Emerging Nations Open To Comsat Suppliers
By Michael A. Taverna 
Space Systems/Loral continues to dominate the commercial telecom satellite market, but European companies are maintaining their inroads and new market entrants are increasingly making their mark.
As in 2007 and 2006, Space Systems/Loral led all geostationary satcom builders with eight orders, accounting for 29% of the open market. SS/L’s continuing domination of the market suggests that changes made after its Chapter 11 reorganization are bearing fruit.
Other U.S. manufacturers are not having similar success, though. Orbital Sciences Corp. finished the year with three orders, two fewer than in 2007. In quarterly earnings posted on Feb. 19, OSC said the global economic crisis could impact its satellite activities, although its popular Star 2 small satellite bus line could allow it to fare better than competitors. The other two big U.S. builders, Lockheed Martin and Boeing, scraped by with three awards between them, although that was better than the single order they won the year before.
However, Sierra Nevada Corp. landed a contract to build a second-generation low-Earth-orbit constellation for Orbcomm, and Lockheed Martin was short-listed for Iridium Next.
Lockheed Martin and Boeing are counting on technology spinoffs from military/government satcom programs—like the Transformational Satellite and Wideband Global Satcom—along with streamlined production and testing setups, to help them improve market share, particularly at the high end. Boeing Satellite Systems President Stephen O’Neill thinks his company has a good chance for three near-term mobile satellite service awards (AW&ST Jan. 12, p. 58). Lockheed Martin is in a good position to win follow-on orders from Vietnam, which recently applied for three new orbital positions.
Among the notable trends last year was the increasing integration of emerging space powers into the global marketplace, both as suppliers and customers. Newcomers landed four orders last year, up from two the year before. China’s CAST finalized a deal for Paksat 1R; Japan’s Melco lined up an order for the ST-2 satellite from ST-2, a joint venture of Singapore’s SingTel and Taiwan-based Chunghwa Telecom Co.; and a European newcomer—OHB System—won an initial commercial order from Hispasat.
Perhaps the most significant deal involved a breakthrough international sale by Russia’s Reshetnev ISS, for Spacecom of Israel’s Amos 5, using Reshetnev’s new Express 1000 small satcom bus. The Express 1000 was selected for a second application, Indonesia’s Telkom 3, in early March.
The new trend, which began with sales of Chinese telecom satellites to Nigeria and Venezuela in 2006, is part of a push by more and more developing countries to establish their own satcom capability—the latest is Sri Lanka. The trend worries traditional manufacturers, who fear it will fuel further sales to emerging nations and exacerbate oversupply. But it also affords new opportunities to end what for all intents and purposes have been captive markets. In 2008, Russia Satellite Communications Co. (RSCC) became the first Russian operator to order a Western spacecraft. Gazprom, which is challenging RSCC for leadership of the Russian market, recently followed suit.
However, 2008 also showed market newcomers that satcom technologies are not something mastered overnight. No fewer than three satellites from emerging nations failed in orbit during the year—NigComSat-1, built by China’s CAST; Eutelsat W2M, assembled by Antrix using an Astrium payload; and KazSat-1, manufactured by Russia’s Khrunichev for Kazakh space agency KazKosmos.
KazKosmos suggested that more know-how from traditional Western suppliers may have to be integrated into the supply chain to improve reliability. It is also noteworthy that Brazil, which also wants to break into the satcom market, turned to French space agency CNES to help in drafting preliminary specifications for a new satellite bus.
These early failures, though, have not driven customers away. Nigeria agreed at the end of January to acquire three more NigComSat spacecraft from CAST, including one to replace the failed unit. KazKosmos has plans for two additional spacecraft and is laying the groundwork for a second-generation system. And more new entrants are likely. Last summer, Argentina contracted with a local company, Invap, to begin work on the first of three planned satelllites that could serve as a stepping-stone to the satcom market. The first, Arsat-1, is to be launched in 2012.
Alongside the strides of those new to the market, European companies managed steady gains, despite an unfavorable exchange rate. Thales Alenia Space finished a close second behind SS/L in 2008, with five orders plus four payload contracts. Thales Alenia also contracted to supply a low-Earth-orbit constellation for O3b, after winning Globalstar 2 the year before. The company was short-listed, along with Lockheed Martin, for Iridium Next, too.
Although Astrium suffered a decline in new satellite business last year, with only two orders, it started off 2009 with a pair of Arabsat satcom contract awards (shared with Thales Alenia) and kept building its lead in the fast-growing government service sector (see p. 50).
Moreover, Europe’s satellite builders are benefiting the most from the integration of new market entrants into the global supply chain. After teaming with India’s Antrix in 2006 to bid for small satcom contracts, Astrium agreed last year to use Antrix’s low-cost Polar Satellite Launch Vehicle to orbit its Earth-observation satellites. Thales Alenia is profiting from a similar relationship with China’s Great Wall Industries Corp. The link helped Thales Alenia win the contract for Palapa D in 2007, leading SS/L to press Congress—so far unsuccessfully—to bar parent companies Thales and Finmeccanica from U.S. defense business (AW&ST Mar. 31, 2008, p. 33). Eutelsat is reportedly next in line to use China’s Long March to orbit a Thales Alenia satellite.
The deepest inroads by European companies have been in Russia. Astrium was picked to supply the AM4 for RSCC, while Thales Alenia landed an order for two Yamal-400 series spacecraft from Gazprom. Thales Alenia, which broke into the Russian market years ago as the payload supplier for Reshetnev’s RSCC spacecraft, is also providing payloads for Amos 5 and Telkom 3 and codeveloping a large satcom bus with Reshetnev.
European suppliers are benefiting from research and development support, increased military spending and government guarantees. Backing from French export finance agency Coface enabled Thales Alenia and Arianespace to land the twin Gazprom satellite and launch contracts. Thales Alenia Space President/CEO Reynald Seznec notes that such financing will “increasingly be an essential factor in the satcom business.”
Photo: Thales Alenia Space
