1994 US INDUSTRIAL OUTLOOK Chapter 28 Space Commerce Revenues of the commercial space industries are expected to increase to $6.5 billion in 1994, up 23 percent over revenues of $5.3 billion in 1993. Satellite manufacturing will reach a record level, reversing a decline in deliveries the previous year. Before reading this chapter, please see "Getting the Most Out of Outlook '94" on page 1. It will answer questions you may have concerning data collection procedures, factors affecting trade data, forecasting methodology, the use of constant dollars, the difference between industry and product data, and sources and references. For other topics related to this chapter, see chapters 20 (Aerospace), 29 (Telecommunications Services), and 30 (Telecommunications and Navigation Equipment). Space commerce consists of five major areas of space-related goods and services: commercial space launches, satellite communications equipment and related services, satellite remote sensing, materials research and processing in space, and space-based private R&D facilities. Although the first commercial satellite, Early Bird, was launched in April 1965, commercial activity in many of the areas covered in this chapter began only in the 1980's following new Federal policies to privatize space activities. Space commerce industries do not have separate Standard Industrial Classification (SIC) codes. The bulk of revenues in space commerce are generated by satellite communications, composed of satellite manufacturing, satellite services, and sales of earth station equipment. Revenues in the commercial space industries reflect the rapid growth in new applications for satellite services and ground equipment created by new technologies. Expanding markets for new technologies include mobile services and equipment for vehicle tracking, navigation and positioning, as well as for voice and data communications. Another milestone in the privatization of Government space activity will occur in 1994--the first year of operation of commercial remote sensing satellite systems. In one case, a privately funded satellite will collect and transmit ocean color data back to earth. Operators of this small earth observation satellite, known as SeaStar, have contracted to provide NASA with data for five years. Another private remote sensing system, known as WorldView, has been licensed by the U.S. Department of Commerce. INTERNATIONAL COMPETITIVENESS The following countries currently are capable of both building and launching satellites: the United States, Japan, France (in cooperation with the European Space Agency), Russia, China, India, Israel, and South Korea. In satellite manufacturing, U.S. builders traditionally capture more than 60 percent of the world's market for commercial communications satellites, followed by France, Russia, the United Kingdom, Germany, Italy, and Canada. The United States also is the acknowledged leader in developing new technology and new markets for small satellites, and for mobile satellite navigation and tracking services. Virtually all commercial satellites contain some U.S. technology. The U.S. commercial launch industry's primary competition is Arianespace, a French-led European launch company. Arianespace and U.S. launch companies dominate the world market. China launched a U.S.-built satellite in 1990, but a change in U.S. policy has suspended future launches of U.S. payloads pending resolution of issues concerning transfer of missile technology. A recent change in U.S. policy will allow Russia to launch a limited number of U.S.-built satellites. In remote sensing--primarily involving space-based images of earth's resources--the two-satellite U.S. Landsat system has about 40 percent of the world market. Landsat's major competitor is SPOT Image, a French-led European consortium that also has two satellites. SPOT is partly owned by Centre National d'Etudes Spatiales (CNES), the French space agency. In addition, Russia is marketing remote sensing data. India, Japan, Canada, and Brazil also have remote sensing satellites used primarily for noncommercial purposes: India to monitor crops and monsoons, and Japan to study urban land use, oceans, and forests. All of the areas of U.S. space commerce have some foreign direct investment, except launch vehicles. Three foreign companies have U.S. facilities for manufacturing earth stations, and one major U.S. producer of communications satellites, Loral Space Systems Corp., has 49 percent European ownership. In satellite services, two international satellite communications carriers have 50 percent or more foreign ownership. Spacehab, a privately financed space-based R&D facility, has a 30 percent foreign investment. Export earnings by the space commerce sector are expected to increase to $1.6 billion in 1994 from $700 million in 1993. Ten communications satellites worth a total of $1.1 billion will be produced by U.S. companies in 1994 for other nations or international organizations, compared with five satellites produced in 1993. The U.S. launch industry, including the makers of Delta, Atlas and Titan boosters, will generate about $480 million in services revenues from the launch of six payloads for foreign countries and international organizations. ENVIRONMENTAL PROFILE Space environment concerns are focused mainly on the problem of space debris, especially in the lower earth orbits (100 to 200 miles altitude). Also of concern is debris falling on land and water, and contamination of air and the ozone layer from solid rocket fuel. Space debris is composed mainly of pieces of rockets left in orbit after launching satellites and the breakup of older satellites. Because of the high velocity at which these objects travel, 30,000 miles per hour or greater, they are considered particularly hazardous to other space missions, manned and unmanned, such as the Space Shuttle, U.S. and foreign satellites, space stations, and other space projects. Space stations will require expensive shielding for protection from space debris. Reducing future amounts of space debris will require an international treaty, as well as more costly rocket design and construction. Outlook for 1994 Combined revenues from all aspects of the commercial space industries are expected to reach $6.5 billion, an increase of nearly 23 percent over the $5.3 billion in 1993. The demand in 1994 for U.S. services for launching medium and large payloads to orbit is expected to increase 25 percent to $580 million from $465 million in 1993. The commercial space launch industry has scheduled seven launches of medium-sized communications satellites, compared with five launches in 1993. In addition, there will be two launches of smaller payloads by small launch vehicles. For further information on the launch industry, see chapter 20 (Aerospace). The U.S. satellite manufacturing industry is scheduled to deliver 15 communications satellites worth about $1.4 billion in 1994, up from the 10 satellites worth $1.1 billion in 1993. Revenues from the manufacture of ground station equipment and antennas are expected to reach $1.85 billion in 1994, compared with $1.6 billion in 1993. Business communications systems and home television users constitute the largest markets for fixed earth stations. The fastest growing market for mobile receivers is for positioning and navigation with the Global Positioning System (GPS), a system operated by the Department of Defense (DoD) that is open to civil users. More information about these satellite manufacturing industries is provided in chapter 30 (Telecommunications and Navigation Equipment). Long-Term Prospects The U.S. satellite manufacturing industry is expected to continue producing at a high level during the next five years, driven in part by demand to replace those U.S. satellites reaching the end of their operational lives. In addition, the industry will supply satellites for new markets in direct-to-home pay-TV broadcasts, and for mobile users. Including international sales, the U.S. satellite industry has 71 communications satellites scheduled for delivery in the next five years, maintaining its traditional 60 to 70 percent share of the global market. The market will continue to develop for small, low-cost satellites called lightsats. Lightsats are satellites weighing less than 1,000 pounds, primarily designed for use in low or medium earth orbit systems. In 1993, 11 satellite companies had applications pending before the Federal Communications Commission (FCC) for such systems to provide worldwide cellular telephone service, tracking of vehicles and shipments, and digital message services. In total, these plans call for more than 270 lightsats involving investments of more than $4 billion. Space Launches The demand for launch services will be adversely affected by the changes in DoD launch plans, although this may be offset in part by launches for planned military systems using small communications satellites in low earth orbit. Launch companies will receive a steady flow of orders to place civil satellites in orbit, as well as nonmilitary satellites of foreign countries and international organizations. International competition for U.S. booster manufacturers will increase when the Ariane 5, a new class of larger and lower cost European launch vehicles, enters the market in 1995. Satellite Services Satellite services include those provided by six major U.S. operating companies, which own or lease transponders (repeaters/amplifiers) on U.S. domestic satellites for services between fixed earth stations, and other companies that provide services to mobile users. Total revenues from fixed and mobile services are expected to reach $2.3 billion in 1994, an increase of about 24 percent over the $1.9 billion in 1993. Fixed services account for about 85 percent of all U.S. satellite service revenues; nearly 65 percent of these revenues will be generated by video transmissions for cable TV networks and the national broadcast networks. Land mobile applications, such as location and messaging services for trucks, account for about 80 percent of all mobile satellite revenues; aviation and shipping applications make up the balance of the mobile market. For further information on satellite services see chapter 29 (Telecommunications Services). Mobile satellite services are the newest services market. In 1994, the first U.S. satellite in geostationary orbit dedicated to mobile communications is to be launched by the American Mobile Satellite Company (AMSC). Growth of the proposed low orbit smallsat systems will depend on market response, and the allocation by the FCC of additional portions of the radio frequency spectrum to accommodate multiple communications systems. Remote Sensing In remote sensing, cameras, radar, or other sensing devices in an orbiting spacecraft acquire and store information about the earth's surface. Revenues from remote sensing include sales of unenhanced satellite data, and those from consulting firms and service providers. Total U.S. revenues of $300 million are expected in 1994, compared with $250 million in 1993. The newest U.S. imaging satellite, Landsat 6, was launched in 1993. The availability of higher resolution spatial data, useful in mapping applications, is expected to generate increased demand for Landsat data, and make it more competitive with Europe's SPOT Image data. The Landsat remote sensing satellites are built and owned by the U.S. Government and managed by the National Oceanic and Atmospheric Administration of the Department of Commerce. The DoD will be responsible for the procurement and launch of Landsat 7 in 1997, and NASA will be responsible for its operation. A private company, EOSAT, has operated the Landsat system and marketed the unenhanced data since 1985 under Government contracts. Worldwide revenues from the Landsat system, which include U.S. domestic and international sales of data, and earth station access fees paid by foreign operators in 16 countries, amounted to about $36 million in 1992. Worldwide revenues from SPOT Image, the French-led European remote sensing system, were $46 million in 1992, but SPOT's revenues are not strictly comparable to U.S. system revenues because SPOT's figures also include sales of maps and other value-added services. Demand for data from Landsat and SPOT by insurance and utility companies, as well as state and local governments, surged during and after the U.S. Midwest floods in 1993. The data was used to assess crop and soil losses, alterations in river patterns, and transportation and utility infrastructure damage. New technological applications were developed by merging data from two European satellites to show in a single image both the extent of Mississippi River flooding and what lay underwater. Radar data from the European Space Agency's Earth Remote Sensing Satellite (ERS) was combined with pre-flood imagery from SPOT Image. Remote sensing satellite applications include land use planning, oil and mineral prospecting, agricultural assessments, disaster assessments, cartography, environmental surveys, and electric power line siting. The U.S. commercial market for software, hardware, and consulting services has been expanding rapidly because of the declining cost of computers and data processing, and because of the shifting from aerial photography to remote sensing data as the source for mapping technology. For many applications, satellite data cost less and are more up-to-date than photography. The fastest growing application for satellite data is for its inclusion in Geographic Information Systems (GIS) that combine large databases permitting satellite images to be overlaid with demographic and economic data. GIS are used in making business marketing decisions, as well as for urban planning and government administration. In 1994, the first privately funded and operated remote sensing satellite, SeaStar, is scheduled to be launched on a Pegasus rocket. SeaStar will provide ocean color data under contract to NASA and other users for five years. In 1993, the Department of Commerce licensed a private, high definition (five meter) remote sensing satellite called WorldView. Space-based Materials Processing Materials processing in space is broadly defined as activities which make use of the near-zero gravity and high vacuum environment of space. These activities include both industrial operations and research in materials and life sciences, such as the growth, processing and analysis of organic matter, the study of human, animal, and plant physiology, and life support systems. At present this work is driven by research objectives, not commercial sales. Researchers to date have tended to use the NASA Shuttle for work because of the availability of crew members and the ability to return experiments to earth. Shorter periods of microgravity can be obtained on suborbital sounding rockets, drop towers, and parabolic aircraft flights. NASA's Office of Advanced Concepts and Technology sponsors research with the goal of fostering commercial applications. These programs include cooperative agreements with industry and NASA-sponsored grants. NASA also sponsors 17 Centers for the Commercial Development of Space. Each Center encompasses a consortium of universities, commercial firms, and state agencies that is engaged in research and testing of commercial technologies with potential commercial applications. Seven of the Centers are built around materials processing and life sciences. Each Center receives about $1 million in NASA funding, as well as additional funds and in-kind support from their private sector and university members. Commercial R&D Infrastructure NASA's Office of Advanced Concepts and Technology is directly involved in developing hardware, infrastructure, and transportation resources for commercial users. In 1993, the first privately funded research lab for microgravity experiments was flown on the Space Shuttle. Spacehab Inc., a commercial company, developed the lab, a pressurized metal module with 44 "lockers" that are leased for research experiments on the Shuttle. Spacehab expects to generate leasing revenues of about $30 million a flight. Most of the first flight was leased by NASA, but Spacehab also expects foreign governments and state government agencies to fund experiments on future flights. Space Insurance Space insurance includes coverage for loss of vehicle and payload, damage to Government launch facilities, and third-party liability. Vehicle and payload insurance covers the value of the launch vehicle and spacecraft from launch through initial operations, and may include coverage beyond that for commercial operations in orbit. Third-party liability insurance is designed to cover injury or damage to parties other than those directly involved with the payload and launch vehicle. The amounts of insurance required for third-party liability and Government property damage for commercial space launch operators are determined by the Secretary of Transportation. Rates for communications satellites, which average about $100 million in insured value, were in the range of 15 to 18 percent of payload value in 1993. The amount of available insurance coverage, called the market capacity, for a typical commercial launch and payload is about $250 million.--Donald Dalton, Business Issues Analysis Division, Economics and Statistics Administration (202) 482-1190, August 1993. Additional References Space Technology Innovation, NASA Office of Advanced Concepts and Technology, NASA OACT Code C, 300 E St. SW, Washington, DC 20546. Telephone: (202) 358-0695. Space Business Indicators, Office of Space Commerce, U.S. Department of Commerce, Rm. 7060, 14th and Pennsylvania Ave. NW, Washington, DC 20230. Telephone: (202) 482-6125. Aviation Week & Space Technology, McGraw-Hill, Inc. 1221 Avenue of the Americas, New York, NY 10020. Telephone: (212) 512-2000. Satellite Communications, Cardiff Publishing Co., 6300 S. Syracuse Way, Englewood, CO 80111. Telephone: (303) 220-0600. Space News, The Times Journal Co., 6883 Commercial Dr., Springfield, VA 22159. Telephone: (703) 658-8400. Via Satellite, Phillips Publishing Inc., 7811 Montrose Rd., Potomac, MD 20854. Telephone: (301) 340-2100. Estimates of U.S. Space Commerce Revenues (in millions of dollars) Industry 1990 1991 1992 19931/ 19942/ Commercial satellites 1,000 1,300 1,300 1,100 1,400 Satellite services 800 1,200 1,500 1,850 2,300 Fixed 735 1,115 1,275 1,600 1,950 Mobile 65 85 225 250 350 Satellite ground equipment 860 1,300 1,400 1,600 1,850 Mobile equipment 145 280 350 420 480 Commercial launches 570 380 450 465 580 Remote sensing data and services 155 190 210 250 300 Commercial R&D infrastructure -- -- -- 30 60 TOTAL 3,385 4,370 4,860 5,295 6,490 1/Revised. 2/Forecast. SOURCE: Estimates for satellite industry by U.S. Department of Commerce, International Trade Administration (ITA), Office of Telecommunications. Commercial launch estimates by ITA, Office of Aerospace. Remote sensing estimates by U.S. Department of Commerce, Economics and Statistics Administration, Office of Business Analysis. -------------------------------------------------------------------------- This file extracted from Dept. of Commerce, Economics & Statistics Division's Jan. 1994 NATIONAL TRADE DATA BANK (NTDB) CD-ROM, SuDoc C1.88:994/1/V.1 Processed 02/16/1994 by RCM (UM-St. Louis Libraries)/ USIO0033 .