launch services contract with motorola for the iridium constellation launch is for at launch of least iridium satellites another satellites have been contracted to be launched by khrunichev enterprise in russian on proton vehicle launches these satellites planned for the delta will be launched at a time providing for at least launches additional satellites in the iridium constellation such as a planned on orbit spares may also be launched on delta although details of the launch services contract were reported to be negotiation and not yet final the usaf mlv contract also went to mdc bidding a variant of their delta ii launcher this contract is only initially worth million but establishes a set of launch options for up to launches encompassing launches from through these launches will deploy the next generation of the usaf s global positioning system block iir navigation satellites plus other programs first option for to meet the usaf launch options is expected to be exercised this year after which the usaf is expected to request launches of up to deltas per year for at least years under this contract the usaf can also request launch on demand services from mdc for the time period with a launch to occur within days of the request commentary if these two contracts are fulfilled they should provide an excellent business base for mdc s delta launch program through the turn of the century combined these two contracts have a potential for about launches worth about m to mdc and sustaining a core business base of m year other contracts for international and commercial payloads as well as for nasa medium elv class payloads will add to this business base keeping mdc as a viable commerical launch company however it should be noted there are risk elements in these contracts motorola s iridium leo communications constellation has not yet received a us federal communications commission license for operation in the u s nor has motorola lined up all the financing and financial partners for the iridium venture without these approvals or financial backing there will be no iridium launches but hopefully these uncertainties will be settled this year similarly the usaf mlv iii program has been the target of several congressional actions which have slowed the production of the gps block iir satellites and deleted the funding for the mlv iii program in favor of the usaf nls spacelifter program at this time while it appears the mlv iii contract will be executed future funding for the mlv iii and other usaf commercial launch contracts is being reconsidered as part of national space launch strategy reviews some opinions expressed from within the administration and congress propose cancellation of all elv upgrade programs including the mlv programs in favor of the proposed spacelifter program such opinions may have some weight in this year s budget deliberations particularly as dod funds will be more difficult to find in the shrinking us defense budget commercial remote sensing venture gets doc go ahead the first commercial license to operate a remote sensing satellite was approved in early february by the us department of commerce s office of space commerce a license was granted to worldview imaging corporation of oakland california to build and operate a pair of leo imaging satellites to provide multi spectral images of the earth commentary there has been little data released on this venture by worldview and the doc other than the announcement of the operating and construction license this was reported to be at the request of worldview most industry speculation identifies this new venture as a star wars spinoff using sdi type technology to provide digital earth sensing data and heavily integrated into digital gis databases for remote sensing gis users most probable customers for this service include exploration geologists agricultural planners and urban planners it is noteworthy this is the first commercial venture under the land remote sensing policy act the act as passed last november provides that remote sensing data gathered from private remote sensing craft may be sold to users at differing prices prior to this act remote sensing data from all satellites had to be sold to all users at the same prices and private remote sensing ventures would have had to sell at the government set landsat data prices there are rumors of several other potential commercial remote sensing ventures working their way through the system at different stages of development i think the large landsat and spot satellite systems will provide the majority of the satellite remote sensing data market for the next decade or so in contrast to these large government sponsored remote sensing systems smaller market ventures such as worldview and others can exploit market niches and use innovative technology and i believe can find profitability on the margin i predict there may be some very interesting ventures appearing in the next year or so investment firm calls gd s space biz still a good investment wall street investment house morgan stanley thinks general dynamic s space systems division could still be a moneymaker despite having failed in the last atlas launches in a recent analyst s report morgan stanley said we are more than ever convinced that if the company can return the atlas to its historical plus success rate this will become a highly profitable cash generating unit based upon discussions with gd s corporate management morgan stanley projects that if the atlas problems are cleared up the unit could see m in earnings per year by and m per year by this is based upon gd s projection of capturing about atlas launches per year on the world market commentary three failures in a row of their launch system has hurt general dynamic s space systems division since gd has restructured to only keep a very few profitable core businesses many market pundits have been speculating gd s space business might be next to be sold the morgan stanley report indicates gd s space systems division has some potential as a moneymaker despite current problems if they can get their act together sales are projected to be about m in which will probably generate a loss of about m if gd can capture their projected share of the space launch market and if they have managed to clean up the reliability of their atlas launchers then they could generate healthy profits from those sales but until they demonstrate the atlas centaur program is back on track this division will continue to show substantial losses in response to the sell off rumors in my opinion this operation is not a really good candidate for takeover and quick profitability to do such a takeover the current set corporate and divisional management would be replaced with another set from outside the firm in gd ssd s case to get the division back on track the management team will have to concentrate hard on the technical problems with the atlas centaur as well as in selling atlas services this would indicate only another firm with experience in rocket launch operations could find such talent in house and be able to convince customers to buy their launch services optimally the firm would have substantial liquid rocket experience and experience in marketing space technology internationally as well candidates for this might be trw rockwell lockheed and martin and possibly mcdonnell douglas and boeing but most of those firms have cash flow problems mdc have had a substantial business contraction boeing and mdc are involved with other launch firms lockheed or have taken on substantial debt martin and coming up with the m purchase price for the division is a big chunk of change for any company ariane predicts dip in launch demand arianespace the operator of the ariane launch system is projecting a dip in launch demand in the late s in early february arianespace released their annual market survey which detailed their projection of the space transportation market for the next decade over short run arianespace expects to retain their dominant position and sustain a majority share of the launch market of international and commercial launches planned through ariane holds contracts for general dynamics atlas vehicle holds contracts mcdonnell douglas delta holds and great wall s long march vehicle holds launch contracts three quarters of future launch contracts for which ariane can compete are projected to come from communications satellites with the remaining split between weather earth observation and scientific satellites most of the future telecommunications demand growth is predicted to come from the asia pacific region arianespace expects the current market consolidation of individual satellite operators into regional or national groups will continue with these groups investing in heavier satellites with larger communications payloads carrying more transponders arianespace predicts the average mass of telecommunications satellites should increase by over today s average level to about kg in geo demand for commercial launch services is expected to remain strong over the next three years but in the second half of the decade arianespace predicts demand will decrease arianespace bases this prediction upon a matching of satellite transponder demand and supply particularly as new data compression techniques appear to could double or triple transponder capacity using existing or near term transponders one of the significant possible changes in the market was identified as the arrival of new launch vehicles including russian launch systems but arianespace predicts that in the long term investors purchasing launch services are looking for the best trade off between launch service quality and price and that russian and other new launch services will have to prove out their capabilities and service quality and their market penetration will be minimal commentary ariane releases their market surveys annually and i reported on their prior market survey in a past issue of csn sti comparing the two surveys there aren t outstanding differences in the numbers the most notable change is the consideration of new data compression techniques reducing the demand for new physical transponders on orbit i note that in contrast to some predictions demand for space based communications transponders appears to be remain strong while fiber optic lines are making substantial inroads into the established point to point telecommunications markets growing demand for telecommunications services world wide and for point to multipoint broadcast services have prevented a decrease in space transponder demand fiberoptic cables provide a higher capability service but only from established point a to established point b to establish a fiberoptic link it is necessary to install cable between the points and while there are improved network solutions installing a large network of distributed fiberoptic links can cost millions or billions of dollars for broadcast services where there is not an existing ground network structure satellites still offer the most cost effective solution and if new services are required into a new region it is cheaper to install a small satellite link costing only a few tens of thousands of dollars and tie into the existing global satellite network this allows rapid growth of new satellite services and has kept demand high the replacement market for fiberoptics is growing as well since as demand grows between the points serviced it becomes cost effective to later install a fiberoptic link to handle the increase in traffic since the telecommunications and data transfer markets are still growing rapidly satellite market projections remain rosy but satellites are also getting longer orbital lifetimes current generation satellites are now getting guarantees of at years of on orbit service or more in contrast to years of service from last generation s satellites this has cut back some of the launch demand as satellite owners are rescheduling replacement satellite launches over longer intervals and as last note arianespace didn t flag it this year but it looks like the space transportation market will be rather over supplied by existing launch systems in the near term the annual commercial launch demand is for about medium sized satellites per year from the supply side ariane is capable of launching up to about a dozen medium sized satellites a year delta is capable of about per year atlas is capable of long march japan s h vehicle russia s proton capable of and other systems such as zenit and soyuz another medium launches per year that s a lot of capability for a small market we can only expect the competition to intensify for commercial launches ntsb investigates pegasus launch over aborted abort the feb pegasus launch by orbital sciences corporation has spawned an investigation over an apparent violation of range safety rules a valid abort order from a nasa range safety officer to halt the mission was overridden and the pegasus was launched in violation of range safety rules in the last few minutes of the pegasus launch countdown one of two abort command receivers aboard the pegasus failed such a failure typically scrubs a launch and a nasa range safety officer at wallops island va issued a mission abort order about a minute before the scheduled pegasus launch somehow this command was overridden by the osc launch team or the message was lost in the communications channels and the pegasus was launched despite the valid abort call fortunately the pegasus functioned as expected and the abort command receiver was not needed but this incident did spark an investigation since a valid abort order was given under agreed to launch constraint rules and was not obeyed leading the investigation is the national transportation safety board ntsb with support from nasa osc and the air force this investigation marks the first time ntsb has taken the lead on an incident involving a space launch according to the ntsb their investigation will take about months and is primarily looking at lines of authority communications links and safety procedures used in the launch commentary this is the first time that the ntsb has led an investigation into a space launch their leadership was requested by the department of commerce s office of commercial space transportation who had licensed the commercial launch at the time of writing this column some of the initial investigations have been concluded and some of the results are starting to leak out into the trade press apparently or four different communications channels were in use during the test after the abort destruct receiver stopped responding the nasa test director and range controller in the mission control room at wallops island gave abort orders about a minute before the launch according to the mission rules this should have stopped the launch somehow the osc test conductor ordered the abort reversed and the nasa communicator on the net relayed that order to the b carrying the pegasus at about seconds before launch differing explainations of exactly how this happened are proposed with the best set being that clear lines of communications and clear definition of the responsibilities of the mission control team and understanding of the mission rules were not established before the launch as we see more and more commercial launches more of these procedural issues are going to crop up and will have to be resolved this case is interesting because it is the first time the ntsb has been called in to investigate a commercial launch problem as they do with commercial aircraft problems i think this problem will turn out to be primarily problems with procedures and communications and will be cleared up with issuance of guidelines on how launch communications should be set up and how specific lines of authority should be delineated another pegasus competitor is announced tsniimach enterprise in russia announced it is marketing a new small space launch system based upon converted icbm components two versions of the launcher are being marketed the aerokosmos winged vehicle launched like the osc pegasus and the severkosmos launched from a mobile ground transporter the aerokosmos is projected to deliver kg to a km circular orbit or kg to an km circular orbit and the severkosmos to be capable of kg to km orbits and kg to km also proposed to be used with these launch systems is a leo data relay system called sineva tsniimach enterprise is described as a ex military establishment focusing on aerodynamics and thermal protection of spacecraft and which has participated in the development of the buran shuttle system they are located near the npo energia facility in kaliningrad outside of moscow commentary there s very little released information on this new venture my suspicion is it is another russian enterprise looking for hard currency and trying to capitalize upon their in house knowledge of ex soviet launch systems it adds to the list of numerous commercial space startups announced from the ex soviet union this one s a little different in that they are offering variants of ex soviet icbms but i can t identify any key customers being targeted or substantial financial backing georgia launch site dropped from planning in late january georgia tech research institute released the results of a preliminary study on the feasibility of a commercial rocket launching site in camden county georgia at the old kingsland missile test launching site on the atlantic coast the preliminary study recommended the site not be pursued as a commercial launch site stating reopening the site was not feasible due to projected low investment returns plus environmental and other geographic considerations however the report did say the site might be ideal for other aerospace uses and recommended other potential uses commentary this should put the nails in the coffin of the kingsland commercial launch site while other sites are still proceeding with commercial launch site development plans kingsland found without a key customer to act as anchor tenant and if substantial infrastructure had to be put in then the expected returns were too low to justify the cost of development this might point out some key discriminators in judging the feasibility of a commercial launch site these include is there an identified key customer to provide core usage sufficient to recover setup costs is there a market advantage of using the site can existing infrastructure be used or modified at the site can financing be found at low enough cost to support the investment other commercial launch site ventures including those at woomera poker flat cape york white sands alabama off shore platform hawaii and vandenberg have to also be judged against these criteria in my opinion some of these ventures are flying on hope and speculation and not on sound financial grounds spain s capricornia launcher still proceeding in one of his last official acts former president bush authorized space technology transfer for several joint space ventures between us and other firms one of these was a proposed use of us technology by spain to build a small booster with that regulatory impediment removed the stage capricornia launch vehicle will start development later this year planning for a first launch in the time period the capricornia is described as a small stage all solid booster designed to put kg into leo several launch sites are being examined for the system including on the iberian peninsula and on the canary islands originated by inta in spain the project reports it has m in development funding and will use technology from argentina s condor launch vehicle as well as from the us commentary several firms have identified a market opportunity in providing a small launcher for the european market small payloads from european firms or organizations currently use either ariane piggyback launches or the us italian scout launcher however ariane piggyback opportunities are limited and the scout program is being phased out accompanied by some disarray in the italian government and space industry regarding any follow on system this has left an apparent niche for a new european small launch system surprisingly enough esa has not supported development of such a system within the current space funding structure studies have been performed by british aerospace aerospatiale deutsche aerospace and italian organizations but with the exception of the swedish pacastro system reported below i have not been able to find any other european development work with even a rumor of funding for hardware also of interest is the linking of the capricornia to the argentinian condor launcher there have been some interesting rumors surfacing out of argentina over the past year about a space launcher irbm program funded under the military junta which ruled the country in the s and early s what is known is in feb the argentinian air force formally transferred control of the condor missile program to the new civilian argentinian national space agency comison nacional de atividades espaciales cnae the condor program was described as originating in expanding upon the smaller condor rocket program in collaboration with egypt and with support of german firms the condor was also reportedly funded indirectly by iraq in the mid s fairly large solid rocket motors were built and tested but argentinan development of a suitable guidance package lagged that of the propulsion system it should be noted cnae is planning to launch its first scientific satellite in late the us m kg sac b satellite will study the earth s upper atmosphere and includes cooperative experiments from italy and the us no launch vehicle has yet been selected but osc s pegasus and the russian burlak air launched rocket are reported to be strong contenders for this contract pacastro signs launch reservation with swedish space corp pacastro a small launch firm in herndon virginia announced in late february it had received a m launch reservation contract from the swedish space corp to launch a satellite on pacastro s pa launch vehicle this will be performed as part of the polar satellite service pss a joint norwegian space center swedish space corp program to upgrade the andoya rocket range in norway and offering small satellite launches into the polar regions according to pacastro pss is also performing an m upgrade of the andoya launch facilities including a new integration facility and a fully enclosed vertical assembly building for small launch vehicles like the pacastro pa pacastro has been chosen as the main alternative rocket supplier for the small satellite launch service to be offered by pss from andoya the date of the launch of the swedish satellite was not specified commentary pacastro has been trying to line up customers and funding for their launch vehicle for some time now the pa is a small two stage rocket fueled by rp and liquid oxygen from pacastro s literature the engines designed for the pa series rockets are built of off the shelf components based upon the lunar module descent engines built by trw and are capable of putting a kg satellite into a km circular polar orbit pacastro is trying to arrange construction financing for its first three pa vehicles with a first launch planned for and orbital launches planned for my records show pacastro hired trw to provide marketing support and systems design with primary engineering to be done by aeroastro a small satellite builder closely associated with pacastro headquartered in the same building the swedish space corporation would supply engineering launch operations vehicle subsystems and marketing support sumitomo corp of tokyo is a first round investor and sits on the board of directors pacastro has gotten a first round financial package of at least k some sources place this of high as m but has been searching for about a year for the additional m needed to design build and launch their first set of vehicles the launch reservation from ssc can possibly be used to help bring some investors on board but by my estimate they will need much more than the single m sale to put their venture into real hardware china and taiwan joint satellite venture reported in early march it was reported a joint satellite communications venture between a taiwanese and mainland chinese was in the works as reported in the taipei press china development corp cdc headquartered in taiwam and with links to the ruling nationalist party is planning to set up a joint venture in hong kong with china great wall industry corp with the objective of launching a regional communications satellite cdc would cover about of the satellite system cost us m in exchange for rights to of the satellite s communications channels commentary this announcement came close on the heels of the release of taiwanese plans for space development released in mid january in those plans the national space program office of taiwan will launch satellites starting with rocsat a kg scientific spacecraft planned for launch in two additional satellites are planned both communications satellites trw has been helping taiwan plan this program budgeted at t b us m through i haven t been able to establish any relationship between this venture and those of the nspot but there might be a connection while taiwan has the financing to pursue several ventures the current taiwanese telecommunications market might not support two separate sastellite ventures the reported name for the tiawanese chinese system is asiasat but i don t thinks this has any relationship with the existing hong kong based asiasat program involving chinese hong kong and other asian investors other than using it as an organizational model there are some obvious advantages to pursuing such a joing venture it could provide excellent first hand experience to taiwan for a very low cost which then can be used in later satellite ventures but there are internal political issues between taiwanese and chinese ventures but putting any joint venture through a hong kong intermediary corporation might allow it to proceed in any case the east asian satellite market is lighting up with substantially growth projected in space services and revenues this is just another indicator to add to the list south korea announces national move into space technologies south korea s trade industry and resources ministry recently announced plans to invest us b in research and development and another us b into manufacturing and research facilities for advanced aerospace technologies space technologies have been specifically targeted as part of this program beginning with manufacture and launch of an advanced multi purpose satellite by the objective of this investment is to raise south korea s aerospace technology to the level of the world s top countries by commentary south korea has been quietly working to develop its national aerospace industry specifically including space activities i m noting this as a flag that potential new players are coming into the commercial space market as part of their national effort national telecommunications satellites for korea telecom will be launched in april and oct on delta designated koreasat and the platforms will provide television and telephone service throughout the korean peninsula southwestern japan and portions of china bordering north korea south korea launched its first small satellite piggyback on ariane in aug called uribyol our star and costing about us m uribyol is planned for piggyback launch in october of this year again on ariane and will be entirely made in korea uribyol projected for a launch will be an environment monitoring micro satellite this satellite may be the precursor to a series of small earth observation satellites the keos korean earth observation system project which has been submitted for approval to the south korean government would use two or three kg spacecraft equipped with optical and microwave sensors south korean press reports claim there is also a parallel military effort to establish the capabilities for building and launching small military satellites by supposedly a government panel had been established to oversee such an effort funded at us m between and in anticipation of an expected pullout of u s intelligence gathering systems from the korean peninsula in conjunction with all of these reported efforts south korean is also pursuing production work either as off sets to existing aerospace technology contracts for example mcdonnell douglas is offsetting production of some delta parts to south korean firms as part of the koreasat launch contracts or for production of consumer space items among other products south korea exports satellite receiver television setups to japan and samsung has announced teaming for production of osc s orbcomm user terminals this looks like a very aggressive push into space technologies considering that east asia is currently the fastest growing sector for commercial space services primarily for telecommunications a south korean push into space technologies may change the composition of commercial space market there over the next decade space technology indexes through march as announced in the last csn sti each issue will give the results of stock indexes and portfolios regarding space stocks and investments the table below summarizes results to the end of march the space technology index did quite a bit better than the market as a whole as represented by the s p index since of the values included in the index are us firms this represents a general increase in the market value of space related firms the increase in the first quarter is more than in all of which is a very promising sign although future months may reverse this trend the commercial space technology index has also done quite well but the pure play portfolio consisting of stocks of firms which are pure plays in space technologies has also surpassed its results in all of we ll keep an eye on these index results through march beginning beginning jan to mar s p space tech index comm l space tech index space tech pure plays final notes what this column s already full and i still have bunches of commercial space developments to report on as i said at the start of this column there s been a lot of interesting happenings but i ll have to put them into the next issue looking ahead i ve got several articles in the works on new happenings with iridium and the leo communications satellite market more news on international launchers appearing and disappearing on the market new international commercial space ventures and other interesting developments and as always i hope you folks find this stuff useful and interesting any and all comments are welcome wales larrison space technology investor felicitas multos habet amicos p o box seal beach ca
