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Last Updated: Sunday, 26 December, 2004, 11:56 GMT
Clawing back demand for satellites
By Jo Twist
BBC News science and technology reporter

It has been a rocky few years for the companies that launch the world's satellites, and it has been an especially testing time for the dominant commercial player, Arianespace.

Esa's SMART-1 testing solar electric propulsion and studying the Moon  (Image: Esa)
Satellite technology is improving quickly
In January, Arianespace's heavyweight "workhorse" rocket launches in one of two qualifying flights to prove it is back in the game after a disastrous maiden mission.

In December 2002, the Ariane 5-ECA, capable of pushing 10 tonnes to a geostationary orbit, went off course and exploded four minutes after lift-off.

The New Year launch could be an important test if Arianespace is to maintain its lead position in an unsettled market.

To Jean-Yves Le Gall, chief executive officer of Arianespace, the rocket's success is crucial.

"During the last year, because of very big changes in this market, we have a keyword in the company which is 'adaptation'," he told the BBC News website.

"We have to adapt to the new needs of our customers. This is why we decided to make the Ariane 5-ECA our workhorse for the future because this launch vehicle will bring both the single-launch flexibility and the double-launch affordability."

Longer life

The satellite launch market is just starting to come out of a global slump, according to analysts.

"There has been a slowdown in demand, growing supply and price decreases in launch services," Rachel Villain, senior analyst for Euroconsult, a satellite consultancy firm, explains.

What satellites are for, where they go, and how they are launched

Demand for major geostationary satellites (GEO) ground to a halt in 2002 after the market - satellite operators, stakeholders, investors - reshuffled.

Analysts say GEO satellite demand is set to stay around 20 a year on average but that will increase later in the decade.

The 1990s was a period of high turnover for the satellite industry. Before the net bubble burst, there was a flurry of excitement around telecoms, driven by broadband net.

Demand was also pushed by the satellite TV industry.

Ariane 5-ECA rocket on the launch pad (Image: Esa)
The Ariane 5-ECA aims to be the leader of the commercial heavy-lift pack
On average, there were 26 launches of GEO satellites. Between 1998 and 2003, the "golden age" was ending and launches had tailed off to an average of 20 a year.

In the 1990s, the suppliers of launch services had the power to negotiate, because of the limited range of rocket services available.

In the 2000s, that has reversed, says Ms Villain. It became a buyer's market, forcing services to adapt and be more flexible.

These two words, "adaptation" and "flexibility" became Arianespace's mantra, says Jean-Yves Le Gall.

Weighty issue

It is not just market forces that have been to blame, however; better technology has impacted the market, too.

"Traffic demand grew sharply for telecoms, the net, and TV broadcasts; but there was also the issue of productivity," Ms Villain told the BBC News website.

"Satellites now are much better than 10 years ago. Transponder capability has increased. There are much more megabits per signal traffic than 10 or 15 years ago."

If a rocket can carry multiple satellites at once, it has a better spread of options for customers
Bruce Elbert, Application Technology Strategy
Improvements in technologies which help power satellites - batteries, solar technology, computers, and thermal treatments - have also extended their life in orbit, explains Bruce Elbert, from US-based satellite consultants Application Technology Strategy.

"If you go back in history, there is a cycle," he says. "It is produced by the fact that satellites have a lifetime. In the 80s, it was about seven years; by the 90s, it was 10, and some are now lasting 20 years.

"These cycles caught the industry with all this capacity." No longer are satellites thought of as expendable, he adds.

However, many satellites are coming up to their replacement age in the next few years which, says Ms Villain, is good news for the industry.

This explains why analysts say the market will look a lot healthier by the middle of the decade.

Virtually cloudless Europe taken by the Meteosat Second Generation satellite (MSG-1) (Image: EUMETSAT)
Earth observation is always in demand
But better satellites also means heavier ones - part of the reason why having a rocket that can throw up a big satellite, or more than one at a time, is crucial. It cuts the cost per kilo of launching them.

"Over the last 20 years, the average launch mass of GEO satellites has increased hugely. In the 1980s, they were about 1,000kg [one tonne] a launch. Now they are 4,000kg [four tonnes] on average a launch," says Ms Villain.

The Ariane 5-ECA can carry two typical 4.5 tonne, eight kilowatt satellites. Ariane's main competitors, Boeing's Sea Launch and Lockheed Martin's Proton, can carry one.

"Large means five tonnes and if you have more room to spare, you can load more fuel," says Mr Elbert. And if a rocket can carry multiple satellites at once, it has a better spread of options for customers.

"[Satellite manufacturers] won't be designing much bigger ones than that though because then only Ariane 5-ECA would be able to launch them."

Demanding future

Looking to future demand for the satellite market, many have hyped up the promise of wi-fi and mobile phone on planes, such as Boeing's Connexion service.

But, says Ms Villain, this demand will be met by existing satellite transponders. Mr Le Gall is sceptical it will "take off", too.

He quite simply does not believe people will want to use their mobiles in the air. There are already phones on planes which are not used, and privacy issues are a concern for him.

Although wary of predictions, Mr Le Gall is confident about the market's growth with newer technologies meaning people will want the capability do more.

TV displays
High-definition TV demand will grow as prices for sets drop
He believes telecommunication needs will grow by an average of 7% a year. This, he says, means double the satellite capability will be required every 10 years.

"This growth will continue because two years ago, everybody had cell phones with just voice," he explains.

"It is clear that we will need more and more capability to send a lot of data from everywhere in the world and so we'll have an increased need for in-orbit capability."

So there is no doubt that telecommunications will still drive up demand, even though many countries have opted for land-tied fibre and DSL technologies.

Regional dynamics also play a huge role in demand. Large continents with sparsely populated swathes of land to cover will still need to rely on satellites to relay broadband signals.

Many developing nations are driving the demand for mobile telephony, leapfrogging traditional landlines.

Geopolitical tension is perversely good for the global satellite market, with increased demand for surveillance, navigation and aerial photography instantaneously.

However, the crucial lifeblood for the industry is coming from direct TV and high-definition TV (HDTV).

HDTV has taken off in the US, where usual TV picture quality is generally poorer than in Europe.

In Europe, HDTV is finally making a breakthrough because of the falling prices in TVs able to receive the high-quality signal.

But with billions in revenue at stake, there is no doubt the market is set to get a lot more interesting in the next five to 10 years.

Huge rocket makes maiden flight
22 Dec 04 |  Science/Nature
'Super-rocket' aims for January
30 Nov 04 |  Science/Nature
Q&A: Jean-Yves Le Gall
30 Nov 04 |  Science/Nature
Major satellite lift for Ariane
18 Jul 04 |  Science/Nature
Europe's rockets get boosted
27 May 03 |  Science/Nature
Engine glitch brought down rocket
07 Jan 03 |  Science/Nature

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