Latest News

Kay Sears, Intelsat General’s President’s Powerpoint Presentation Sparks GeoMetWatch/AsiaSat deal

By Mark Holmes | May 9, 2013

A PowerPoint presentation given by Intelsat General’s President, Kay Sears proved to be the catalyst that sparked GeoMetWatch (GMW) to pursue a hosted payload deal. GMW is a commercial technology company specializing in global hyperspectral weather services. David Crain, GeoMetWatch’s CEO explains how this presentation had a “huge influence” on the deal the company eventually signed with AsiaSat.

 

VIA SATELLITE: Could you tell us about how the deal with AsiaSat came about? How significant is this deal for GeoMetWatch?

Crain: The GMW business model is centered on hosted payloads, thus leveraging the costs already being borne by operators to get into space, and allowing for cost effective collection of weather data.

    The AsiaSat deal is of extreme importance to GMW, mainly because it provides a hosted ride into space in 2016 and it provides significant credibility for us in the industry now that we have a hosting partner.

    The concept of hosted payloads even went back as part of my previous job, and how we would price missions: you buy a satellite, a launch vehicle, and an orbital slot, requiring capital expenditure of up to $1 billion. That was just too high of a hurdle for an investment. It was a talk that Kay Sears gave in 2006-2007 pointing out that Intelsat was looking at the plausibility of co-hosted payloads. We really started looking at hosted payloads then. When we formed GeoMetWatch, I had in my mind that hosted payloads were the way to go. We didn’t need to reinvent the wheel or incur the capital expenditure costs of the launch vehicle and other expenditures. This is a high bandwidth mission. Our STORM payload will need 50-100 Mbps downlink. In the old days, to pay for that type of bandwidth would be prohibitive. But now with Ka- and Ku-bands, the cost of that bandwidth has gone down to a few million dollars a year. The other advantage of working with an established operator is that they already have the orbital slot and the frequency. By being a hosted payload, we don’t have to worry about the regulatory issues of finding an orbital location; it reduces the complexity of what we have to do. We have to build an instrument that can be accommodated on a communications satellite but that is a small change in the instrument compared to doing the whole mission.

  

VIA SATELLITE: How much an influence was that Kay Sears presentation?

Crain: It was a huge influence because at the time I had never even thought about hosted payloads. I was well aware of commercial missions such as GeoEye and DigitalGlobe, so I realized there was a market for these services on a commercial basis. But, before that presentation from Kay, I really didn’t even know whether operators would get on board with a hosted payload concept. We had the hallway-type conversations back in 2006-2007. These conversations were very disparaging; most operators would not even consider this, they were making money without adding payloads to their satellites and they weren’t as open to discussions regarding hosted payloads as they are now. There were also some programs that NASA was thinking of, but the amount of money the government wanted for those did not really pay the opportunity costs. So, listening to Kay, I realized that there was a real opportunity to find a host. I was looking at many, many opportunities for payloads. We saw this hyper-spectral sensor as not only having revenue potential but also to meet the lost transponder potential. The ROI we will get with the STORM payload is significantly higher than what the operator would normally get from a pure transponder payload. By combining with the operator, we improve their business case and their overall ROI. We spread their risk, because the customers that buy our data are not the same that would lease their transponders. We have sort of de-risked the business case of whatever satellite we fly on.

  

VIA SATELLITE: Can you quantify what the cost savings will be?

Crain: In terms of capital expenditure costs per launch, we are saving $300 -$400 million per launch. Those costs are coming down all the time. Once we have established the revenue model, I think some of our satellites will be free flyers. There will be times when we won’t be able to plug into a particular location that we need, or it just might be more cost-effective for us to fly our own mission. We also looked at the Condo-sat mission, where at some point in the future, where we might fly our mission as a primary, and rent transponders back to an operator, as they might have a need for them. There will be regulatory issues there as well so, we have not taken them to ground yet but it is a concept we can consider in the future.

  

VIA SATELLITE: How many other operators did you seriously consider?

Crain: We went very far with two operators before AsiaSat. Those operators are still potential candidates for future missions. We just could not come to an agreement. They were either asking for too much upfront for a hosting fee or we could not agree on terms. AsiaSat is a true partner with us. If we are successful, they will be successful. If we hit our revenue numbers, they will get a percentage of that. At this stage of our venture, they were the type of partner we needed. At a future stage, and when we do have revenue and cash flow, we could complete our own financing. To get the first one up, we really needed someone to step into the ring and take some risk with us. AsiaSat seemed to be one that was the most aligned with us.

  

VIA SATELLITE: Were these two operators global in nature?

Crain: They were of equal size, if not bigger than AsiaSat. They were significant operators. The good thing about the AsiaSat deal is that it sets the bar. Every operator we talk to in the future has to at least equal the AsiaSat deal. More importantly, AsiaSat is interested in doing all of our missions. But, we now have a baseline, so we know the costs and know the terms.

  

VIA SATELLITE: What kind of capability will this deal bring to GeoMetWatch? Had you looked at other business models like this before?

Crain: This brings a reality to the GMW concept in securing an operator for our first sensor, STORM-1. In the two weeks since the announced partnership, we have recognized significant momentum on our project due to the significance of a solid hosting partner. We are largely following similar efforts pioneered by companies such as GeoEye, DigitalGlobe, and Space Exploration Technologies, where typical government paid programs/efforts are being commercialized.

  

VIA SATELLITE: How will GeoMetWatch look to work with the satellite industry in the future?

Crain: GMW will be working over the next few years to launch a minimum of six, and maximum of 12 STORM instruments. Our relationship with the rest of the satellite industry is critical for us, but we believe it is critical for the industry to work closely with us as well, since we are able to provide each other with market and revenue opportunities that would otherwise not be available, and that will indeed be very beneficial to all of society.
    In terms of next steps, we have about a dozen MoU’s for purchase agreements in Asia. One of the things we want to do now is go back to those customers, and get firm commitments to buy the data. This will satisfy most of the obligations we have with AsiaSat and give us the collateral to make sure the business goes forward. Alternatively, we are also doing fund raising. The terms of the AsiaSat deal are very open, as we secure contracts, it will make any unclosed issues go away. The main challenge is to start firming up the contracts. The most pressing concern this year is getting everything in place for a second deal.

  

VIA SATELLITE: So, a second hosted payload deal this year?

Crain: AsiaSat would have first shot at any deal we do. The big challenge is to ensure they have the orbital locations that we need. That will be their challenge. If they never do another deal with us, getting this deal has been a big help. It will be up to them. This deal will be a pathfinder, it will see how well we work together, and how well we can integrate this entire project. They will define the RFP for this satellite mission. We will have some lessons learned that will influence their decisions going forward but I think if we are successful, everyone will want to continue the relationship.