Space Markets--communications

Summary

Existing and growing market even at current prices and reliability. Lower prices might help, as would higher reliability (reliability determines launch insurance rates). Some people predict a dip in demand in 1998-2002 (CSTS, section 3.1.3.3, page 17), oops, they now say 2000-2005 (OCST, GEO, 1997). They always push it back but these predictions have never materialized in the past (see CSTS, section 3.1.3.3, page 17, or my summary page). I don't believe it for a minute (mainly because such projections fail to account for new communications markets).

Communications Markets

Point to point

I include in this both traditional GEO systems such as Intelsat and also broadband LEO systems like Teledesic. Basically, this market serves various niches, but can't compete once the competing fiber gets laid. For example, satellites now carry only some 16% of the telephone market, down significantly from the year 1977 (KPMG, page 45). In particular, satellites tend to see a lot of use when introducing communications to a new geographical area (currently Asia and Latin America), and then get replaced when the density of customers has risen.

The satellite point to point market may shift someday from GEO to LEO (for example see the comments of Marco Caceres in "Satellite services soar", Aerospace America, November 1996, page 27, in which he expects future growth to occur in LEO), but that isn't the real trend here; the real trend is the shift away from satellites and towards fiber.

The market commonly called "Fixed Satellite Service" is split between point to point and broadcast, in fact GEO satellites can generally handle a mixture of point to point and broadcast customers. For a list of satellites, see OCST (they list LEO and GEO separately) or Lloyd Wood's page (LEO).

Movies on demand would be a broadband point-to-point market (see CSTS, section 3.6.2, page 240, for example); of course this market is currently served by video rentals and broadcast.

Broadcast

The bread and butter of this market is broadcasting programming from networks to cable television companies (something like 60% of Fixed Satellite Service, CSTS, page 12, section 3.1.3.1); however this is expected to be stagnant with only 3% growth (KPMG, page 43). Expect satellites to lose market share in the future; in the words of one company who plans to lay transcontinential fiber, "We could provide pricing 100 times cheaper than satellites" for television capacity ("Oceanic Cable Means Ocean Of Change", TechWeb, 4 May 1999).

Another segment is for "broadcasting" to a small set of sites (for example, various offices of a corporation). Examples of this include Boeing's DigitalXpress and the VSAT market (CSTS, page 12; KPMG, page 44). Or another sort of niche broadcasting is television programming aimed at specific populations, such as the Lawyers Communication Network (see "American Bar Association and Data Broadcasting Corporation Conclude Agreement", American Bar Association news release of 12 Dec 1996).

Direct Broadcast Service is television programming delivered directly to viewers. Existing market as of 1994. Number of satellites/launches doesn't scale with the number of viewers as such, as a single satellite can reach most of a hemisphere, but it does scale with number of channels desired and number of companies with systems. Demand also increases with higher resolution or Interactive TV (for example, viewers can select which camera angle to view a sports event from), but as far as I know there is little commercial interest in those concepts.

For lists of systems which are proposed for broadcast applications, see OCST.

Big LEO

By this I mean a service which provides medium bandwidth (e.g. voice) to relatively inexpensive, generally mobile, ground stations. Inmarsat is currently the only game for global service. Iridium will cost something like $3/minute (according to "Iridium", Wired, date about 1993 although I don't have the exact date) and is aiming at people who really need global service. The other short-term system is Globalstar which is is priced similarly to cellular phones or slightly higher. This market is both mobile and fixed site; Globalstar expects half its sales to be fixed site, according to "Emerging New Services", Telecom 95, International Telecommunications Union, Oct 1995. For a list of systems which are proposed and information on each one, see Lloyd Wood's page or OCST.

Little LEO

These systems carry short messages, like pagers do. Cost is something like $5 to $45 per month plus a "nominal" fee per message (CSTS, section 3.1.5.1., page 26). They have both fixed (for example, reading meters or monitoring pipeline equipment) and mobile (for example, tracking wild elephants or tracking fleets of trucks) applications. For a list of systems which are proposed and information on each one, see Lloyd Wood's page or OCST.

Other information

As of about 1994, communications was a $460 billion per year industry worldwide, and rapidly growing (projections are for $3 trillion in 2003) (CSTS, section 3.1.1.2, page 6). Of that, satellites were $11 billion in 1992 (CSTS, section 3.1.2.2, page 10).

One source of growth in communications markets is new countries and new operators launching satellites for the first time. This seems to roughly correspond to the demand for Delta II-class payloads to GEO, which accounts for about 2-4 launches per year (OCST, GEO, 1997, page A-5).