Section 3 is the Market Assessment/Market Analysis section, it contains the following sections:
3.1 Communications Market 3.2 Space Manufacturing 3.3 Remote Sensing 3.4 Government Missions 3.5 Transportation Missions
3.6 Entertainment 3.7 New Missions 3.8 Space Utilities 3.9 Extraterrestrial Resources 3.10 Advertising

Table of Contents for Section 3.3

3.3 Remote Sensing
3.3.1 Introduction
3.3.2 Remote Sensing Market
3.3.3 Launch System Attributes
3.3.4 Confirmation of Market Opportunity
3.3.5 Conclusions and Recommendations
The Full Section Index is at the end of this Section

Commercial Space Transportation Study


3.3 Remote Sensing

3.3.1 Introduction

The data in this chapter of the report are concerned primarily with assessing the launch vehicle market for deploying remote sensing satellites. Included is the market demand for commercial, U.S. government, and international launches, and the overall assessment of the launch market. Commercial launches are forecast to begin in 1995. The data on the commercial launch vehicle market are based upon several U.S. companies deploying a significant number of satellites in the latter half of this decade and then expanding and replenishing their satellite deployments in later years. The assessment also evaluates the remote sensing market to determine if there is a viable market for the commercial satellite operator and therefore provide a basis for validating launch vehicle demand.

Space remote sensing is a high-growth international market that is poised for rapid expansion in commercial applications over the next 5 to 7 years. Several U.S. companies are planning to deploy their own remote-sensing satellites and market their own space imagery.

The origin of the market can be traced to the U.S. government, which began promoting the civil uses of government satellite data by enacting the Landsat Remote-Sensing Commercialization Act of 1984. Earth images from Landsat satellites were being released by 1985 on a routine basis to the private sector. The French government, a consortium of European countries, and several prominent industrialized nations also pursued similar economic policies. By the late 1980s, several governments invested heavily in remote-sensing satellite programs in preparation for stimulating a new commercial market that would create jobs and exports for their domestic industries.

The civil sector has responded to governments' vision. Throughout the world today, the private sectors and government agencies of many nations have begun to rely on satellite imagery. The remote-sensing market has emerged from its embryonic state and is experiencing double-digit growth. It is a "high tech" industry with the potential to generate several billion dollars in sales annually within 10 years. Many commercial companies are poised to enter the market with better products than are currently being produced from government satellites.

Several initiatives and trends in the marketplace indicate significant growth in commercial remote-sensing satellite deployments in the next 10 years. There is substantial demand for more detailed images than can be provided by the current government satellites. Images are limited to 10- to 30-meter resolution. Current and future end-user applications are demanding better resolution. Governments are responding slowly with long-range programs to meet the demand. However, several U.S. companies announced plans in 1993 to independently launch their own constellations of remote-sensing satellites with 1- to 5-meter resolution that will be available in the mid-90s.

Independence from government-provided space imagery will stimulate the remote-sensing market over the next few years. Higher resolution (1- to 5-meter) imagery from commercial satellites will begin to compete with government data in the private sector. By the end of this decade, sales of space images from commercial satellites are expected to draw even with the share generated from government satellites and become the dominant supplier by the year 2005.

Combined launches of remote-sensing satellites from government, international, and commercial operators will rise from an average of 8 per year in the first half of this decade to 10 per year through the second half of this decade. Launches will remain relatively flat early next decade, maintaining an average of 10 per year through 2005.

Worldwide sales for the emerging space imaging market topped $190 million in 1992 and are expected to reach $332 million by 1995. The introduction of commercial satellite data in the mid-90s should cause the market to grow at a moderately higher rate and reach $823 million by the year 2000. As the market matures and diversifies in the 2001 to 2010 time frame substantial increases in private sector demand for space imagery will accelerate market growth. Annual revenues will top $2.7 billion in 2005 and surge to $6.8 billion in 2010.

Employment figures for the remote-sensing field are estimated at under 22,000 in 1991, including the aerial remote-sensing segment. The number is expected to jump to over 58,000 by the end of this decade, with most of the growth in high-tech jobs related to value-added imaging services, geographic information system (GIS) workstation engineering and equipment production, and satellite ground operations. Employment will nearly double to 100,000 by the year 2010.

3.3.2 Remote Sensing Market

Sales of Earth images produced by government satellites will continue to dominate the commercial remote-sensing market up to the end of this decade. The U.S. and French governments and the ESA consortium of European countries have ongoing long-range programs for replacement satellites with improved sensor performance in image resolution, spectral bands, swath, revisit times, data throughput, and other satellite parameters. These new satellites will come on line later in this decade and early in the next decade. Furthermore, Japan, India, Russia, China, Canada, and other countries also have the technical capability and resources to offer competitive remote-imaging data.

Commercial users, including universities, and state and local agencies, now depend on government satellite data for an expanding range of economic, environmental, analytical, surveillance, education, and regulatory uses. Earth images with 10- to 30-meter resolution are commonly available from an expanding commercial infrastructure.

There was substantial activity in 1993 to secure U.S. government approval for deployment of commercial satellites with a capability to provide 1- to 5-meter resolution data to the private sector. The remote-sensing industry believes there is substantial pent-up demand in a range of existing and creative new industrial uses for the more detailed images. If the industry estimates prove-in, they could earn several billion dollars annually and create tens of thousands of high-tech jobs in the process by the early part of the next decade.

The market value of worldwide sales of satellite and aerial remote-sensing data has been estimated by several sources to exceed $2 billion in 1992, with satellite data and derived product sales estimated at $190 million (fig. 3.3.2-1) . The estimates project that the space imagery market will expand by at least 15% annually through the first half of this decade. The market will grow from $190 million for 1992 to $332 million in 1995, as illustrated below. The entry of several commercial satellite operators by mid-decade should increase competition and industry sales of space imagery more rapidly in the latter half of this decade.



Figure 3.3.2-1. Projected Revenue From Satellite Space Images

By the 1995-96 timeframe, the private sector will reduce its dependence on government-provided low Earth orbit (LEO) imagery by deploying its own commercial remote-sensing satellites. These commercial satellites will provide better-resolution Earth images; more frequent coverage than government satellites currently provide; customized products to niche markets; and timely, responsive delivery of imagery to a growing number of users.

The entry of the commercial satellite operators and their concentrated efforts to expand the market will stimulate demand for space images. Worldwide sales have the potential to approach $823 million annually by the year 2000. The largest share of space imagery growth will come from the existing remote-sensing market serviced by aerial imaging products.

In the latter part of the decade new users, requiring specialized space imagery, will account for significant revenue gains. Sales of value added, or enhanced, images will therefore outpace the demand for more satellite data. Satellite operators will also provide Earth and Earth limb data directly to end users, as well as value-added resellers (and indirectly, through sales of ground station licenses). The growth should be large enough so that several commercial satellite operators can successfully compete for significant shares of a robust space imagery market.

In the longer term, revenue from space imagery is forecast to overtake the aerial market by the early part of the next decade. The combined total market revenues for satellite remote-sensing, including government, international, and commercial, indicate explosive growth in the range of 50% annually, in the 2001 through 2010 timeframe. The market has the potential to exceed $2.7 billion by 2005, and by the end of the decade to post $6.8 billion, as illustrated below. From discussions with industry providers and the companies planning to deploy commercial remote-sensing satellites, the researchers concluded that value-added operations that enhance space imagery will claim the largest share, as illustrated in figure 3.3.2-2.


Market Value ($M)Growth (%)
20002005201020052010
Satellite Data$3311,0112,5166150
Value-added4551,6884,2015750
Ground Stations3747762432
Total Market Value8232,7476,7935349

Source: CSTS market research estimates.

Figure 3.3.2-2. Market for Satellite Remote Sensing

During 1995 through 2000 worldwide launches for all remote-sensing satellites will increase moderately from 7 to 11 per year, as illustrated in
figure 3.3.2-3. This projection includes commercial operators who will begin deploying satellites in 1995 and ramp up to five deployments by 1997 and level off to three per year by 2000. The technology investments in low-cost satellite hardware during this decade will substantially lower commercial remote-sensing satellite costs and promote long-term growth.

Source of data: CSTS remote-sensing database.

Figure 3.3.2-3. Combined Deployment of Government, International, and Commercial Remote-Sensing Satellites

The overall market will have matured by 2001 and will be able to sustain and moderately increase the number of commercial satellites launched through 2010. Launches in the range of 10 to 12 per year will be based upon three fundamental factors. First, commercial operators who enter the market in the mid-90s will have recouped their investments and begun to expand their operations. The operators will begin replacing their first-generation satellites on the average of every 5 years. Second, the potential for substantial increases in sales, offset by lower operating margins, will fuel a surge in deployment of low-cost, specialized satellites for niche markets. Commercial satellite launches will increase to four in 2005 and six annually by the year 2010. Third, government and international launches will remain relatively constant, concentrating primarily on replacing aging satellites and initiating several new, multipurpose satellite projects.

The commercial demand for satellite remote images in the U.S. has been stimulated over the last decade as a result of the government's decision to allow satellite imagery to be marketed commercially. Data produced by U.S. government spacecraft are managed through the Earth Observation Satellite Company (EOSAT), Lanham, Maryland. The company was designated by the government in 1985 to market and distribute remote images to domestic and worldwide users. Multispectral Earth images using a thematic mapper on the Landsat-4 and -5 satellites provide 30-meter resolution in five electro-optic wavebands. The Landsat-6 satellite was to provide panchromatic data of 15-meter resolution, and 30-meter at multispectral (at bands 1 through 5, and 7) and 120-meter at band 6. Landsat-7 plans to provide 5-meter panchromatic images.

Other major providers in the international area are the French government and the ESA consortium of European countries. Japan, Russia, China, and India have also deployed satellites, and they provide remote data for commercial users. The French space organization, Centre National d'Etudes Spatial (CNES), offers satellite data to the worldwide market through a commercial company: Satellite Pour Observation de la Terre (SPOT) Image, Toulouse, France. Currently the SPOT-2 and -3 satellites acquire panchromatic data with 10-meter resolution, and 20-meter resolution in three electro-optic wavebands. The data are marketed and distributed worldwide through commercial affiliates and subsidiaries of SPOT Image.

EOSAT's and SPOT Image's combined worldwide sales revenue in the satellite remote sensor market for 1992 was $62 million. Both companies maintain they are profitable, however, their operating costs do not include payments for their governments' investments in acquiring and deploying the satellites that produce their sales.

Survey data provided by companies interviewed for this study indicate the cost for providing digital satellite imagery compares favorably with aerial imagery in an expanding commercial market. There is strong demand, both nationally and internationally, for topographic imaging of the Earth and the Earth limb from space using multispectral (electro-optic and microwave) sensors with 1- to 5-meter resolution to meet various commercial end user applications, including:

a. Commodity management, such as agriculture and forestry products.
b. Environmental monitoring and management.
c. Surveillance (real-time and non-real-time).
d. Mapping, charting, and geodesy.
e. Natural resource exploration.
f. Economic development, such as urban planning.
g. Crisis management, and others.
The increasing demand in the commercial sector provides significant economic momentum for producing more remote images. Aerial imagery has generated 10 times more commercial revenues than satellites due to the high demand for more detail resolution than the leading suppliers of satellite imagery (Landsat and SPOT) have been able to provide.

3.3.2.1 Market Evaluation

Overall, two key characteristics indicate moderate to high growth for satellite-based imagery over aerial imagery through the end of this decade. First, users will require medium resolution images in the 1- to 5-meter range over larger Earth viewing areas. The new commercial Earth-sensing satellites will provide this capability over broader area coverage more cost effectively than aerial platforms. Second, satellite data has the potential for reaching the customer much faster than aerial data. Satellite performance and costs in these regimes compete favorably with airborne platform costs.

In 1985, EOSAT was selected by NOAA to operate the Landsat satellites and to market and distribute the imagery for a 10-year period. NOAA, NASA, and DOD fund the acquisition of the satellites. EOSAT is required to provide the imagery at uniform prices to all commercial users. Because of this reliable and consistent source of imagery that is available on a long-term basis, industry has been able to build up a stable commercial infrastructure, which includes:

a. End users with inhouse capabilities to process and analyze satellite data,
b. Value-added firms, which enhance the images and resell to end users,
c. Entrepreneurial companies capitalizing on technology transfer from government-developed imaging capabilities,
d. Defense contractors transferring technology to commercial uses.
New government satellites (e.g., Landsat -7 and -8, the EOS family, and other international programs such as SPOT -4 and -5, and Helios) to be deployed over the next 10 years will improve the multispectral resolution of satellite sensors to the 1- to 5-meter range.

The remote-sensing market includes revenues generated from images produced by satellite operators, enhanced images provided by value-added resellers (VAR), and from fees paid by ground station operators to receive satellite imagery directly. Significant growth in commercial demand for satellite imagery is expected in the future, primarily due to the existing and planned future government satellite programs. 1992 sales of satellite data and related products were estimated at $190 million, as detailed in figure 3.3.2.1-1 below. 1995 sales of satellite data alone should double, realizing an increase from $65 to $131 million.


Product / Year199192939495969798992000
Satellite Data54.765.493.0110.0130.8156.2187.3225.4272.6331.3
Value-added 80.5 97.9 117.6141.2170.3206.1250.3304.3371.0454.7
Ground Stations26.027.028.129.230.431.632.934.235.637.0
Total161.2190.3238.7280.4331.5393.9470.5563.9679.2823.0

Source: Mapsat Market Review, 1991, KPMG, Peat Marwick.

Figure 3.3.2.1-1. Satellite Segment of the Remote-Sensing Market


Several companies are targeting the higher resolution segment of the market where sales of aerial imaging produced an estimated $2 billion in sales in 1992. Typical aerial imaging resolutions are 1 meter. Earth coverage, however, is over relatively small land areas when compared to the broad area scenes that can be produced by satellite sensors. U. S. companies believe they can offer panchromatic 1- to 5-meter resolution images that compete favorably with aerial sensors. Multispectral imaging and stereo capability that are not easily provided from aerial platforms will also have important market implications for competing successfully.

The satellite operators must also be able to supply timely imagery in a digital form that can be processed and analyzed quickly and accurately on geographic information system (GIS) equipment. The long-term rate of market growth depends heavily on how fast the industry can promulgate universal digital imagery standards for processing satellite, aerial, and terrestrial images and displaying the data on GIS and other desk-top terminals and workstations. The issue has been identified and standardization initiatives are underway.

The market for remote-sensing satellite data products is estimated to approach $823 million annually by the end of the century, as illustrated in figure 3.3.2.1-2. Commercial companies in the remote-sensing satellite market will realize the largest share of the double-digit growth forecast for the next 5-year period, and by the year 2010 will push the market to $2.7 billion.



Figure 3.3.2.1-2. Market for Remote-Sensing Satellite Data

The satellite remote-sensing data market, in the 2005 to 2010 period, will experience 50% annual growth as standardized digital satellite imagery gains wide acceptance across an expanding list of commercial customers in the areas of environmental monitoring and assessment, geological mapping, commodity management, urban planning, and real-time surveillance.

3.3.2.2 Mission and System Requirements

The large majority of remote-sensing satellites operational since 1991 and most of those planned through 2005 are under 3500 kg and will be deployed to low Earth polar orbits, mostly at 400 to 900 km altitudes. Appendix D.2 summarizes the remote-sensing satellite deployments over this time period. The database indicates that a small quantity of satellites, however, will continue to be deployed to geostationary orbit, primarily for global weather forecasting.

There will also be a few heavy government satellites to LEO, in the 5000 to 6000 kg range, that combine large suites of sensors for multiple missions. The largest share of LEO satellites are clustered in four groups organized by mass to orbit, as illustrated in figure 3.3.2.2-1 below. Satellites to be deployed by commercial operators dominate the 200 to 500 kg group. Government, international, and commercial satellites in the 900 to 1400 kg category are relatively equal. Government and international satellites account for all deployed satellites in the bundles above 1500 kg, and international deployments outnumber U.S. deployments in the heaviest group.



Figure 3.3.2.2-1 LEO Deployment of Remote-Sensing Satellites

Source: CSTS Remote-sensing Satellite database, Appendix D.2.

Note: Not included in the figure are small quantity of satellites in two groups - LEO satellites in the >4000 kg, medium Earth orbit and geostationary satellites. The former are multipurpose Earth observation platforms and the latter are weather satellites and remote sensors combined with communications satellites.
Several U.S. companies are planning to develop commercial remote-sensing satellites, in the 200 through 1000 kg range, which incorporate visible and near infrared electro-optic (EO) sensors. There is also interest in radar images; however, adding this capability with EO sensors makes the payload package heavier, and more complex and expensive. The researchers concluded radar will not be combined with EO sensors on commercial remote-sensing satellites.

From low Earth polar orbits, remote sensors will look down to provide more Earth detail (e.g., 1 to 5 meter resolution) than can be obtained from operational satellites, such as Landsat-5 (30-meter multispectral), or from SPOT-2 and -3 (10-meter panchromatic, 20-meter multispectral).

The diversity of the private sector applications, as well as the larger government missions, require more than just satellites to respond to the demand. There are Earth stations operated by users that receive satellite imagery. There is also a growing number of third-party companies acquiring and enhancing Landsat and SPOT images and reselling their value-added products to the end users.

Operational life of remote-sensing satellites has been in the 3- to 5-year range. Advances in satellite technologies, such as lighter weight, more reliable buses, propulsion, solar array, avionics, recorders, multispectral sensors, computer processors, telecommunications, and others now make it possible to develop LEO satellites with 5-year lifetimes. Some commercial operators are estimating 7-year lifetimes.

Payload costs have also been reduced through miniaturization of electronics that provide more function per volume-mass and lighter weight materials that extrapolate into lower cost, smaller, less expensive launchers.

Low-cost processing of satellites at launch sites will be required to aid in the optimization of launch costs. Users will want to launch replacement satellites within 2 weeks in order to prevent loss of sales from a failed operational satellite.

The satellite owners will want to achieve accurate placement of their satellites in polar orbits. Onboard data storage in the hundreds of megabits will be required to reduce the number of ground stations required for downlinking of data.

3.3.2.3 Commercial Market Enablers

The market for commercial remote-sensing in the U.S. was precipitated by the government's decision to release Landsat data to commercial users through NOAA. The 1984 Landsat Act modified the approach. Space imagery began to be released through EOSAT, a commercial company, which markets and distributes government satellite imagery to the private sector, under the auspices of NOAA. The most recent government policy changes, to the Landsat Act in 1992 , reinforced the government's decision to make available comprehensive space remote-sensing data to the private sector. The government has planned several major investments in advanced technology to improve remote-sensing satellites over the next 15 years that are comparable with advances planned by governments of other countries.

A stable commercial infrastructure is required to ensure a viable and growing remote-sensing market. As a result of more than 10 years of government investment and support, the commercial infrastructure has been built up to the point where end users can rely and depend on gaining access to government-provided satellite imagery.

The marketplace must make adjustments in the products and services offered to the end users to ensure growth in the remote-sensing field. Companies perceive substantial demand for more detailed space imagery than is being provided from government satellites. Several firms have major projects to deploy their own remote-sensing satellites with 1- to 5-meter resolution in the mid-1990s.

From the research conducted for this report, a low-cost launch system that costs in the range of $3 to $5 million is required to expand the number of commercial satellites to be deployed to polar, LEOs. However, at today's launch system prices, commercial flight rates will build up to an average of three per year by the end of this decade. Replacement and growth satellites will push the average to four by the year 2005. In the longer term, growth in the remote-sensing market will require up to six launches by the year 2010 . Based upon discussions with the companies planning to deploy commercial satellites, if a $7 million per launch CSTS system were available in 2001, the estimated launch rate would increase from 6 to 12 annually by the 2010 timeframe. Also if the price were lowered to $4 million, the number would more than triple to over 18.

Small, inexpensive satellite buses capable of functioning as highly stable platforms for remote sensors will be required. Operational lifetimes in the 5- to 7-year range are also required.

A responsive launch system infrastructure that is capable of launching a replacement satellite within 15 days of a failed satellite will be needed by commercial operators in order to avoid major losses of sales revenue.

Data continuity between existing government satellite, aerial, and terrestrial sources with imagery from commercial satellites will be pivotal. Substantial growth in the market will depend on standardization of remote imagery in a universal digital format that can be accessed by a wide range of user workstations. The work on standardization of digital data has begun, however, it will take several years to secure international agreement. The explosive growth of commercial space imagery may not occur until after the widespread implementation and acceptance of standard format digital data.

Revisit time intervals between Earth scenes will be important to users in several applications. Currently, Landsat revisit times are every 16 days. As illustrated below in figure 3.3.2.3-1, there are many applications that require revisit images on a weekly basis, and others requiring as little as 2-day intervals between coverage.


ApplicationBandsResolutionScene Size (Min) Desired Coverage
Nonrenewable resources explorationvisible, near-IR, radar2-30 m 40 km X 40 kmseasonally
Land use planningvisible, near-IR, radar2-10 m 10 km x 10 kmweekly-monthly
Mappingvisible, near-IR, radar1-5 m30 km x 30 km monthly
Resource Managementvisible, near-IR, radar5-30m 40 km x 40 kmweekly-monthly
Environmental Assessmentvisible, near-IR, radar2-10 m 40 km x 40 kmweekly
Agricultural/Forestryvisible, IR5-30 m40 km x 40 km 2 days-2 weeks
MarineIR, radar20-1000 m80 km x 80 km 2-7 days

Source: NASA, Office of Technology Assessment, 1993.

Figure 3.3.2.3-1. Sensor Requirements for the Remote-Sensing Market

The CSTS researchers found that commercial satellite operators are planning to deploy small constellations of remote sensors that will be capable of providing 2- to 3-day revisit times that are required by the commodity management applications in agriculture, forestry, and marine fisheries markets.

3.3.2.4 Business Assessment

To determine if it made good business sense for the CSTS Alliance to develop a launch system for this market, the study team concluded it was essential to evaluate the potential for the satellite owners to recover their investment from the revenues they earn from the remote-sensing market.

The analysis described below concluded that it was a feasible investment over a time horizon of 5 years. The investment costs were provided from field research data collected during discussions with analysts and from interviews with business leaders and technical authorities in the remote-sensing field. The several market reports referenced in this report provided data on the remote-sensing market and cost of operations for commercial enterprises.

The researchers concluded that there was adequate growth in the remote-sensing market during the 1995 to 2010 timeframe to support the entry of several commercial satellite operators. The size of the market is expected to grow from $332 million in 1995 to $823 million in the year 2000. In the longer term, the market would post annual sales of $2.7 billion in 2005 and surge to $6.8 billion by 2010.

To determine the near-term trends in satellite investments, data on the acquisition and deployment costs of remote-sensing satellites and their launch systems were assessed for the 1994 to 1998 timeframe, using the database in appendix D.2. The researchers concluded the near-term investment in satellites and launch systems will remain relatively strong at an average of $1.6 billion annually over the 1994-98 timeframe, as illustrated in figure 3.3.2.4-1 below.


Element19941995199619971998Total 1994-985-Year Average
P/L Costs ($M)1,0701,4851,1051,0151,4316,1061,221
LV Costs ($M)3544073125495012,123425
Total ($M)1,4241,8921,4171,5641,932$8,229$1,646

Source: CSTS remote-sensing satellite database,
Appendixes D.2 and D.4.

Figure 3.3.2.4-1. Remote-Sensing Satellite and Launch Vehicle Investment

Beginning in 1995, the data above include investments by commercial operators that will augment government spending. Detailed inspection of the data (see app. D.4) revealed the commercial operators' investment will reach $1,195 million for the 1995-98 timeframe, with the launch costs accounting for more than one-third, or $450 million for 12 launches. This compares to $4,291 million and $1,319 million for government and international launch and satellite figures over the same period.

The operators expect to recover their investments through revenue earned on satellite imagery and related product sales to end users and value-added resellers. Individual commercial operators investments will be on the order of $135 million for a small constellation of three satellites, with 5-meter or better resolution, ground stations, mission operations, and end user workstations. Today's launch costs are approximately one-third of the total investment.

Satellite operators expect to recover their investment in 3 years. Their revenue projections appear to be very optimistic. Time horizons of up to 5 years with more moderate sales figures were used for this analysis. The three revenue streams listed below (fig. 3.3.2.4-2) were evaluated for the assessment:


Revenue Projections (Millions of 1994 constant $)
199619971998199920002001Total
Optimistic10501252003004001085
Nominal53570140250350850
Conservative52050100150200525

The revenue streams include sales of satellite data, enhanced
imagery, and fees from ground stations.

Figure 3.3.2.4-2. Three Projected Investment Revenue Streams

From a business perspective, it may be reasonable for commercial operators to expect revenues from satellite imagery in the range of $100 million per year, after a 3-year startup period. Revenues should increase at a more moderate rate in later years in accordance with the figures above. A $525 million revenue projection over 5 years was baselined.

It is unlikely that 5-meter satellite data can be sold at a significantly higher price than that charged for Landsat or SPOT imagery. Previous market research indicates the end users who purchase remote images have not shown a preference to purchase higher resolution images for a premium price. Therefore, commercial companies must provide comparably priced and just as reliable products as those available through EOSAT, or SPOT Image. The researchers decided that the higher resolution images would encourage users to consume the new operators data and that this would compensate for the lower pricing, therefore not seriously limiting the commercial operators revenue streams.

The data were used in an investment business model constructed to assess the viability of a satellite operator's investment and their ability to recover the investment over a reasonable timeframe.

A top-level parametric financial analysis was performed to assess the viability of commercial remote-sensing as a business. A rate of return of 20% was established as a floor for the investment. The baseline assumptions are listed in figure 3.3.2.4-3.


TY$Ms (4% infl)199419951996199719981999 200020012002
Revenues5.623.460.8126.5197.4273.7284.7
FA investment11.437.042.224.90.09.814.523.637.7
Cost of goods sold9.47.626.229.26.112.719.76.814.2
After-tax earnings-16.2-20.0-51.9-60.312.448.790.7148.7150.4

Figure 3.3.2.4-3. Commercial Remote-Sensing, ROI Assumptions

The above numbers assume that a spare satellite was built and used as a replacement satellite when one from the original constellation failed. Value-added expenses were assumed and the advertising/marketing expenditures included in the operating expenses (not shown) were at a $5 million per year level because of the relatively narrow target market. The full tax implications were used, assuming there was no other portion of the business that could benefit from the tax benefits associated with the initial losses. For simplicity, tax benefits were not carried forward.

The model treated the business as an ongoing entity, with replacement satellites produced and deployed at the end of life for the first-generation constellation. For terminal value, a book value of the assets at the end of 2008 (the assumed end of the program for the profitability calculations) plus the incremental net working capital was assumed.

The result of the analysis concluded that a company could successfully invest in a commercial space remote-sensing business and expect to recover its investment over a 5-year period using a 20% return rate. The data for this conclusion are illustrated in figure 3.3.2.4-4 below.



Figure 3.3.2.4-4 Parametric Analysis of 5-Year Investment

3.3.2.5 Satellite and Launch Vehicle Investments

The CSTS alliance market study was primarily interested in determining the launch systems needed to deploy remote-sensing satellites. The worldwide market for the equipment (i.e., remote-sensing satellites) combined with their launch systems approached $1.8 billion for 1992, as detailed in
figure 3.3.2.5-1 below. The 1993 market is estimated to be worth more than $1.8 billion.
1991929394 95969798
Payload 1,6351,1601,3871,0701,485 1,1051,0151,431
Launch vehicle410598455354407 312549501
Total ($M)2,0451,7581,8421,4241,8921,4171,5641,932

Sources: Space Directory, 1992-93; Civil Needs database,
NASA, January 1993, and space industry periodicals.

Figure 3.3.2.5-1. Market for Remote-Sensing Satellites and Launch Systems

Remote-sensing satellites will continue to be deployed at a rate of between 6 to 10 per year worldwide during the 1994 to 2000 timeframe. U.S. government and international users account for all remote-sensing satellite deployments in 1994. However, U.S. companies will begin deploying commercial satellites in 1995 and will reach six in 1999 before leveling off at three per year in 2000, as illustrated in
figure 3.3.2.5-2 below.
Year of Deployment 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
U.S. Government 3 3 2 3 3 1 1 4 1 4
International 6 3 8 4 3 2 5 4 3 3
Commercial 0 0 0 0 1 3 3 5 6 4
Total9 6 10 7 7 6 9 13 10 11

Source: CSTS remote-sensing satellite
database,
Appendixes D.2 and D.3.

Figure 3.3.2.5-2. Government, International, and Commercial Launches

Commercial satellite deployment will be more than two-thirds of the total in 1999 before dropping below half by the year 2000. In the longer term, commercial satellites will account for a larger share of deployments in the 2001 to 2010 timeframe, rising from four to six per year by the end of the decade.

3.3.2.6 Market Infrastructure

In 1985, the U.S. government made a 10-year agreement with the Earth Observation Satellite (EOSAT) Company to provide satellite images to nongovernment end users. The approach allows commercial users to purchase data directly or buy licenses to receive satellite data through their own ground stations, as illustrated in
figure 3.3.2.6-1 below. VARs also purchase the satellite data, enhance the imagery, and resell it to the end users at a premium.

Figure 3.3.2.6-1. Remote-Sensor Satellite Industry Infrastructure, Today

The approach has been successful to the extent that EOSAT is able to operate profitably as long as it does not have to develop and produce its own remote-sensing satellites. SPOT Image has a similar situation with the CNES of the French government. The high-growth commercial uses will change the infrastructure of the market. Commercial users are demanding better products and services, such as improvements in image resolution and shorter revisit times. Government-administered satellite programs have two difficulties in responding to commercial demand. First, they have difficulty justifying taxpayer development funds for commercial requirements. Second, government administered programs cannot respond fast enough to the changing dynamics of the commercial market.

The remote-sensing satellite industry infrastructure must change to accommodate the high growth in the market. To capitalize on the market opportunities the commercial operators will build and operate their own satellites. The remote-sensing market infrastructure will adjust over the next several years to incorporate the commercial operators. A notional approach to the change is illustrated in figure 3.3.2.6-2.



Figure 3.3.2.6-2. Remote-Sensor Satellite Industry Infrastructure, Emerging.

During the next phase of the CSTS program, the launch system providers must begin working with the commercial satellite operators to develop the detailed satellite and operational requirements. The CSTS researchers concluded that a low-cost launch system for commercial remote-sensing satellites will be essential to ensuring the success of commercialization of the market.

3.3.3 Launch System Attributes

3.3.3.1 Launch System Characteristics

In general, the remote-sensing satellite operator wants the launch system provider to be responsible for all requirements related to delivering the satellite to its proper orbit, on time. Program leadtime of up to 2 years from selection of the launch system to the actual deployment has been acceptable in the past, however, being able to replace a failed operational satellite within days is also desirable. Competitive forces in the market may force operators to require shorter leadtimes, to as little as 6 to 3 months. High reliability of the launch system is important in order to reduce the insurance costs associated with deploying the satellite to its intended orbit.

Commercial satellite mass is 200 to 1,000 kg. Low Earth polar orbits of 400 to 900 km are required. Payload volume of between 2 to 4 meter3 will accommodate the first generation of commercial space sensors.

Positioning a satellite to a specific point in space is important and requires a narrow time window for the launch. Operators want to pass over the same geographic point periodically at the same local time, that is, sun-synchronous orbits. This is a more demanding requirement for polar orbiting satellites and will require reliable launch operation timelines, highly accurate guidance and staging, and precision range-tracking instrumentation.

Some of the companies planning to commercialize space remote-sensing do not have the broad range of technical personnel, expertise, and equipment necessary to certify the integrity and operational readiness of their satellites before deployment. Furthermore, mission planning, especially for launch ballistics and orbit insertion, will require considerable expertise. The launch system company must provide the technical support and make available integration and test facilities to the satellites' operators.

In the short-term, launch system costs for the satellite operators are in the $12 million to $14 million per flight range. This will limit the buildup in commercial deployments from one in 1995 to an average of three per year by the end of this decade. Small reductions in the prevailing price of a launch system do not appear to alter a company's business decision to deploy more satellites. The researchers found that companies began to increase the number of launches when the price was lowered by 50% as illustrated in figure 3.3.3.1-1.



Figure 3.3.3.1-1. Remote-Sensing Launch System Elasticity

The satellite operators will maximize their deployments of satellites in the longer term if the launch price can be reduced. As illustrated in
figure 3.3.3.1-1, the number of satellites increases much faster at the $4 million per flight level than at the $7 million; however, further price reductions did not urge operators to think about deploying more satellites. At this point, reductions in their internal costs for ground infrastructure (e.g., ground stations, imaging equipment, GIS hardware and software, and end user workstations) would have to be realized before more reductions in launch prices would wring out more demand.

Assuming that a CSTS launch system is available at a more attractive price in the early part of the next decade and that it can be used for noncommercial flights also, the number of deployments are forecast to increase sharply. By 2005, the number of satellites deployed on a CSTS launch system could reach 12 per year and climb to 18 or more per year by 2010.

3.3.3.2 Launch System Preliminary Capabilities

Commercial satellites can be lofted to orbit by small launch vehicles. The operators are evaluating air launched and ground-launched solid rocket and liquid fueled vehicles that are capable of throw weights of up to two metric tons to LEO. Developers are designing satellites to the launch loads and environmental requirements of the air-launched, multistage Pegasus or ground-launched multistage vehicles based on solid rocket motors. Typically longitudinal stress of under 8 g's is suitable. A standard interface between the payload (satellite bus and sensor instruments) and the launch vehicle is needed to provide commonality among the several types of launch vehicles. The separation interface between the boosters and payloads uses Marmon clamps.

Orbital injection requirements will require high-precision trajectories with final trim capabilities. Trade studies will probably be performed after launch vehicle selection to determine if the satellite bus or the upper stage of the launch vehicle will be used for the final orbit adjustments.

Launch reliability will be extremely important to commercial satellite operators. Insurance costs can amount to 7% to 15% of the launch price. Therefore, a CSTS launch system must provide a 99% ascent reliability, or probability of mission success. Achieving this requirement may require significant redundancy in the launch vehicle subsystems and equipments to ensure fail-safe operations.

The redundancy requirements for all flight vehicle subsystems, except primary structure and pressure vessels, should be established on an individual subsystem basis. Designs should emphasize fail-safe modes, which allow the vehicle to sustain a failure and successfully complete its mission.

3.3.3.3 Unique Ground Handling Requirements

Some satellite operators are small companies and will not have the facilities and equipment to verify the integrity of the payload prior to deployment. The space launch system should therefore include provisions to provide ground test facilities to assist the small company in space-qualifying their payloads.

Dynamic tests must be considered on commercial operators' satellites to ensure that mechanical interfaces between payloads (sensor instruments and spacecraft) and launch vehicles function properly.

3.3.3.4 User/Space Transportation System Interfaces

The launch system must incorporate standard interfaces across the payload to launch vehicle interfaces. The potential customers could not provide the researchers detailed information about the payload to booster interfaces. This type of data should be collected during the next phase of the CSTS program, however, some examples of interface requirements include mechanical payload attach fittings to the launch vehicle. Vehicle-payload electrical interfaces must also be standardized to ensure that test, checkout, and sustaining power to the payload are provided during integration and prelaunch operations.

3.3.3.5 Launch System Refinements

The CSTS researchers concluded from field research that a new-generation commercial launch system that is available in 10 years must incorporate these requirements:
a. Lower launch costs.
b. Improvements in launch system reliability.
c. Responsiveness and performance.
In the short term, however, existing launch systems must accommodate the commercial satellite operators' needs for lower costs. Single-satellite launch vehicles are estimated at $14 million per flight by the commercial operators. To respond to their concern for lower cost launches, the operators should consider manifesting more than one satellite on a single flight. This could be a feasible approach to lowering launch system costs.

The mass and volume of commercial remote-sensing satellites is relatively low as compared to those produced for government remote-imaging missions. These low-volume features allow accommodation of multiple satellites on a single launch. A typical commercial satellite mass is estimated at under 400 kg. Up to four payloads could be launched on one of several launch vehicles that are available today. For example, a Titan II could launch three to four satellites at once, with performance margin. To the first order approximation, each satellite could be placed in orbit for under $10 million each.

Since some of the satellite owners will be small companies with limited technical staff, equipment, and facilities, the launch system providers must provide support in a range of areas:

a. Space flight operations, including mission planning, spacecraft tracking, orbit planning and altitude determination, data acquisition and uplink services, and special orbital requirements such as time of month, of day, and phase of the moon to determine the constraints on the launch time.
b. Spacecraft and launch vehicle integration, including design of the spacecraft with the physical constraints.
c. Integration of instruments with spacecraft, including thermal, electrical, communications, data recording and downlink, and command and control.
d. Development of ground test program, including thermal vacuum, EMI, and vibration testing to ensure the integrity of the payload design and its implementation.

3.3.4 Confirmation of Market Opportunity

An interim version of this report was circulated to the prospective satellite operators, the companies that would use a potential new launch system to deploy remote-sensing satellites, and other organizations involved with the remote-sensing market. Their comments have been included in the report.
Dr George May, Director
Keith J. Draper, System Engr
Institute for Technology Development
Stennis Space Center, MS 39529
Douglas B. Gerull, Walter Scott
World View Imaging
Livermore, CA 94550
Martin Titland
CTA Inc
Rockville, MD 20852
Dr. Cory Williams,
Marion Rose, Ken Witherlyd
BHP Minerals International
San Francisco, CA
Dr Keith Lyon
SeaStar Program Mgr
Orbital Sciences Corp
Dulles, VA 20166
Dr. H. A. Franklin, Pete Mote,
Dr. Sandra Feldman
Bechtel Corporation
San Francisco, CA
Neal Anderson
Business Devel.
Ball Aerospace,
Space & Systems Engineering Division
Broomfield, CO 80038
Dr J. Bossler, Dr. Carolyn Merry,
Mike Varner, Dr. William Anderson
Center for Mapping
Ohio State University
Columbus, OH 43212
Don Walklet
Lockheed Space Systems Div.
Sunnyvale, CA 94089
Dave Thompson, president
Donald Burrowbridge
Spectrum Astro
Gilbert, Arizona 85234
Rick Fleeter, president
Richard Warner, vice pres.
Aero Astro Space
Herndon, VA 22070
Fred Henderson, president
Geosat Committee Inc.
Norman, OK 73070

3.3.5 Conclusions and Recommendations

The private sector is planning to produce its own space imagery and sell the data to commercial users. Initial remote-sensing satellite deployments are scheduled to begin in 1995. The number of new satellites required through the late 1990s to accommodate commercial demand will be modest. Several companies are planning to operate small constellations of two, three, and even seven satellites. By the end of this decade, commercial operators will account for an average of 3 of the 11 estimated annual satellite deployments illustrated in
figure 3.3.5-1.

Source: CSTS remote-sensing database,
Appendixes D.2 and D.3.

Figure 3.3.5-1. Combined Deployment of Government, International, and Commercial Remote-Sensing Satellites

In the longer term, the explosive growth in the space remote-sensing market will require continued launches of commercial satellite deployments for replenishment and real growth. Four commercial satellites will be launched in 2005, and up to six per year by 2010.

Commercial satellites weights are in the 200 to 1000 kg range and are deployed to circular, low Earth polar orbits, in the 400 to 900 km range, as illustrated in figure 3.3.5-2.



Source: CSTS Remote-Sensing Satellite database,
Appendixes D.2 and D.3.

Figure 3.3.5-2. LEO Deployment Ranges of Commercial Satellites

Note: Not included in the figure are small quantity of satellites in two groups -- LEO satellites in the > 3500 kg, medium Earth orbit and geostationary satellites. The former are multipurpose Earth observation platforms, and the latter are weather satellites and remote sensors combined with communications satellites.
In the short term, small launchers with the capability to place payloads up to one metric ton to LEO have been selected by commercial satellites companies for their initial launches in the 1995 to 2000 period. Using today's launch price of $14 million per launch for small launchers, the companies will require three to four launches annually.

The CSTS researchers' assessment of the remote-sensing market concluded that a relatively small number of satellites will be able to meet the end users demand for space imagery during the 1995 to 2000 period. From the launch provider's perspective, this means three to four launches per year, which is not high enough to warrant the development of a new CSTS transportation system.

Demand must be substantially higher in order to make the major investment needed to create and operate a new transportation system. The satellite companies would not significantly increase the number of satellites deployed until the price were cut by as much 50% as illustrated in figure 3.3.5-3.

Without cost savings in other parts of the commercial companies operations, a two-thirds reduction in today's launch system prices seems to be the threshold for substantially increasing the number of satellites deployed. Also, further price reductions, such as to 10% of prevailing prices, would not stimulate further launch demand, because the operating and investment costs of the satellite operator's ground infrastructure must also decrease proportionally.



Figure 3.3.5-3. Launch Vehicle Elasticity of Demand

To achieve a 50% or more reduction in launch costs for the mid-1990s may require interim solutions, such as multiple manifesting of satellites on existing launch vehicles. Either multiple remote-sensing satellites or other types of payloads with similar deployment requirements, that is orbit altitude and inclination, may be able to be combined. Space research, LEO mobile communication, and microgravity processing are examples of complementary commercial applications that can be combined with remote-sensing.

The initial surge to populate small constellations will sustain three deployments of new remote-sensing satellites per year, building to four or five through the end of this decade. Most demand in the commercial sector by the year 2000 will be for replenishment satellites, accompanied by an increase in demand for expansion satellites. Substantial growth to 6 to 10 satellite deployments per year can be expected by the year 2005. After commercial satellite operators establish their positions in the user markets and satellite hardware costs come down, there will explosive growth in the use of space imagery, which should push commercial deployments to more than one launch per month by 2010.


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3.3 Remote Sensing
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