The satellite industry, or at least the overwhelming majority that were still in business or were still employed at the start of the new year, breathed a collective sigh of relief for having survived 2009--one of the worst years since the Great Depression of the 1930s. The industry can take heart that not only has it survived 2009--it has gone through an entire decade in a better position than it started.
The first decade of the new millenium was bookended by two major downturns and saw a lot of consolidation among satellite companies that made a few a lot bigger and lessened the number of smaller companies and start-ups. The amazing thing is that despite the fact that four of the last ten years were marked by downturns in the economy as a whole, the satellite industry grew consistently at an average annual rate of 7-10 percent during the 2000s. Consolidation made some very large companies larger but it also did not render extinct small companies that continued to thrive into this new decade.
So what can we expect from the new decade of the 10s or the "teens"?
I think the name of this new decade might be the key to its development. The real teens or teenagers of the 90s and the 2000s who grew up in those decades will now join the workforce or are starting to move up the ladder. There will be a lot more teens coming up in this decade who have never read a newspaper or anything printed for that matter. This 18-35 demographic will be driving demands on the telecom infrastructure with the mantra of getting broadband access "anytime, anywhere" and at blazing speeds. What this means for the satellite industry is that the demand for bandwidth will only continue to increase in the coming decade which would translate into more demand for satellite services and products.
I hesitate to make predictions but it’s a safe bet that bandwidth demand will only increase in the coming decade not only for the consumer sector but for other sectors such as the government and military.
One thing we learned from the most recent downturn is that study after study affirrmed that consumers worldwide stick to their cell phones and internet services even in hard times. Among other neccesities, consumers rank telecom and broadband services high among their priority list. Studies show that most consumers would turn off their cellphones and internet last among other utilities.
I’ve compiled a list of key trends to watch in this new decade that will impact on the satellite industry. It will be interesting to see them unfold.
Convergence, Mobility and Lots and Lots of Bandwidth
The 1990s and 2000s were full of buzzwords like "convergence" and "triple play" and even "quadruple play" (video, audio, data and voice). The 10s will most likely see these buzzwords turn closer to reality. With over 3 Billion mobile phones in the world today reaching over 50% of the population--consumers are demanding more functionalities to their handheld devices that will only drive more bandwidth demand.
In the broadcast market, the 2000s saw the rise of High Definition (HD) TV which is now in about half of US homes. HD, together with will likely be the standard for broadcasts in new decade just as color televisions replace black and white sets in the 70s.
Lately the buzz has been 3-D technology in major trade shows such as IBC in Amsterdam in September and the Consumer Electronics Show in Las Vegas to start off 2010. The success of blockbuster movies such as Avatar has fuled interest in 3-D technology and major companies such as Sony, Toshiba and Panasonic have announced ambitious plans to launch 3-D TV sets commerically in late 2010.
But the jury is stil out on 3-D technology. 3-D was first developed in the 1950s and recently reintroduced to consumers. In some trials such as during a Dallas Cowboys NFL game in December, fans weren’t that enthusiastic. The main drawback to 3-D technology are the glasses you have to wear in order to view 3-D, which viewers found cumbersome and obtrusive. A technology that will allow 3-D viewing without glasses is still in a nascent stage of development.
With consumers having just invested in new HD sets in the last two years, it would be a hard sell to have them switch to an expensive 3-D set in the next few years. What we will likely see in the next decade is that HD will take off to near ubiquity in the first few years while 3-D, if it does overcome some technical and market issues starting to take root in the second half of the decade. If 3-D does not take root, however, there is always Ultra-HD (with up to 5 times the quality of HD) which is starting to gain inroads.
Watch the Commercial Space Market
Changes are in the offing in the way the US government approaches the exploration of space. The new Obama administration has charted a course ofr space exploration that will emphasize the use of commercial companies and encourage private investment in space.
One satellite launch company has already benefitted from this policy. El Segundo-Calif.-based Spacex received a reported $1.6 Billion contract to transport cargo to the International Space Station.
With the dramatic technological developments from the private sector in recent decades--it just make more sense to privatize space exploration. With more contracts going out to private companies, space could do what the military and government markets did to the satellite industry in the last decade. Space can be a major market segment for satellite products and services.
Opportunities for the satellite industry may come from an unexpected segment of the commercial space sector. When SpaceshipOne won the X-Prize several years ago for successfully demonstrating the viability of commercial space travel, analysts were predicting that commercial space travel can do for other industries what the introduction of air travel did during the early part of the last century. They were saying that commercial space travel will give rise to many allied industries and revive the sagging parts of the aerospace sector. I fully subscribe to this view, except that it will take longer than than the next decade for commercial space travel to reach a critical mass. At the unveiling of the Spaceship2 (SS2) spacecraft in the Mojave desert last month,Virgin Galactic announced that it will launch its first commerical service by the end of 2010. Virgin Galactic is projecting that it will have 500 passengers who will pay $200,000 each for the two-hour flight during their first year of operation and 50,000 passengers within 10 years.
Not exactly overwhelming numbers, but the development of commercial space travel will no doubt spur some ancilliary benefits to the satellite industry. For one, there will be some crossover technology that the satellite industry can share and develop togetter with the commercial space sector. We are already seeing a direct impact on the satellite industry of Virgin Galactic’s foray into space tourism. In July 2009, Virgin Galactic signed a $280 million deal with Abu Dhabi’s Aabar Investments for a 32 % stake in their company. The investment is earmarked for development of a rocket that wil launch small satellites into orbit. That makes for a very interesting launch services market in this new decade that alrady has seen some competition from start-up companies such as Spacex.
The Emergence of "BRIC" Countries
The global economic has seen in the last decade the emergence of the so-called "BRIC" countries of Brazil, Russia, India and China. The emergence of these countries economically has led to their assertion of their new found influence into the space sector. Russia, which had a colorful rivalry with the US during the cold war has three major satellite operators: Intersputnik, Russian Satellite Communications Company (RSCC) and Gazprom Space Systems. That’s two more than the US which legally has only one satellite operator--SAT-GE, although it could be argued that Intelsat which has its major operations and corporate headquarters in Washington, D.C. is a US-based company (Intelsat is a Bermuda-registered company.)
China and India accelerated their space program in the last decade with manned space missions and announced plans to land missions to the moon and Mars in this new decade. With US export control restrictions still in effect, Chinese and Indian companies have been slowly gaining market share in the satellite manufacturing and launch services sector. China and India are also positioning themselves as low-cost alternative to the major providers based in the US andEurope.
Brazil is also emerging as a space power. Brazil’s President Luiz Inacio de Silva recently announced that it plans to launch its own satellites by 2012 in the sprawling launch facility their are building in Alcantara in the Amazon region. Brazil is forming a joint-venture with a Ukranian company for launch services.
Watch out also for the tiny country of Israel. Israel has a vibrant space sector with many service providers and manufacturers. They are particularly strong in the defense sector. The Israel-based satellite operator, Amos Spacecom will be launching satellites in the next few years that will give it complete global coverage, joining an exclusive club of only a handful of operators with true worldwide coverage.
Going Green
Although not exactly wht you may call a "smokestack" industry- the satellite industry is renowned for its breakthrough technologies such as solar panels and long-lasting lightweight batteries that provide power for satellites in space for up to 20 years. The industry however is growing more conscious of its responsility for the environment, thanks in part to efforts by industry associations such as the World Teleport Association (WTA), the SSPI and the GVF among others (se article by Lou Zacharilla on page 12). Look for more efforts to make satellite service providers on the ground more environmentally-friendly.
Conclusion
The preceding list of trends are by no means exhaustive. The trends are not meant to be predictive of events or outcomes but merely a guide to where things may be heading and what opportunities may arise as a result.
Apart form saying that the satellite industry will still be here in 2020, there is really no certainty on what could happen between then and now. The satellite industry has always been dynamic in the midst of changing conditions. Alan Kay, a renowned computer scientist, perhaps said it best: "The best way to predict the future is to invent it." So to be certain of the future, one can develop a new product or solution and in the process make one’s own destiny.
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Virgil Labrador is the Editor-in-Chief of Satellite Markets and Research based in Los Angeles, California. He is the author of two books on the satellite industry and has been covering the industry for various publications since 1998. Before that he worked in various capacities in the industry, including a stint as marketing director for the Asia Broadcast Center, a full-service teleport based in Singapore. He can be reached at virgil@satellitemarkets.com
