by Stephane Chenard

Well, here it is: the year 2000. It looks like personal helicopters are missing from the picture (but then, so are those unpleasant food pills and seceding lunar colonies). Will this be just another humdrum year?

The satellite industry will not battle klingons just yet. It has plenty of pending business to execute first, and lately has worried that the projects wiped out in the Asian and Latin American recessions of 1998-99 will not return soon, although some industry leaders are beginning to see signs of hope for the Asia-Pacific region. With 24 satellites sold in the first ten months of 1999 (including some orders by Hughes and Lockheed affiliates), sales have been slightly down (from 31 in the same period in 1998). Asian operators, which were engines of growth in the mid-1990s, posted poor results in the first half of 1999 and deferred orders.

Record sales in 1996-97 and various delays in 1999 mean that the list of launches due in 2000 is long: at least 48 geostationary satellites for commercial operators alone, plus spares for the Iridium and Globalstar constellations (many of these launches, of course, will slip into 2001). Launches of note include Turkey’s Eurasiasat 1; India’s first two Insat 3 satellites; the first satellite of Alcatel-led global operator Europe*Star; and the high-resolution commercial earth observation satellites of Orbital Imaging and West Indian Space.

Another 64 satellites of all shapes and sizes will be launched in 2000 for government programs or earth observation missions. This in addition to seven U.S. Space Shuttle and three Russian Soyuz flights to build the International Space Station (ISS) and deorbit the space station Mir (whose cinders will rain on the southern Pacific Ocean no earlier than February). The Russian-built Zvezda service module must be launched by April to reboost the ISS elements already in orbit, or they will (reportedly) fall back. Also on the government side, the European Space Agency’s Envisat climatology satellite, one of its largest programs ever, launches in December; and China remains likely to test-launch its manned spacecraft sometime in early 2000.

Many large satellite projects launched in the mid-1990s, when spectrum and money were somewhat easier to obtain than now, will hit the market in 2000. If they perform well, a number of investors may come back to the satellite market, and the downturn of 1999 will turn out well. If they don’t, many of these investors will walk away.

The entire digital audio broadcasting market will come alive in 2000, with the launch of the first satellites by Serius Radio in early 2000 and by XM Radio in December, and the continued rollout of Worldspace Corp.’s Afristar system in Africa and its expansion into Latin America and Asia. Afristar launched its service in October, but no sales figures had been reported at press time in November. (We don’t know the truth yet about the millennium bug either-maybe no-one will ever read this.)

An interesting experiment is awaited in the U.S. direct broadcast market, as DirecTV and Echostar, pending the launch of Echostar 6, start providing hundreds of local television channels. The U.S. Congress approved requisite amendments to the Satellite Home Viewer Act in conference in early November, paving the way for its signing into law sometime in 2000. Carriage deals must then be signed or confirmed. DirecTV and Echostar will also find out during 2000 how much value they do gain from their 1999 alliances with interactive television providers WebTV and Tivo.

A lot of unfinished business at Iridium and ICO Global will also be sorted out in 2000. Iridium service providers, showing the flag at the International Telecommunication Union’s Telecom ’99 show in October, claimed to have fixed many of the problems which drove the project into bankruptcy two months earlier, by revamping their distributors, marketing strategy and price lists. As a result, Iridium may start 2000 with 100,000 subscribers or so. How it will finish the year is largely up to its creditors and the U.S. bankruptcy court in New York; liquidation remains a possibility.

The case of ICO Global is no less intriguing, since Teledesic LLC chairman Craig McCaw announced in November (and apparently convinced another bankruptcy court in Delaware) that he would rescue the ailing project, by investing $1.2 billion through the end of June. Among the mysteries which McCaw must now clear by early 2000 is how ICO Global will be restructured; whether it will be turned from a mobile telephony system into a mobile data precursor to Teledesic; and how many of ICO Global’s 60 other strategic investors will stay on despite the write-offs, the change of plans, the dilution of their shares and the intervention of a white knight about whom many of them are likely to know very little. ICO Global can then proceed with the 11 satellite launches it plans for 2000 (service will not start before mid-2001).

Much of the industry’s attention will also be on Globalstar’s rollout, which by the end of the year is planned to have expanded to 100 countries. The many milestones spelled out by Loral Chief Executive Officer Bernard Schwartz in late 1999 for the coming year include bringing the production of handsets to 40,000 per month by January, with cumulative deliveries of 130,000 units by the end of March; selling 600,000 to a million phones and reporting gross revenue of about $650 million by the end of 2000; and completing the construction of all of the system’s 38 gateways by June.

Two other mobile satellite ventures will launch in 2000, both using geostationary satellites: the ACeS system in Southeast Asia (pending the resumption of Proton launches, suspended after an accident on October 27) and Thuraya in the Middle East. The Orbcomm mobile data system of Orbital Sciences Corp., which analysts and stockholders punished during 1999 for not meeting sales targets, is eagerly expected to make progress. Orbcomm’s direct competitor Final Analysis plans its first launch in the fourth quarter of 2000.

Globalstar is also expected, possibly as early as the summer of 2000, to add some data services to its offering, which could allow its handsets to provide some Internet access or to be used as return channels for Loral’s Cyberstar service. News about Cyberstar, presently an Internet caching service provided by Loral Orion using its Ku-band services, has been scarce in 1999 even as other Ka-band projects announced billion-dollar investments.

By the end of 2000, Hughes and Lockheed Martin should have started to build their first Spaceway and Astrolink satellites, both due to launch in 2002. Progress on some of their more complex components, such as onboard processors, will be watched closely, as will any emerging details on user terminals, pricing and marketing strategies, and content deals. The major deals announced in 1999 by Hughes with AOL and by Astrolink with Liberty Media, both providers of multimedia content, gave long-awaited substance to their Ka-band projects and were decisive turning points; how these alliances evolve during 2000 will be a key question.

Likewise, the mysterious "large telecom operator" which Alcatel claimed in 1999 to have signed up into its Skybridge project will probably have to sing and dance (i.e., name itself, declare its cash investment, show its support of Skybridge and its overall strategy in regulatory forums, etc.).

Skybridge also has a major stake in the 2000 World Radio Conference (WRC), which will draw hundreds of telecommunications regulators to Istambul, Turkey, from May 8 to June 2. Among many issues, the WRC will review expert studies on whether non-geostationary Ku-band systems like Skybridge can coexist with geostationary satellites.

Stephane Chenard is chief analyst of Euroconsult and editor of its World Space Markets Survey reports in Paris.