Overall Country Assessment

1992 vs. 1997

This panel was not tasked to evaluate the U.S. industry as part of the first study in 1992. Consequently knowledge resulting from the professional careers of the panel members was used in this comparison. In the late 1980s there was an impression in the satellite industry that fiber optical cables were going to swamp the communications market and no major place for satellites except perhaps for TV broadcasting was foreseen. There was doubt that all major U.S. satellite players would survive the near future. Since then, the cellular avalanche has changed the landscape and convinced people that there is a place for satellites in the mobile market. In particular, Motorola has acted on this belief and set the Iridium system in motion. In doing so many others were drawn along.

Today, the satellite industry in the United States has gone through some mergers and consolidation and appears healthy. The trend to merge may not have quite run its course and may also involve companies outside the United States. In addition a number of new players such as Motorola and Boeing have come on the scene and Orbital Sciences Corp. (after acquiring the satellite operation of CTA) is focusing on the small GEO and LEO satellite market.

Satellite manufacturers have also embarked on vertical integration. For instance, Hughes is providing entertainment distribution services and is a spacecraft manufacturer. Similarly, other manufacturers have aligned themselves with telecommunications operators. In general, there is a trend towards convergence of broadcasting and telecommunications; the service distinctions of the past are being washed out.

As the GEO orbital arc is filled with C and Ku-band satellites, frequency spectrum is seen as the principal entrance ticket to additional future markets. Starting with Teledesic, there has been a rush of filings and alliances (not always backed by sound business plans) to keep a foot in the door and possibly preempt the competition from using spectrum. It is questionable how soon some of these filings will be translated into hardware and commercial systems. A critical datum will be the degree of initial commercial success in satellite mobile systems (especially Iridium and Globalstar); much will depend on early success of these ventures.

The center of gravity of satellite telecommunications traffic has changed from telephony to television distribution (first to cable heads, now directly to the consumer). Another new factor (since 1992) boosting the U.S. satellite industry is the explosive growth of the Internet and associated multimedia computer applications. This has brought new players like Bill Gates and new companies like Teledesic into the satellite business and created a great deal of commercial interest in new applications. The Internet boom began in the United States, and the United States retains a lead in the associated hardware and software. Should the current explosive growth of Internet services continue, satellites will be able to able to attract a substantial market share especially with services directly to the consumer (using similar infrastructure as television distribution, established transmission path, billing, customer care, etc.). The United States will have a substantial advantage here, as the business culture is much more attuned to the market than in Japan or Europe.

Key Conclusions

Key findings of the WTEC panel's assessment of the U.S. satellite industry include:

Key Trends in Technology

The size of GEO satellites continues to increase; incremental improvements are foreseen in bus design (in particular thermal control) to allow use of prime power beyond 10 to 15 kW. Such satellites with onboard processing will offer mesh connectivity from one telephone handset to another telephone handset.

Phased array antennas are now used in several satellite designs; onboard processing and intersatellite links (ISL) are taking their first commercial steps.

Digital beam forming for phased array antennas with many beams is now an attractive option and will be used in the ICO satellites. If this is successful, many more such systems will follow.

ATM switches in the satellite are under development.

The trend to use higher frequencies (Ka-band and V-band) will continue, although perhaps not as fast as assumed in various filings.

Electric propulsion will be used extensively by most U.S. satellite manufacturers.

Research Priorities and Key Development Objectives Including Experimental Satellite Programs

In general, U.S. industry will fund research in areas where the commercial payoff is near term (a few years) or where satellite manufacturing costs can be saved. No clear consensus of the U.S. industry on research priorities and development objectives was apparent. Each company will do whatever it sees as necessary to stay in business and make a profit. Development decisions are governed many times by short-term financial considerations. The panel noted a few hints of long-term business plans that include technology roadmaps at only one or two companies.

With exception of the long delayed ACTS experimental satellite that is still providing excellent service for a number of experiments, and is planned to continue operations until September 2000, there is no experimental communications satellite planned in the United States.

Governmental Policies: Competition, Trade, Spectrum and Standards

The U.S. government continues to foster competition among service providers and satellite manufacturers.

Regulation of the satellite telecommunications industry is spread over several agencies, making it difficult to get consensus on policy.

U.S. industry would prefer a more streamlined way to allocate spectrum.

New Facilities, Installations and SATCOM Infrastructure

Some satellite manufacturers have established new ways of assembling satellites with methods borrowed from the automobile industry. Even the production of large GEO satellites has been streamlined by several manufacturers. For instance, after the Lockheed - Martin Marietta merger, commercial spacecraft building was consolidated in a large new facility in the San Jose area and payload development and manufacturing was moved into a new facility in Newtown, PA.

In general U.S. industry invests in new facilities when business demands indicate the need.

The U.S. satellite communications infrastructure is strong in many areas; many small companies manufacture parts essential for communications satellites.

Commercial Objectives, Alliances, Partnerships

Multinational partnerships including U.S. companies are now much more prevalent than five years ago. Alliances have roots in financial advantages for partners.

Published: December 1998; WTEC Hyper-Librarian