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. Last Updated: 07/27/2016

Satellite Market Skyrockets




PARIS -- Demand for commercial satellites, launches and related services is booming and looks set to continue despite uncertainties in the newly created market for low and medium earth constellation satellites.


Analysts say demand for large geostationary, or GEO, satellites continues to dominate the market, which remains strong ahead of Friday's scheduled first commercial launch of Europe's new generation Ariane-5 rocket. Ariane-5 is designed to launch the largest GEO satellites that are planned for operation in the next century.


"The U.S. domestic market represents a huge, almost captive market for American satellite manufacturers - the number of satellites they launch is incredible," said Phillip Balaam of the Ariane space rocket launch company.


"In the U.S. market, it doesn't matter how many satellites they launch, they always fill them up. Demand tends to follow supply," he told a space transportation conference.


As for Europe, he said: "Virtually all the satellites are full and this is a trend we see continuing in the near future."


The Asia-Pacific market remains difficult, he added. Financing for satellite projects is returning, confidence is returning but the pace is slow.


"Thank God there is India and Japan. They are the driving force [behind] demand in the region at the moment," Balaam said.


The last 18 months have been turbulent for low, or LEO, and medium Earth, or MEO, satellite constellations for global mobile telephone and data services.


After launching more than 70 satellites into orbit, satellite telephone company Iridium filed for protection from creditors in August under chapter 11 of the U.S. bankruptcy code.


Another company, ICO Global Communications, went bankrupt the same month but won new investment in November from telecommunications pioneer Craig McCaw.


A third company, Globalstar, does not have its telephones ready yet.


"One has to ask the question for the first generation of constellations, 'are they at the right place at the right time?'" Balaam said. "All of the analysts on Wall Street are waiting to see results."


Analysts see strong latent demand for Internet services in the Asia-Pacific region that should boost the opportunities for new satellite projects that currently can't find financing.


The number of Internet users worldwide will surpass 300 million by the end of next year, analysts say. In the Asia-Pacific region there are currently only 15 million users, 10 million of whom are in Japan.


The latent demand for Internet services is slated to emerge when those areas get back the disposable income lost in the Asian financial crisis.


In 1998 alone the launch of satellites into GEO was worth an estimated $45 billion dollars - 58 percent of the market value of all commercial launches.