By Scott Chase

A celebrated warrior, in the heat of action, once cried, "Damn the torpedoes, full speed ahead." Substitute "financials" for torpedoes and much the same sentiment can be heard these days in the high bays and clean rooms of the world’s principal commercial satellite manufacturers Alcatel Space, Boeing Satellite Systems, EADS Astrium, Lockheed Martin Commercial Space Systems, Orbital Sciences Corporation and Space Systems/Loral.

While many would have been shell-shocked by the barrage of bad news and the plunging profitability the industry has suffered of late, down in the trenches commanders and troops are sizing up opposing forces and preparing to do battle for what many see as potentially a stronger and certainly a more exacting world market for new commercial spacecraft. A summary of expectations from key spacecraft manufacturers is that global demand will support 12 to 15 new satellite orders per year, trending up toward 20 per year as the decade closes. The split between new orders and replacement satellites will remain fairly even and stable.

Where there is a bit of a difference is in how the market will shake out in terms of spacecraft size, capacity and capability. The big players see more big satellites, and the smaller players see continued room for their specialized offerings.

"During the recent few years the supply of commercial communications satellite transponders has far exceeded the demand," says OSC subsidiary Orbital Communications International President Alia Atia. "As a result of this glut, transponder lease prices dropped significantly, compared to the prices in the 1990s. One of the major reasons for this problem has been the premise that, due to economies of scale, larger, more powerful satellites (with payload power of 6 to 15 kW, launch mass of 3 to 5 tons and 30 to 80 active transponders) are more economical and more profitable, because the price per transponder on orbit is lower than for small satellites."

Most satellite manufacturers, Atia argues, reinforced this premise and kept growing their products, thus perpetuating the capacity glut operators now face.

"While economy of scale produces lower cost per transponder on orbit, it is not necessarily the correct metric satellite operators should use in business planning," says Atia. "A more useful metric would be the cost per revenue producing transponder. With lessons learned from the recent past, the trend today is shifting toward small to medium satellites, with modest numbers of transponders. There are certain applications and orbital slots that will require large satellites and demand for those will continue, but the percentage of small to medium satellites will increase to something like 15 to 20 percent of the total market," added Atia

Flight Heritage and Proven Systems

A recurring theme for the satellite manufacturers has been reliability. A decade ago all of the majors were engaged in a battle of one-upmanship, each proclaiming the virtues of this technology or that manufacturing process. Factories of the future were springing up all over the place. At some point in the equation, eyes moved off the ball on quality control and mission performance and the price was paid.

But the times are changing: "Manufacturers are placing a renewed emphasis on flight heritage and are taking a more conservative approach to new technologies," explains Panamsat Engineering Senior Vice President Bridget Neville. "There is," she continues, "greater understanding that it takes more than a few months of in-orbit time to consider technology flight ‘proven,’ and that having sufficient data to have high confidence in a design is a powerful advantage in the marketplace.

"Our industry depends on the advances of new technology, but you don’t want to give a potentially valuable new design a black eye by flying it before it has been thoroughly analyzed and tested on the ground and can operate reliably once in orbit."

A case in point comes from BSS President David Ryan: "Last year marked the success of our return to quality initiatives, with key milestones achieved in our factory. We continue to evaluate our processes for improvement opportunities and implement lean manufacturing and Boeing program management best practices."

Late last year BSS achieved the Software Engineering Institute’s Capability Maturity Model Integration (CMMI) Level 5 ranking. "Only a few companies worldwide," Ryan notes, "have passed the test against this benchmark." In addition, he adds, an independent auditor for the International Standards Organization recommended BSS for ISO 9001 certification, a key metric of the company’s overall quality improvement plan.

"Taken together, these events speak volumes about the efforts we are making to put continuous improvement programs in place to meet our customers’ schedule, cost and technical requirements," Ryan concludes. "We are pursuing AS9100 certification and expect an audit for that certification."

Echoing these sentiments, LMCSS President Ted Gavrilis says, "Our continuous improvement measures, combined with a strong market share in 2003, have solidified our position in a relatively flat market.

"We believe that the manufacturers are now realizing that the faster, better, cheaper philosophy was perhaps flawed," says Intelsat Chief Executive Officer Conny Kullman. "Satellites are not automobiles and you cannot treat them as if they were commodities production. They can’t be recalled!"

Corner-cutting in design, analysis or testing, Kullman adds, did come back to plague the manufacturers every time shortcuts were taken. Most satellite manufacturers have now created a "Flight Assurance" department. This department relies on technical experts that are not part of the satellite project team or the design office and provide an independent assessment of satellite quality during all key program reviews.

With All That, Is Enough Being Done?

The operators, having been in many cases "twice bit," seem reassured that satellite manufacturers are serious about quality control, phased introduction of new technologies, appropriate on-ground testing and other procedures.

"Satellite manufacturers have clearly taken a step back during the recent slow-down in satellite orders to closely review their product offering and manufacturing processes, with a view to ensure that they are closely aligned to forecasted satellite requirements," says Romain Bausch, chief executive officer and president of SES Astra. "Some manufacturers, such as LMCSS, have actively embedded the principles of Six Sigma into their operations to ensure that if anomalies occur during production or in orbit that the root cause is clearly understood and where possible, permanently eliminated."

C. Patrick DeWitt, president of SS/L, says, "SS/L plans to continue implementing both proven technologies and technological advances as the mission requires. The 1,300 bus and SS/L payloads have evolved throughout 15 years in an incremental and methodical fashion. Only when a new or increased mission requirement demands it, will SS/L undertake insertion of new technology. And when a new or upgraded technology is required, SS/L will step up the internal investment and meticulous planning necessary for success."

This approach, DeWitt, claims, "has been well demonstrated in major strides in technology insertion throughout the past five years with Lithium-Ion batteries, ion propulsion, a super high-power bus and spotbeam designs. The result is good positioning to enable new services, such as mobile TV, HDTV and high data-rate broadband."

Alcatel Space President Pascale Sourisse brings a different perspective, focusing on applications as the technology driver. "On the broadcast side," she explains, "key success factors are local [and] specific coverage (local-into-local channels, ethnic programming), cost of bit per second (more channels in the same bandwidth), available bandwidth capacity (Ku-band shortage over the United States), and security (anti-jamming/piracy). Alcatel Space develops the corresponding technologies–multi-beam or shaped coverage antennas, wideband, high-power transponders/channels and Ka-band anti-jamming systems.

"On the broadband access side, key success factors are cost of bit per second, cost of infrastructure and connectivity," Sourisse says. To address these, "Alcatel Space develops improved transponder usage efficiency, low-cost terminals, using open standards (DVB-S2, DVB-RCS) in partnership with consumer electronics manufacturers, and on-board processing to provide mission flexibility."

So far, so good . . .

Driving the Future of Satellite Manufacturing

Having held out their collective hands for a bit of wrist slapping–regardless of culpability–the world’s satellite manufacturers have gone back to the future in the sense that they listen carefully to what their customers are saying about current and projected needs. New applications, or the flowering of long-discussed trends, are driving some careful innovation.

"We are developing advances in both communications payload and bus technology," says Astrium President Antoine Bouvier. "A major breakthrough for us this year is the successful introduction of the Lithium-Ion battery. We were the first to implement on a commercial satellite.

"[These] batteries save hundreds of kilograms on a spacecraft, are safer and provide large margins during launch and orbital operations," Bouvier maintains. "They have been successfully demonstrated on Eutelsat’s W3A and the Amazonas satellite and have been operated at full operational power during the longest equinox eclipses last September, fully meeting their predicted behavior."

On the payload side, Bouvier invokes successful Astrium programs. "A major technological advance in payloads has been achieved for the Inmarsat 4 satellites, for which we have developed the highest level of advanced technology to reconfigure the payload in orbit according to evolving mission requirements. Flexible combinations of multiple spotbeams are made possible by the large digital processor that provides channelization, switching, gain control and beam-forming."

Orbital, focused on the market for smaller satellites, sees a similar technology path. The company, Atia says, "continues to develop new technologies for future use on new satellites subject to the following general guidelines:

• Development is limited to improvements of the existing STAR Bus, and involves incremental evolutionary changes rather than large-scale revolutionary changes.
• Time frame for developments and implementation of new technologies must be consistent with schedules for manufacturing and launching new satellites.
• Thorough testing of prototypes is performed to mitigate any technical risks on flight models.
• The technology may have a reasonably significant impact on performance, cost or may enable new services to be introduced.
• The development cost must be affordable or can be incrementally funded.

"Some examples of bus and payload technologies that fit in the above guidelines and which Orbital is currently pursuing are Lithium-Ion batteries for onboard energy storage, star trackers for precision attitude determination and control, Ka-band multiple spotbeam antenna technologies, radiation cooled TWTAs and very low loss output multiplexers," he explains.

Boeing’s Ryan chimes in, with emphasis on the impact of the government/military market as well. "The world demands communications services everywhere, all the time, and that’s a prescription for opportunity," he says. "This is equally true in both commercial and government markets. We project the government market to double between now and 2013, with complementary, albeit somewhat slower, increases in the commercial market.

"We project some movement of replenishment satellites for the commercial constellations to move further out, as the new constellation owners improve their financials, hence delaying the recovery to the mid-1990s satellite quantities of about 20 satellites per year. New applications, like broadband and direct-broadcast services, are gaining a foothold in the market and growing rapidly, and provide a potential upside.

"We have slightly shifted our perspective to align our strategy to join this global growth process," Ryan adds. "We’re not just building satellite platforms anymore–we’re supplying satellite systems that unite elements in space, in the air, on the ground and at sea to make network-enabled operations possible. These are effectively an integrated architecture forming a network-enabled system that provides users the critical information they need, in real time, to make decisions and take action."

Similarly, SS/L has focused on providing value to its customers with, low-risk technologies, DeWitt says. "Key to minimizing risk is the use of flight-proven designs in new and creative ways. An example is in our use of spotbeam designs and frequency reuse to maximize a satellite’s information capacity in orbit. For example, the iPSTAR satellite dramatically reduces the cost-per-bit on station, which provides the operator a huge competitive advantage."

Warming up to the theme, DeWitt adds, "SS/L provides in-orbit flexibility, so operators can take advantage of changing markets or multiple orbital slots with flight-proven technologies applied in creative ways. DirecTV 7S is a satellite that can operate Ku-band spotbeams at two different orbital positions using flight-proven technology. SS/L also inserts technologies as needed to improve on-orbit performance and reliability, reduce launch costs, and extend satellite life. Lithium-Ion batteries are helping to offset the large repeater mass of a 100-plus TWTA communications payload on iPSTAR. Stationary Plasma Thrusters (SPTs) extend the life and improve pointing for large unfurlable antenna payloads, such as MBSat."

All in all, it sounds like the satellite manufacturers are beating a path to the same outcome, increased customer satisfaction based on low-risk architectures, without incurring wrath by flying–or even suggesting–technology test-beds on commercial spacecraft.

LMCSS’s Gavrilis perhaps says it best: "We believe that technological advances are clearly the lifeblood of our business and the enabler in continuous improvement of our products. We never lose sight of the fact that mission success and reliability are directly related to hardware heritage. In partnership with our major customers, we are currently developing and incrementally implementing new technologies, while maintaining a very low risk to the overall mission."

Yea or Nay to Consolidation

A recurring theme at satellite conferences and after-hours cocktail parties throughout the past few years has been consolidation. Almost every key satellite manufacturer has at one time or another been the target of rumor or innuendo. Company A is merging with Company B. Company C is getting ready to give up the ghost. Company D will never recover from its financial downturn.

As it turns out, the "Big Five" are still with us and comments to Via Satellite suggest that these stalwarts, along with Orbital and other contenders such as Mitsubishi, will remain in the game. Indeed, top satellite manufacturing business unit heads point to the operators, and say consolidation has happened there.

The current restructuring of the satellite operators, opines Alcatel Sourisse, offers new opportunities and a less fragmented market to the hardware providers. She also notes that the recent MOU announcing the merger of "space activities" of Alcatel and Italy’s Finmeccanica is part of the more modest shakeout the satellite manufacturing side can expect.

Astrium’s Bouvier likewise downplays consolidation. "Manufacturer consolidation has not occurred yet and no one can predict accurately how and when it will be done," he says. "The main players, those with the best assets, fundamentals and most powerful and motivated shareholders, will remain and emerge from the crisis with improved positions. With the current overcapacity, there is little room for newcomers in a market that is reluctant to review new, unproven offers and can rely on experienced satellite suppliers to maintain quality."

Sage Advice from the "Godfather"

As the global communications satellite industry enters the coming year, it is likely that at least a few old-timers will recall that 40 years ago, in April 1965, a fledgling Intelsat launched and then operated Early Bird. Built by Hughes, the predecessor parent of today’s BSS, Early Bird–or Intelsat 1–was the world’s first commercial geosynchronous communications satellite.

Other greybeards may even note that sci-fi great and futurist Sir Arthur C. Clarke first predicted both the orbit itself, known affectionately by many today as the Clarke Orbit, as well as communications satellites in a paper completed in May 1945 titled "The Space Station: Its Radio Applications." That paper subsequently was edited and Clarke’s piece on "artificial moons" was published in the October 1945 edition of Wireless World magazine.

Sixty years later, the guru of global communications still sees an unending and flexible role for applications satellites in the worldwide connectivity infrastructure.

"There is no real technology threat to satellites on the horizon because even if or when a totally integrated and seamless terrestrial network is created, there will still be a requirement for independent redundancy and backup," Clarke told us from his home in Colombo, Sri Lanka, in October. "In addition, the unquenchable thirst for bandwidth makes all sources of supply relevant and attractive."

However, Clarke adds, "anything that makes satellites more efficient, economical and/or reliable should be implemented as soon as possible." On applications beyond communications, he says, "a whole new range of services related to security is coming online or is possible via satellite, including tracking of individuals, containers, ships, etc., monitoring every aspect of the environment, right down to specific species and even precise individuals, be they animal or plant." And beyond his fabled "artificial moons" for worldwide, two-way radio and television broadcasting, the role of weather satellites will gain in importance, he predicts.

But the big game still resides with the commercial Clarke Orbit communications towers in the sky. Sir Clarke says they will be with us forever, that there always will be underserved areas, new point-to-multipoint applications, increasing needs for independent and seamless redundancy and backup and an insatiable hunger for cost-effective bandwidth.

Or, as LMCSS’s Ted Gavrilis puts it, "Let’s face the facts. Satellites are here to stay!"

Scott Chase is a former editor of Via Satellite magazine. He can be reached at [email protected].