Stability returns to comsat market: orders are expected to remain in the low twenties for the next few years.

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The 5th World Symposium on Market Forecasts for the Satellite Business, organised by consulting company Euroconsult in Paris on 3 September, was the occasion for satellite manufacturers, satellite operators and launch service providers to evaluate the prospects for the telecom satellite market for the period 2007-2011.

Thales Alenia Space believes that the volume of business will stabilise around 20 satellites per year on the open market, plus five "captive" satellites. For 2006, the company forecasted 23 and 3 satellites, respectively, while orders were actually logged for 29 and 3 satellites. The five-year forecast has been revised upwards from last year. In 2006, the total market was estimated at 109 satellites (40 small, 55 medium/large and 13 very large). This year the total has jumped to 124 satellites (49 small, 56 medium/large and 19 very large). The major differences stem from an increase in the number of small satellites on the captive market and the number of very large satellites on the open market.

EADS Astrium sees a total market of 110 geostationary satellites over the five-year period, a potential market of $12.5 billion (+15% compared with last year). This represents a total of 4,800 new 36MHz transponders to be built for an estimated capacity requirement of 12,000 transponders in 2014 (including 80% in the C and Ku bands).

Euroconsult executive vice president Pacome Revillon predicts that 20-25 geostationary comsats will be launched every year through 2016. That total does not include renewal of the mobile services constellations (Globalstar, Iridium, Orbcom, etc).

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Sea Launch was grounded for five months during the first half of the year, following the explosion of the Zenit launch vehicle on the launch platform on 30 January. Return to flight was achieved on 29 June with the successful lift-off of a Zenit-2 from Baikonur. The Sea Launch Failure Review Oversight Board (FROB) agreed with the interagency CIS Joint Commission that the launch anomaly initiated within the RD-171M LOx turbopump as the result of a metallic object becoming lodged between the pump's moving and stationary components. This object ignited and burned as a result of friction-induced heat. The combustion of the object set off a string of events that led to the destruction of the LOx pump, RD-171M engine and ultimately the Zenit 3SL.

The damaged blast deflector on the Odyssey platform has been replaced and repair work was scheduled for completion during the month of September. The next launch is scheduled for October, carrying Thuraya-3, followed by a second launch in December. The inaugural mission of Land Launch is set for March 2008, with Amos-3. A total of four missions are scheduled for 2008--four for Sea Launch and three for Land Launch.

According to Sea Launch president and general manager Robert Peckham, the company hopes to subsequently settle into a cycle of one launch every 50-55 days. The company also plans to introduce small modifications to the launcher that will boost payload capacity from 6.1 to 6.3t. For now the company has a backlog of 10 satellites for Sea Launch, and six for Land Launch.

In anticipation of the accelerating launch rate, the Yuzhnoe plant in Dnepropetrovsk is ramping up production in order to meet demand for 5-6 Sea Launch and 3-4 Land Launch missions per year from 2009 onwards. The company has only "lost" one payload (Spaceway-3) in the wake of the January failure; the other payloads that were transferred to other launchers have been replaced by additional payloads from the same customers. In addition, two new contracts have been signed--MSV-2 and an unannounced payload, probably

Sicral-lB. Peckham indicates that there are three other unattributed contracts that could be signed by the end of the year. Peckham believes that launch prices have come down over the past 10 years as payload mass has increased.

During the hiatus in Sea Launch operations, Arianespace and ILS have both been filling up their order books. Since the beginning of the year, Arianespace has announced 14 contracts. The most recent Arianespace contract was concluded on 2 September. It covers four Soyuz launches (+ four options) for 24 second-generation Globalstar satellites (+ 24 options). The first six-satellite cluster is scheduled to go into orbit in the summer of 2009 from Guyana, whereas the first-generation satellites were launched in clusters of four from Baikonur. This could turn out to be the inaugural launch of the Soyuz from Guyana, currently set for March 2009. A total of three clusters will be launched in 2009, followed by a fourth in 2010. Arianespace will also launch France's two Pldiades satellites on Soyuz from Guyana.

Fully booked

Arianespace plans a total of six Ariane-5 launches in 2007, seven in 2008 and eight in 2009. The 2008 manifest is already fully booked, and the contracts currently under negotiation are for launch slots no earlier than 2009. According to Arianespace and Starsem CEO Jean-Yves Le Gall, the current order book comprises 28 geostationary satellites to be launched with Ariane-5 (including some with a launch mass less than 3t that could be launched on Soyuz), II institutional satellites (nine ATVs, Helios-2B and Herschel/Planck), 10 Soyuz launches (four from Baikonur and six from Guyana) and five Vega launches currently under negotiation (the Verta contract with ESA for the first five commercial launches after the inaugural flight in 2009).

On the list of geostationary satellites, Arianespace is only counting two of the five satellites covered by the framework agreement signed with SES--NSS-9 and NSS-12, which are both firm. Le Gall recalls that, as far as the bottom line is concerned, what counts is not the number of contracts, but the number of satellites in orbit.

Arianespace still has 23 Ariane-5 launch vehicles from the PA batch, plus the four Soyuz launchers ordered at Le Bourget.

The contract for the PB batch of Ariane-5s (35 launchers) is expected to be signed at the end of this year or early in 2008. Further Soyuz launchers will also be needed--there is an 18-month lead time between order and delivery.

Looking ahead to the ESA ministerial conference in November 2008, Le Gall sees three major issues to be addressed in the launcher domain: complete the programmes in progress (Soyuz and Vega); set up an "institutional environment" for launcher operations (similar to Arta, but not another EGAS): and agree on a programme of complementary developments (i.e. improve the performance of Ariane-5 by a few hundred kg). Le Gall clearly does not include the Vinci engine in the improvements to be submitted to ministers in 2008. Finally, Le Gall speaks out in favour of the European preference policy and the need to respect commitments to the customer (e.g. by refusing to "overbook").

Le Gall expresses some concern about China's return to the launch market (NigComsat-1, Chinasat-6B at Chinasat-9 in 2007; Venesat-1 in 2008; and Palapa-D in 2009). He might also have mentioned Boeing Launch Services (Delta-2 to LEO and Delta-4 to GEO, see box) and Lockheed Martin Commercial Launch Services (Atlas-5 to GEO).

Soaring demand

Demand for satellite transponders is soaring, driven by high-definition TV (HDTV), interactive broadband, mobile and personal services, and dual (commercial/government) usage. The telecom and TV segments of the market are enjoying a glorious revival. Following the rise of digital thematic TV, HDTV is now driving demand for a greater share of capacity on geostationary satellites. Three other market segments are growing strongly: video and radio broadcasting to mobiles; broadband internet using compact terminals; and government telecommunications networks (for defence and security applications). Global and regional systems have each carved out a share of the market. In Europe, two global players--SES and Eutelsat--co-exist alongside multiple regional operators: Hispasat (Spain), Hellas Sat (Greece and Cyprus), Turksat (Turkey), Telenor (Norway), Gazcom and Russian Satellite Communications Company (Russia), and Spacecom (Israel). All of these operators have satellite fleets that are running out of capacity. The months ahead are expected to see a flurry of activity as they move to beef up their space segment.

Following the wave of consolidation of recent years (Intelsat/PanAmSat, Loral/Telesat, SES/NSS, etc), the Big Three operators now account for almost 63% of global revenues in the sector--Intelsat, 26.6%; SES, 23.6%; and Eutelsat, 12.6%. Add on Loral/Telesat (7.1%) and Jsat (5.3%), and the proportion rises to over 75%.

Intelsat--the world leader with sales of $2.1 billion and an $8.1 billion order book at the end of 2006--has already invested $615 million in satellite fleet replacement in 2007. Of the seven satellites currently under construction for Intelsat, four are scheduled for launch in the next 12 months.

SES is still recovering from the Proton-M failure on 5 September. The same vehicle had been reserved for the launch of Sirius-4 (4Q 2007), AMC-14 (4Q 2007), Astra-lM (2Q 2008) and Ciel-2 (4Q 2008)--all of which now face delays of several months. Arianespace has been selected for AMC-21 (2Q 2008), NSS-9 (1Q 2009) and NSS-12 (2Q 2009). Launch vehicles for AMC-5R (3Q 2009) and Astra 3-B (4Q 2009) have yet to be selected.

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Eutelsat CEO Giuliano Berretta is firmly conviced of better times ahead for the operators thanks to current growth. He sees three major factors of success:

* having the most reliable and most flexible satellite technology; Eutelsat has five new satellites currently under construction--Hot Bird-9 (scheduled for launch in June-August 2008); W-2M (September-December 2008); W-2A, with S-band payload, and Hot Bird-10 (January-March 2009); and W-7 (June-August 2009). Launches have been split between Ariane-5 (3) and Sea Launch (2);

* optimisation of the 24-satellite fleet to develop the high-growth video business; Eutelsat currently broadcasts 2,600 channels, 500 of which have been added over the past 12 months, representing 72.2% of revenues as of June 2007;

* investing in new generations of satellites and payloads that will open the door to new services such as mobile video and interactive services via S-band (2009) and broadband via a dedicated Ka-band satellite (2010).

Regional partnerships

Regional operators, meanwhile, are making no secret of their interest in partnership and teaming arrangements. Turksat, which the Turkish government has charged with responsibility for developing information and communication technology (teledistribution, satellites, e-government) on Turkish territory, is looking for an international partner for the operation of space systems. Turksat and Tubitak (the Turkish science and technology research council) will form a pole within the still-to-be-created national space agency for testing and integration of future Turkish satellites.

Israel's Spacecom, which operates the Amos satellites at 4[degrees]W (two in orbit, with a third set to fly on Land Launch in March 2008), wants to consolidate its international position. It has recently ordered the 3.8t Amos-4 from IAI, which will cover Asia, Africa and the Mediterranean with Ku- and Ka-bad transponders from an orbital position over the Indian Ocean. Half of the satellite's capacity has been reserved by the government, which has provided $265 million of the total cost of $365 million. Spacecom VP strategy Omri Arnon says the company is exploring a joint venture arrangement for another satellite, which could be launched before Amos-4, if discussions currently in progress--which also involve IAI--reach a successful conclusion in the near future. Arnon says the exact mission and position of this satellite have still to be defined.

In 2010-2011, Europe will enter the era of mobile video and digital satellite radio. For several years now, Worldspace, with a geostationary platform (initially Afristar at 21[degrees]E) and Ondas Media, with plans for three satellites in inclined ellipitical orbits, have been eyeing the European market for broadcasting L-band (1.4GHz) programmes to vehicles. Both projects have been held back by financing problems and difficulties in obtaining a European broadcasting licence.

Eutelsat and SES have decided to join forces in another, poorly defined market segment--pocket TV receivers. They have formed a Dublin-based joint venture and are investing jointly in an S-band (2.2GHz) payload on the W2A satellite which Eutelsat has ordered from Thales Alenia Space for launch in early 2009. They are proposing a Complementary Ground Component (CGC) network so that very-high-power digital TV channels can be received on portable terminals. A second satellite is under consideration. The project faces two unknowns concerning broadcasting in Europe: the licensing procedure (not before 2011?) and the lack of coordination between the European Commission and the International Telecommunication Union (ITU) which records national requests for positions and frequencies.

Terrestar debut

A new US operator, Terrestar Networks--which has recently created a European subsidiary, Telekom Austria--is also seeking a European S-band licence for its Terrestar-3 satellite, scheduled for launch in 2011.

In the broadband segment, the star of the past year has been WildBlue. The Colorado-based company, with Ka-band capacity on two geostationary satellites at 111 .l[degrees]W (Anik-F2, launched in July 2004, and WildBlue-1, which has been in orbit since December 2006), has made a dramatic entry onto the North American market. WildBlue offers broadband internet connectivity with low-cost, minidish terminals which are easy to install, using Viasat Surf Beam/Docsis technology to maintain transmission quality and overcome signal attenuation due to rain and snow. The company has more than 250,000 subscribers and is adding new customers at a rate of up to 30,000 per week.

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WildBlue is looking for Ka-band transponders, particularly from Echostar, to meet this growing demand. The success of the venture has prompted Ka-band specialist Viasat to consider plans for its own Ka-band satellite, according to Viasat VP broadband Marc Agnex, who confirms that the company is studying proposals from Lockheed Martin, Boeing and Loral, since Itar regulations prevent the company from working with European manufacturers. The Viasat platform, which is scheduled for launch in 2010 to 77[degrees]W, could be jointly operated with WildBlue.

While Ka-band satellites (HughesNet/ SpaceWay, Telesat/Anik-F, Dish Network/Echostar) are in high demand in North America, Europe is focusing on satellite broadband service to isolated regions with poor access to terrestial networks. In March, SES Astra inaugurated its Astra2Connect Ku-band service using Newtec's Sat3Play system (80cm dish, 1Mb/s downlink, 128kb/s uplink).

SES is currently leaning towards a hybrid Ku-band/Ka-band satellite, rather than a dedicated Ka-band platform. Eutelsat plans to launch a Ka-band satellite in 2010 to the Hot Bird position at 13[degrees]E. Its answer to Astra2Connect is Tooway, with hub operations in the SkyPark telport in Turin, under a partnership with Skylogic and Viasat, using Docsis technology. Service will be available from the end of the year in Germany, France, Spain and Bulgaria.

SpaceX success

UK-based Avanti Communications plans to launch broadband HDTV and internet service in Ka-band in 2009. The orbital platform will be the EADS Astrium/Isro Hylas satelllite, but no information has yet been released on the ground segment. Eyebrows were raised when Avanti announced that it had selected the untested SpaceX Falcon-9 as the launch vehicle. The launch is scheduled for mid2009, but SpaceX has yet to successfully fly its Falcon-1 mini-launcher that is the pre-cursor for the heavylift Falcon-9, which will be designed to place 2.6t into geostationary orbit. Avanti has also booked three options for satellites to be launched through 2012. The decision is all the more surprising considering that Avanti has financial backing from BNSC and ESA (which is providing one-third of the total cost) under a public-private partnership arrangement. The launcher selection clearly ignores the "European preference" policy that is supposed to apply to ESA satellites, though as a minority contributor, the European agency cannot impose the choice of launcher. According to Jean-Yves Le Gall of Arianespace, the Avanti business plan included a launch cost equivalent to 10% of a launch on Ariane-5.

Another high-growth market which SES has firmly in its sights through its NDSatcom subsidiary is government communications. SES CEO Romain Bausch indicates that the company is studying a satellite system for France that would be operated by SESNDSatcom, offering capacity for the defence, interior and foreign affairs ministries. This "post-Syracuse 3" concept would be based on the UK Paradigm and German Satcom-BW systems.

GOVERNMENT BUSINESS THE KEY FOR BOEING SATELLITES, LAUNCHERS

Although Boeing has built one-third of the 254 communication satellites currently in service, it has yet to sell a commercial satellite this year. Last year, it sold just three satellites (702 platforms) to MSV. The reason for this is that, over the past 10 years, Boeing has switched from being primarily (70/30) a builder of commercial satellites to being primarily a supplier of satellites to the US government. The current order book contains around 25 satellites, not including classified programmes.

In the telecommunications sector, Boeing is offering the heavy 702 platform for satellites in the 5.5-6.5t class, with 12-18kW power (highly complex payload, active antenna, reconfiguration, flexibility, etc). Examples include the DirecTV series (DirecTV-10 launched in July, two others under construction), Spaceway (Spaceway-3 launched in August), Thuraya (Thuraya-3 to be launched in October), and MSV (three satellites under construction).

Boeing is also working on a lighter 702B variant (6-8 and 10-12kW) which will be on the market in 3-5 years. Boeing Satellite Systems International President Stephen O'Neill says discussions are ongoing with several potential customers.

The two key prizes in Boeing's sights at the present time, however, ore the GOES-R next-generation weather satellites and the TDRS-K to N relay satellites. The contracts, each of which covers two firm satellite orders plus two options, represent a total value of S2 billion. Boeing has previous experience on both programmes. It developed GOES-N, -0 and -P. The former was designated GOES-13 following its launch in June. The next two launches will be on Delta-4s, in 2008 and 2009. Boeing also developed TDRS-H to J, launched in 2000-2002. Boeing is hopeful of winning both contracts in the coming months.

On the military side, the launch of Boeing's first Wideband Global SATCOM satellite, WGS-1, is now scheduled for 10 October. The next two satellites in the series will be launched in 2008, with a fourth to follow in 2011. The contract is for five satellites in all, with an option for a sixth. These are 702 platforms (13kW) providing Defense Satellite Communications System (X-band) and Global Broadcast Service (Ka-band) capacity. Boeing is also in competition with Lockheed Martin for the future Transformational Satellite Communications System (TSAT) programme. Proposals were submitted this summer, and a contract award is expected by the end of the year.

The first TSAT launch is scheduled for 2013. The two rivals are also in competition for the next-generation GPS-3 satellite series, due to go into orbit in 2013. The GPS-3 series will comprise a total of 32 satellites--eight GPS-3As, eight GPS-3Bs and 16 GPS-3Cs. A contract announcement is expected by the end of the year. Boeing submitted its 702-based proposal on 27 August. Boeing developed the 12 satellites in the GPS-2F series. According to Howard Chambers, who is VP and head of military programmes, the first GPS-2F is scheduled for launch on on EELV in the first quarter 2008, followed by a further two per year for the next five years.

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Government launches are now in the hands of United Launch Alliance, the Boeing/Lockheed Martin joint venture that produces and launches Atlas and Delta launch vehicles for the Pentagon, NASA and the National Oceanic and Atmospheric Administration (NOAA). Boeing is in charge of Delta commercial launches, as well as being the largest shareholder (41%) in Sea Launch.

Delta-2 still has five Navstar-2Rs to launch for the USAF through the end of 2008, and ULA is under contract to provide this launcher for NASA missions through 2012. What happens thereafter depends on whether the USAF and NASA are prepared to place further orders for Delta-2, since the demand on the commercial market is unlikely to be enough to keep the production line running.

The estimated cost of a Delta-2 launch is around S70 million, compared with $140 million for the Delta-4, though the actual cost varies as a function of the version, i.e. the number of strap-on boosters. An increasing number of observers speculate that ground infrastructure costs could be added to the launch costs, rendering the launcher non-competitive.

Boeing is currently making a comeback on the commercial launch market--the June launch of the first Cosmo/Skymed on a Delta-2 marked its first commercial launch in five years. It was followed by WorldView-1 on September 18. Boeing Launch Services currently has a backlog of four Delta-2 launches: two Cosmo/Skymeds, GeoEye-1 in early 2008, and another, unannounced payload in 2008. BLS VP Kenneth Heinly explains that these platforms (imaging satellites operating from a sun-synchronous orbit) correspond to the company's primary target market--a niche in which he claims Delta-2 offers the best service to the customer. BLS is currently planning on 2-3 commercial launches per year through 2011.

Delta-4 is presently gearing up for the October launch of a Defense Support Program early warning satellite (DSP-23) on a Delta4-H--the eighth Delta-4 since 2002. According to Heinly, five government launches and one commercial mission (GOES-O) are scheduled for 2008. This will be followed by an additional commercial mission (GOES-P) and an unspecified number of government launches in 2009. He says that GEO communication satellites constitute the primary target for commercial launches. SATELLITE AND LAUNCH CONTRACTS IN 2007

SATELLITES Contractor Satellite Thales Alenia Thor-6

Palapa-D

Arabsat-5A and 5B *

Yahsat-1A and 1B * EADS Astrium Amazonas-2

Arabsat-5A and 5B **

Yahsat-1A and 1B ** Boeing -- Lockheed Martin -- Loral Nimiq-5

Intelsat-14

Echostar-14

NSS-12

Sirius-6 Orbital Optus-D3

IS-15

AMC-5R

AMC (ground) + 2 options IAI (Israel) Amos-4

LAUNCHES Launch co. Operator Satellite Launcher Arianespace Protostar Protostar-1 Ariane-5

SES Americom AMC-21 Ariane-5

HNS Spaceway-3 Ariane-5

Horizons Horizons-2 Ariane-5

Intelsat Inte sat-11 Ariane-5

Arabsat Arabsat-5B Ariane-5

SES NSS-9, NSS-12 Ariane-5

Optus Optus D3 Ariane-5 Soyuz

French MoD ELISA Soyuz

Globalstar G oWstar-2 Soyuz

JSAT Corp JCSAT-12 Ariane-5

Telenor Thor-b Ariane-5 Soyuz

RascomStar-QAF Rascom-1 Ariane-5

ISRO Insot-4G Ariane-5 ILS *** Ciel (Canada) Ciel-2 Proton

CMBStar Ec ostar Proton

Nimiq-5 Telesat Proton

MSV MSV-1 Proton

Ara b sat Arabsat-5A Proton

SES 5 satellites Proton

Inmarsat Inmarsat-4F3 Proton Sea Launch MSV MSV-2 Sea Launch

Italie (MoD) ? Sicra-1B ? Sea Launch ? China Indosat Palapa-D Long March * Thales Alenia Space payload. ** EADS Astrium platform. *** Four unannounced contracts not shown