Satellite builders booked more commercial orders in 2019 than the prior two years combined, but the industry remains in flux

This article originally appeared in the Jan. 20, 2020 issue of SpaceNews magazine.

Manufacturers are hopeful that 2019 marked the beginning of a turnaround for geostationary satellite orders, even though their market remains fraught with uncertainty.

After booking just 14 orders in 2017 and 2018 combined, satellite manufacturers reported 2019 orders for 15 commercially competed geostationary communications spacecraft and two military comsats awarded without open bidding.

While total commercial GEO satellite orders in 2019 more than doubled what satellite operators ordered in each of the prior two years, the range of spacecraft ordered grew as well.

Satellites ordered in 2019 ranged from the 350-kilogram small GEO satellite Astranis booked in January, to the heavyweight 6,500-kilogram very high-throughput ViaSat-3 Asia-Pacific satellite that Boeing booked around the same time.

In May, Airbus Defence and Space announced it would build three approximately 3,000-kilogram small GEO satellites for Inmarsat based on its new OneSat platform. The satellites are small enough that all three could launch on a single heavy-lift rocket, such as the Ariane 64, while supporting thousands of reprogrammable beams, Inmarsat said.

And operators remain divided on the viability of satellite megaconstellations in low and medium Earth orbits.

“There’s a tremendous range in satellite size and price,” said Pascal Homsy, executive vice president of Thales Alenia Space’s telecommunications business line. “The number of satellites is an easy metric, but one that’s becoming obsolete.”

Three manufacturers — Airbus, Boeing and Thales Alenia Space — introduced small geostationary satellites weighing 2,000 to 3,000 kilograms that emphasize lightweight design and reprogrammability.

Two more manufacturers, the newly formed Saturn Satellite Networks and China Great Wall Industry Corporation, unveiled smaller geostationary satellites weighing around 1,000 kilograms.

And startup Astranis joined Tyvak in building even smaller GEO-bound satellites weighing a mere 250 to 350 kilograms.

GEO satellites ordered in 2019 are already starting to reflect that diversity of spacecraft offerings. Startup manufacturer Astranis announced the first GEO satellite order of the year — a small GEO it plans to operate for Pacific Dataport, a customer that will lease capacity to provide internet in Alaska.

Astranis CEO John Gedmark said the satellite has grown by 50 kilograms to around 350 kilograms, attributing the change to the “usual growth you see sometimes with a new spacecraft program.”

Airbus finished 2019 with six GEO orders — three for Inmarsat, one for Measat and two satellites it will build as “lead partner” with Thales Alenia Space for Hisdesat.

Jean-Marc Nasr, head of space systems at Airbus Defence and Space, attributed last year’s sector-leading order total to Airbus being first to roll out a reprogrammable small GEO satellite.

“We have invested on time with our flexible satellite market solution before the others, reaching the market expectations on time,” Nasr said.

That Boeing and Thales Alenia Space rolled out their own reprogrammable small GEOs months later is good and bad for Airbus, he said.

“Bad news because of competition, but good news because it means we were right,” he said.

UNCERTAINTY DRIVES FLEXIBILITY

Nasr said Airbus expected more GEO satellite orders to close in 2019, but that operators delayed because of uncertainty about the markets they serve.

“We still see a lot of difficulties for customers to close their business cases. It is more and more difficult for them to make a decision going forward with a GEO satellite,” Nasr said. “We have not seen, at the moment, decisions going towards cancellation — it’s more just more time needed for them to decide.”

Thales Alenia Space anticipated closing a GEO satellite order with the government of Nepal last year, but saw that decision delayed. Company spokeswoman Sandrine Bielecki said a contract signature is now expected in the first months of 2020.

Intelsat also delayed to this year a planned 2019 replacement decision for the failed Intelsat-29e satellite.

Operator uncertainty largely stems from an increased interest in satellite broadband. End-user demand changes more rapidly with broadband than with television broadcasters, shifting the mix of customers that satellite operators now serve into less predictable territory.

Reprogrammable satellites featuring digital channelizers, onboard electronically steered antennas, and other technologies allow operators to change the size, shape and power of their satellite beams, making them more responsive to customer requests.

Homsy said that by Thales Alenia Space’s count, 70% of satellites ordered last year were digital. He expects that trend to continue.

“We are seeing both very large and very small satellites, but most missions will be digital,” he said. “We are already starting to see 100% software-defined satellites. In terms of missions, there will be VHTS, video and connectivity, and 100% flexible [satellites].”

“Flexibility before was only affordable for government or military satellites,” added Rachel Villain, a principal adviser at Euroconsult who specializes in satellite manufacturing. “Now, it’s becoming affordable for the commercial and civilian world.”

Villain said aviation and military customers often have unpredictable data needs, which make it difficult for operators to plan satellites lasting 15 years or more unless those satellites can adjust their coverage.

Fu Zhiheng, executive vice president of China Great Wall Industry Corporation, said his company is seeing more demand for flexible satellites when operators want high-throughput or very-high-throughput broadband capacity, but less so for other types of spacecraft.

“This will become more common in the near future,” Zhiheng said of flexible satellites. “However, it does not mean the flexible satellite will completely replace the conventional satellite.”

FUTURE SATELLITE ORDERS

Manufacturers said 2019 finished largely in line with their expectations for the number of GEO satellites ordered. Most expect similar numbers in 2020.

“Some of the most optimistic estimates point to 20 satellites,” said Guy Beutelschies, Lockheed Martin Space’s vice president of communication satellite solutions. “Other more pessimistic reports indicate 10 to 11. I’m willing to guess 14 is a reasonable number for 2020.”

Paul Estey, Maxar’s executive vice president of customer relations for space infrastructure, said his company expects industry GEO satellite orders “near the top end of the 10-15 range in 2020.”

Nasr said Airbus expects a modest increase over 2019’s 15 commercial orders, while Homsy said Thales Alenia Space projects 2020 orders will decline slightly to 12 or 13 satellites.

Amer Khouri, Northrop Grumman’s vice president of commercial satellites, was more optimistic, saying 2020 could see 15 to 20 GEO satellites ordered because of a strong need among many operators for replacement satellites. He said that number could be heavily influenced by the C-band spectrum debate in the United States, since satellite operators say they will need new satellites to continue services with less spectrum.

Intelsat and SES said that they would buy four satellites each, all from American manufacturers, if the U.S. Federal Communications Commission chose their private auction plan. The FCC ultimately chose a public auction instead, but has emphasized continuity of service for C-band satellite operators as a priority.

Some of 2019’s GEO orders were also unusual in that they were driven by military requirements despite being competed commercially. Space Norway competed its Arctic Satellite Broadband Mission among European and American manufacturers before selecting Northrop Grumman to build them both. The two satellites will have military payloads for the Norwegian Ministry of Defence, the U.S. government and British commercial operator Inmarsat.

Hisdesat similarly competed its two-satellite SpainSat Next Generation system globally before choosing Airbus and Thales Alenia Space. The SpainSat satellites will provide military communications for the Spanish Ministry of Defence, which has a 30% stake in Hisdesat.

Thales Alenia Space’s Ital-GovSatCom win in July was not an open procurement, according to several analysts and manufacturers, and Boeing’s April contract to build an eleventh Wideband Global Communications satellite for the U.S. Air Force was a sole-source award funded by a congressional earmark.

FINDING A NEW METRIC

Despite their predictions, manufacturers were reluctant to embrace the number of GEO orders as a useful metric of demand, since operators can request satellites weighing anything from a few hundred kilograms to several thousand kilograms.

Indonesian satellite operator PSN, for example, said last year it is weighing buying a single large VHTS satellite, or multiple small GEOs, since either approach could secure the 300 gigabits per second of additional capacity it wants in orbit come 2023.

Homsy suggested using the total value of an order as a better metric, but this also has limitations because operators don’t always buy standalone spacecraft.

“We are seeing more and more complete packages in which the satellite is only one component, and in which the system also generates more revenue,” Homsy said.

Beutelschies said the three most recent commercial satellites Lockheed Martin built included ground segment infrastructure.

For CGWIC, whose international business is limited by U.S. export regulations, most of its commercial deals are bundled with a launch on a Chinese rocket, an approach Zhiheng said will continue.

“In 2020, we will actively explore new opportunities in the emerging markets,” he said. “As we have done in the past, our strategy is to provide a packaged in-orbit-delivery solution to customers.”

He declined to address reports that China will help Ethiopia domestically build a communications satellite.

Zhiheng said CGWIC anticipates finalizing an order in the first half of 2020 with its new DFH-3E, a small GEO platform, which the company is offering bundled with a Long March-2C or Long March-2D launch. He said CGWIC is also making efforts to bid on programs with established satellite operators and eying new opportunities in its “fast-growing domestic market.”

Villain said the average capital expenditure for deploying a GEO satellite, including manufacturing, launch, insurance and gateway stations, ranges from $150 million to $500 million. She estimated satellites under 1,000 kilograms likely cost operators less than $100 million to deploy. Villain said that the “performance/capacity of GEO comsats is growing proportionally faster than their prices,” meaning operators are getting more capacity per dollar spent than they did in the past.

Some new manufacturers are also operating the spacecraft they build. Saturn Satellite Networks will own its first satellite and lease its capacity to Moscow-based Intersputnik. Jim Simpson, Saturn’s chief executive, said in a December interview that his company will sell or lease its satellites based on customer preference. Astranis also will retain ownership of its first satellite.

NSR analyst Shagun Sachdeva said she expects the manufacturer-turned-owner trend to continue, albeit modestly.

“As the operators’ priorities vary between cost, asset ownership, flexibility and throughput, there are limitations to how much market this trend will capture,” she said.

This article originally appeared in the Jan. 20, 2020 issue of SpaceNews magazine.