Although a combination of smart planning and sound financial management has enabled the world’s biggest satellite operators to weather the global economic crisis without significant disruption to their businesses, the firms are confronting other obstacles that executives say also could threaten their futures if left unchecked.
    A lack of diversity among launch providers and the continued grip of U.S. government restrictions on the export of space hardware are among the issues topping the satellite industry’s collective agenda, industry officials said during the SATELLITE 2009 opening general session yesterday.
    One of the chief concerns is that American launch companies are not playing as big a role in the industry as they have in the past, a situation that limits choice and creates uncertainty for satellite operators, said David McGlade, CEO of Washington-based Intelsat. American rocket firms have become less active in the commercial launch business even as U.S. State Department regulations severely restrict the transport of satellites with U.S.-manufactured components to launch sites in other countries, particularly China, he said.
    Satellite operators like to be able to choose from multiple launch providers when arranging for launches because it lowers the risk that a rocket failure will disrupt their ability to get transponder capacity into orbit.
    Launch companies in the United States are devoting more of their resources to serving the robust government market—and they are accustomed to an environment very different from the commercial marketplace, McGlade said. “We’re at risk of getting brought into the mentality of government,” which means dealing with the kind of long timeframes and cost uncertainties that private enterprise cannot tolerate, he said. “What we need is a commercial understanding of our business.”
    The shortage of commercially minded launch providers means satellite companies have limited options when deploying new spacecraft, said Giuliano Berretta, CEO of Eutelsat, in Paris. “We know with a certain amount of precision” when a satellite will be delivered, he said, “but a launcher can make you wait for a year. Then you can get your money back, but [you don’t get] the launch.”
    McGlade said Intelsat is so determined to maintain and enhance competition in the launch industry that the company recently provided financial assistance to one launch company even though the investment hurt Intelsat’s own bottom line. “This is so crucial for us,” he said. “We have gone above and beyond to ensure there would be competition.”
    Dan Goldberg, CEO of Telesat, of Ottawa, said the preoccupation of U.S. launch providers — which traditionally have provided a sizable chunk of capacity to the launch industry — with government customers highlights the need for satellite operators to have access to alternative launchers.
    Goldberg said he does not understand why U.S. launch companies are not going after the dozens of commercial satellite launches set to occur during the next few years and urged the State Department to take a more pragmatic approach to regulating satellite technology so companies like Telesat can have more launch options.
    The government’s ITAR rules, which limit the export of satellite technology made in the United States, make U.S. satellite manufacturers less competitive and prevent commercial companies from accessing all available launcher capacity, Goldberg said.
    “We need broader recognition that ITAR needs to be revisited. It needs to be updated to protect legitimate national security concerns but not hobble the industry,” Goldberg said.  “It would be good for the American [satellite] manufacturing industry and good for our industry.”
    Up-and-coming launch provider SpaceX, of Hawthorne, Calif., may emerge as a viable option for satellite operators looking for more ways to access space, Goldberg said. Although the private firm has yet to post the kind of track record that would allow it to compete with more-established rocket lines for Telesat’s business, SpaceX could be at that point in several years, he said.
    The continuing demand for satellite launches reflects the satellite industry’s ability to keep its financial house in order amid the financial crisis ravaging the world.
    Romain Bausch, president and CEO of SES, said his company has been able to manage its debt despite the credit crunch. He said the company, based in Luxembourg, had little trouble refinancing debt recently with a consortium of banks. SES had access to plenty of money at attractive terms, demonstrating the satellite industry’s credibility with the skittish financial community. “It shows that from the financial side, our industry is considered a solid one,” Bausch said. “Even in this financial crisis, there are no problems financing the activities of very established satellite operators.”
    Bausch added that the negative impact of the crisis on his company would remain small as long as the economy begins picking up steam by the middle of next year. “If we recover by the first half of 2010, I believe we’ll be one of the few sectors not really hurt.”
    Goldberg said Telesat has similarly held up well during the financial crisis. Long-term contracts and strong demand for the transmission of high-definition television signals has contributed to the company’s healthy bottom line, he said.
    Still, the company is noticing some weakness in some areas of its business, Goldberg said. For example, the decline in the price of commodities has impacted the sale of capacity to customers such as oil exploration companies.
    Intelsat’s financial condition also remains strong, McGlade said. The company benefited from financial arrangements laid out before the crisis hit, which smoothed the way as it refinanced hundreds of millions of dollars in debt and helped Intelsat negotiate extra borrowing capacity in case the satellite operator needs the money, he said.