Ideally, broadband satellites would last no more than five years in orbit before being replaced by newer technology to keep up with the fast-changing data-distribution market. At least that’s the view of the chief technology officers at two top-tier satellite fleet operators, Eutelsat and Hispasat.
But there’s a catch: A satellite designed for five years would need to cost half as much, and preferably one-third, the cost of today’s satellites, which are designed to last 15 years in orbit.
Launch-service providers would also need to further cut their prices since fleet operators aren’t likely to pay the same to launch a five-year satellite as a 15-year satellite.
Neither of these massive capital-expenditure reductions appear on the horizon. But Eutelsat’s and Hispasat’s CTOs said keeping up with terrestrial competition will require the satellite industry to move toward this goal.
In a discussion at the recent World Satellite Business Week in Paris, the two CTOs also touched on whether the CTO position is still affordable in today’s market, and what the recent SpaceX failure says about the continued risk of the industry.
> SpaceX’s Sept. 1 pre-launch failure
The SpaceX failure that destroyed the Amos-6 satellite is a twofold problem. One is specific to Eutelsat. We had struck a deal with Facebook for use of the Amos-6 Ka-band payload as a gap-filler to await the arrival of one of our own satellites.
For the industry as a whole, this failure reinforces what I have said before: We need to have three sustainable and competitive launch solutions to avoid traffic jams for access to space, and the associated bottlenecks.
Another challenge for the industry is the disconnect between industry cycles and the marketplace’s evolution. The market is evolving faster than our ability to design and place into service a satellite. Keeping a satellite’s life at 15 years is justified for some markets, but not for others.
We are manufacturing satellites today the same way we did 40 years ago.
What happened with the Amos-6 satellite is not just bad for us, but for the whole industry. It reminds us this is a non zero-risk business. The risks materialize and grow. It reminds us of our duty to remain humble.
That being said, these and other factors have made next year a difficult year for launchers and getting reliable access to space. It will be at least a very crowded year.
Should I be optimistic or pessimistic? It’s safer to be pessimistic because, if I am right, they will call me a visionary. If I am wrong, people will be so happy they will forget what I said. But if I am optimistic: If I am right, that’s OK. But if I am wrong I will be blamed for having been too optimistic.
But we have reasons to be optimistic in this industry. But we need to be competitive with terrestrial solutions.
> Is a five-year satellite life optimal?
We need to reduce the cost per bit in orbit. Flexibility is one way to get costs down. The other is the pace of technological progress, which needs to be taken into account. For some markets designing your satellite for 15 years makes no sense. If you design your satellite on the assumption that you can be comfortable with it for 15 years, I think you are making a mistake, at least for the broadband markets.
Given the pace of change, your satellite will be obsolete after four or five years. So flexibility, cost per bit and then finding the right size of the satellite are the important challenges. If the satellite is too small you cannot get the cost per bit down. If it’s good big it will take you too long to fill it.
The question is how much can you save by designing a satellite that will last five years, versus a satellite that will last 15 years. If building one for five years costs about the same as building one for 15 years, then that would be a stupid thing to do.
If you can cut the cost in half with a smaller satellite and a shorter life, you are in a much better situation.
We have been working with industry a lot over the last 25 years and I can tell you we have reduced the capex in orbit by two orders of magnitude. One order of magnitude came with going to Ku from C-band, and a second order of magnitude came with the high-throughput satellites (HTS).
The bad news: If we had been operating under Moore’s Law during the past 25 years, we would have reduced the cost of capacity in orbit by another two orders of magnitude. There are many reasons why we can’t follow Moore’s Law, but we have asked the manufacturers for one order of magnitude compared to HTS. The current state of the art is a satellite design that is one-half an order of magnitude better than HTS.
One minor caveat: It takes a terabit-per-second satellite to get to these prices. Is there a market for this Terabit-per-second satellite? We have made progress and we need to continue because, if we succeed, there will be new opportunities.
Today it is difficult to sell 1 Terabit per second, according to our understanding of the broadband market today. But if we can make solutions that are competitive with terrestrial solutions, then there is a possibility to increase the size of the market.
About flexibility and shorter satellite life: We performed an exercise on how we would design a satellite if we could launch it for free, one that would have zero cost for the users. And we concluded that we wanted a five-year satellite.
You know why? That way we could follow market trends more closely and keep up with the evolution of the market. The problem is the capex of the launcher. If you have a satellite with a five-year lifetime, the launcher will, in effect, be three times the cost. I don’t know, but they have to make the satellite cheaper.
If we are talking about satellites that could be obsolete in five years then we need to talk about getting a return on the investment with lower lifetimes.
What we learned from our Ka-Sat is that the go-to-market strategy is also very important to be successful. I believe we have learned from this.
As for technology evolution, we see optical communications as an interesting technology but one whose maturity is more than five years away. There will come a time when we need to build much bigger satellites than what we are building today and the number of gateways will become the limiting factor. We can also go up in frequency range. There are more bands available above Ka-band.So we are not yet at the stage where optical links are necessary. For the gateways it is a question of both operational and financial aspects.
> Photonics experiments on Hispasat 1F, Amazons 5
Let me say this about optical, just speaking in general orders of magnitude. With a Terabit-per-second satellite we are talking about 40-60 gateways. This can get down to four to six with optical communication.
I think this can be done in five years. It is something we have been talking about with U.S. industry and the European Space Agency is also working in this area.
I believe optical will come with very-high-throughput satellites.
But on photonics there is something that can be interesting if you are talking about a large satellite, say 500 receivers on it, you can imagine that on the receiver side of the satellite what that might be like with RF receivers. This can be very easily done with photonics.
We have been working with Space Systems Loral and Spanish industry, with a company specialized in photonics devices. We will be flying two demonstration elements for photonics use on the Hispasat 1F and Amazonas 5 satellites. So we hope to have flight experience very soon.
> Would you put your satellite on a rocket for static-fire test to save a day?
I was in fact presented that choice [by SpaceX] and we decided not to put it on the rocket for the static fire. Remember what I said earlier: This event should remind us to be very humble in this industry. So no, I did not authorized SpaceX to put our satellite on the vehicle for the static fire.
We also considered it was not worth it for the two launches we had.
> Is technical oversight eroding among satellite operators?
When we order satellites we consider they are Eutelsat satellites and there is no temptation to lower technical standards. We are willing to make our relationships with satellite manufacturers more one of collaboration. Issuing an RFP and then selecting the best price has its limits as a model. It would be much better if we work together — not to share the margin, but to reduce the cost. We can reduce the cost if we do some co-engineering of satellites.
I cannot answer this question for others. If the question is: Are there other ways to manage the satellite business with a different risk profile? Then I say: Yes, absolutely. Our model is to balance the risk and revenue what we have with our shareholders. Working with a different risk profile is not compatible with our shareholders.
If the question is: Can this be done without having a technical team and without spending the money on the technical side? The answer is yes. I explain this to my shareholders: To buy a satellite you really need only two thing — a lawyer and a telephone.
But the probability that you will have a satellite working in orbit there years after is, say, 50 percent. If you say: I cannot sleep at night with this uncertainty. I say: OK, we hire some people, get a CTO, build up a team of engineers, deploy residents at the manufacturers, and then we follow the entire process. Now I have changed the risk of failure to around 10 percent. It’s up to you how you want to do it.
There is a complementarity between our expertise and the expertise of the satellite manufacturers. They understand their processes. We buy satellites from several manufacturers and by so doing, we can be aware of possible technical problems that the manufacturer might not be aware of with its own product, its own platform.
> Does the commercial launch sector have sufficient launch capacity?
We deal with what we have. It is well known what Eutelsat, along with Intelsat, assumed its responsibilities one year ago, and without that the industry would be in much worse shape than it is today. I am referring to the multi-launch agreements we signed with International Launch Services
I didn’t mention that in the last 25 years the cost of putting a kilogram into orbit has been reduced by 50 percent. The issue with launchers is that there appears no technology in front of us that can bring an order-of-magnitude reduction in cost.
We are building rockets like we did in World War II. And we expect no real difference in the future. We will make advances in manufacturing and implement lean manufacturing, and get new materials for the combustion chamber. But we cannot expect to get major savings.
If you ask me what is the target? I say, an order of magnitude reduction. If you say: Please be reasonable. I will say get it to half of the price — to start.