Unlike modern politicians, former American president Calvin Coolidge was known for not talking. When asked by reporters what a minister had spoken about during a religious service he had attended, "Silent Cal" replied, "Sin." When asked to elaborate further, the 30th president paused and added, "He’s against it."
Mr. Coolidge would have fared poorly in Paris, a city and a culture known famously for its ability to engage in conversation. You see this attribute no matter where you go. Conversation is king. This was true at Euroconsult’s World Satellite Business Week summit held last September 7-10, which again gathered the industry’s leaders in to share forecasts, brief the financial community, the press and senior leaders on our industry’s state of affairs. (See the Satellite Business Week show report on page 14).
Despite the good news (and there was plenty of it, centered around emerging markets for broadband and mobile services, as well as an increased use of satellites in support of emerging economies in Africa, observational and environmental sciences and the appetite of the global enterprise) the issue of how to ensure that satellites get into service was, understandably, remained a source of anxiety. It is a challenge with long roots.
The ProtoStar and Sea Launch bankruptcies were naturally top of mind among operators and reporters, and this fed discussions in the corridors. The exchanges were revealing. While the global economic panic has not reached into the satellite community to any significant degree, people debated whether a launch company is "too big to fail." Of course, the phrase originated in the halls of government, and relates to automobile companies and investment banks. Yet it also describes a concern with getting payloads into orbit efficiently. This buzz was heard audibly at the SSPI Cocktail Reception and throughout the "salons" of the Napoleon Room and Winter Garden.
Asked whether Intelsat and fellow operators, including SES, might find it in their interest to fund the survival of Sea Launch, CEO David McGlade thoughtfully acknowledged that Sea Launch was vital. He upheld the company’s public commitment to honor its agreements, but did not bite when a reporter asked whether he and others should take a more aggressive, somewhat unconventional action, such as a letter of credit or possible direct investment, to prevent a potentially darker fate.
The question and the answers reveal a conflicted issue. Companies such as Arianespace have maintained, perhaps correctly, that the operators’ insistence on lower and lower launch prices have harsh consequences. Sea Launch, which essentially tried to accommodate these requests to generate business with lower prices, may be a symbol of the big issue which may not go away.
The industry is struggling to learn the importance of the Sea Launch lesson. For any satellite executive, it forces an assessment of the realistic options available to accommodate the growth in demand for more satellite service. The question is important – extremely so, because one can check the global Yellow Pages and not come across many companies advertising low-cost, fast turnaround services to lift 6,000 kilos worth of modern telecommunications – the lifeblood of the global economy – into orbit! (Not today at least.) Among the future options, which were duly noted by Romain Bausch, Elon Musk, Greg Wyler and others, is the idea that Chinese and Indian rockets, as well as new ventures such as the Falcon fleet of SpaceX, will fill the gap and ultimately reinvent the market. Since these options represent a point of departure, resistance to change and the weight of mixed opinions will be more prevalent in the near-term. Long-term, change will come.
With a steady stream of launches pending and apparently more on the way in support of the growing set of needs, two quotes come to mind. They reflect the conversation which will be carried into the "salons" of Satellite Week in New York, PTC, the Satellite show in Washington, D.C. – and dozens of other events in between:
The first comes from a persistently prescient article, written in 2004 by Owen Kurtin and Michael R. Flynn. Appearing in Satellite Finance under the title "30, 50 & 70," it addressed this issue during a time of overcapacity.
Its authors wrote, "As counterintuitive as it may sound in a situation of chronic oversupply, a big part of the long-term olution lies in increasing launch frequency……Frequent launches will wing out launch vehicle reliability issues, lowering insurance costs and contributing to space access affordability….Frequent flights implymass production of standardized vehicles, and such vehicles will be lessexpensive."
The second I offer to you from a man writing a few years before our industry began. Set within today’s struggle, which may be defined as a necessary evaluation between price leverage and the need for deeper collaboration among all of the players for the sake of expansion, Shakespeare’s warning to another group of businessmen is worthy of a sentence of Silent Cal, "If you wrong us, shall we not revenge?"
Let the talk continue...
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Lou Zacharilla is the Director of Development of the Society of Satellite Professionals International (SSPI). He can be reached at lzacharilla@sspi.org
