The state has always played a central role in the development and continued prosperity of the satellite sector. The very nature of the commercial space industry, with its global focus, huge technical requirements and prohibitive upfront costs, has…
The state has always played a central role in the development and continued prosperity of the satellite sector. The very nature of the commercial space industry, with its global focus, huge technical requirements and prohibitive upfront costs, has necessitated a strong relationship with government. While the dynamic between the two has changed over the years as the industry has matured, the importance of the state’s investment in space, both direct and indirect, has not diminished.
National pride remains a vital spur to demand. Both France and Russia recently pledged significant sums to their space sectors in order to maintain their global standing, particularly in the launch services sector where the boundaries between state and industry are often blurred.
At the same time, developing countries are increasingly keen on owning their own communications satellites. This demand has helped China Great Wall Corporation expand internationally through a series of vendor-financed construction and launch contracts. Bolivia is the latest country to take this path, following the footsteps of Venezuela, Nigeria and Pakistan.
Meanwhile, at the end of 2010 the Mexican government awarded Boeing with a US$1bn contract to manufacture three new satellites that will be used to improve both civil and national security communications as well as to help in the war on the country’s powerful drug cartels.
While the deal is a fillip to both Boeing and Orbital, which is sub-contracted to build one of the three birds, it means that the national satellite operator SatMex will lose one of its largest customers. However, the contract may be the catalyst to the state finally selling its 20% stake in SatMex and this in turn should make the satellite operator a more attractive proposition to potential acquirers, especially as previous sale attempts have been scuppered by governmental inflexibility on price.
The rise in hosted payloads and export credit
During the recent downturn and subsequent recovery, two kinds of governmental investment have particularly come to the fore – growing ECA support and the rise in hosted payloads on commercial satellites.
The French export credit agency Coface has become increasingly ubiquitous over the last couple of years, supporting the financing of a number of new satellite systems. Driven by the French government’s wish to protect its commercial space interests, Coface has guaranteed debt facilities supporting Globalstar, Iridium and O3b’s next generation satellite constellations.
The US ExIm Bank, on the other hand, has been conspicuous by its comparative lack of activity. The roles, however, could well be reversed in 2011.
Having already authorised just under US$400m of structured finance in 2011 to help fund the new Loral-built satellites of Hispasat, with its Amazonas-3 satellite, and SES, with Quetzsat-1, the North American ECA is to lend Inmarsat US$666m to help fund the construction of its three satellite Kaband constellation, which is to be built by Boeing.
As well as utilising the ECA opportunity, Inmarsat is also allegedly considering providing a hosted payload on its next generation spacecraft. The move would reflect the wider trend of satellite operators looking at generating additional revenue streams for their forthcoming satellites by offering governments a separate secure payload. It is mutually beneficial with governments eager to limit expenditure while at the same time aiming to accelerate the development of certain civil and military satellite communications programmes.
A number of companies have formed hoping to tap this trend, which has seen the number of hosted payloads increase from two in 2002 to eight in 2009, and to an estimated 13 by 2013. Two such firms, Spaceflight Services and Innovative Space Logistics, have recently formed a joint venture in order to expand internationally. Their business plan focuses on brokering rideshare services for governments and companies and the two are optimistic that this is an area with huge potential.
The size of the hosted payload market is still a matter of debate but its rapid rise highlights how the relationship between the state and the satellite industry is not just a one way street.
The two rely on each other both financially and technologically and this bond is unlikely to diminish for some time.
