It has been a rocky road for the satellite industry during the past few years. From the high-profile failure of PamAmSat’s [SPOT] Galaxy IV bird to the recent troubles of Iridium LLC [IRID] and ICO Global Communications Ltd. [ICOGF], the satellite industry has had enough recent bad press to last a while.

However, that does not translate to a bleak future for the industry.

But in order for the satellite industry to rebound from a these setbacks, it will need to focus on markets that will carry it forward. And the one common thread that will tie the markets together is the Internet.

There will be a continued growth in Internet usage, with 200 million users in North America in the next three years, and 410 million users in emerging markets worldwide, said Riyad Said, vice president of communications research at Arlington, Va.-based institutional brokerage, research and investment banking firm Friedman, Billings Ramsey & Co. Inc. during a recent Washington Space Business Roundtable meeting.

Satellite companies are in a position to take advantage of this growth in a variety of ways, including services to Web-enabled automobiles, extension of coverage of terrestrial wireless networks and providing broadband Internet services to consumers – much the same way that consumers now can receive cable services via satellite direct to their homes.

…Expect More M&A Activity

However, en route to this rebound, there is going to be a lot more merger and acquisition activity. The Hughes [GMH]/Boeing [BA] transaction is most likely just the beginning as satellite companies re-evaluate their existing strategies to focus more solidly on core markets.

"Many satellite companies got very big, very fast," said Anita Antenucci, managing director at Washington, D.C.-based Quarterdeck Investment Partners Inc. "The nerve structure doesn’t rewire itself very fast."

And a shift toward Internet-based services could help struggling companies raise much needed capital.

Roger Widing, managing director of Reston, Va.-based venture capitalist SpaceVest said $30 billion of venture capitalist money was given away last year, an increase of more than 2.5 times from three years ago.

"The aerospace community in general needs to do a better job of tapping these resources," said Widing.