Fewer Launches Planned for Imagery Satellites.

Industry study predicts growing demand for high-resolution color pictures

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:

* Many one-time civil missions are earmarked for launch over the next few years, with no follow-on units expected.

* New satellites have longer design lives and do not require replacement as often as their predecessors.

* Satellite constellations are undergoing consolidation, which will decrease the need for spacecraft in the long term.

* Dual-use systems will merge civil and commercial programs together and reduce the number of spacecraft needed.

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:

* EROS, built by the U.S.-Israeli joint venture ImageSat, already has $300 million in imagery contracts after the launch of its first satellite in December 2000. ImageSat has three main investors: Israel Aircraft Industries, El-Op Electro-Optics, of Israel; and Core Software Technology, of Pasadena Calif.

* RapidEye, a German constellation of four imaging radar satellites focused on the agriculture market.

* France and Italy combined an optical system from France (Pleiades) and the Italian radar constellation, Cosmo-SkyMed, to form Cosmo-Pleiades. The system will be used for government and commercial purposes.

* The European Space Agency recently proposed a global remote-sensing system called Global Monitoring for Environment and Security. The system would cost approximately $1.5 billion and comprise several European remote-sensing systems, some of which currently are in orbit.

* Israel and Ukraine have agreed to share resources. Ukraine will launch Israeli satellites, and in return Israel will share communications and imaging services.

* China and Brazil are sharing technology, as both countries work on the CBERS remote-sensing program. The satellites are built in Brazil by engineers from both countries and launched by Chinese Long March vehicles.

* The Indian Space Research Organization is planning IRS-2 and -3 series.

While the next 20 years may see a decline in satellite production, the number of ground receiving stations will increase, proving the demand for imagery, said Wade. "The faster an end-user is able to access data, the more valuable the imagery."

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.-