Analyst Places $52.7 Billion 10-Year Value on Commercial Satellite Industry

[Satellite News 06-27-12] The 49 commercial satellite production programs and 419 individual communications satellites produced between 2012 and 2022 will be worth a combined $52.7 billion, according to a Forecast International study published June 27.

   The firm’s “Market for Commercial Communications Satellites” study included surveys of high-speed broadband Internet, digital television and video broadcasting, and government services markets showing significant areas of growth for the commercial communications satellite industry.
   Forecast International Space Systems Analyst and Author William Ostrove noted that demand will be especially strong in developing markets such as Eastern Europe, North Africa, the Middle East, Latin America and Asia. “A lack of terrestrial networks and the rapid growth in demand for communications services in these areas of the world is driving this demand,” Ostrove wrote in the report.
   The digital television market is driving satellite service growth specifically for that reason, according to the study. The trend of terrestrial shortcomings leading to satellite gains was prevalent in areas of the world where cable and fiber-optic line penetration is low, such as Eastern Europe, North Africa and the Middle East. “And even where cable providers do exist, such as in Europe, satellite operators have been successful, providing television to 84 million homes on the continent,” Ostrove added.
   The study also showed particularly acute demand for satellite-delivered broadband Internet in rural areas, where high-speed Internet demand isn’t high enough to justify the cost of laying miles of cable. According to Ostrove, customers and businesses are starting to recognize how useful and cost-effective satellites can be in increasing connectivity for mobile applications.
   “Airlines such as United, Southwest and JetBlue plan to equip their entire fleets with Wi-Fi in the future. Ka-band satellites will be a primary supplier of the bandwidth needed to provide in-air broadband Internet connections,” said Ostrove.
   The report seems to support business models outlined by satellite Internet service providers such as ViaSat, which has invested heavily in the launch of its Ka-band-powered Exede broadband service. In its most recent fiscal quarter, ViaSat broke analysts’ fourth-quarter revenue projection of $229 million by $11 million, reaching $240.4 million in revenue during the period. While ViaSat spent more money on its ViaSat-1 broadband platform, the company also surprised analysts by adding 49,000 Exede subscribers during the quarter, which effectively doubled the size of the company’s subscriber base from the previous quarter.
   ViaSat CEO Mark Dankberg said his company would have been able to sign up even more Exede subscribers if not for delays in installations and rollout. “The demand we saw upon the introduction of the Exede service was really strong,” said Dankberg. “It ramped quickly, and the fulfillment issues we had were based on the ability to schedule install appointments after orders.”
   Ostrove predicts that governments will increasingly employ the services of commercial satellite operators despite long-lasting anxiety regarding the sector’s health due to budget cuts. “Rather than purchasing new satellites, governments are turning to commercial operators, often deploying their communication packages aboard commercial satellites under a scheme known as hosted payloads. The top manufacturers in the commercial communications satellite industry during the next 10 years will be Space Systems/Loral, Thales Alenia Space, EADS Astrium, Boeing and Lockheed Martin,” said Ostrove.
   That’s good news for Canadian information solutions provider MacDonald, Dettwiler and Associates (MDA), which acquired satellite manufacturer SS/L for $875 million earlier this morning. The acquisition transforms MDA into a significant commercial communications entity as it adds SS/L a top global provider of commercial communications satellites to MDA’s portfolio and provides the company with critical mass in the U.S. market.

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