Satellite Industry

When you watch the Olympics do you think of satellites? Maybe you should. For many years satellites have been televising sporting events such as the Olympic games, which popularized the phrase "live via satellite" and helped create a common impression of what commercial satellites do for us here on Earth. It was, in fact, a boxing match pitting Muhammad Ali ("The Greatest") against ("Smokin") Joe Frazier in 1975 when satellites were first used to broadcast a single sporting event to the entire world. While satellites still bring us sports, news, and entertainment programming from around the world each day, the commercial satellite industry can and will do much, much more—from delivering high-speed Internet content to taking pictures from space of objects on Earth that are as small as a soccer ball.

Historical Development of the Industry

While you are probably familiar with movies such as Apollo 13 (1995) and The Right Stuff (1983), which chronicled the beginnings of the National Aeronautics and Space Administration (NASA) and its civilian space program, you probably did not know that the commercial satellite industry actually developed right alongside the government space program in the early 1960s. The satellite industry got kick-started back in July 1962, when scientists at AT&T Bell Laboratories decided to build the world's first commercial satellite, dubbed Telstar, after losing a competition for NASA's active satellite program. NASA later offered to launch the Telstar satellite into a two-hour and forty-minute elliptical orbit during which it transmitted brief live television transmissions across the Atlantic Ocean for the first time. Telstar had a tremendous worldwide impact by showing the amazing potential of satellite communications.

A few years later, in April 1965, the International Telecommunications Satellite Organization (INTELSAT) launched Early Bird, the world's first commercial geosynchronous satellite. So-called "GEO" (geosynchronous Earth orbit) satellites orbit Earth at 35,786 kilometers (22,300 miles) in a belt directly above Earth's equator. At that point in space, the satellite orbits Earth at the same speed as Earth's rotation—making the satellite appear to be fixed in the same location in the sky. It was futurist Arthur C. Clarke, author of 2001: A Space Odyssey (1968), who first predicted back in 1945 that you could connect the world by placing three communications satellites in geosynchronous orbit.

The Early Bird satellite was built by Hughes Aircraft, the company founded by eccentric billionaire Howard Hughes. The satellite had a total capacity to carry only 480 telephone channels (240 simultaneous calls) and had the power of an ordinary household light bulb. It was impressive considering that the largest undersea transoceanic telephone cable at the time carried only 256 channels. By comparison, today's largest telecommunications satellites are more than 500 times more efficient and generate more than 15 kilowatts of power, allowing a single spacecraft to carry ten of thousands of simultaneous telephone calls or hundreds of channels of television programming to dishes on the ground as small as 46 centimeters (18 inches).

It was really in the 1990s that we observed the greatest changes in satellite technology and with them fundamental changes in the commercial industry. For the first two decades of its existence, the satellite industry worked to connect large companies to other large companies across oceans, deserts, and great distances. Telephone companies first employed satellites to connect calls where there were no undersea cables. Later it was television networks, such as ABC, NBC, and CBS in the United States, which used satellites to transmit programs to their local affiliate stations—so-called point-to-multipoint distribution—and helped the satellite industry grow. In the late 1970s cable television companies began to get into the act, using satellites to downlink channels such as CNN and MTV, and then retransmit the signals over coaxial cables to homes.

The satellite industry can mark 1976 as the year it began to evolve from a purely business-to-business model to one that also included business-to-consumer or so-called retail services. That year a Stanford University professor named Taylor Howard designed and built the first backyard satellite dish. Howard used his 4.9-meter (16-foot) home satellite dish to receive HBO and other television programs that previously were carried only by cable television companies. By 1980 Howard had sold the blueprints on how to build his dish to over 5,000 people, and the direct-to-home (DTH) satellite industry was born. By 1985 several DTH equipment companies were shipping more than 500,000 home satellite systems to consumers across the United States.

The introduction in 1994 of high-powered direct broadcast satellite (DBS) services, which used new digital compression technology and more powerful spacecraft, allowed consumers to receive hundreds of channels of digital-quality programming on a dish about the size of a pizza pan. The DTH industry has since continued to grow with more than 14 million American homes and another 25 million homes outside the United States subscribing to DTH satellite television services by the early twenty-first century.

Key Segments of Today's Satellite Industry

History aside, the best way to understand the satellite industry today is to divide it into four key segments: satellite services—transmitting voice, data, and television signals to businesses and consumers; ground equipment—designing and manufacturing satellite dishes, large Earth stations, software, and consumer electronics; satellite manufacturing—building spacecraft, components, and electronics; and launch—building space launch vehicles and carrying satellites into orbit.

Each year, the Satellite Industry Association (SIA) surveys over 700 companies around the world to determine the state of the industry. The SIA reports worldwide employment and revenue in each of the segments. The SIA reported in 2001 that the commercial satellite industry generated $69.1 billion in revenue in 1999, an 8 percent increase over adjusted 1998 revenue. The U.S. satellite industry accounted for $31.9 billion of the total, or roughly 46 percent of worldwide revenue.

Satellite Services.

The largest and fastest growing segment of the industry is satellite services, which generated $30.7 billion in revenue in 1999, a 25 percent increase over 1998. More than $8 billion in revenue in this sector was generated by companies that lease transponder capacity to programming companies such as the Discovery Channel and ESPN, as well as to long-distance telephone companies such as MCI WorldCom and AT&T. The bulk of the services revenue, nearly $23 billion, comes from consumer/ retail services including DTH satellite television.

While traditional satellite service providers such as PanAmSat, Eutelsat, GE American Communications, and SES Astra continue to lease capacity to television and telephone companies, a growing portion of their business now comes from data services. Internet service providers (ISPs) are now using satellites in countries throughout the developing world to link directly to the Internet backbone in the United States. Those providers set up a small 1-to 3-meter (3.3-to 10-foot) dish and in one hop can link directly to a point of presence (POP) on a fiber-optic backbone. Another new application being pursued by satellite operators is to broadcast common content—such as Stephen King's latest short story or streaming audio/video clips—over the web to local ISPs around the world where the content can be retrieved by nearby web surfers. In using satellites for the same kind of point-to-multipoint distribution service used by television broadcasters, popular web sites can manage the flow of traffic on the World Wide Web and avoid crashing their servers or networks.

Mobile satellite services such as those offered by Globalstar, ICO, Inmarsat, Motient, and ORBCOMM are yet another emerging part of the services business. These companies provide voice and data service to thousands of ships, planes, cars, and people in parts of the world that are not served by cellular or traditional wired telephone networks. These systems often use constellations of satellites in either GEO or low Earth orbit to serve laptop-and handset-sized mobile terminals. Such systems allow pipeline workers, merchant ships, and other mobile users to communicate even in the most remote places on Earth.

A new service offering launched in 2001 is satellite digital audio radio services (DARS). Three new companies—XM Satellite Radio and Sirius in the United States and WorldSpace in other regions of the world—began delivering hundreds of channels of digital music, news, sports, and entertainment programming to cars, homes, and boom boxes. Satellite-ready radios will become standard equipment in many new cars sold in the United States starting in 2003, and the subscription-based service—at approximately $10 per month—is expected to be popular with commuters and others who spend a lot of time in their cars.

Ground Equipment.

Along with the growth in new services, we have seen a corresponding increase in the demand for more earthly products such as satellite dishes, mobile satellite phones, and Earth stations that control satellites in orbit. The manufacture of satellite-related ground equipment in 1999, from satellite control systems to DBS dishes, accounted for $16 billion of the industry's total revenue—an increase of 15 percent over 1998. An increasing portion of the ground equipment market is made up of DTH systems. Since its introduction to American consumers in 1994, DBS dishes and set-top boxes have been the fastest-selling consumer electronics product of all time—outselling VCRs, personal computers, and color televisions during their first year on the market.

Companies such as Hughes, RCA, Sony, and Gilat manufacture these dishes for both consumers and large corporations that own private satellite networks called very small aperture terminals (VSATs). VSATs are a little-known but important part of our telecommunications network. They allow retail companies, such as Target and Blockbuster, as well as gas stations such as those run by Exxon Mobil, to verify credit cards and control their inventories. More than 2,200 shopping malls in America use VSAT dishes to transmit and receive data. Prices for VSAT dishes dropped from $10,000 to $20,000 per terminal in 1980 to $1,000 to $3,000 in 2001, helping fuel sales to many large and small corporations. Next time you are at a gas station or grocery store, look up at the roof and you will likely see a small satellite dish at work connecting that business to its corporate headquarters.

Satellite Manufacturing.

Exciting new satellite services, such as DBS and DARS, would not be possible without advances in satellite manufacturing. In terms of power, capacity (bandwidth), and lifetime in orbit, large telecommunications satellites at the turn of the millennium were twenty times more capable than satellites manufactured only a decade previous. This capability figure was expected to increase by another factor of five by 2002 when new larger satellites incorporating spot beam technology are put into full production. While the prices of communications satellites have stayed relatively constant during this period, and were possibly declining when factoring in inflation, their capabilities increased dramatically.

Both the number of transponders and the overall power of satellites increased. Each transponder that used to be able to carry a single analog channel can now carry several simultaneous digital channels. Increases in power are tied to more efficient solar panel and battery technology. By increasing the power of the satellite in space, satellite operators can dramatically reduce the size of receiving dishes on Earth. Another major achievement is the use of ion propulsion technology for satellite station-keeping. By using ion propulsion to generate the thrust that keeps the satellite oriented towards Earth, satellite manufacturers have been able to increase the number of years that a satellite is able to provide service before it runs out of fuel. Altogether, these technologies have had a major impact on the ability of satellites to compete with terrestrial telecommunications technologies.

Satellite manufacturing, including payments to prime contractors and their subcontractors, accounted for $10.4 billion of the $69.1 billion industry total in 1999. Leading satellite manufacturers include Astrium, Alcatel, Hughes, Lockheed Martin, Motorola, Orbital Sciences, Space Systems Loral, and TRW. This segment of the industry has experienced rapid consolidation in the past few years as several European companies have merged in order to compete with U.S. companies, which have historically built over two-thirds of the communications satellites in orbit.

Launch.

Of course, the satellite industry would not exist if it were not for the expendable launch vehicles (ELVs; commonly called rockets) that launch commercial spacecraft into orbit. The worldwide launch industry generated revenues of $6.6 billion in 1999, with $4.3 billion paid to launch service providers and another $2.3 billion earned by subcontractors engaged in vehicle construction. Companies such as Arianespace, International Launch Services, Boeing Launch Services, Sea Launch, Orbital Sciences, Rocket Systems Corporation, and China Great Wall sell rides into outer space.

The launch segment of the industry has also changed dramatically since the 1970s when U.S. Air Force rockets were used to launch commercial satellites. The U.S. decision to shift all satellite launches from ELVs to the space shuttle helped spur the Europeans to develop their own ELV—the Ariane rocket. In the wake of the space shuttle Challenger tragedy in 1986, the United States decided to fly satellites aboard ELVs once again, and U.S. companies got back into the launch services market. In the 1990s, Chinese, Russian, and Ukrainian rockets began to be used to launch commercial satellites. The market in the early twenty-first century is more competitive than ever, resulting in lower launch costs for satellite operators.

Meanwhile, launch service companies have worked steadily to increase the lift capabilities of their rockets to accommodate the heavier, more powerful satellites. Vehicles such as the Ariane 5 rocket are capable of delivering 6.5 metric tons (7.2 tons) to geostationary orbit , and their ability is expected to only increase in the coming years. Sea Launch—an international cooperative venture including Boeing (United States), RSC Energia (Russia), Yushnoye (Ukraine), and Kvaerner (Norway)—launches satellites from a converted offshore oil drilling platform and command ship that motor to a site on the equator in the middle of the Pacific Ocean in an effort to increase lift capability. International Launch Services now uses powerful Russian-built RD-180 engines to increase the lift capability of the workhorse Atlas ELV.

Emerging Technologies

Outside of the four major industry segments—communication services, ground equipment, satellite manufacturing, and launch—there are a host of other emerging technologies that are beginning to generate revenue and interest. Commercial remote sensing satellites, such as Space Imaging's Ikonos spacecraft, are now capable of taking pictures from space clear enough to see objects on the ground less than 1 meter (39 inches) in size. Such images are used by farmers, geologists, and urban planners to assist them in their jobs. Software that links these images with maps generated using coordinates from the U.S. Air Force global positioning satellite fleet provides an important new source of information to businesses that use scarce natural resources here on Earth.

The satellite industry has come a long way since AT&T's Telstar satellite first proved that space could be used for moneymaking commercial ventures. The continued growth in Internet data and new information technologies are expected to drive the commercial satellite industry in the coming decades. The growth in these services markets will fuel demand for more satellites, dishes, and launches. Arthur C. Clarke's vision of a world connected via satellite has become a reality. Today's visionaries see viable markets for solar power generation and tourism within our reach. Do not count them out—many people thought President John F. Kennedy's pledge to put a man on the Moon would never be fulfilled.

see also Communication Satellite Industry (volume 1); Navigation from Space (volume 1); Reconnaissance (volume 1); Remote Sensing Systems (volume 1); Satellites, Types of (volume 1); Small Satellite Technology (volume 1).

Clayton Mowry

Bibliography

Clarke, Arthur C. 2001: A Space Odyssey. New York: New American Library, 1968.

Internet Resources

"History of DTH." SkyReport.com <http://www.skyreport.com/dth_his.htm#1975>.

International Telecommunications Satellite Organization. <www.intelsat.com>.

Satellite Industry Association, statistics by Futron Corporation. "Satellite Industry Indicators Fact Sheet 2000-2001." <http://www.futron.com>.

"Satellite 101." Boeing Satellite Systems <http://www.hsc.com/sat101.html>.

"Telstar History." NASA. <http://roland.lerc.nasa.gov/~dglover/sat/telstar.html>.

Whalen, David J. "Communications Satellites: Making the Global Village Possible."NASA Headquarters. <http://www.hq.nasa.gov/office/pao/History/satcomhistory.html>.