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