State Of The Industry: News Players Enter Growing Market
The global satellite communications industry continued to show growth in 2006, but this does not necessarily mean that the established players enjoyed all the gains. New and returning companies began to gain footholds in the launch and satellite manufacturing sectors. In the in-orbit activity sector, completed mergers consolidated the control of many of the communications satellites under fewer owners, and the impact of these moves on the manufacturing and launch industries has yet to be determined. Once again, Via Satellite takes a closer look at the industry developments that shaped business endeavors in 2006.
Commercial Launch Activity
The market for the three major launch service providers — International Launch Services (ILS), Arianespace and Sea Launch — remained steady in 2006 compared to 2005. The major launch providers again performed 15 missions, but in 2006, the number of launches was split evenly among the three.
ILS suffered the only failure when a January mission of its Proton rocket left the Arabsat 4A satellite short of its intended orbit. The bigger news for ILS was the loss of its access to Lockheed Martin Corp.’s Atlas 5 rocket. In October, Lockheed Martin completed the sale of its interests in the international joint venture, leaving ILS with the Proton to offer to commercial customers, while Lockheed Martin will assuming marketing efforts for commercial launches of Atlas 5.
While the number of commercial launches remained steady in the teens, the number of providers competing for missions is growing. China used its Long March rocket to place the Sinosat-2 communications satellite in orbit, while Khrunichev State Research and Production Space Center, the manufacturer of the Proton, performed a commercial launch of the Kazsat spacecraft for Kazakhstan. The Indian Space Research Organisation tried to use its own Geosynchronous Satellite Launch Vehicle to loft Insat-4C, but the mission failed.
Commercial In-orbit Activity
According to Via Satellite, there were 249 geostationary commercial communications satellites in operation at the end of 2006, with nearly 50 percent of those controlled by four companies.
Intelsat, having completed its acquisition of PanAmSat in July 2006, has 20.5 percent of geostationary communications satellites in orbit, while SES Global followed with 17.3 percent.
The two companies dwarf their nearest competitors, with Eutelsat third at 9.2 percent of the market. The impending merger of Loral Skynet and Telesat Canada is expected to be closed before the end of the summer and will create the fourth largest satellite operator, but the new entity, dubbed Telesat, will operate about 4 percent of the world’s communications satellites.
Demand for Fixed Satellite Services shows no sign of slowing down, as transponder fill rates have grown from 58 percent in 2004 to 70 percent in 2007.
Commercial Manufacturing Activity
Orders of commercial communications satellites continued a three-year climb, with 23 ordered in 2006, up from 20 in 2005 and 12 in 2004. These orders reflect publicly announced, non-low Earth orbit, commercial communications satellites.
EADS Astrium and Space Systems/Loral (SS/L) garnered the most orders in 2006 with seven apiece. Among EADS Astrium’s awards were Astra 3B for SES Astra and Hot Bird 9 and Hot Bird 10 for Eutelsat. SS/L’s orders included Sirius FM-5 for Sirius Satellite Radio and TerreStar-2 for TerreStar Networks Inc.
Alcatel Alenia Space (now Thales Alenia Space) followed with five — Turksat 3A for Turksat AS, AMC-21 for SES Americom and W2A and W7 for Eutelsat. Lockheed Martin Commercial Space Systems and Orbital Sciences Corp. each captured one contract.
Boeing Satellite Systems International returned to the commercial market, receiving a contract from Mobile Satellite Ventures (MSV) for two satellites to support MSV’s planned commercial mobile satellite service. The order was Boeing’s largest commercial satellite award since 1997.
The Russian Satellite Communications Co. also placed orders for three geostationary communications in 2006, awarding contracts to Khrunichev State Research and Production Space Center for Kazsat-2 and Express MD-1 and MD-2. Thales Alenia Space will provide the telecommunication payloads for the Express satellites.
Satellite industry revenues reached $106.1 billion in 2006, up 19.5 percent from 2005 and nearly twice the average annual growth of 10.5 percent recorded since 2001, according to an industry study sponsored by the Satellite Industry Association and prepared by Futron Corp.
The growth was triggered by an increase in the number of satellites launches and revenue growth of nearly 19 percent in the satellite services segment, which recorded total revenues of $62.6 billion, according to the June “State of the Satellite Industry Report.”
Services revenue gains are being driven by gains in the Fixed Satellite Services (FSS) and end-user segments. FSS revenues in 2006 were $11.8 billion, up from $9.8 billion in 2005. End-user revenues, which include direct-to-home (DTH) TV, satellite radio and broadband services, contributed $48.8 billion in revenues, up from $41.3 billion in 2005. Annual end-user revenues have more than doubled since 2001.
Worldwide satellite manufacturing revenues jumped 54 percent to $12 billion in 2006. The launch sector was the only major sector to see a decline in the past year, falling from $3 billion in revenue in 2005 to $2.7 billion in 2006. This was due mainly to the retirement of higher-priced launch vehicles in 2005 and not a decline in missions.
The ground equipment market continues to grow as well, with revenues improving 14 percent in 2006 to $28.8 billion. Some of the growth is being driven by increases in prices for consumer service-related hardware such as more capable satellite radio and DTH receivers that offer more services.
Predictions for the next decade are optimistic. Euroconsult estimates the space industry overall will be valued at $145 billion throughout the next 10 years, compared to $116 billion from 1997 to 2006. According to its “World Market Survey of Satellites to be Built & Launched by 2016” report, Euroconsult expects 960 satellites to be launched throughout the next decade, compared to 900 in the previous 10 years.
The growth will be driven by increasing demand from both government and commercial customers, Euroconsult says. The manufacturing and launch industries are also entering a growth cycle that will become evident in the next five years, according to Euroconsult. Market shares in the coming years may depend on the ability of companies to manage their product line-ups, ranging from basic to highly-complex satellites. Maintaining competitiveness in the global marketplace likely will require more research and development efforts as well as new marketing alliances between companies.