I was thinking about the space industry the other day and it occurred to me that things are more complex than they once were. It is not clear to me exactly what we mean when we speak about the satellite industry in the second decade of the 21st century.
There was a time when satellite companies were quite separate from other communications companies and were, by their very nature, repositories of a great deal of specialized skill and knowledge. Intelsat is the classic example of such an organization. Intelsat not only used satellites but also contracted for the development of entire classes of satellites and then operated them in-house. Intelsat did not order a standard design, as is now common practice. In the old days an Intelsat satellite was the result of a design process that yielded a unique satellite, which would be purchased by Intelsat in quantity. The Intelsat V series, for example, was developed by Ford Aerospace (now Space Systems/Loral) and had 15 members. Intelsat was, in fact, a major driver of the development of the communications satellite itself.
These days a “satellite” company buys a somewhat tweaked version of a standard design. It would be unthinkable for a company to seek a truly unique solution to its needs for a GEO-based communications satellite. Iridium is an example of a company that still maintains the ability to hold up its end in the development of a new satellite design, but these satellites are used in LEO and will be procured in quantity. In GEO even Intelsat uses standard bus designs these days.
What this means is that anyone can start a satellite company. Well, anyone with millions of dollars at any rate. For example, XM Satellite Radio has five satellites in orbit. (XM is owned by Sirius but still maintains a separate satellite infrastructure because of technical differences between the two systems.) These satellites are operated not by XM but by Telesat Canada. What XM provides is programming and involvement in terrestrial receivers. Is XM a satellite company? Clearly they are a media company, but are they truly a satellite company?
An even more striking example is EchoStar/Dish Network. Founded as EchoStar in 1980 to distribute C-band satellite television systems, in 1987 EchoStar applied to the FCC for a DTH satellite slot. When this was received Dish Network began transmitting television programming from orbit. This initial EchoStar was clearly a satellite company with capacities ranging from programming to satellite operations. In 2008, however, the EchoStar name along with the attendant satellites, consumer hardware and satellite operation was spun off as the EchoStar Corporation and Dish Network became purely a programming company that has since invested in spectrum with the clear intent to develop terrestrial video distribution channels (amongst other uses). Is Dish a satellite company? Did the satellite mojo all go to EchoStar?
According to the Satellite Industry Association (SIA), 78 percent ($79.1 billion) of satellite service revenue came from DTH satellite services in 2010, yet Dish, a major player, no longer has direct contact with satellite operations technology. Of course no broadcaster, in any medium, is ignorant of that medium’s technology, but Dish Network is a far cry from the old Intelsat.
In broadband the two major North American players are Hughes and ViaSat. Both of these companies are clearly in the forefront of satellite technology development, but Hughes considers itself a network operations company rather than a hardware developer. Although its consumer broadband division is still a pure satellite play, it has grown increasingly agnostic on the networks that its network arm manages, offering cable and DSL as well as traditional VSAT networks.
Hughes is clearly a satellite company, but not just a satellite company. The number of companies that can be categorized as purely “satellite” focused is constantly declining. As the communications marketplace grows more and more interconnected, so do the technologies that support it. It is no longer necessary to have a superlative in-house satellite group — such expertise is available elsewhere. This allows what were once “satellite” companies to pursue their real function — be it broadcasting or communications in general, supported by a smaller set of companies, or divisions of companies, that are truly “space” companies with the deep reservoirs of space and satellite expertise required to allow everyone else to get on with their real business.
Max Engel is an experienced satellite industry and telecom industry analyst and founder of The North Star Consultancy. He can be reached at firstname.lastname@example.org.