[10-29-07 – Satellite News] AeroAstro, a microsatellite company based in Ashburn, Va., recently was acquired by Radyne Corp.. President and CEO Rick Fleeter talks with Satellite News about how being a part of an established corporation has changed how AeroAstro operates and where he sees the satellite business headed.

Satellite News: How has merging with Radyne helped your business?

Fleeter: I started the company in my basement with no money, and that really restricts what you can do. We had no [research and development] budget, but now we have somebody behind us. So if we can show a reasonable of return, we can do much more. I try to be really smart about being a system designer. Here’s the problem a customer wants to solve. What’s the cleverest way to solve it? You can be pretty clever about taking parts off shelf, but if you can’t build anything custom because you don’t have capital it’s a much harder problem. The industry needs miniature low-cost radios, star trackers, little wireless devices, but we’ve just not been able to develop them. We finally got the money from the Air Force to do a star tracker, but it took a 10-year campaign.
    One of the ways that it has changed, is that [Radyne is] a publicly traded company and they need to show results every quarter. I really like that discipline, it goes back to my belief of providing more for the dollar than what the customer has to shell out. I think that AeroAstro needed that discipline. Space in general needs that discipline. If it’s not a business, then why are you doing it? We’re not running a museum here. It’s not the museum of space; it’s the business of space. Space is supposed to be a utility that provides people things that they need at a price that they can afford. Radyne comes from the communications side of things. They do a lot of the equipment that’s in local trucks. They’re in a part of the space business that is highly competitive but also profit oriented and I think that discipline that it brings to AeroAstro is good. “OK, you want to do this. But what’s the path to making this commercially viable?”
    Having run a small company that I started myself, space customers are very risk averse. They look at the company and say, well, it’s Rick Fleeter and 50 to 75 other people. How do I know that they’re going to stay around through a long duration program, and what if there’s financial stresses? They want to see that there’s something bigger behind you. Now they think well, it isn’t just these 75 people in Ashburn, there’s a 450 person, publicly traded substantial company backing them up. When they sign a contract with me, they’re really committed. They can handle the cash flow, legal issues.

Satellite News: Can you describe the contract you were recently awarded from Globalstar?

Fleeter:  We’ve been working with Globalstar since around 2000, slowly getting the system installed more and more universally into their network. They’ve taken an interesting approach, totally incremental. They say, “If this goes well we’ll install it into a different part of our network.” It’s just one more step in the process to slowly integrate and make it a part of a global network. Our latest contract puts us in 100 percent of their network now rather than just in Europe or North America. Everywhere they have network coverage we’re there. When we started, the attitude was that all the money was in telephone and real-time voice, and our attitude was as long as you’re doing this we’ll piggyback data onto the wire. If you can make it work we’ll put it in a few gateways. Who knew that telephone wasn’t going to be the big thing, data was going to be. They were farsighted to at least make the investment.

Satellite News: What else do you have in the pipeline?

Fleeter: There’s two or three sides to our business. One is the communications side that we do mostly with Globalstar. We’re in a continuously process of updating service with that. As we bring each new geographic area online we keep adding to it, and there’s going to be service improvements.
    Our second area is really in the technology and components area, new stuff that we’ve been working on there like low-cost star trackers. Because if you’re going to build a satellite for a million dollars you really don’t want to spend a half-a-million on a star tracker. I think that’s going to be one of the areas that we’re poised to become successful in. We used to think of it as peripheral because I’m a satellite guy and I didn’t want to be distracted into making components. But I now see it as if you’re going to be successful making low-cost satellites you have to have the pieces to build it with. I think we’re getting the first flight of our low-cost star tracker, which is 20 percent of the cost of a traditional star tracker.
    In the satellite areas, there’s the STP [Space Test Program] satellite in Albuquerque. Following that, we’re now doing the SIV [Standard Interface Vehicle] with Ball. We’re trying to develop a bus that can be used repeatedly for small satellite missions. I think we have the beginnings of a bus of that class. We also have the smart bus, which is kind of the miniature version of that. This is closer to $1 million or $2 million in cost. We’re bidding that on a couple jobs. We’re going to sell one of those and have a real mission. We’d really like to have two. Sometime in 2008 I’d like to say we have a customer and we’re really doing that now on the small bus side the same as we are on the big bus.

Satellite News: How is ITAR affecting your international business?

Fleeter:  I think what government tends to not understand is the unintended consequences. We don’t want to give away technology to other countries who might use it against us, but the unintended consequence is that it encourages people to make the technology at home. It becomes such an impediment that they make rules: “Thou shalt not use any products that needs parts that come from the U.S.” Because they’re going to come with all these strings attached, and we don’t want to have to deal with that. We just want to have freedom to make product and then sell it.
    What ITAR has done is to develop highly capable industry outside the U.S. No one thought the results would be to teach other countries to do what we used to be uniquely able to do. It would have been better if we had been a more open supplier. Nobody would have developed their own star tracker or their own radios or their own piece of equipment. Everyone has learned.
    Now what we’re finding is that in the microspace area we don’t even lead in that area. There are other companies out there that, because they’ve been able to sell to rest of the world, they’ve built more many more satellites than we have and have done a bigger variety of missions than we’ve been able to do. Even our own government buys things from our non-U.S. competitors because they have more experience than us. It really hurts when they say that, because on the one hand they’re right, and on the other it’s like, “Yes, but look at this 15-year history of all these jobs you wouldn’t let us bid on that they won.” I think nobody wanted that to happen, but that was net result of ITAR.
    … It’s not just microspace. Launch vehicles are not competitive in the rest of the world. You don’t see other countries coming in and buying Deltas and Atlases, they’re buying Arianes and Protons and Indian launch vehicles. The aerospace business is growing away from the U.S. I think we gave a lot of it away by thinking we’re the only player in town and you have to play by our rules. We created our own competition because of ITAR.

Satellite News: Where do you see the small satellite market going in the next 10 years?

Fleeter:  I’m not a person who thinks they’re going to replace bigger satellites, but there is mission supplementation that you can do with small satellites. I think big satellites will almost always fly with small satellites as a counterpart. If there’s a problem on a big satellite a small satellite can inspect it. We’re already doing that with shuttles on the space station. One thing I learned in my big satellite life is that you hardly ever just build one big satellite. Usually it’s part of a series. If something goes wrong, a little satellite can very easily take pictures and do diagnostics to tell you what happened. And not just when things go wrong, let’s have a picture of how solar panels actually deployed when you put them, that kind of servicing bigger mission is definitely a role for smaller satellites.
    Refueling geosatellites, that’s another area that you’ll see small satellites in service to bigger satellites. Another area is where you need a lot of satellites. A lot of defense needs want to have continuous service, but because things are in orbit it doesn’t work like that. You’ll have a larger number of them up, have continuous coverage of events that are happening on the ground. Not that we would replace big satellite, they will always have higher resolution, but you can’t afford to have 100 up at one time, and you can with a microsatellite.
    They could also be used as a way to do things before you commit to a huge mission. You have a new technology and just want to get it up there and see if it works before you commit a lot of dollars. We already see that, and it’s a business area that is going to grow over time.
    Just like with PCs, we’re slowly nibbling away at what people used to think of big satellite missions. We continue to take over missions that used to be considered in the purview of big satellites. I think we will steal market share from the big satellites.