Commercial Manufacturing Activity
Without a doubt, there was significant momentum in 2003 on the side of the satellite manufacturers. Via Satellite counted 19 commercial communication spacecraft orders publicly awarded and announced by the major Western satellite manufacturers last year--14 more contracts signed than in 2002.
Lockheed Martin Commercial Space Systems (LMCSS) led this segment with close to 30 percent of the marketshare. In addition, analysts at Frost and Sullivan recognized LMCSS for its A2100 satellite platform last year. According to the company, the A2100 is "The most reliable and efficient of its class, and has held an outstanding on-orbit reliability record since it was first offered in 1996."
Similar to the launch contracts, there were some wild cards within the manufacturing arena as well. Space Systems/Loral (SS/L) was one such cardholder. Last year, Intelsat agreed to order an additional satellite from this manufacturer contingent upon the approval of the operator's acquisition of Loral's North American Satellites. Likewise, DirecTV gave authority to proceed with the other spacecraft in Loral's high bay upon its completion of DirecTV 7S, which recently reached orbit. Therefore, there is a chance that SS/L's marketshare for 2003 may be higher than indicated once the dust settles on some of these business initiatives.
But the CEOs within this market segment have asserted the satellite manufacturing market will remain as is, with many manufacturers chasing a handful of contracts until 2007, when they expect an increase in new satellite orders. At least that was the sentiment at the manufacturing panel during SATELLITE 2004. Depending on which CEO you listen to, the total number of new satellite contracts worldwide could be as low as 12 or as high as 20 throughout the next few years. Though rumblings continue within this arena, nothing definitive has yet surfaced. So will this flat growth market be able to sustain itself in its current state until 2007? This remains to be seen.
2004 And Beyond
So how is the near-term future landscape of the global satellite industry shaping up? Most executives will say they are operating under a veil of cautious optimism. Yes, there is resurgence within the satellite arena and the momentum has not wavered halfway through 2004, but neither has the industry returned to the glory days of yesteryear when aggressive, ambitious plans were the norm and somewhat uninhibited business flair was commonplace in the boardrooms. Only time will tell if this new-found grounding to an orbiting business pays off.
Meanwhile, some of the business areas to keep an eye on include the growing initiatives News Corp continues to make regarding key decisions on DirecTV, Panamsat and HNS; bold broadband services such as Wildblue and in-flight Internet access, which are putting the space sector to the test; the growth of HDTV and its market acceptance; the continued strength behind consumer satellite service such as radio and broadcasting; and the metamorphosis of ownership surrounding the FSS sector, either with public offerings or more sales to investors.
In addition to private equity firms purchasing the operations of some FSS sector members, it will also be important to note the continued change in business offerings from the major satellite operators. Customers continue to look for complete service providers. They also want carriers that are technology-neutral: that can carry whatever traffic the customer wants them to carry, as quickly and economically as possible. Therefore, a business plan that makes the best use of all alternatives would certainly seem more likely to be a business success, offering customers global, efficient networks. This is where the future of the transmission business lies, and where the satellite industry needs to go if it is to survive. These are interesting times indeed.
Nick Mitsis is editor of Via Satellite magazine. He also sits on the board of SSPI's Mid-Atlantic chapter.