is asia’s crowded satellite market in for a change? · ast year, satellite manufacturers booked...

SEPTEMBER 26, 2016SPACENEWS.COM BUSINESS | POLITICS | PERSPECTIVE

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Is Asia’s crowded satellite market in for a change?

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CONTENTS

Inflated ExpectationsBalloon operator has high hopes for LEO launcher24

ZERO 2 INFINITY ARTIST’S CONCEPTZero 2 Infinitiy’s Bloostar preparing for deployment of its satellite cargo.>

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Is Asia’s crowded satellite market in for a change? 12

In the world’s most competitive market, national pride often obliterates business logic and consolidation hopes come to die

ABS, APT and Measat on survival, and maybe even growth 14

Three veterans of the Asian satellite scene discuss growth prospects amid falling bandwidth prices

The commercial space station race 21The future of commercial research in low Earth orbit is on the clock

MY TAKE 2Chris Quilty looks for a glimmer of hope for satellite manufacturers

QUICK TAKES 4FOUST FORWARD 8

Different paths to Mars

COMMENTARY 28Private law in the final frontier

BOTTOM LINE 32Correctly pricing for failure

FEATURES DEPARTMENTS

ast year, satellite manufacturers booked only 15 commercially competed geostationary satellite orders, marking the industry’s weakest order book since 2012. Was 2015 a mere blip, or a

leading indicator of a more durable industry trend?For optimists, there are several reasons to believe that

2015 may have been an outlier. Weak global economic conditions, combined with abnormally high exchange rate volatility prompted several satellite operators to hit the pause button on their growth plans. In addition, the industry lost an important source of financing July 1 when the U.S. Export-Import Bank ceased issuing new loans due to a congressional budget impasse. Finally, the industry’s launch capacity was impaired by two major launch failures (ILS Proton in May 2015 and the SpaceX Falcon 9 in June 2015) that shaved a combined nine months of critical heavy-lift launch activity from the 2015 calendar.

For the pessimists, however, there are also legitimate reasons for concern. Over the past 20 years, the average power of a GEO satellite bus has more than tripled to 15-plus kilowatts, with average spacecraft life also growing modestly. Furthermore, on the demand side, the recent emergence of high -throughput satellites has caused unprecedented pricing erosion for satellite operators, raising concerns that a near-term supply/demand imbalance could prompt a further retrench-ment in satellite orders.

Adding to industry uncertainty, the competitive field is likely to intensify over the next several years as com-panies such as OHB and Surrey Satellite Technology Ltd. introduce new GEO buses, Lockheed Martin attempts to re-enter the commercial market, and regional players such as Mitsubishi Electric and China Great Wall Industry Corp. seek to expand beyond their home markets.

Legacy satellite manufactures have responded to these threats through a combination of cost-cutting (Boeing layoffs), product innovation (all-electric and software-defined satellites), and market repositioning (Orbital ATK moving up-market and Space Systems Loral moving down-market). That said, “the big eight” satellite manufacturers have historically experienced a

profit squeeze when satellite orders drop below the 20 to 22 annual norm.

Could the nascent LEO market provide a backstop in the event of a prolonged GEO market downturn? Possibly, but the recent his-torical record suggests a mixed prognosis. Boeing actually anticipated the LEO trend, announcing its Phantom Phoenix small satellite family in April 2013, but has been unable to secure a customer order. Likewise, Thales’ success with “old” NewSpace com-panies (Globalstar, Iridium, O3b) hasn’t yet translated into follow-on business. The (legacy) industry’s one notable success story, Airbus’ satellite manufacturing contract with OneWeb, was

secured in 1990s fashion … with an equity investment in the customer. That strategy eventually boomeranged on the industry when the Internet bubble popped, but perhaps this time will be different?

Even if 2015 was a mere anomaly, satellite manufac-turers are likely to face a more challenging competitive environment in the years ahead as new competitors enter the market and LEO constellations (potentially) take a bite out of the GEO pie. Consequently, the industry’s future growth prospects may depend on the ability of lower launch costs, combined with plummeting bandwidth costs, to “grow the industry pie.”

Chris Quilty is the president of Quilty Analytics, an independent research and consulting firm specializing in satellites and space.

2 | SPACENEWS SEPTEMBER 26, 2016 www.spacenews.com

A glimmer of hope for satellite manufacturers?

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Source: Quilty Analytics

[ MY TAKE ]CHRIS QUILTY

Annual global satellite ordersYear to date orders through mid-September.


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| QUICK TAKES |

Soyuz delayed for tricky repairRussian technicians will attempt “dangerous” repairs to a Soyuz spacecraft whose launch may be delayed until November. Engineers have traced a short circuit discovered during launch preparations to an improperly bent wire behind the seats in the spacecraft’s descent module. The repair is straightforward, but could violate safety procedures since the spacecraft has already been loaded with pressurized gases and toxic fuels that can’t easily be removed. Those repairs may delay the launch of the spacecraft, carrying a new three-person crew for the International Space Station, until the beginning of November.

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SpaceX investigation points to breach in Falcon’s helium systemInvestigators have traced the explosion that destroyed a SpaceX Falcon 9 on the pad Sept. 1 to a “large breach” in the helium system in the rocket’s second stage, although the root cause of the accident remains unknown.

In a Sept. 23 update, the first released by the company in nearly three weeks, SpaceX said that an accident investigation team con-tinues to study evidence from the explosion that took place while the rocket was being fueled for a static-fire test.

“At this stage of the investigation, prelimi-nary review of the data and debris suggests that a large breach in the cryogenic helium system of the second stage liquid oxygen tank took place,” the company said in a state-ment. What caused that breach, though, is still a mystery.

Helium is used to maintain the pressure of the liquid oxygen tank. In the June 2015 Falcon 9 failure, a strut holding a helium bottle in place within the upper stage’s liquid oxygen tank failed at below its rated strength, causing helium to leak and the tank to over-pressurize and break apart.

SpaceX, though, said there was no link between that failure and this accident. “Through the fault tree and data review

process, we have exonerated any connection with last year’s CRS-7 mishap,” the company said, referring to the June 2015 launch failure.

The company said an accident investiga-tion team, which includes SpaceX personnel as well as those from NASA, the U.S. Air Force and the Federal Aviation Administration, continue to examine “all plausible causes” of the accident. The failure took place quickly, SpaceX stated, with a loss of telemetry from the rocket less than a tenth of a second after the first signs of a problem.

The pad explosion, which destroyed the Falcon 9 and its Amos-6 satellite payload, also damaged “substantial areas” of the pad at Cape Canaveral’s Space Launch Complex 40. However, the company said that a support

building at the pad and a new farm of liquid oxygen tanks were undamaged by the explo-sion. Tanks that store kerosene fuel were also “largely unaffected” by the blast.

While the root cause remains unknown, and thus the scope of any corrective actions, SpaceX said it remains confident it can resume Falcon 9 launches as soon as November, resuming assembly of various vehicle compo-nents as they’re cleared by the investigation.

“We will work to resume our manifest as quickly as responsible once the cause of the anomaly has been identified by the Accident Investigation Team,” the company stated. “Pending the results of the investigation, we anticipate returning to flight as early as the November timeframe.”

SpaceX also stated that the investigation is not affecting its work on NASA’s commercial crew program, noting that the investigation “will result in an even safer and more reliable vehicle for our customers and partners.”

A company official made similar comments last week. “I still know what I have in front of me for the next day, the next month,” said Abhishek Tripathi, director of certification at SpaceX, during a panel session at the AIAA Space 2016 conference in Long Beach, California, Sept. 16. “It doesn’t affect my day-to-day work while they’re working on the anomaly.”

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| QUICK TAKES |IS-33e thruster problemA thruster problem on a new Intelsat spacecraft will only slightly decrease its operational life. The IS-33e spacecraft, launched Aug. 24 by an Ariane 5 rocket, suffered a thruster problem as it traveled to geostationary orbit. That problem will delay its entry into service by several weeks, and will shorten its lifetime by about 18 months. Intelsat may be eligible to file an insurance claim for 10 percent loss of service, valued at about $40 million.

SES floats balloon ventureSES is getting into the balloon business. The satellite operator’s SES Government unit is commercializing a low-altitude aerostat that, flying at altitudes of just a few hundred meters, could provide images and broadband communications in a nearby area. The new product is a sign that satellite operators, facing flat or declining prices for conventional satellite services, are looking to broaden their product portfolios.

Airbus bets on high-resA decision by Airbus Defence and Space to invest in four high-resolution imaging sat-ellites comes with no guarantee of French government support. Airbus announced last week its plans to develop the four satellites for launch in 2020 and 2021 to provide very high resolution images and provide continuity for the existing two Pléiades satellites. Airbus will fund their development, and a French general said the French military has given the company no guarantees it will purchase images from those satellites.

Avanti gets $12 million assistSatellite operator Avanti has won an ESA contract as it seeks a buyer or strategic investor. The London-based company said it received a $12 million investment from ESA to support efforts to provide broadband satellite services in Africa. The award comes as Avanti continues to look for outside investment or a buyer to fund construction and launch of its satellites. The company said it is discussing a poten-tial acquisition with several prospective companies.

VERBATIM | Martian football“I do like outer space a lot. And after watching ‘The Martian,’ I’m trying to science the s--- out of this game plan.”

— Martellus Bennett, a tight end for the NFL’s New England Patriots, when asked by reporters after a practice Sept. 14 why he was wearing a hat with the NASA “worm” logo.

China orbits Tiangong-2China launched its Tiangong-2 space module Sept. 15 as a precursor for a future space station. The module, launched atop a Long March 2F, is intended to test technolo-gies planned for a future full-scale space station. A two-person crew, launching on the Shenzhou-11 spacecraft in October, will dock with Tiangong and spend one month there. With the launch of Tiangong-2 (shown left), Chinese officials say they’re ready to start work on a space station next year. Chinese officials envision developing a station with three main modules, with the core module launching in 2018. The station, capable of accommodating up to six people, will enter service around 2022 for a 10-year life

Commercial weather dealsTwo companies received the first commercial weather data contracts from NOAA Sept. 15. NOAA awarded Commercial Weather Data Pilot contracts to GeoOptics and Spire Global, with a combined value of a little more than $1 million. Under the contracts, the companies will prov ide GPS radio occultat ion data from commercial satellites to NOAA, which will assess the feasi-bility of using that data in weather forecasting. If successful, the con-tracts could lead to additional data purchases, something both industry and key members of Congress have been calling for in recent years to mitigate potential gaps in other weather forecasting data.

NASA astronaut Kate Rubins (shown on the ISS wearing a spacesuit decorated by patients at Houston’s MD Anderson Cancer Center) may have to vote from space if her return trip is delayed. Rubins was scheduled to return to Earth in late October, in time to vote in the Nov. 8 U.S. election. The delay in the launch of a Soyuz spacecraft may now keep her in orbit until after the elec-tion. Rubins said she prepared to vote by absentee ballot prior to her launch just in case her return was delayed.

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Average 9/26/16Hyten: U.S. must prepare for space warThe nominee to become the next head of U.S. Strategic Command told senators the U.S. must be prepared

to fight in space. At a confirmation hearing by the Senate Armed Services Committee, U.S. Air Force Gen. John Hyten said that space control efforts, and a battle management command and control system, should be among the Defense Department’s top space priorities. Committee chairman Sen. John McCain (R-Ariz.) said he found it “deeply disturbing” China and Russia were developing systems designed to “cripple” U.S. satellites. The hearing also covered several other space issues, from problems with the next-generation GPS ground system to plans to phase out the Delta 4 launch vehicle.

U.S., China to talk space debrisAmerican and Chinese diplomats will meet later this year to discuss orbital debris and other military space issues.Frank Rose, the assistant secretary of state for arms control, verification and compli-ance, said at the AMOS conference Sept. 22 in Hawaii that orbital debris would be among the topics of an upcoming meeting, following a “very frank discus-sion” between officials in May.

“It’s very clear there are new threats to the space systems and the space systems of our allies. At the same time, we need a comprehensive approach to this threat. There is no silver bullet,” Rose said. “We want to promote strategic restraint where we can. We’ve also made it very clear to China, Russia and other potential adversaries the United States will defend ourselves and our friends in outer space.” While China’s 2007 ASAT test, which created thousands of pieces of debris, remains a contentious issue between the countries, Rose said there has been recent progress in discussions to limit the growth of debris and avoid collisions.

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Different paths to Marst seems like we’re hitting peak Mars.

On Sept. 27, the space community, and many others, will turn their attention to Guadalajara, Mexico, where Elon Musk will give his long-

anticipated speech at the International Astronautical Congress outlining SpaceX’s architecture for Mars missions. He’s released few details in advance of the speech, other than it will likely involve a new inter-planetary spacecraft and a heavy-lift launch vehicle, and could be ready to start taking people in a decade.

SpaceX, though, isn’t the only company talking about Mars. In recent weeks more conventional aero-space companies, including Boeing, Lockheed Martin and Orbital ATK have all been talking up Mars exploration, although with different approaches than what SpaceX is likely envisioning.

At the AIAA Space 2016 conference in California, Boeing distributed booklets titled “The Path to Mars” outlining its concepts for getting humans to Mars, such as the development of cislunar habitats. A week later, Lockheed Martin hosted a reception in Washington to discuss Mars exploration, including its “Mars Base Camp” concept unveiled earlier this year that could send humans to Mars orbit (but not the surface) as soon as 2028.

There are variations in some of these concepts, but they’re all based on the same general approach: develop habitats in cislunar space to build up experience before sending humans to Mars. It’s the same overall strategy as NASA’s own Journey to Mars.

“Hopefully, what you see today is a whole lot of simi-larity,” said Kent Rominger of Orbital ATK. He spoke at a panel session on Capitol Hill organized by the advocacy group Explore Mars that included Aerojet Rocketdyne, Boeing and Lockheed.

There are differences in the details, he acknowledged, like Orbital ATK’s use of cislunar habitat modules based on its Cygnus cargo spacecraft, but the general aims are

similar. “Hopefully, you’ll appreciate how similar they are.”So why the push now? A big reason is the upcoming

presidential transition. The candidates have said little about space policy, and seem unlikely to say much more.

Hillary Clinton, in response to a questionnaire on science policy issues from the group ScienceDebate, said she backed the goal of humans to Mars in general, but didn’t mention if she supported NASA’s current strategy. That’s still more detail than Donald Trump, who said he supported the space program in only the broadest of terms, without specifically endorsing humans to Mars.

A bipartisan group of senators has emphasized that uncertainty in their effort to pass a NASA authorization bill that formally endorses both NASA’s overall goal of humans to Mars and specific efforts like the Space Launch System and Orion. “Whenever one has a change in administration, we have seen the chaos that can be caused by the cancellation of major programs,” said Sen. Ted Cruz (R-Texas), sponsor of the bill approved by the Senate Commerce Committee Sept. 21.

SpaceX’s Mars plans, though, are something of a wild card: Musk isn’t playing along with NASA’s Journey to Mars, and seems willing to go it alone, without NASA funding. Does that distract from the message other space companies are trying to coordinate about Mars exploration?

The panel at the Explore Mars panel seemed hesitant to answer that question. “Anything that highlights going to Mars is good.” Rominger said. “It brings it to the attention of the American public, and really the international public.”

“I think it’s an example of how the public and people of means are really excited about Mars exploration,” said former astronaut John Grunsfeld. “There’s a true hunger, a thirst, for us to go out and explore Mars.”

However, will that hunger be satisfied by NASA’s plans, or will the public find the menu Musk unveils in Mexico more appetizing?

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SpaceX’s Dragon capsule is depicted landing on Mars. The company aims to send people to the red planet by 2030.

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Forget UAVs. For commercial imaging firms, satellites are still the main event

Operators of commercial geo-spatial imagery services says unmanned aerial vehicles

(UAVs) are an increasingly useful complement to their business but are unlikely to pose a direct threat to satellite systems for defense and intelligence customers.

These companies — Airbus Defence and Space, DigitalGlobe, MDA Geospatial Services, e-GEOS and ImageSat — also agreed that while providing value-added services is a growing share of their business, selling data to military cus-tomers remains the biggest single breadwinner.

Whether the revenue base among government customers is under threat, from competing constellations of small satellites or a shift in government pri-orities, was not a subject of consensus.

Massimo Comparini, chief executive of e-GEOS, owned by the Italian Space Agency and Italy’s Telespazio, said his business remains evenly divided today between data revenue and service revenue overall, but is likely to be 70 percent services within a few years.

Telespazio is working with the

European Defence Agency and the European Space Agency on trials using UAVs and satellites together for specific data transfer applications.

David Belton, general manager of MDA Geospatial Services, a division of MDA Corp. of Canada, said his com-pany’s revenue from the Radarsat-2 satellite is mainly from data purchases by government customers.

Belton said the challenge for his company, and for all those commer-cializing satellite imagery, would be to unlock the commercial market, where services are a better sell.

“Our ability to squeeze more out of our government customers is very challenging,” Belton said. “Equally challenging is to get new customers to adopt our products.”

MDA has operated a commercial UAV service for more than a decade alongside its main satellite offering.

Noam Segal, chief executive of Israel’s ImageSat, said military use of satellite imagery is becoming more difficult to the extent that militaries are interested in counterterrorism operations in addition to their historic use of satellites to collect views of

large military installations.“There was a focus in the last

decade of space-based sensors being based on high-density conflict,” Segal said. “It’s quite clear how we can use a satellite sensor to monitor submarine bases and airfields. It’s an easy game for most of the customer base.

“But how to use space-based sensors for counterterrorism — here there is no clear solution. It is harder. It takes more proficiency in working with the system to deal with counter-terror.”

Segal assumed his post in late 2015 after a military career that he said included 2,500 hours operating UAVs. ImageSat personnel, he said, have a total of around 6,000 hours of hands-on UAV operations experience.

Here is how Segal described the misunderstanding among many UAV customers of the technology’s cost and limitations:

“It is clear to most of the customers we are dealing with why they can use UAVs, even if the UAV is definitely not the solution to the problem,” Segal said. “The role for us is doing the patient work with the customer


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ImageSat expects its Eros-C high-resolution optical Earth imaging satellite to launch in 2019. Company CEO Noam Segal said he expected no significant effects on the satellite’s production by Israel Aerospace Industries despite the apparent anomalies on board the just-launched Ofek-11 Israeli military imaging satellite.

>

base to provide the end game so that they can become, later, a customer for the [satellite] data.

“Some of the customers in the defense community do not understand the limitations of UAVs, especially in an anti-access, area-denial environment. Most of the these customers operate in these environments, and UAVs are not the most suitable solution for their data-acquisition plans.

“Second, a UAV operator lives

in a 25-square-meter environment. Satellites are much more adaptable for wide-area surveillance. If the event is tactical and persistence is needed, then UAV is a good solution. But for most of the areas where we are oper-ating, they are not a good match at all, not in the performance.

“By the way, a UAV’s footprint in terms of human resources and cost is outrageous. People don’t appreciate this. It seems to be very easy; it’s not.

The operator base is quite narrow. You see it with the United Nations tenders in Africa: The time from tendering to deployment is six to 10 months, and for a full operational capability it is sometimes 12 months, whereas a satellite can provide data within days.

“So I think UAVs are comple-mentary, and they are not a real competition to people who under-stand the limitations.”


As a wildfire delayed the launch of one DigitalGlobe satellite, another of the com-pany’s spacecraft kept an eye on the flames

that threatened the launch site.A United Launch Alliance Atlas 5 was scheduled

to launch WorldView-4 Sept. 18 from Vandenberg Air Force Base after a two-day delay caused by a technical problem. However, ULA scrubbed the launch several hours in advance after a fire spread onto the California base, postponing while firefighters tackled the blaze.

As WorldView-4 waited out the fire, sealed inside the pad’s vertical integration building, WorldView-3 satellite took daily images of the fire, helping firefighters to in their efforts to contain the sprawling blaze. “These super-spectral images were taken with the satellite’s shortwave infrared (SWIR) sensor, which is uniquely able to pierce through smoke to provide high-fidelity identification of hot spots without the risk of having to fly a plane over an active fire,” DigitalGlobe founder

Walter Scott said in a Sept. 23 statement.One image showed the fire Sept. 18, when it came

within 2.5 kilometers of the Atlas pad. A second image, taken four days later, showed the progress firefighters made in containing the blaze and keeping it away from active launch pads. As of Sept. 23, the fire was 90 percent contained after burning about 12,500 acres.

ULA and DigitalGlobe said they were considering early October. launch dates for WorldView-4

The wildfire gave DigitalGlobe an opportunity to demonstrate the capabilities, but also the policy limitations, of commercial infrared images. “SWIR imagery is a valuable tool for combating wildfires, classifying materials in urban environments and detecting minerals on earth’s surface,” Scott said. “However, U.S. regulatory reform is needed to fully leverage this capability, as the SWIR imagery we are permitted to distribute today contains only 25 percent of the information that is captured by the satellite.”

WorldView-3 keeps eye on wildfire delaying WorldView-4 launch

DIGITALGLOBE

Is Asia’s crowded satellite market in for a change?

AsiaSat Chairman Jue Wei Min’s August state-ment to shareholders that the Asian satellite telecommunications market features “increasing

competition [and] fierce pricing pressure” could have been said a year ago, and even 10 years ago.

So it goes in the world’s most competitive market, where the pride of having a national satellite operator obliterates business logic, and where hopes for industry consolidation go to die.

When a nation like Laos, with a total population less than that of Hong Kong, launches its own satellite, you know you’re in a rough neighborhood for making a living selling satellite capacity.

But LaoSat-1 was entered into service early this year after Laotian authorities demonstrated enormous deter-mination coordinating frequencies with neighboring operators, and signaled their commitment by taking out a $259 million loan from the Export-Import Bank of China.

Can Myanmar, Nepal and Mongolia be far behind?Recent trends in satellite transponder pricing none-

theless hold out at least a slim possibility that the Asian situation may be about to change. If it does, it will be thanks to China, where investors are showing a new interest in satellite telecommunications.

ABS of Bermuda, which does most of its business in Asia, is being sold by its private-equity owners, led

by Permira. ABS Chief Executive Tom Choi is quick to point out that this is not a fire sale, but only the normal cycle of financial investors who book their profit and then invest in some other promising industry.

Industry officials have said ABS’s owners began shopping the company at prices that the market found too rich at a time of slow growth for many fleet operators.

In addition to ABS, Hong Kong-based AsiaSat is said to be considering a change of direction. Measat Chief Executive Paul Brown-Kenyon, who in recent years has been a strong voice for Asia’s satellite sector, has announced he would be leaving the company this fall.

Israel’s Spacecom was to have been purchased by Beijing Xinwei Technology Group of China before Spacecom’s Amos-6 satellite was destroyed in the Sept. 1 explosion of a SpaceX Falcon 9 rocket.

Industry officials said the Chinese company, which continues to negotiate with Spacecom, has a growth strategy in the satellite field that likely includes rolling up assets in Asia and elsewhere.

Chinese investors are said to be among those looking at Avanti Communications of London, whose financial distress is well-known.

As in many areas of life in Asia, the most interesting question for the region’s satellite market may be: What does China want? It has shown signs of opening its market, at least partly. AsiaSat, after knocking on the


< PETER B. de SELDING >

Is Asia’s crowded satellite


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door for nearly a decade, in 2016 was granted access to China’s mainland and is already showing an uptick in China-based revenue.

While the industry speculates on China’s endgame in the satellite operations field, it has seen what has happened in Indonesia, where three satellite opera-tors are launching a total of four telecommunications spacecraft.

It would be difficult to imagine a geography better suited to satellite connectivity than a nation of 13,400 islands, which is why satellite builders have spent so much time courting the market in recent years.

Indonesia’s Ministry of Communications and Information Technology told the United Nations in late 2015 that 34 non-Indonesian satellites were operating on Indonesian soil as of late 2014, an extraordinary figure even after accounting for Indonesia’s territory

and its population of more than 250 million people.That compares to just 22 satellites with landing

rights in Indonesia in 2013, 18 in 2012 and 10 in 2011, the ministry said.

Is it possible that all these operators are making money in Indonesia? Whatever the answer, Indonesia’s Bank Rakyat Indonesia decided it could use its own satellite and ordered BRIsat from Space Systems Loral. The sat-ellite was launched aboard an Ariane 5 rocket in June.

Indonesia’s PT Telkom has two satellites on order, Telkom-4 from Space Systems Loral and Telkom-3S from Thales Alenia Space.

Pasifik Satelit Nusantara (PSN) has ordered PSN-6 from Space Systems Loral, scheduled to launch in 2017.

It will be interesting to see how many of those 34 foreign satellites stick with the Indonesian market beyond 2018.

Three veterans of the Asian satellite scene on Sept. 12 discussed whether satellite bandwidth prices would continue to fall, whether mobility markets would provide growth to fleet operators and whether pockets of growth remained in their current businesses.

Measat Chief Executive Paul Brown-Kenyon, ABS Chief Executive Tom Choi and APT Satellite Vice President Huang Baozhong have been at their jobs long enough to see the Asian market go from one dominated by the global fleet operators to today’s heavily populated scene, including several one-satellite companies born of their nations’ desire to have a flag in space.

Two of them may not be long in their jobs. Brown-Kenyon said during the recent World Satellite Business Week conference in Paris that he would be leaving Measat shortly. ABS owner Permira has put the company up for sale, and Choi’s job may disappear depending on who the buyer is.


ABS, APT Satellite and Measat on survival, and

maybe even growth< PETER B. de SELDING >

Paul Brown-KenyonChief Executive,

Measat

Tom ChoiChief Executive,

ABS

Huang BaozhongVice President,APT Satellite

> Trends in the Asian satellite market

Paul Brown-Kenyon“The industry is seeing so many changes that it’s time for satellite operators to think of themselves as communications providers, not satellite fleet operators. I’m not saying we go into the OTT business. But we need to figure out where we as a company can

do a better job than our competitors. And I think you move away from being a wholesale satellite provider. We’re already doing that at Measat. We’re doing end-to-end broadband solutions into Malaysia. That’s one area where we moved beyond our traditional business to innovate and develop a sticky customer set.

“Today I have a DTH system that has growth in it, and a C-band distribution that I think has some growth. I don’t think it makes sense for the company today to provide an OTT service.”

Huang Baozhong“We have more than tripled our revenue compared to 10 years ago. In the last five years we have a CAGR of over 16 percent. We have been performing pretty good even over the last six months despite the market conditions.

“Yes, we feel the pressure, especially the price pressure. But we are adapting. We are helping our broadcasting clients distribute their content world-wide. The pickup of HD from SD is slower than many

had expected. This is worrisome.”

> Aeronautical, maritime markets: An opportunity?

Huang Baozhong“We have announced the creation of APT Mobile Satcom with Chinese investors and the Chinese Ministry of Communications.

“We now have three satellites under construction. Apstar 5C, continuing are partnership with Telesat, is progressing very

well. Then Apstar 6C, which we announced with Apstar 9. The third is Apstar 6B, to develop the mobile market in China, with Chinese Ministry of Communications as partner. The share-capital money is paid in and the company has already started. We hope to deliver a satellite into orbit in 2019. It’s mainly Ku-band beams over China, but also surrounding region.

The main customer is the Chinee market, but we are not limited to that. China has over 710 million internet users. Of them, 650 million are mobile users. Such a big market cannot be filled just by the mobile network infrastructure.

We have announced we will have global coverage

for the high-throughput satellites. The first satel-lite is for the domestic Chinese market and then gradually we will expand east and west to cover the world.”

Tom Choi“We may not have a mobility initiative for a long time. Our industry has been running from competition in the past 10 years. We’re not investing in mobility markets. Maritime is likely to be a niche where prices fall because of all the satel-

lite operators jumping in to serve it.”

Paul Brown-Kenyon “We provide some maritime services today but we are not investing heavily in the maritime market. We don’t think we can compete there strongly. And I personally don’t think it’s going to be an attrac-tive segment longer term. So we choose

segments where we believe we can compete strongly against the competition.

“Mobility doesn’t need a wide global footprint, which


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is what we offer. I also believe a lot of people have thrown their hat into the mobility market in the last couple of years. The forecasts I’ve seen suggest that there is going to be overcapacity. And finally, you don’t make money in mobility unless you actually own the equip-ment in the ship or own the equipment in the aircraft because people will switch from one satellite provider to another. Maybe if you’re Inmarsat you can protect your margins, but otherwise people are going to switch to the lowest-cost provider.”

Tom Choi“Indonesia has a relatively open market and we have a full telecom license, VSAT and satellite license, and the first service we’re launching is a DTH service, this year. The country has less than 3 million broadband households, around Jakarta. We’re targeting

the other 60 million plus householders where people don’t have multi-channel TV services, and it will be available for free.

“We think DTH is a bigger opportunity than OTT in Indonesia.

“Over the next year, prices will drop further and it’s a good thing. Prices are dropping because customer demand is growing at double digits and satellite operators built capacity that is growing faster than demand. Our industry is very cyclical. It will probably take another four or five years to rebalance. Prices are likely to drop another 25 percent in the coming years, but there are lots of different applications.”

Paul Brown-Kenyon “We have some segments where we believe prices will increase over the next five years given contractual com-mitments. Other segments, it will be dropping.”

Huang Baozhong“I would say pricing will keep dropping. We will try to find more value-added services. Prices will keep dropping but we will try to find more value for the customers.”

Paul Brown-Kenyon “In segments where I have a [DTH] neighborhood and long-term con-tracts, I see prices increasing slightly. In segments such as data there will be a signif icant price adjustment. HTS [high-throughput satellites] can do

what wideband satellites can do but much less

expensively. It w il l be l ike your mobile data plan, you are paying about the same today but for 1,000 t imes more data.”

> $500 per MHz per month?

Huang Baozhong“We notice that in some extreme cases in Asia, some operators are selling at close to $1,000 per MHz per month. This is a crazy price, I am pretty sure of that. A satellite has its own cost. If you are selling below cost you will die.

This is why we must secure half of the satellite’s capacity before we invest in it. If we can do that, then there is room to drop the price.”

Tom Choi“Prices will be going down to $500 [per MHz/month]. I personally have seen prices like that from one of our competitors. HTS are going to dra-matically lower the cost per bit, but it will not take away revenue from a

regional-beam DTH platform. It will bring into the market new users.”

> ABS-8 and dodging a bullet

Tom Choi“Our A BS - 8 that we had ordered f rom Boeing w a s dependent on Ex- Im Bank f inancing. Fir st they had their author izat ion revoked, and now without a functioning board they cannot approve our loan. So

we have been stuck.“That was not necessar i ly a bad thing. In

early 2015, when we were conceiv ing A BS - 8, it was going to be a high-throughput satel l ite. It was going to beat satel l ites l ike Intelsat’s Epic in terms of pr ic ing. Then we had an interest ing announcement from ViaSat w ith ViaSat-3 and the economics they can achieve w ith that bird.

“So we dodged a bullet. Now we are re -exam-ining what satell ites we need to be competit ive with ViaSat. That is the bar we would shoot for. Within a few months we wil l no longer need to depend on the Ex-Im Bank. By the f irst hal f of 2017 we w il l restart the program again but it w i l l be a completely di f ferent design.”



< DEBRA WERNER >

Soon after three engineers lef t Bat tel le Columbus Laboratories to establish

Orbital Technologies Corporation (ORBITEC) in 1988, they won their first NASA Small Business Innovat ive Research (SBIR) contract. Since then, the firm has built a thriving business on the propulsion, life support and bio-technology work that often began under SBIR contracts for NASA, the U.S. Air Force and other gov-ernment agencies.

“We’ve won hundreds of SBIRs and have taken viable technology and commercialized it where possible,” said Paul Zamprelli, business director for Madison, Wisconsin-based ORBITEC, a sub-sidiary of Sierra Nevada Corp. “We also use the technology in products we provide to prime contractors, NASA, the Air Force and other government agencies.”

ORBITEC is a small business success story. About 60 engineers worked there when Sierra Nevada purchased ORBITEC in 2014. It is continuing to grow rapidly. By the end of 2017, ORBITEC will employ about 150 engineers, Zamprelli said.

NASA’s SBIR and Small Business Technology Transfer (STTR) programs are designed to nurture f ledgling firms. Companies with fewer than 500 employees can

STARTING SMALL TO DEVELOP

BIG IDEAS

“SBIR has been a big piece of

how we get the spark started.”

— Rich Boling,Techshot

vice president

Above, Rich Boling holds Techshot’s Analytical Containment Transfer Tool (ACT2). Depicted below, it is a device that looks like a syringe and is used to house and transfer biological samples in orbit.

>TE

CHSH

OTTE

CHSH

OT


compete for SBIR funding to help NASA meet its research and devel-opment goals. To receive STTR money, a small business must join forces with a university or other nonprofit research institution.

In 2015, NASA handed out approximately $181 million in SBIR and STTR funds to meet its own needs, while spurring tech-nological innovation, creating jobs and encouraging the par-ticipation of businesses owned by women and minorities. That work led to the creation of 2,175 U.S. jobs and added about $474 million to the U.S. economy in jobs and tax revenue, according to NASA’s Economic Impact Report 2016: NASA SBIR/STTR Programs.

“For every dollar that goes into the SBIR program, an average of $3 goes into the economy, creating jobs and products,” said Carlos Torrez, NASA’s SBIR and STTR program manager.

ORBITEC, for example, is selling commercial versions of Veggie, the food production system it began developing under SBIR and later sent to the International Space Station, to customers around the world, including universities and government agencies.

W it h S BI R f u nd i ng a nd internal investment, ORBITEC also developed the environmental control systems and the engines Sierra Nevada is installing in its Dream Chaser, one of three cargo ships NASA selected to resupply the ISS.

Now that ORBITEC is part of Sierra Nevada, it is no longer eligible to compete for SBIR fea-sibility studies or research and development contracts. However, ORBITEC can still apply for NASA funding to move technology the company developed through past SBIR contracts into government programs or commercial markets.

In addit ion, OR BITEC i s reaching out to small companies. “We open our arms to team with any small companies,” Zamprelli said. “We will support small

Techshot’s Payload Operations Control Center, where operators monitor and can control their equipment in real time aboard the ISS (Ken Barton, John Vellinger, Sam Logan).

>TECH

SHOT

NASA astronaut Steve Swanson of Expedition 39 activated the red, blue and green LED lights of the Veggie plant growth system on May 7, 2014 that was developed by ORBITEC.

>NASA

TECH

SHOT

Techshot’s Bone Densitometer, an X-ray machine developed through SBIR, traveled to the space station in 2014 on a SpaceX Dragon cargo flight. It remains in the orbiting outpost where it is used to measure bone and muscle loss of mice in space and to test bone loss countermeasures and treatments.

>

Carlos Torrez has a passion for helping small businesses. For more than 27 years, Torrez has moved up the ranks, working first as a NASA contracting officer, then business manager for

SBIR and STTR, before taking the reins in January 2015 as NASA’s SBIR and STTR program manager, where he oversees efforts by NASA’s 10 field centers and four mission directorates to harness the expertise of thousands of small businesses and research institutions.

During his NASA career, Torrez has helped the agency expand its small business initiatives. Much of his work has focused on helping firms bridge the “Valley of Death,” where products or services languish after successful development. To bridge the valley, NASA now provides small companies with money to match funding from investors inside or outside the space agency.

Under Torrez’ leadership, NASA also has expanded outreach to the business community. Torrez organized a workshop in mid-September at the NASA Ames Research Center to introduce small business executives and research institutions to the NASA managers and technologists who need their help in tackling some of the space agency’s most vexing challenges, from machine learning

Carlos TorrezNASA Program Manager for

Small Business Innovation

Research (SBIR) and Small

Business Technology

Transfer (STTR) programs

speaks with SpaceNews’ Reporter Debra Werner

BRIDGINGTHE VALLEY OF DEATH

businesses like the larger compa-nies supported us.”

Techshot Inc. of Greenville, Indiana is another SBIR success story. Established in 1988 by two engineers, the firm, then called Space Hardware Optimization Technology, quickly began winning SBIR contracts.

“SBIR has been a big piece of how we get the spark started,” said Rich Boling, Techshot vice president.

Techshot’s Bone Densitometer, an X-ray machine developed through SBIR, traveled to the space station in 2014 on a SpaceX Dragon cargo f light. It remains in the orbiting outpost where it is used to measure bone and muscle loss of mice in space and to test bone loss coun-termeasures and treatments.

Techshot a l so used SBIR funding to develop the Analytical Containment Transfer Tool (ACT2), a device that looks like a syringe and is used to house and transfer biological samples in orbit. Since April, astronauts have been using two of the devices on the space station. A third ACT is scheduled for launch next year.

Techshot has grown to a staff of 32. In 2010, it spun off Techshot Lighting to manufacture and sell the rugged, energy-efficient light-emitting diodes it developed for military tents.

“SBIR has been a field leveler,” said Boling. “We are not near any NASA centers or major military installations, but SBIR has enabled us participate fully in government programs.”

SBIR also gave Techshot a chance to experiment. “We can’t bet the company on every crazy idea,” Boling said. “Through SBIR, we are able to test some of the crazy ideas and some of them work.”



and robotics to energy storage and synthetic biology.

Has NASA’s SBIR and STTR program changed during your career?

Absolutely. In operations alone, we have grown from a team of a few isolated people at two to three NASA centers to a strong team with offices at every NASA center. The Program Management Office resides at Ames Research Center — the heart of Silicon Valley. In addition, our program paved the way for changes in contract manage-ment not only at NASA but across the federal government. Today we see that firms are awarded their contracts on time and with ample performance periods.

How are you trying to bridge the Valley of Death?

Many companies that win phase 1 or phase 2 SBIRs and STTRs cannot get across that valley into successful com-mercialization, which leads to jobs creation, investment and continued innovation beyond what has been developed. We implemented initia-tives that allow funding up to $1.5 million and, most importantly, tie in industry investment and resources.

Why is industry investment important?

When I speak with industry, the clear message I hear is that people don’t know how to connect with these small businesses, mine the technology and bring them into their supply chain. Because NASA does a lot of research and development investment, com-panies and angel investors told me that if a company had government investment, that would make them more comfortable investing. It’s hard for companies with technologies that are forward leaning, four to five years forward, to obtain investment without some sort of government backing.

Some of the investors include John Deere, Caterpillar and Kelly Moore Paints. Why are they interested in NASA technology?

They want to use autonomous systems to farm, or drones to look at the health of crops, or paint that is adaptable and flexible.

How do they get involved?

Let’s say a company has a phase 2 SBIR contract to develop paint to prevent rust for the space station. If the company sees a need for it in the commercial marketplace, it will talk to different paint manufac-turers and find out there is interest. If one agrees to provide funding in exchange for an equity stake or data rights or a revenue stream, the

company makes a proposal to NASA to partner to enhance the technology through further research, infusion or commercialization.

NASA also pairs small firms with large govern-ment contractors through the mentor protégé program. Why?

NASA’s Office of Small Business Programs provides money to large companies to mentor small businesses to help commercialize their products or infuse their product in NASA or another government agency. The small companies get the benefit of working with a large business and learning strategies for entering this marketplace.

Small businesses are defined as firms with 500 people or fewer. What is the average size of the companies that win SBIR and STTR contracts?

Five to eight people. They truly are small businesses.

What are some commercial products that stem from SBIR or STTR?

There are a lot of them in health monitoring and agriculture where companies have successfully com-mercialized technology or infused their technology within NASA. There is SBIR technology in all the current NASA missions.

EUMETSAT is the European Satellite Organisation for monitoring weather and climate. Bringing together the resources of 30 Member States, we develop and operate a range of satellite systems surveying the atmosphere, land and ocean that deliver vital data 24 hours a day, 365 days a year.

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Space-News-7x3-engineers.indd 1 22/09/2016 15:28

The future of commercial research in low Earth orbit is on the clock.

For several years, NASA and the Center for the Advancement of Science in Space (CASIS), the non-profit organization that manages part of the station’s research facilities, have worked to stimulate interest in per-forming research on the International Space Station. That effort is still a work in progress, but it has shown promise based on experiments that have flown.

However, the ISS itself has a limited future. NASA and its partners have agreed to extend the station’s life to at least 2024, but its future beyond that is hazy. Part of that is linked to the

station’s age, as engineering reviews conclude it could operate until 2028. There’s also a more pragmatic reason: getting the ISS off NASA’s books frees up funding to continue its Mars exploration plans.

So, at some point in the 2020s, that commercial research currently being fostered on the ISS will have to find a new home. Even before then, demand for the station’s facilities could exceed its capacity, particu-larly if the promise of microgravity research is finally realized.

The solution seems clear: develop a commercial space station of some kind, perhaps starting with a single module docked to the ISS, that can host research and other uses. But

as interest grows in developing such stations, NASA has also come to a con-clusion that there are ways it can help support their development, rather just waiting for one to show up in orbit.

“We’re looking really hard at what happens after the space station,” said Bill Gerstenmaier, NASA associate administrator for human exploration and operations, at a meeting of the NASA Advisory Council in July. “We started to hear from a lot of folks who wanted to attach modules to ports on the station, or they wanted to use some of the unique resources on the station.”

To assess how it might make that port, and other station resources, available to commercial users, NASA


Bigelow Aerospace is proposing installing one of the company’s expandable modules, called XBASE, to the International Space Station.

>BIG

ELOW

AERO

SPAC

E

< JEFF FOUST >

The commercial space station race


issued a request for information (RFI) in July, asking companies to describe their interest in adding a commercial module to the ISS. “NASA is making available a port, power, atmosphere; everything a private company could want from an infrastructure stand-point,” Gerstenmaier said.

NASA requested responses to the RFI by Aug. 12, and is now reviewing them. “We got a lot of feedback from companies that are interested in building commercial modules,” said Robyn Gatens, deputy director of the ISS at NASA Headquarters, at a Sept. 16 commercial space conference in Washington organized by Women in Aerospace.

She didn’t disclose who responded to the RFI, but the number of com-panies that appear interested in commercial modules is growing. That includes Bigelow Aerospace, a company established more than 15 years ago to create commercial space stations. It has flown several prototypes, including the Bigelow Expandable Activity Module, built under a NASA contract and flown to the station earlier this year. It cur-rently occupies the docking port NASA is considering offering to

commercial users.Even before the NASA RFI,

Bigelow was making its own unso-licited offer. At a press conference during the 32nd Space Symposium in Colorado Springs, Colorado, in

April, company president Robert Bigelow said his company would have two of its B330 modules — so named because, when expanded, they have a volume of 330 cubic meters — ready for launch by 2020. One of them, he proposed, could be docked to the ISS, something he called the

Expandable Bigelow Advanced Station Enhancement, or XBASE.

At the ISS Research and Development Conference in July in San Diego, organized by CASIS, Bigelow didn’t state whether Bigelow was planning to respond to the RFI, but said that the company had already submitted a proposal to install XBASE on the station. “We would be really excited to do that with NASA, and we gave them a tremendous deal,” he said in an interview.

Bigelow, though, has competi-tion in the commercial space station business. In June, Michael Suffredini, the former NASA ISS program manager who left the agency nearly a year ago to take a position with Stinger Ghaffarian Technologies, announced the formation of a new venture, Axiom Space. It, too, has plans for commercial space stations, starting with a module attached to the ISS.

“What we would like to do is fly a module that begins its life at the International Space Station,” Suffredini said in an interview during the NewSpace 2016 conference in Seattle. “That will help us transition from research and manufacturing

Axiom Space is proposing to develop a commercial module that can be added to the International Space Station and later form the core of a commercial space station.>AXIOM

SPAC

E

“NASA is making

available a port,

power, atmosphere;

everything a private

company could want

from an infrastructure

standpoint.” — Bill Gerstenmaier

and everything else done on ISS on a future platform.”

The two companies, while having similar goals, have different approaches. Bigelow is developing its own modules at its Las Vegas factory, with plans to eventually develop modules far larger than the B330. The company is funded by Robert Bigelow, who in the company’s early days pledged to invest $500 million into the venture.

Axiom Space, by contrast, plans to have another company develop its module. Suffredini said he hopes to have that company under contract by January. That schedule is contingent on Axiom’s ability to raise money, which Suffredini said this summer was in progress.

Could the two work together, perhaps by Bigelow building an expandable module for Axiom? Suffredini sounded skeptical. “In order to make money, we have to get to orbit fast,” he said, citing a goal of having the module on the ISS by 2021. “I think it’s going to take a while to build a spacecraft out of inflatable technology.”

There’s at least one other venture interested in installing a commercial

module on the ISS, which is taking advantage of a different NASA program. On Aug. 9, NASA awarded contract for the second phase of its Next Space Technologies for Exploration Partnerships (NextSTEP) program, designed to develop tech-nologies intended to support habitats for missions in cislunar space. Several companies that won contracts in the first round of NextSTEP received follow-on contracts, including Bigelow Aerospace, which proposed installing a module on the ISS.

A new entrant in NextSTEP, though, was a group of companies collectively known as Ixion, which includes NanoRacks, Space Systems Loral and United Launch Alliance. They proposed converting a Centaur upper stage into a commercial ISS module (and, later, a cislunar habitat.) That approach that would save money since it would not require a dedicated launch, outfitting the Centaur after it’s used to send a cargo spacecraft to the ISS.

“Our plan is to dramatically lower the proposed costs for habitats to allow for the largest customer base, both commercial and government,” said Jeff Manber, chief executive

of NanoRacks, a company current involved in commercial ISS activi-ties through smallsat launches and other research. NanoRacks has also proposed the development of a com-mercial airlock that could be added to the ISS and, once the station is retired, moved to a commercial station.

How NASA leverages this growing interest in commercial ISS modules remains to be seen, and will likely depend on the responses it received from the RFI. In one sense, there is no rush for NASA to figure out how to give access to that ISS docking port: it won’t be available until 2018, when BEAM completes its planned two-year stay there, and it’s unlikely any company would have a module ready before 2020.

On the other hand, the long-term schedule for the companies has little margin. If a company gets its module there in 2020, it will have only a few years to show it can close the business case on a full-fledged commercial space station, and start getting that station in place, if NASA goes ahead with plans to retire the station in the mid-2020s. In that sense, there’s no time to lose.


An industry team called Ixion is studying converting a Centaur upper stage into a module that can be added to the International Space Station.>NANO

RACK

S

< DEBRA WERNER >


ZERO

2 INF

INITY

Bloostar>High-altitude balloon

operator has high hopes for LEO launcher


Zero 2 Infinity plans to fire a rocket above controlled airspace for the first time in

October, an important milestone in the Spanish firm’s effort to build Bloostar, a small satellite launch vehicle that rises through the atmo-sphere on a balloon.

“We’ve test flown balloons, flown tanks at high altitude and ignited rockets at sea level, but we have not yet fired a rocket from high altitude,”

said Jose Mariano Lopez Urdiales, Zero 2 Infinity founder and chief executive. “Ignition at high altitude is a big step for us.”

With Bloostar, Zero 2 Infinity is seeking to address growing demand for launch vehicles driven by firms planning to establish con-stellations with tens, hundreds or even thousands of small satellites to provide customers with com-munications, Earth observation

and remote sensing. “Launch is a huge bottleneck,”

Lopez Urdiales said. “Who is going to get those thousands of satellites in those constellations into orbit in a sustainable way? That is a challenge that needs to be solved.”

As Lopez Urdiales sees it, startups and established firms building large constellations of small satellites may have trouble finding reliable ways to augment and resupply their

How Bloostar places the satellite in orbit

constellations. “To close the business model, you need a constellation that can be resupplied and that is not a solved problem,” he said.

Unlike competitors planning to offer satellite customers rides on air- or ground-launched rockets, Bloostar begins its journey by rising slowly through Earth’s atmosphere on a balloon launched from a boat near the Canary Islands. That

journey takes about 90 minutes.At an altitude of approximately

22 kilometers, Bloostar is designed to separate from the balloon and fire six methane and oxygen-fueled engines to propel it to an altitude of 80 kilometers. There, six addi-tional engines ignite to carry the spacecraft to 400 kilometers before a single engine sends the satellite to 600 kilometers.

“For Bloostar, it’s not so much about launching from a balloon but rather igniting our engines from above the dense atmospheric layers,” said Guillaume Girard, Zero 2 Infinity partner. “At 22 kilome-ters, the atmosphere is so thin that it makes our overall system less complex to achieve, with a very light structure and a capacity for large volume.”

Bloostar is designed to loft satel-lites weighing 75 kilograms or less into sun synchronous orbits. “We have surveyed the market and this seems to be the sweet spot,” Lopez Urdiales said.

Because Bloostar does not need to minimize drag on its journey through Earth’s atmosphere it is shaped more like a mushroom cap than a missile. The payload fairing is two-meters in diameter, which means Bloostar can carry satellites with solar panels and antennas already deployed, Girard said.

That design provides one competi-tive advantage, Lopez Urdiales said. Another advantage Zero 2 Infinity


Zero 2 Infinity team on a campaign.

At an altitude of approximately 22 kilometers, Bloostar is designed to separate from the balloon and fire six methane and oxygen-fueled engines to propel it to an altitude of 80 kilometers. There, six additional engines ignite to carry the spacecraft to 400 kilometers before a single engine sends the satellite to 600 kilometers.

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A ISTech, a startup born in 2015 in a European Space Agency incubator in Barcelona, is raising money for a constellation of 25 cubesats to provide multispectral imagery as well as aircraft and maritime com-

munications and tracking. “Our goal is to provide information to people that today don’t have access

to spatial information,” said Carles Franquesa, AISTech co-founder and chief operating officer. “With this valuable information, organizations will make better decisions.”

In May, AISTech began testing its sensors and communications components by sending one of the cubesats it is developing to an altitude of 30 kilometers on a high-altitude balloon flown by Barcelona-based Zero2Infinity. AISTech plans to conduct additional high-altitude testing of a new camera and to begin working with potential customers to determine how the firm can help them obtain the information they need, Franquesa said.

With data derived from high-altitude testing, AISTech is updating its computer models to ensure they can accurately track ships at sea and aircraft in flight. The firm also is beginning to integrate its first technology demonstration mission scheduled for launch late next year.

In 2019, AISTech plans to launch the first two satellites of its 25-spacecraft constellation. The entire constellation will be in orbit in 2022, Franquesa said.

AISTech raised 300,000 Euros in its first private investment round. Now, the firm is seeking to raise approximately one million Euros for the launch of its first satellite demonstration mission and to develop its ground infra-structure, Franquesa said.

— Debra Werner

ESA-backed startup banking

on inflation

Aistechsat 1 on Zero 2 Infinity’s sub-orbital platform where testing of satellite components in space-like conditions.

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offers when compared with U.S. launch providers is that customers will not have to contend with U.S. government rules, including the U.S. State Department’s International Traffic and Arms Regulations, he added.

Since 2012, the firm has been launching balloons of various sizes to carry research experiments and technology demonstration payloads to altitudes of 20 to 40 kilometers. Through that work, Zero 2 Infinity has earned more than 900,000 Euros ($1 million) in revenue, Lopez Urdiales said.

Zero 2 Infinity was established in Barcelona in 2009 by Lopez Urdiales, former general manager of the Barcelona Aeronautics and Space Association. The firm announced plans for Bloostar in 2015. Since then, 10 satellite opera-tors in Denmark, Japan, Russia, Columbia and Italy have signed letters of intent to spend 240 million Euros on Bloostar flights, Lopez Urdiales said.

Customers will pay 4 million Euros for a single Bloostar launch and 2 million Euros per flight when they purchase a series. “If you buy several flights it’s a better price than if you buy a single flight,” Lopez-Urdiales said. “Buying several flights would be typical for constellation replenishment. We want repeat customers.”

Although Bloostar will not be the least expensive launch option for small satellites that can ride as sec-ondary payloads on larger rockets, Bloostar customers will be able to select the date and time of their launches as well as the elevation and azimuth of their orbits. “We think customers will pay a premium for that,” Lopez Urdiales said.

Zero 2 Infinity plans to slowly increase the amount of weight each Bloostar can launch without increasing the price. In the future, the firm also hopes to develop an extra-large Bloostar designed to loft 150-kilogram satellites and to slowly turn Bloostar into a reusable launch vehicle, Lopez Urdiales said.


Ordering the Cosmos: Private Law in the Final Frontier

e are coming up on a year since President Obama signed the Spurring Private Aerospace Competitiveness and Entrepreneurship (SPACE) Act into law. The SPACE Act aims,

in part, to “promote the right of United States Citizens to engage in commercial exploration for and commercial recovery of space resources free from harmful interference, in accordance with the international obligations of the United States and subject to authorization and continuing supervision by the Federal Government.”

However, this law is controversial in policy and scholarly circles. Despite its stated intent to comply with existing international law, government protec-tion of space property rights may run afoul of the 1967 Outer Space Treaty, and specifically Article II, which forbids the extension of territorial sov-ereignty to space. Many legal scholars argue that government protection of space property rights is a de facto extension of sovereignty. If the SPACE Act is incompatible with international law, some other

means must be found to promote space property rights, and hence space commerce.

Fortunately, we may already have an answer without realizing it. The answer is to embrace private law — property rights and dispute adjudication that arises out of contractual relationships among commercial entities, and does not rely on sovereign enforcement. At first, this solution seems incredible. How can we have private property, and the law that governs its use, without sovereign enforcement? The answer is that property rights and their attendant rules can be self-enforcing.

A large and growing body of economic scholarship shows that traders are able to define and enforce property rights and contracts without making use of the state’s role as an irresistible monopoly enforcer. In fact, a body of such law already exists: that which governs international trade.

States are sovereign, but there is no international super-sovereign. Those engaged in international trade are almost always in a “state of nature” with

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respect to each other. And yet international trade occurs regularly, and usually without incident. Despite the absence of sovereign enforcement, international traders almost always respect each other’s property rights, as enshrined in voluntary contract. And when there are honest disputes, there are almost always provisions in these contracts for pursuing private arbitration or mediation.

In fact, Peter Leeson, an economist at George Mason University, estimates that over 90 percent of international trade contracts contain clauses that state parties will pursue arbitration if a dispute arises. International organizations such as the International Chamber of Commerce (ICC) and the International Center for Dispute Resolution (ICDR) offer arbitration serv ices, which are used by traders from hundreds of countries in contractual disputes that can sometimes be worth billions of dollars. Leeson further estimates that 90 of these arbitration decisions are complied with voluntarily. Even if a trader loses a judgment, defecting on a previous agreement to abide by an arbitrator’s judgment will render that trader untrustworthy, making it extremely difficult to continue in business in the future. International traders have an incentive to play nice today, for the sake of profit tomorrow.

Just as traders find themselves in a position of “international anarchy,” future space commerce entities will find themselves in a position of “celestial anarchy.” But while this means — at least if inter-national law is not significantly amended — that sovereignty is ruled out, orderly interaction and commerce are not. The body of private law that successfully governs international trade shows that a lack of sovereignty does not preclude the existence of property rights, rules for adjudicating disputes over those rights, and mutually enriching trade resulting from exchange of those rights. Admittedly, we cannot say with certainty what the specifics of space commercial law will look like. The basic rules of property and contract in international trade have existed for centuries and are unlikely to change, but

extensions to new contractual disputes will require the creation of new law, which must emerge out of the particulars of those disputes themselves. But that we cannot foresee in advance the development of private commercial space law is not a weakness; it is a strength. If we were going to plan a legal regime for space, the sophistication of that regime would be limited to the intelligence and knowledge of those drawing up the laws. By instead allowing commercial space law to emerge out of contract adjudication, we can harness a much higher degree of social intelligence: the evolutionary process underlying the development of new law is “smarter” than any one person or group of persons.

Space commerce can be privately governed. And given existing international law, it should be. Solutions for commercial space governance that involve extending the jurisdiction of public organi-zations runs afoul of Article II. But this does not mean that domestic agencies have no role in blazing the final frontier. Domestic agencies are well suited to enforce rules relating to launch safety, which can prevent those engaged in space commerce

from inadvertently harming the earthbound, as well as de-orbiting guidelines for useless space debris, which will keep important orbits uncluttered. But with respect to space commerce, we must avoid what F. A. Hayek, legal scholar and Nobel laureate in economics, called the “pretense of knowledge.” The wealth creating potential of outer space is enormous. We cannot afford to whittle that wealth away through badly designed, top-down law. Given the constraints posed by current international law, a purely private legal regime for defining and enforcing space property rights is our best bet.

Alexander William Salter is an assistant professor of economics at Texas Tech University, where he is also a research fellow with the Free Market Institute. He has published several scholarly articles on law and

economics issues in space.

The wealth creating potentials of outer

space are enormous. We cannot afford to whittle that wealth away through badly

designed, top-down law.

CLAY MOWRY, the longtime head o f A r i a n e -space’s U.S. subsidiary, is going to work for BLUE ORIGIN, w h i c h j u s t announced its intent to build the New Glenn

family of orbital launchers.Mowry had been president of Washington-based Arianespace Inc. for 15 years. WIENER KERNISAN, Arianespace Inc.’s vice president for sales and marketing, will succeed Mowry.

CHUCK BEAMES is leaving Paul Allen’s VULCAN AEROSPACE, devel-oper of the Stratolaunch air-launch system. In an internal email, A l l e n s a i d that Beames,

who had been president of Vulcan

Aerospace since 2014, “decided that now is the right time” to leave the company. Jean Floyd, the CEO of Vulcan-owned Stratolaunch Systems and a longtime Orbital ATK employee, will take over as interim executive director of Vulcan Aerospace. Vulcan’s major project is Stratolaunch, featuring a giant aircraft that will carry an as-yet unan-nounced launch vehicle for launching satellites.

The COMMERCIAL SPACEFLIGHT FEDERA-TION has a new chairman. The industry group elected ALAN STERN of the South-west Research Institute as the new chairman of its board of

directors. Stern, the principal inves-tigator of NASA’s New Horizons mission that flew past Pluto last year, is also the chief scientist of World View, a company developing high altitude balloons for research and tourism. The CSF also added several

new member companies, including small launch vehicle developer Vector Space.

A long t ime White Sands Missile Range (WSMR) execu-tive is the new CEO of New Mexico’s SPACE-P O R T A M E R I C A . T he space -port’s board announced

Sept. 22 that it hired DANIEL HICKS to run the spaceport, succeeding Christine Anderson, who retired in August. Hicks worked at WSMR for 34 years, most recently as deputy executive director and director of plans for the U.S. Army facility in southern New Mexico.


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Correctly pricing for failurehe explosion of a SpaceX Falcon 9 rocket and its Amos-6 satellite payload on Sept. 1 in preparation for a static test fire has raised anew the question:

Is the commercial space industry letting tech-nical standards slip?

Placing a payload on the rocket for the static fire adds risk, but it’s done for a good cause: Trim a launch campaign by about a day and give the customer a modest launch discount.

Amos-6 was not the first. Thailand’s Thaicom did so twice, for Thaicom 6 in 2014 and Thaicom 8 this year. Commercial operator Orbcomm likewise selected this option for its 2014 and 2015 launches.

Fleet operator SES of Luxembourg was willing to launch its SES-9 on a Falcon 9 Full Thrust rocket in March of this year despite the fact that the vehicle had launched only once before — to low Earth orbit, not the geosta-tionary transfer orbit, which was SES-9’s destination.

Low-cost insurance was available for all these missions.

Russia’s Proton rocket has failed five times since 2011. Commercial Proton customers now pay slightly higher insur-ance premiums, but this can be compensated by a slight reduction in launch-service cost.

On the satellite production side, the days when a large fleet operator would send a bus load of engineers to oversee satellite manufacturers’ work are long gone. “They’re all focused on the money now. They’re letting standards slip, and the underwriters are not making them pay for it,” said one insurance official.

Finally, the many small satellite fleet operators who have arrived on the scene in the past 10 years do not have the resources to maintain in-house technical expertise. With insurance underwriters often competing

for business, these operators do not automatically pay higher premiums.

All of the above is true, but so is this:I asked Space Systems/Loral President John Celli

— who recently recalled working with a small army of Intelsat engineers on the Intelsat 9 program in the late 1990s — whether the vastly reduced customer presence on satellite builders’ premises signaled less-rigorous technical oversight. He said no. With the ease of broadband communications links, he said, it is less

necessary to have customers physically present.

There is no indication that satellites built in the past five years are any less reliable than those built 10 or 15 years ago.

For launchers, critics say Proton returned to flight too early after a failure, making a new failure more likely. Maybe: But an examination of the Proton failure reviews show no particular pattern that would have been spotted with a longer investigation.

As of this writing, SpaceX has not announced a cause of the Sept. 1 failure. But already some suggest Falcon 9 should be grounded for a year to get to the bottom of it.

But don’t modern simula-tion techniques and rocket telemetry data allow for quicker failure reviews and quicker adoption of corrective measures?

The U.S. Atlas rocket in the early 1990s, Europe’s Ariane 5 in the late 1990s, Proton earlier this decade, and now Falcon 9: They all had strings of failures. Atlas and Ariane 5 have built stellar records since then.

Anyone lamenting the days gone by should remember that in the late 1990s, the owner of a large satellite project was asked about his company’s technical oversight. His response: He didn’t do much of it.

“That’s what I have insurance for,” he said.

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The pad at Space Launch Complex 40 at Cape Canaveral, Florida, after the explosion of a SpaceX Falcon 9 rocket and its Amos-6 satellite payload on Sept. 1 in preparation for a static test fire.

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Automated potting of inserts into carbon fiber sandwich panels for satellite structures at RUAG Space in Zurich, Switzerland.

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