World Gets Wired, Cheap, via Satellites
CALL it "Son of Sputnik." Nearly 40 years after the launch of a Russian satellite set off the first space race, a new race is on to put commercial satellites in orbit - as quickly, reliably, and cheaply as possible.
In 1957 the original Sputnik carried a simple radio transmitter and weighed 158 pounds; today's communications satellites can easily weigh three tons and cost $90 million to launch.
By the year 2000, the world's telecommunications services are expected to be a $1 trillion market. Satellite services could account for 25 percent of that, according to industry analysts.
This proliferation of satellites promises virtually instant communication anywhere and at ever-lower costs. Once available only to big governments and their militaries, new space-based services are now in reach of consumers, including the world's poorest.
Satellite-based television programming already reaches 200 million people in Asia and 75 million in India. Soon, no one will be out of reach of a pager or a mobile phone. Lost hikers will be able to pinpoint their locations to within a few feet anywhere on earth; dispatchers to keep tabs on trucks; farmers to monitor their fields; pilots to navigate planes and ships; and scientists to map ozone in the atmosphere and plankton in the oceans.
Though much of the world lacks access to telephone land lines, satellites may mean people will never need them.
Today's hand-held communicators bypass wires and cables, and make affordable two-way communication available where it has never existed before, industry leaders say.
"The market for these services will be global. Not confined to just rich countries, in some cases near-term demand will be even stronger in economically developing areas with minimal telecom infrastructure," said David Thompson, head of Orbital Sciences Corp., in a speech in Washington Feb. 29. The Virginia-based company is setting up the world's first commercial low-orbit satellite network. Its current service, which covers the continental United States, is priced at 25 cents for a short 50-character message. The new service would go worldwide.
Some governments in Asia and the Middle East are resisting opening their markets to the new programming and communications capacity satellite-based communications offers. But industry leaders say political resistance will soon be overcome. "Government opposition to new communications services is fading as more and more governments conclude that information-policy reform and the opening of markets are good for economic growth," Mr. Thompson said in an interview. "It may be years before all obstacles are broken down, but the trend is clearly in that direction."
The high cost of satellite launches is proving to be a formidable obstacle to making new services affordable, however. Success in driving down launch prices will determine how quickly new space-based services can develop - as well as which launch providers will survive into the next millennium.
Orders for the world's four leading commercial launch services are back-logged into 1998. Competition in the next few years is expected to be fierce, and industry analysts say that few competitors may survive into the year 2000.
For Arianespace, the European space consortium that has dominated the commercial launch market since NASA's Challenger space shuttle blew up in 1986, the watchword is "bigger."
Arianespace is gearing up for a May 7 launch of what spokesmen describe as its "crowning achievement": the Ariane 5 launcher, capable of carrying two three-ton satellites into high Earth orbit. The Ariane 5 is the result of an eight-year, $8 billion development effort, financed by 12 European nations, with France covering 45.2 percent of the costs.
Yet many US satellite companies, such as Orbital Sciences and Teledesic, which is based in Washington State, say the future for newer applications (such as mobile and personal communication) is in smaller satellites in lower Earth orbits (LEO). Such LEO satellite networks are cheaper to launch and more reliable than the bigger telecommunications satellites in high, geostationary orbits (GEO), which are used mainly for TV broadcasting and other video distribution.
Some 350 GEO satellites are expected to be ordered in the next 10 years to replace existing satellites or to keep up with a worldwide demand for more telephones, TV channels, pagers, e-mail, data transmission, global positioning, and other space-related services. Meanwhile, Teledesic plans to launch 840 small LEO satellites in the next seven years to offer global broadband-on-demand service - a $9 billion project.
Many American companies are also building partnerships with Russian and Ukrainian companies in a bid to slash the price of putting satellites into space.
A European launcher that ensures access to space for European satellites is a matter of critical strategic importance to Europe. Few analysts gave Arianespace a chance to succeed when it first challenged NASA's monopoly on commercial launches in 1973.
France pushed hard for Europeans to develop their own launcher, arguing that access to space was key to Europe's strategic independence. And NASA inadvertently lent weight to the French case at a critical moment by offering to launch the Franco-German satellite SYMPHONIE - but only on condition that it be limited to noncommercial uses.
"We used this NASA document to persuade the Europeans to come on board," said Arianespace founder Frederic d'Allest in an interview. "It was a miracle for us that we had this very formal proof from the US government that if Europe relied on American launchers, we would have no freedom," he added.
Europe's Ariane looks east - Far East
Arianespace now controls 50 to 60 percent of the market for commercial satellites and US rivals Lockheed Martin and McDonnell Douglas 26 percent. The balance is provided by China, Russia, and Ukraine.
Recently, Arianespace stepped up the pace of its launches to maintain its market share, especially in fast-growing Asia-Pacific and Latin American markets. "When our market analysis showed demand would increase by more than 30 percent, we decided to increase our capacity by almost 50 percent," says an Arianespace spokesman. "Instead of nine Ariane 5 launches, we now project 12 between 1997 and the end of 1999."
From the start, European and US launch providers traded accusations over the extent to which the other received direct government subsidies that artificially lowered prices. But now attention is focused on Rus-sian and Chinese launch providers, which are offering prices at least 15 percent below their Western competitors. "Today, there is more concern about Russian and Chinese pricing because these are nonmarket economies," says Stephane Chenard, a space analyst at EuroConsult, a consulting firm in Paris.
Launch providers from the former Soviet Union are making strong inroads into the international commercial market. In April, the Krunichev scientific center - a Russian state enterprise - in a joint venture with Lockheed Martin will launch a Proton rocket carrying a television satellite built by Hughes Communications for Luxembourg. "This will be the enterprise's first commercial launch," says Krunichev spokesman Sergei Zhiltsov. The Proton rocket was designed in 1967 and has completed 189 launches, with a reliability rate of 97 percent.
The Russians now have contracts worth some $1.5 billion, 70 percent of which are to launch American-made satellites. These contracts make up 15 percent of the world market. But Mr. Zhiltsov says Krunichev is aiming for 50 percent of the world satellite-launch market by the year 2000. "We believe that our performance is absolutely competitive with Ariane," he says.
A peaceful alternative to the arms race
For both Russia and Ukraine, the move to commercial launches is not so much to preserve strategic access to space but to find uses for an oversized military-industrial complex. They found a powerful ally in the US government and several top American aeronautics firms. In December 1995, the US offered Ukraine the option of bidding for five launch contracts, and Vice President Al Gore and Russian Prime Minister Victor Chernomyrdin signed a deal to allow Russia up to 20 commercial launches through 2000.
In April 1995, the Seattle-based Boeing Corp. announced a joint venture with Ukraine's Yuzhnoye missile producer to launch commercial satellites from mobile ocean platforms starting in 1998. A launch site near the equator is viewed as the most desirable location for sending a satellite into geosynchronous Earth orbit, the orbit used for GEO commercial satellites. The French launch site in Kourou, French Guiana, has given Arianespace an edge. But Boeing's sea-launch concept would eliminate that edge, allowing it to launch from the equator.
"The Boeing project is radically different from what's been done before," says telecommunications analyst Mark Anderson, head of Technology Alliance Partners in Washington State. It's "the most likely candidate for consistent, low-insurance, low-cost launching."
To respond to concerns that state-owned commercial launchers would undercut American competitors, US trade representative Mickey Kantor negotiated a deal with Russian and Ukrainian launchers to establish a fair-market price, including consulting with the US over any launch priced 15 percent below market price.
US companies are launching their own offensive on Arianespace's market share. On March 11, Orbital Sciences successfully launched its first Pegasus XL rocket as part of a bid to provide launch services for smaller LEO satellites more cheaply at $12 million to $14 million per launch. "Our success ... proved that space can be made affordable," says Orbital Sciences spokeswoman Elina Fuhrman.
Until recently, China had led the way toward reducing launch costs. But its efforts have been hurt by several explosions of its Long March launch vehicles, which have killed scores of civilians.
"The Long March launcher is priced out of the insurance market," says Mr. Chenard, the space analyst. "The Chinese are becoming marginal players."
*Peter Ford in Moscow contributed to this report.