The state of the satellite industry in 5 charts

The U.S. Satellite Industry Association found the entire satellite sector grew modestly in 2015, with dynamic niches such as satellite-delivered radio contrasting with near-zero growth in ground equipment and reduced revenue for launch services.

Any broad survey such as this can be criticized for what it leaves out, and how it characterizes its findings. That’s inevitably the case for a global industry whose two most dynamic players — the U.S. and Chinese governments — do not publish precise figures on large swaths of their activities.

But the underlying trends highlighted in the charts that follow appear valid. Governments remain the alpha and omega of the entire business, but there is increasing private-sector involvement.

The march of industry from the government owned- and -operated model, to one where industry builds to government specifications for mainly government customers, to where the private sector wants its own hardware for its own purposes, remains as interesting to watch as ever.

The 2016 State of the Satellite Industry Report, prepared for SIA by the Tauri Group, is available at www.sia.org.

1. As the national pride generated by a flag in space is enabled by the fall in small satellite prices, onethird of the world’s 196 nations soon will have flown at least one satellite.

Visitors to Asia and sub- Saharan Africa often return astonished at how many ostensibly poor people carry smartphones. In the telecommunications satellite industry, the surprise is how many poor nations find a place in their budgets for satellite development.

The phenomenon is not just small technology demonstrators. Programs in Belarus, the Democratic Republic of Congo, Bangladesh, Mongolia are deploying geostationary- orbit telecommunications satellites costing $200 million or more.

Lumping a $300 million, 5,000-kilogram telecommunications satellite operating for 15-plus years in orbit and generating well over $1 billion in revenue together with a 10-kilogram cubesat assembled by university students is of limited value.

But to international regulators, they are cataloged as equals and treated as such when it comes to frequency rights and orbital-debris-mitigation issues.

Creeping into the satellite count as a category all its own are the fleets of positioning, navigation and timing systems. Once the province only of the U.S. GPS and Russian Glonass systems, China and Europe are launching their own constellations, while India and Japan are deploying large regional systems.

operational-sats

2 TV still rules the revenue roost. The question is will it continue to grow.

Sooner or late the number of new satellite TV channels will stop growing. HDTV penetration, which is now providing much of the growth, will plateau.

What’s next? Will ultra-high-definition and its even greater appetite for transponder capacity be a successful as HD?

Every compilation of industry trends runs into questions of what portion of a given revenue stream should be attributed to the satellite component. GPS-enabled service already is a multibillion-dollar business. The European Union thinks its Galileo constellation, once fully operational in 2020, will add billions more.sat-revenue

consumer-service3 The growth of satellite radio revenue is an ongoing success story that has happily moved beyond the time when its prospects were clouded by U.S. regulators’ hesitation to allow the merger of the two main North American providers, XM and Sirius.

The question is why this success has had so little success outside North America. Driving patterns, a single regulatory regime and language basin all play a role. It might take the coming connected-car era before satellite radio finds a global market.

Satellite consumer broadband has entered a slowed growth period. Here, too, the question is whether a U.S. success — despite often-tepid regulatory support — will be repeated in Europe, Latin America, Russia and East Asia, where projects are under way.

The two U.S. providers, EchoStar’s Hughes Network Systems and ViaSat Inc., are reporting sluggish subscriber growth as both companies await new satellite capacity.

Aeronautical passenger connectivity is about the hottest consumer broadband market now no matter how it is classified in surveys. It is bringing in new suppliers — Intelsat, Sky Perfect JSat, SES and others — and by all accounts should be a materially important contributor to consumer satellite revenue tallies in the coming years.

4 The rise in cubesat functionality with the continued lower cost of computing power and microelectronics is among the most-watched developments in the space industry.

How far it will develop will depend on the business success of the Silicon Valley-inspired new ventures. Also important will be the tradeoffs the new businesses make between ground resolution, in-orbit service life, orbital-debris mitigation and launch costs.

small-satsA good early sign will be whether Spaceflight’s Sherpa small-satellite carrier, scheduled to deliver 80-plus small satellites into low Earth orbit aboard a SpaceX Falcon 9 this year. Arianespace of Europe and United Launch Alliance of the United States are both making overtures to the small-satellite market. If these three launch-service providers can craft financially attractive offers to small-satellite builders, a major roadblock to future growth will have been removed.

5 SIA and the Tauri Group estimate that Earth observation services revenue grew 10 percent in 2015 compared to the previous year, to about $1.8 billion.

It seems likely that top-line revenue growth will continue given the remarkable number of companies and satellites entering the business.

Absent from this chart are the Cosmo-SkyMed satellites commercialized by Telespazio, Europe’s Copernicus environment- monitoring system and its Sentinel satellites, and several init iat ives in China, which now mainly counts on its own spacecraft for its domestic Earth observation imagery services.

Separating the pubic and private sector in Earth observation has been difficult since the first commercial Earth observation company — Spot Image of France — was formed 30 years ago.

What remains true is that government is the primary market. But the proliferation of proposed new constellations — the color coding of this graphic may lead to confusion about what’s operational and what’s aspirational — suggests that the private sector sees a big opportunity here.earth-observation