Satellites : a new service sector ?

New mar­kets, new sta­ke­hol­ders, new pro­fes­sions : the satel­lite sec­tor cur­rent­ly shows expo­nen­tial growth. It remains a cen­tral issue for States, yet the mar­ket also seems to be ope­ning itself up to the pri­vate sec­tor as well – both big groups or inno­va­tive start-ups. Murielle Lafaye is head of the Busi­ness Intel­li­gence Centre (pôle Intel­li­gence éco­no­mique) at the Natio­nal Centre of Space Stu­dies (CNES, Centre Natio­nal d’Études Spa­tiales). Her mis­sion is to gather infor­ma­tion on issues around space eco­no­my and to iden­ti­fy the growth dyna­mics of this high­ly com­pe­ti­tive market.

What is the prin­ci­pal trans­for­ma­tion have you obser­ved in today’s satel­lite market ? 

Murielle Lafaye. The major uphea­val is that, over the past 5 years, the satel­lite mar­ket has shif­ted from a sec­tor focu­sed on ins­ti­tu­tio­nal and defence needs, to a more clas­sic eco­no­mic model based on ser­vices. In 2015, under the impe­tus of the Ame­ri­can govern­ment, public autho­ri­ties aban­do­ned their inhe­ri­ted model of satel­lites to favour ad-hoc pur­chases of ser­vices from pri­vate com­pa­nies. It is a real para­digm shift !

These pro­cu­re­ments of ser­vices by public autho­ri­ties are also what allow new players to pros­per, even though they are not always pro­fi­table. Pla­net (for­mer­ly Pla­net Labs) and other new actors in the obser­va­tion of Earth thus receive orders from the Natio­nal Geo­spa­tial-Intel­li­gence Agen­cy, which is part of the U.S. Depart­ment of Defense.

But late­ly, the pri­vate sec­tor is also inter­es­ted in these new space com­pa­nies. Even if their invest­ments are smal­ler than those of public ins­ti­tu­tions (in 2019, 95% of invest­ments were from the public sec­tor as oppo­sed to only 5% from the pri­vate sec­tor), they are on the rise each year. Fur­ther­more, some clients and inves­tors have begun to join the boards of direc­tors. For example, the Cli­mate Cor­po­ra­tion, a sub­si­dia­ry of Mon­san­to-Bayer, joi­ned the board of Pla­net. Their aim is to influence the objec­tives of space mis­sions to gene­rate infor­ma­tion more adap­ted to their busi­ness. Per­haps they could even influence the pro­duc­tion of satel­lites in the long run. Ove­rall, the diver­si­ty and the amount of these funds is what makes it pos­sible for new com­pa­nies to chal­lenge his­to­ri­cal actors. Pla­net is now in third place on the space ima­ge­ry mar­ket, just behind Maxar and Airbus.

In what ways are these new ope­ra­tors dis­rup­ting the space economy ? 

Up until now in space tele­com­mu­ni­ca­tions, com­pa­nies main­ly put satel­lites in geo­sta­tio­na­ry orbit. They were pro­du­ced one by one and cost seve­ral $100M. Today, Spa­ceX (with Star­link), Ama­zon (with Kui­per), or the Cana­dian Tele­sat, want to create mega-constel­la­tions of seve­ral dozens of thou­sands of satel­lites : some­thing that was uncon­cei­vable only a few years ago.

Howe­ver, the inno­va­tions of com­pa­nies that engage in the mar­ket are not only quan­ti­ta­tive. We are now able to make satel­lites capable of gene­ra­ting medium-reso­lu­tion images (5 to 10 m) of the sur­face of Earth for a few $1M. More and more ope­ra­tors even offer metric reso­lu­tion obser­va­tions : such a pre­ci­sion was up to now the pre­ro­ga­tive of govern­ments and their intel­li­gence services.

Many com­pa­nies, like the Chi­nese com­pa­ny Jilin or the Ame­ri­can com­pa­ny Pla­net, have thus spe­cia­li­sed in the obser­va­tion of Earth, to detect or manage natu­ral disas­ters, to fol­low agri­cul­tu­ral pro­duc­tion, or to observe oil and gas infra­struc­tures. In the case of Pla­net, the rise of pri­vate invest­ments allo­wed the com­pa­ny to rapid­ly under­take big mer­gers and acqui­si­tions. Hence, it acqui­red two com­pa­nies using satel­lites to pro­vide high-reso­lu­tion images of natu­ral and urban envi­ron­ments : the his­to­ri­cal pro­vi­der Black­bridge and its Rapi­dEye satel­lites in 2015, and the Ter­ra Bel­la satel­lites, after rea­ching an agree­ment with Google in 2017.

How do you explain the expo­nen­tial growth of the num­ber of satel­lites produced ? 

By the strong need for connec­ti­vi­ty, and the need to manage vast flows of infor­ma­tion. Ter­res­trial infra­struc­tures are no lon­ger suf­fi­cient. The­re­fore, it is neces­sa­ry to seek a com­ple­men­ta­ry solu­tion in space. New acti­vi­ties for space in space will also require connec­ti­vi­ty and power­ful means of communication.

The increase in pro­duc­tion was made pos­sible by the expan­sion of the satel­lites mar­ket, the opti­mi­sa­tion of pro­duc­tion lines (par­ti­cu­lar­ly due to robo­ti­sa­tion), and the minia­tu­ri­sa­tion of elec­tro­nics. The com­bi­ned have resul­ted in a signi­fi­cant decrease in cost, and explains the abun­dance of ini­tia­tives. His­to­ri­cal­ly, satel­lites were pro­du­ced one by one and for a spe­ci­fic mis­sion, whe­reas now, they are mass-produced.

The main issue today has become access to laun­chers : there are not enough to meet demand in the face of the abun­dant pro­duc­tion of satel­lites. The cost of laun­ching has been redu­ced. This has made space more acces­sible and increa­sed demand. Eve­ryw­here in the world, engi­neers work on this issue : there are no less than 150 pro­jects on micro-laun­chers at present. Even if they do not all come to frui­tion, it shows the dyna­mics of this sec­tor, in which many new pro­fes­sions are crea­ted to orga­nise pro­duc­tion, tests, trans­por­ta­tion, and the inte­gra­tion of these satel­lites on the launch sys­tem. We are also seeing the growth of pro­fes­sions such as satel­lite constel­la­tion ope­ra­tors, and bro­kers, who buy the avai­lable places on laun­chers to resell them at retail, taking a com­mis­sion in the process.

Has this rise of the pri­vate sec­tor led States to take a step back ?

Not at all ! They rely more and more on the pri­vate sec­tor, but States are not with­dra­wing from the space sec­tor, as it remains an issue of sove­rei­gn­ty. The Minis­ter for the Armed Forces, Flo­rence Par­ly, thus stres­sed in her speech in Janua­ry 2020 that “our satel­lites and their pro­tec­tion are a stra­te­gic impe­ra­tive”. To address the risks in orbit (pro­li­fe­ra­tion, debris, espio­nage…) and pro­tect their satel­lites, the French Space Com­mand and the North Atlan­tic Trea­ty Orga­ni­sa­tion (NATO) thus deci­ded to create the Space Centre for Excel­lence (Centre spa­tial d’excellence) in Tou­louse, which will become ope­ra­tio­nal in 2023. 

Many States, for­mer­ly clients of Euro­pean or Ame­ri­can his­to­ri­cal actors, are see­king to regain control of the satel­lite sec­tor by encou­ra­ging the crea­tion of natio­nal com­pa­nies. This is par­ti­cu­lar­ly the case in Chi­na : the coun­try tries to keep up with the Uni­ted-States and will pro­ba­bly pro­duce natio­nal coun­ter­parts to Star­link and Kui­per. It is also the case in India : the 15^th of Februa­ry 2021, the Indian govern­ment announ­ced its wish to also create new natio­nal com­pa­nies in order to address issues of Earth obser­va­tion, com­mu­ni­ca­tion and/or connectivity.

Moreo­ver, States conti­nue to play their regu­la­to­ry role. France, for example, crea­ted a law on Space Ope­ra­tions (Loi sur les Opé­ra­tions Spa­tiales – LOS) to force ope­ra­tors to equip their satel­lites with thrus­ters to deor­bit them at the end of their lives and avoid space pol­lu­tion. The­re­fore, the access to space is not beco­ming enti­re­ly pri­va­ti­sed, rather it is beco­ming more open. 

Inter­view by Juliette Parmentier