The document provides an overview of the space sector, including the value chain from satellite manufacturing to services. It discusses major players in upstream manufacturing (Boeing, Lockheed Martin, etc.) and downstream services (telecom providers, satellite TV, etc.). The business models are described as institutional, government owned/operated, concession, and mature private. Sustainability challenges are noted when applications are emerging but investment is large. Potential influencers and investors in the sector are also mentioned, such as Elon Musk, Mark Zuckerberg, and Bill Gates.
1. IT CONSULTING ASSIGNMENT~ 1
Table of Contents
1. Overview of the space sector
1.1SpaceValue Chain
1.2Upstream Satellite manufacturing: Provision of new technology
1.3Downstream Satellite Services: Exploitation of technology
1.4Major dominant players in both the segments
1.5Country wise distribution
2. Satellite manufacturing & services:Business model
2.1Business model of the sector
2.2Sustainability of the business model in future years
2.3Influencers/ Potential Networkers:Wishful Thinking
2.4Industry Visionaries
2.5Investors
3. Conclusion
2. 1 Overview of the space sector
The year 2014 has had a substantial growth in space technology and capabilities. A booming
commercial sector has paved the way for compelling products that add significant value to customers
around the globe. Despite economic slowdown across the world, debt crises in most parts of Europe,
governments have continued to propel heavy investments in space agencies, exploration programs,
and the further development of commercial capabilities signifying a better global space economy
overall. Consisting of launch and ground services, satellite manufacturing, satellite television and
communications, government exploration, military spending, and other interests, the global space
economy grew by 9% in 2014, reaching a total of $330 billion worldwide.
1.1 SPACE VALUE CHAIN
From the point of manufacturing satellites to the final usage of its applications by the end consumers,
the space value chain can be summed up with the following categories
1) Manufacturing: Space industry manufactures space systems and associated ground segment
and user terminals.
2) Launch services: Launch operators deliver the satellites into orbit.
3) Lease or sale of satellite capacity or data: The satellite operators own and operate their
satellites, or sell direct services such as communications bandwidth, positioning signal, or
Earth observation data.
4) Value Added Services: The service providers buy satellite capacity or data, control ground
stations and networks, and deliver high value services, such as global communication
solutions, track and trace, geo-information services.
1.2 UPSTREAM SATELLITE MANUFACTURING: PROVISIONING NEW TECHNOLOGY
The upstream encompasses the provision of technology like the space prime contractor, contract
R&D, space component supplier and space subsystems.
Manufacturing companies: This is the classical space industry having close synergies with country
specific defence sectors. The size of the companies in this upstream segment ranges to several billion
revenues for the global primes (Boeing, Lockheed Martin, and Thales Alenia) to hundred millions for
the satellite primes (Loral space systems, OSC,OHB). However there is a recent trend of private firms
emerging quickly like the SSTL, Bigelow and Space X.
Launch Operators: Because of the sovereignty issues of the space venturing nations, this sector is
fairly narrow with most launchers being child companies of satellite manufacturers. For example
ULA is a joint venture of Boeing & Lockheed Martin.
Space Operators: Depending on the typology of services (navigation, remote sensing, Earth
observation etc.) launch service providers vary. For telecommunications the business has matured
with 60% of the revenues coming from its top four players (Eutelsat, SES, Intelsat, Inmarsat).
Similarly for navigation the business for private players is still nascent with most of its players owned
by government organizations (GPS, Glonass, Bideou). For Earth observation the business is not very
mature with three dominant players (Geoeye, Digital Globe and Spot Image).
3. 1.3 DOWNSTREAM SATELLITE SERVICES: EXPLOITING OF TECHNOLOGY
The downstream part of the space value chain addresses mainly the end users. A whole lot of
companies, from established service providers (mainly in telecommunications), to small start-ups
addressing niche market segments are available. The market is very unstructured & scattered. The
downstream business draws benefits from having a vibrant upstream enabling to influence market
direction, definition and adoption of standards and regulatory controls.
1.4 DOMINANT INDUSTRY PLAYERS BOTH UPSTREAM & DOWNSTREAM
UPSTREAM MANUFACTURERS
1) Boeing: Boeing introduced the 702 spacecraft family in 1995 with HP, MP, and SP product
lines having flexible designs to support 3-18 kilowatt payloads. In 2014, the Boeing 502
satellite provided an option for customers who would want to choose satellites between the
large geosynchronous spacecraft and nano satellites. U.S air force, Intelsat and HyspecIQ etc
are some its major clientele.
2) Lockheed Martin: Partnering with national security and military, civil government and
commercial customers, they develop solutions to help protect lives and advance the cause of
civilization. A2100, Defense Satellite communications, GeoEye2 are some of its selected
products.
3) Thales Alenia Space: Thales Alenia Space is a joint venture between Thales (67%) and
Finmeccanica (33%). Its satellites and payloads are recognized worldwide as benchmarks in
delivering communications and navigation services, monitoring our environment and the
oceans, better understanding climate change and supporting scientific research. They are
expert in very-high-resolution optical instruments especially for intelligence satellites.
4) Space Systems Loral: A pioneer of manufacturing geostationary commercial satellites.
Courier 1B, launched in 1960, SSL has manufactured more than 250 satellites. SSL’s
commercial platform has also been leveraged for numerous unique applications, such as
GEOS Weather satellites, Air Traffic Control in Japan, and a propulsion system for NASA’s
Lunar Atmosphere and Dust Environment Explorer (LADEE).
5) Orbital Space Corporation: It has been provider of small- to medium-class satellites for
commercial, military & civil customers’ worldwide. It also provides constellations of Low
Earth orbit communications satellites. Earth imagery and high resolution digital imaging
satellites such as the OrbView series are also developed and manufactured by Orbital.
6) OHB: This German manufacturer has been a key driver for most European space programs.
Galileo navigation satellites, the SARah reconnaissance system, the MTG meteorological
satellites, the EnMAP environment satellite, the TET-1 technology testing vehicle and the
HispaSat, ELECTRA and EDRS-C telecommunications satellites top include their success
lists.
7) Airbus Defence & Space: On July 31, 2013, EADS announced that it would change its
corporate name to Airbus Group by the end of that year, and that Astrium, Cassidian, and the
Airbus Military divisions would be merged to form a new company: Airbus Defence and
Space. Eurostar its satellite bus service has been used for a series of spacecraft providing
telecommunication services in the geosynchronous orbit.
8) ArianeSpace: It provides launch services to commercial satellite operators and
government space agencies around the globe based on a complete family of launchers:
4. The Ariane 5 heavy-lift launch vehicle (77 launches to date, including 63 successful
missions in a row).
9) SpaceX: World’s largest growing provider of launch services.50 launches in its manifest
representing 5 billion USD in contracts.
10) Bigelow Aerospace: A fairly different spacecraft manufacturer with innovative ideas for the
first space habitat, resupply to ISS in conjunction with NASA & SpaceX has developed
BEAM (Bigelow Expandable Activity Module).
UPSTREAM LAUNCH OPERATORS
1) United Launch Alliance: ULA is a 50-50 joint venture between Lockheed Martin and The
Boeing Company formed in 2006. Atlas and Delta launch vehicles carry payloads to space
ranging from weather, telecommunications and national security satellites to deep space and
interplanetary exploration missions that further our knowledge of the earth.
2) Aerojet Rocketdyne: This company has powered space explorations with close to 20 Atlas V
launches powered by Aerojet.
3) Mitsubitshi Heavy industry: MHI provides launch services with the H-IIA, Japan's primary
launch vehicle, and has also participated in the development and production of KIBO, the
Japanese Experiment Module (JEM) on the International Space Station, contributing to space
development in Japan.
4) Sierra Nevada: Sierra Nevada teamed up with Stratolaunch Systems to develop a way to get
a scaled-down version of Dream Chaser spacecraft off the ground.
5) ISRO: Currently this has two operational launch vehicles PSLV & GSLV (Polar & Geo
satellite launch vehicles).
DOWNSTREAM SERVICE PROVIDERS
1) Telecom providers: Verizon, China mobile, AT&T etc are the top telecom service providers.
2) Satellite TVproviders:DISH,DirectTV are some of the premier service providers for TV &
internet services in the global market.
3) GIS providers: ALK technologies, Kore Telematics, Caliper etc are experts for Geographic
information systems across the globe.
4) Earth Observation & Geospatial solutions: DigitalGlobe, Planet labs, UrtheCast, Trible,
Garmin etc are the top service providers for geospatial imagery.
5) Remote Sensing: Airborne data systems, Borstad Associates, Emap International are expert
remote sensing providers.
1.5 COUNTRY WISE DISTRIBUTION
In all countries, the role of governments remains essential as a source of initial funding for public
R&D,as well as a major anchor customer for many space products and services. When national space
budgets are converted using purchase power parities to allow better international comparisons, the
United States,China, India and the Russian Federation are among the top-four investors on space in
2014. Joint institutional space programmes still provide an excellent way to develop and use national
expertise and scientific capabilities, while sharing financial burdens in common large-scale projects.
2 Satellite Manufacturing & Services Business model
Indeed this sector is a capital intensive business with bottlenecks around the huge investments are
their amount (from hundreds million to billions), the payback time and level of ROI, and the risks
5. (technical and business) to be shared between the manufacturing industry, the operators, the investors,
and the value added service providers.
2.1 BUSINESS MODELS IN USE
2.1.1 INSTITUTIONAL BUSINESS MODELS
This model is addressing programs of strategic or political importance, or not leading to commercial
applications (e.g. space science, military, human spaceflight). Government agencies are procuring
space systems from the manufacturing industry, and operating these systems to deliver services to
government. Example is the NASA.
2.1.2 GOVERNMENT OWNED COMPANY OPERATED MODELS
A derivative of the previous, this model, is applied when the government does not want to keep the
duty of operating the system, or when the system owned by the government might have commercial
applications beside its public service purpose in which case the operations & sale of the services are
granted to an operator, through a concession, a convention of use, or a licensing scheme. Example is
the Arianespace.
2.1.3 CONCESSION MODEL
This involves disengagement of the government from the infrastructure duties; the concession model
applies to a global solution and service delivery to the public customer. It is a particular case of a PPP.
A successful example is the Paradigm project in line with the UK Ministry of Defence.
2.1.4 COWNERSHIP MODEL
Another PPP example is the case where the public and the private partners are deciding to jointly
invest and own a space system, in order to share the funding and the risks. The Earth radar
observation Terra SAR-X is an on-going example for such a scheme. The first satellite has been
jointly funded by the German DLR space agency and Astrium.
2.1.5 MATURE PRIVATE BUSINESS MODEL
Established operators, generally owned by equity funds, have the financial capacity to invest for the
replacement and upgrade of their satellite fleets, thanks to a solid market for the sale of bandwidth
capacity, their customers being generally value added service providers, agreeing to sign long term
contracts. Telecoms are perfect examples.
2.1.6 VALUE ADDED SERVICES MODEL
Today there is no economical linkage between the infrastructure investment and the commercial
services. The GPS system is funded by the US government, but for military purpose. The civil signal
being offered free of charge worldwide, there is no demand today to reimburse this investment.
Therefore the commercial value chain starts in fact at the level of the value added service providers,
which address a large variety of customers, and can develop new applications and propose new offers,
with very limited investment.
2.2 SUSTAINABILITY OF THE EXISTING BUSINESS MODELS
6. When the application sector is only emerging and not mature as a commercial business, whereas the
investment is larger than tens millions, the risk is not acceptable for the private investors. A public
support is needed for R&D and experimentation, and for initial infrastructure investment to start the
application business. Further if the maturity of the domain allows a good forecast of the market and of
the competition, then the business uncertainties and risks are highly decreased. Galileo and GMES in
Europe are demonstrating the difficulty to guarantee the long term sustainability of key space
infrastructures and associated services, when the initial intent is to escape from the traditional
government procurement business model.
3 Influencers/Potential Networking
3.1. INDUSTRY VISIONARIES
3.1.1 Vern Fotheringham: CEO of Leosat, a Virginia-based company developing a constellation
of low-earth orbit satellites. He is a veteran of the telecom business who previously led Advanced
Radio Telecom and Bazillion.
3.1.2 Greg Wyler: CEO of OneWebsatellite which expects to provide global internet service to
individual customers by 2019. His big innovation for O3B was reduction of latency.
3.1.3 Mark D. Dankberg: Founder & CEO of ViaSat communication. ViaSat is unable to meet
demand in its high growth regions & Dankberg is interested in pumping money for the internet
service through LEO satellites.
3.1.4 Amie Chan: CEO of Norsat, a leading provider of innovative communication solutions that
enable the transmission of data, audio and video for remote and challenging applications. Norsat also
provides engineering consulting to meet customers’ specific needs.
3.1.5 Thomas Choi: A satellite entrepreneur & CEO of ABS. prior to which, he founded Speedcast
Ltd, a valued added satellite service company in joint venture with AsiaSat. He believes that the Ku-
band market will continually grow due to the demand from DTH markets, while most HTS systems
will teeter out in the long run.
3.2 INVESTORS
3.2.1 Elon Musk: His dream of producing reusable low cost rockets resulted in the dawn of SpaceX.
He has invested heavily in developing technology for making space habitat possible.
3.2.2 Mark Zuckerberg: Facebook’s accquistion of “Titan Aerospace” was detected in satellite
industry radar with caution. His vision of connecting remote areas through drones can be altered by
cheaper satellite solutions.
3.2.3. Bill Gates: Given his backing to Kymeta, which aims to achieve high speed data network based
on satellite constellation he can prove as a potential investor in high speed satellite technology.
7. 4 Conclusion
The global breadth of satellites, which has long been one of the space industry’s defining
characteristics, is generating interest and investment from other industries, particularly from those
whose continued growth may actually depend on connecting the billions of people on the planet who
are still without access to modern communications. For clients who are already a part of the network
there is prospect of seeing the world in a new way as several space companies vying to provide
transportation into space and an exciting view of the world in which we live.
5 Appendix
http://www.lockheedmartin.com/us/what-we-do/space/satellites.html
http://bigelowaerospace.com/beam/
http://www.saiindia.gov.in/english/home/Our_Products/Audit_Report/Government_Wise/union_audit
/recent_reports/union_compliance/2014/SD/Report_22/22of2014.pdf
http://www.spacefoundation.org/sites/default/files/downloads/The_Space_Report_2014_Overview_T
OC_Exhibits.pdf
http://www.thestreet.com/story/12519024/1/facebook-shows-up-on-satellite-industrys-radar.html