This article originally appeared in the Aug. 27, 2018 issue of SpaceNews magazine.

When it comes to buying next-generation telecom satellites, operators are stumped. Deliberations about the right orbit, the right throughput and the right coverage are stretching on as operators scrap assumptions and return to their drawing boards again and again.

With just eight commercial orders worldwide last year, 2017 was the worst year for geostationary comsat sales in at least 15 years — coming in four satellites below the period’s previous low of 12 satellites in 2004. Satellite builders have largely given up on returning to an average 20 orders a year; most now expect to compete hard for scarcer multi-ton geostationary satellite wins and a handful of big orders for constellations of smaller satellites in non-geostationary orbits.

The European Space Agency, which has been funding satellite telecom technology development for 25 years, currently spends 400 to 500 million euros ($456 to $571 million) annually to help Europe’s satellite sector remain competitive. Among ESA’s goals is to ensure European manufacturers — Airbus Defence and Space, Thales Alenia Space, and OHB Systems, along with their supplier base — don’t fall behind their U.S. counterparts that benefit from large, technology-rich Defense Department satellite projects.

But how does ESA decide what technology to invest in when few have confidence on what operators will want?

Three experts overseeing ARTES, the European Space Agency’s Advanced Research in Telecommunications Systems division, explain.

Carlo Elia , head of ESA’s telecommunications technologies, products and systems department

, head of ESA’s telecommunications technologies, products and systems department Philip Haines , ESA’s head of telecom market analysis

, ESA’s head of telecom market analysis Magali Vaissiere, ESA’s head of telecommunications and integrated applications

Many satellite telecom operators are paralyzed by indecision because of the rapid development of new technologies. How does ESA decide what technologies are best to invest in when industry sometimes cannot?

Vaissiere: I wouldn’t say that satellite operators are paralyzed. There’s a huge amount of activity going on at the moment, both amongst the “old space” and the Newspace satellite operators. In fact, two of the big constellation projects come from “old space” companies – O3b from SES, and Telesat LEO from Telesat.

At ESA our role isn’t to decide on which is the best technology and then invest our R&D effort just into that. We aim to invest in a range of technologies to help de-risk them for commercial use. That means that sometimes we invest in technologies that don’t succeed — and if we didn’t have failures we wouldn’t be taking enough risk.

Right now our key focuses are on the growth path from high-throughput satellites to very-high-throughput satellites and ultra-high-throughput satellites, LEO and MEO constellations, 5G, and space and security. But there are hundreds of smaller developments as well, and any one of them could turn out to be the next big thing.

At times when the demand is decreasing, we reinforce our longer-term technology developments line to prepare industry for the next generation. We are very much pushing for optical technologies both at intra-satellite (photonics payloads elements) and inter-satellite (optical uplinks/ inter-satellite links) level as well as quantum key distribution. We are also starting developing W-band technology.

What are some of ESA ARTES’ biggest focal points in telecom?

Vaissiere: Our biggest projects are the new satellite projects – Quantum, Electra, NEOsat, etc. – and we can invest tens of millions of euros in projects like these. But at the other end of the scale we invest a few hundred of thousands of euros in smaller projects that can be just as valuable.

Haines: Flexibility is very important. If you look at the old way of doing things, from the day you decide to buy a satellite to the day you sign a contract is typically two years, from there to launching it is three, and then it lasts another 15, so you are trying to predict what the market will want in 20 years time. That’s very hard to do these days, so flexible payloads that can respond or be repurposed for different missions are absolutely crucial to the success of satellites in the future.

European manufacturers have won at least four contracts with the ESA-sponsored Neosat next-gen platform since 2015 (Konnect, Konnect VHTS, and Eutelsat’s two Hot Bird replacements). Is progress with this program going as expected?

Vaissiere: The Neosat program is a success and in line with the performance objectives and cost reduction targets. The development activities are continuing on the main product lines and extensions.

We’re delighted with the Neosat orders that started rolling in very soon after the start of the development. It should become the platform of choice for customers buying that class of large satellites from European primes.

On the other hand, OHB took seven years to build their first SmallGEO, which launched last year. When a program gets troublesome, what does ESA do?

Elia: First of all, we are in development, so risk is part of the equation — and with risk there are delays. We normally try to provide very strong project teams on the ESA side, especially when you are talking about OHB, who is a new entrant into the GEO satcom market. We had to consider that there is a certain time required for somebody new, in which that entity will need to learn. We are in that phase with OHB, but having a very strong team that has the experience of many developments helps especially when it comes to innovative elements.

Don’t forget these developments are always done in partnership, so it’s not that ESA is providing funding to an industry and allowing for delays or cost overruns. Everything is co-funded, so decisions to proceed or not and decisions on extensions are done together with industry.

Haines: Our satellites aren’t just state of the art, they are beyond the state of the art. They define the new state of the art, and that’s what the innovation is about. It’s not surprising that they sometimes take longer than ordering a standard satellite from Airbus or Thales Alenia Space would.

China is becoming a significant international competitor in space. Are you worried European manufacturers will lose business to China?

Vaissiere: The Chinese space industry is doing very well and we follow developments there closely.

They have growing capabilities in everything from satellites to launchers to manned space flight. In satcoms they’re still not up to the scope of European and U.S. satellites, but there’s a part of the market where they’re doing very well. Also, they have the appetite to take on deals which European and U.S. primes might shy away from — this year they’ve won contracts in Nigeria and Cambodia — so they’re broadening the satellite market which will be to the benefit of everybody in the medium term.

As I said before, our industry is changing and China is one of the drivers of that change. European and U.S. primes ignore China at their peril.

As NewSpace evolves in Europe how has that affected the way ESA interacts with startups?

Haines: NewSpace companies come from a different background than “old space” companies. Many of them are startups. They are funded by venture capital, they want to do things very quickly, and they are not always 100 percent sure what it is they want to do, or how they are going to do it. That’s a long way away from a traditional spacecraft program where we set a specification at the beginning, which is set in stone and never changes. This is why we need to adapt ARTES so we can be more flexible. They are smaller companies, like startups with an IT, communications or entrepreneurial background. They are not the kind of large systems integrators we’ve traditionally worked with in the past.

What kind of changes are you making to ARTES?

Elia: ARTES 4.0 is an attempt to create a single program where all the national delegations provide their funding, and through that we can place contracts in R&D development both at the technology level and products or entire satellites. We do not need to have compartmentalization or transfers of funding between boxes. That way we can reduce the time to contract with industry overall from contract to action out to two months.

How long do contracts take today?

Elia: Three to five months.

Haines: But it’s not all us. There is one program where we have very good metrics. We respond to initial proposals within 10 working days. The full proposal takes 10 days, but the single longest item is usually for the company to write the full proposal.

How far away do you suspect Q- and V-bands are from commercial use? What is ESA doing in this area?

Vaissiere: As an industry, we’ve always moved upwards in frequency.

When we were using C-band, Ku-band was said to be impossible due to the rain fade but from the earliest experimental Ku-band transponders embarked on C-band satellites we engineered our way to a good solution where Ku-band became the norm.

Then when we were using Ku-band, Ka-band was equally impossible but we solved that, too. Now it is Q- and V-band’s turn to be “impossible,” but as in industry we’ll fix that as well, and then it will be time for W-band and optical.

When will it happen? When it’s needed and not before. While we still have adequate Ka-band spectrum available nobody is going to move to Q- and V-band, but with the current rate of growth we would expect to see Q- and V-band coming into the mainstream in five to 10 years.

Why is ESA investing in even higher frequency W-band technologies when Q- and V-band are still being studied?

Elia: We started focusing on W-band two years ago. This is part of our long-term R&D research. We have a large portion of the budget being used for short-term market developments in which we co-fund together with industrial partners mainly at the level of 50-50. W-band is not one of those. It is part of the effort to scout technologies and improvements for the longer term, the same way we started with Q- and V-band. We launched the first Q- and V-band payload onboard the AlphaSat satellite in 2013. That was an experimental payload.

We have today six or seven activities in W-band. One of them is a cubesat with a W-band channel to measure for channel measurement. So we are at the level of measuring and characterizing the channel to understand if, when and how it can be used.

We are starting looking at how feasible it is to develop components such as frequency converters from W-band to Ka-band or waveguides in those frequencies. We also have some demonstrators for checking how you can do smart gateway diversity for the ground.

What’s the advantage of W-band?

Haines: One is more bandwidth. As we fill up Ka-, Q- and V-band, it’s the next place to go. The other advantage is as you go up in frequency, the terminals can get smaller, and the spacecraft equipment can get smaller and lighter, all of which is of benefit to the user. But the higher frequency bands have their challenges and we have to find ways to engineer around those challenges to make them workable, commercial solutions.

Many flat panel antenna manufacturers say they are nearing commercial readiness, but industry is still skeptical. What is ESA’s take?

Vaissiere: Industry has a good reason to still be skeptical, we’ve been promised flat panel antennas for decades and they’ve constantly been “available next year.”

But this time it’s different. Firstly, there are several companies with viable products including Phasor Solutions and SatixFy in Europe and Kymeta in the U.S., and secondly there’s now sustainable demand from the aeronautical satcoms sector where the still-high pricing is viable. And as with all technical developments, these first low-volume, high-price units for aeronautical satcoms will lead to higher-volume, lower-price units for other applications. There’s a long way to go to get down to the tens-of-euros price point where the automotive manufacturers become interested, but we’ll get there.