Commercial remote-sensing satellites will be launched at a declining
rate during the next decade. The reasons: uncertainty about the
U.S. government’s future demand for commercial satellite imagery,
consolidation within the industry and longer satellite life expectancies,
according to an industry analyst.
Despite an expanding market for civilian applications of satellite
imagery, only governments make significant purchases of high-resolution
images, where objects one-meter (about 3 feet) wide or smaller can
be seen. The satellites required to produce that detailed imagery
are expensive to build and launch, so companies will be reluctant
to invest in new satellites, unless the government can guarantee
it will purchase more imagery, said Amy-Jane Wade, space systems
analyst at Forecast International Inc., a market intelligence firm
in Newtown, Conn.
A case in point is the decision by Space Imaging Inc. to delay
the launch of new satellites that can produce half-meter (19-inch)
resolution imagery, said Wade in an interview. The Thornton, Colo.-based
firm owns and operates the Ikonos satellite, which can produce one-meter
imagery. In April, many newspapers nationwide printed an Ikonos-generated
image of the Navy EP-3 surveillance plane at the Lingshui air base
in China, after it was involved in a collision with a Chinese fighter
plane.
"Before Space Imaging decided to launch Ikonos, [company officials]
were under the impression that the U.S. government would be one
of its largest purchasers of remote-sensing data," said Wade.
About a year and a half ago, government officials said U.S. agencies
would purchase $1 billion worth of imagery during the next five
years. But, she said, "the government has failed to live up
to that."
Last year, the National Oceanic and Atmospheric Administration
granted licenses for half-meter imaging to two U.S. firms: Space
Imaging and EarthWatch Inc. Both companies intend to have a satellite
with half-meter capability during the next two to five years. "While
governments will be the number-one purchaser of half-meter images,
this extremely high resolution will not immediately have as many
commercial applications as one-meter images," said Wade. "It
is expected that with time, new applications and product lines involving
half-meter imagery will surface."
The U.S. government also has taken indirect measures that will
help the commercial remote-sensing industry, she said. In 2000,
the United States did not renew launch quotas with Ukraine and Russia.
Access to inexpensive launch vehicles from these countries will
lower overhead costs for U.S. companies, she explained.
Space Imaging, meanwhile, is "having a difficult time trying
to convince shareholders that they need to produce another satellite"
for half-meter imagery, said Wade. The company is planning a 2004
launch of a commercial imaging system with a half-meter ground resolution.
Other U.S. commercial providers of high-resolution data, such as
EarthWatch and Orbital Imaging Corp., also are relying on future
government contracts. The reality, said Wade, is that "commercial
applications for half-meter resolution images are limited."
EarthWatch, based in Longmont, Colo., is expected to launch a 0.61-meter
imagery satellite in late 2002. "That is going to be very attractive
to the U.S. government," said Wade. After its second launch
failure, the company, she said, "may surprise us in August
with a half-meter-capable imaging satellite aboard its QuickBird
spacecraft."
Orbital Imaging, in Dulles, Va., plans to launch satellites with
one-meter imagery capability, said Wade. Orbimage’s OrbView
-3 and -4 are awaiting launch in 2001.
The government has been slow to respond to the greater availability
of commercial imagery, Wade explained, because agencies such as
the Defense Department and the Central Intelligence Agency, for
the most part, rely on their own satellites. "They are slowly
moving to the commercial market," she said. That crossing-over
may take time, which is not good news for imagery providers. "These
companies are spending millions of dollars in new technologies,"
Wade said. "They are hoping that the government will make due
on their promise."
Brian Soliday, Space Imaging executive vice president for global
products and services, told National Defense that the U.S. government
has not been a "reliable" customer.
"While the U.S government, and in particular the National
Imagery and Mapping Agency, is a mature user of remote sensing technologies,
they have not developed a robust commercial imagery strategy,"
said Soliday. "The government has not decided what it wants
the commercial industry to be."
The company currently is not suffering "from a lack of demand,"
said Soliday. "The backlog of the company is healthy and the
demand will continue to grow." Business in North America, particularly,
has "exceeded our early expectations."
Today, Space Imaging is mainly a business-to-business and a business-to-government
service provider. The company–whose major shareholders are
aerospace giants Lockheed Martin and Raytheon Co.–has developed
an extensive value-added service organization, he said.
More than half of Space Imaging sales are to government customers,
mainly for national defense applications. "We expect the commercial
sector to grow more rapidly as companies see the value of this technology
as a business and a decision support tool," said Soliday. "Over
time, we hope to gain about 30-40 percent of the market share of
commercial remote sensing imagery."
Satellite Production
In a recent study, Wade predicts that remote sensing satellite production
will drop sharply in 2003 and continue to slide through the remainder
of the decade. Approximately 152 commercial remote-sensing satellites–worth
about $10 billion–will be produced, one-third within the next
couple of years. That level of production is lower than what had
been predicted in past years, said Wade.
The production value for civil and commercial remote-sensing satellite
systems will be nearly $14 billion for the next 20 years, according
to Forecast International. Wade estimates that 224 satellites will
be manufactured during this period, with 152 slated for production
within the next 10 years. Production will take a dive in 2003 and
another in 2012.
The production decline can be attributed to several factors:
Although satellite production rates will fall, Wade said, the market
for remote-sensing imagery and value-added services is expected
to soar. These services involve the manipulation of raw imagery
to make it usable for specific customers. About 90 percent of the
profits in the remote-sensing industry come from value-added imagery,
said Wade. "When an image is taken, it’s a raw image.
The service providers touch it up or interpret the data."
Despite a predicted decline in production, she said, the remote-sensing
market is one of the fastest growing sectors in the satellite industry,
spawning "ever-increasing product lines and user applications."
Future international competitors to U.S. firms include ImageSat
International, a venture led by Israel Aircraft Industries. The
firm announced it would be launching a 0.82-meter imagery satellite
by next year.
Among the industry’s non-military customers are farmers and
urban developers, said Wade. Remote sensing data are used to determine,
for example, what portions of someone’s land have diseased
crops.
According to Forecast International, the following are the remote-sensing
satellite systems to watch for, in the near future:
The financial failures of other satellite programs, such as Iridium
and Globalstar, have "caused investors to shy away from the
commercial part of the industry," she said. "It is hoped
that the emergence and success of the remote-sensing market will
restore confidence in the space industry as a whole."
The development of nano- and micro-satellite technology will "play
an important role in price and demand of remote-sensing satellites
and data in the future," she said. "While smaller satellites
might not provide the best resolution available, they do grant access
to nations and universities that may not otherwise have been able
to afford imagery being sold on the commercial market."
The industry will have to target consumers who are willing to "pay
a higher price for timely high-resolution images," Wade said.
"Many distribution centers can send images via the Internet
to their clients within hours of receiving the image." This
is convenient for industries like fishing and archaeology, where
clients need timely data, but are not necessarily in a fixed location,
she said. "By making imagery accessible by a number of means,
a company can increase its client base."
Most government-owned civil satellite systems have low resolution
or are mission specific, noted the Forecast International study.
For example, Landsat has a 30-meter imaging capability and Europe’s
CryoSat will study mass imbalances of Antarctic ice sheets. The
upshot is that most imagery produced by government-run programs
is not useful to the commercial industry, said the report.