By Nick Mitsis

Not too long ago, small satellites were serving a niche market, often dwarfed by the large global payloads. Today, customers are paying more attention to smaller satellites, many times making them their primary choice.

But don’t rule out the large players quite yet. In fact, industry executives are forecasting that the next generation of space-based assets will be made up of a diverse mix of platforms, as different operator requirements will not be met by a single size. The final decision will ultimately come down to the specific service and market the client plans on serving.

With 19 geostationary-orbit commercial telecommunications satellite ordered last year, executives across the satellite manufacturing industry believe a slight resurgence is underway and that 2006 could being a similar amount of satellite manufacturing contracts.

"We see 2005 to be fairly typical as part of a five-year window where we expect the market to be stable and the number of orders to stay flat," says Ted Gavrillis, president of Lockheed Martin Commercial Space Systems. The U.S. manufacturer captured four contracts last year.

"Operator consolidation will exert some downward pressure on the industry. The satellite manufacturing marketplace continues to experience overcapacity, resulting in fierce competitive pressures. The projection for this year remains at about 15 spacecraft industry-wide," he said.

Lockheed’s global manufacturing counterparts concur, stating that the commercial telecommunications satellite market has begun to once again stabilize. "We expect that there will be global orders in the range of 12 to 15 commercial telecommunications satellites in 2006, and the market will follow its typical cycle reaching a peak in the 2011-2012 time frame of 20 to 25 satellites," adds Stephen O’Neill, president, Boeing Satellite Systems International Inc. (BSS).

BSS focused on its defense business in 2005, capturing no new commercial orders. However, Mobile Satellite Ventures (MSV) awarded a contract to BSS in early 2006 for three satellites and related ground systems to support MSV’s planned commercial mobile satellite service.

The three geo-mobile satellites will be among the largest and most powerful ever built, each supplying 11,000 watts of power. MSV-1 and MSV-2 satellites will cover Canada, the United States, Puerto Rico, the Virgin Islands, Mexico and the Caribbean Basin. The third satellite, MSV-SA, will provide service in South America. The satellites are scheduled to launch in 2009 and 2010.

In a telephone press conference, Alexander Good, chairman and CEO of MSV, said the contract is valued between $500 million and $1 billion, depending on the final configuration of the satellites. This is Boeing’s largest commercial satellite order since 1997.

"Boeing sees growing opportunities in the broadband, direct-to-home (DTH), mobile services and satellite radio markets. Mobile satellite telephony has already showed regional success from Thuraya and Inmarsat," O’Neill adds.

Strategically Smaller

But even with certain markets driving demand for complex payloads, smaller spacecraft are truly coming into their own. Orbital Sciences Corp. has dominated the market with its Starbus platform, but Europe’s EADS Astrium, known for competing in the large platform market place, has entered a strategic partnership in 2005 with Antrix of India to make joint bids for smaller satellites. Through this partnership, Antrix will provide the platform and EADS Astrium will be responsible for the payload electronics. Orbital’s early entry in the small satellite payload market helped the company capture 18 percent of the overall satellite manufacturing orders awarded in 2005, according to the company’s own tally. Orbital Sciences’s platform solidified new contracts both in Asia and Europe, tying with Lockheed Martin and Space Systems/Loral in the number of satellites ordered.

In fact, last year was even more significant for the manufacturer announced it reached a settlement with China Telecommunications Broadcast Satellite Corp. (Chinasat) regarding the Chinasat 8 satellite and launch. Beneficial to both parties, this settlement amicably resolves all outstanding differences between the company and Chinasat.

While Orbital’s performance was strong in the overall market, the company dominated the small satellite niche, capturing 60 percent of orders in that class, says Ali Atia, president of Orbital Communications International. "While focusing on a small niche, we still captured a respectable percentage of orders," he says.

With the small satellite market picking up steam, Atia is not surprised that other manufacturers are making moves to play in the niche. "All manufacturers migrated away from the small market. Now, because they see business picking up, they are trying to get back in. We expect the [small satellite] market to grow modestly," he said.

According to Atia, opportunities that are driving demand include high-speed Internet access by Ka-band, digital satellite radio and high-definition (HD) TV, which takes three to four times the bandwidth of normal TV. "So once all the distribution moves to HD we will need three times the capacity and three times the number of transponders," he adds.

"We may be a niche player in the broadband market for people who do not have the initial funding for a large satellite or for those testing over a certain market. We have talked to a couple of potential customers. We had three Ka-band contracts before the industry collapse, but those never came to fruition," Atia says.

A Mixed Future

Even though small payloads gained momentum in 2005, the future demand for satellites will most likely encompass a wide spectrum of sizes and will be fueled by the market applications most in demand by the customers.

Mobile communications, HDTV and digital audio radio broadcast satellites most likely will be large because of their power and antenna requirements. For traditional service, satellites will remain small to medium. So whether big or small, the near-term platform demands will remain as diverse as the applications they will deliver.