The NEXT Space Race

1
The NEXT Space Race
AGENDA

• Space Race Paradigm Shift
• Market Overview
• Launch Services
• Telecommunications Satellites
• Futuristic Commercialization Opportunities
• Conclusions

2
Space Race Paradigm Shift

• The FIRST Space Race
• National Pride - First to the moon
• Politically driven
• Cost low priority
• Significant public backing
• The NEXT Space Race
• Economically driven - maximize ROI
• Commercial ventures
• Global partners and markets
• Cyberspace more interesting than outer space

3
Introductory Market Facts

• Over 4,000 orbital launches since 1957
• Average of 100 launches per year
• Average of 115 payloads per year
• Average payload price is 75M
• Launch prices vary 1.7M - 360M (Titan IV)
• Shuttle cost 500M / launch

4
Market Forces

• Degree to which new launch vehicle technologies
  can reduce the cost to orbit.
• Willingness of buyers and sellers to negotiate
  long-term contracts with favorable pricing.
• Launcher reliability and associated insurance
  premiums.
• Launcher dependability to meet launch date
  commitments and avoid lost revenues.
• Federal government tax incentives for new
  launchers.
• Need for human versus robotic space missions.
• Availability of spaceports, launch sites, and
  ranges.

5
Market Forces (Concluded)

• Competition between government subsidized
  launchers and those developed commercially with
  venture capital.
• U.S. regulations for technology export.
• Availability of financial capital necessary to
  develop new commercial launch systems.
• Demand for global space-based communications
  infrastructure versus ground-based infrastructure.

6
Launch Services Market Size

• 1998 Market size 7.9 billion.
• Revenues include worldwide commercial, military,
  and science launches.
• Space Shuttle launches are excluded (3 billion
  per year)

Source Frost Sullivan, 1998
Launch market growth rate is forecast to be flat
from 1994 to 2004.
7
Global Commercial Space Launches
Source FAA Commercial Space Transportation and
Commercial Space Transportation Advisory Committee
Projections show an equal split between LEO and
GSO launches.
8
Launch Economics

• Economic variables of supply and demand are at
  work.
• Payload to Orbit Costs
• LEO Space Shuttle 10,000 per lb ELV 2,000 to
  8,000 per lb
• GTO ELV 8,000 to 15,000 per lb
• DOD EELV goals to reduce costs by 25 to 50
• 75 reduction in costs required to stimulate
  demand to grow market from 100 to 300 launches
  per year
• LEO 100 to 500 per lb
• GTO 1,000 to 5,000 per lb
• Reductions of this magnitude require RLVs with
  launch rates of 25 to 50 times per year.

9
Launch Economics (cont)

• Significant oversupply of launch capacity exists.
• Mainstream, struggling launchers
• Ariane, Delta, Proton, Pegasus
• Both Ariane and Delta average 10 to 12 launchers
  per year.
• Starving for orders
• Taurus, Athena, Conestoga, and many Russian,
  Ukrainian, and Chinese launchers.
• Dozens of RLV startups lacking investment
  capital.
• Kistler K-1, Rotary Roton, Eclipse Astroliner,
  etc.
• Even if only half of proposed launchers get
  built
• 30 launcher programs with 60 models competing for
  market of 80 to 100 launchers per year.

10
Telecommunication Satellites

• Overview
• Iridium ICO Global
• Near simultaneous bankruptcies - 1997
• Expensive service
• Limited Time Division Multiple Access (TDMA)
  capability
• Globalstar - Public Company
• Well positioned for Iridiums customer base
• Launched services in 25 countries
• Lower cost, higher capability, ease of use
• Teledesic - Private Company (McCaw, Gates,
  Boeing, Motorola)
• Code Division Multiple Access (CDMA) capability -
  Broadband
• Connextion - Boeing
• Real-time, high-speed, two-way connectivity

11
FUTURISTIC COMMERCIAL OPPORTUNITIES (REMOTE
SENSING)

• Applications
• Terrestrial - climatology, environmental,
  geologic
• Solar System - moons, planets
• Deep Space - stars, galaxies
• Five major constellations in place today
• SPOT, Indian Remote Sensing (IRS), Landsat,
  RADARSAT, OrbView
• Four new systems should start service in 2000
• Space Imaging IKONOS (first 1m satellite,
  9/24/99)
• QuickBird - Earthwatch
• West Indian Space - Israel Aircraft Industries
• RapidEye AG from Germany

12
FUTURISTIC COMMERCIAL OPPORTUNITIES (SPACE BASED
ENERGY)

• Sometime in the mid-21st century, the world will
  need a new, safe, clean, and
• economical source of energy
• Nuclear Fission
• Radioactive waste and potential for catastrophic
  disaster
• Solar
• Abundant, clean
• Inefficient, low power density
• Fusion Helium-3
• Its estimated that there is 10 times more energy
  in the Helium-3 on the moon than in all the
  economically recoverable coal, oil and natural
  gas on earth
• At 1 Billion dollars a ton, the energy cost of
  Helium-3 is equivalent to oil at 7 per barrel
• Experts predict that technological breakthroughs
  will make nuclear fusion the major energy source
  of the 21st Century

13
FUTURISTIC COMMERCIAL OPPORTUNITIES (MICROGRAVITY
RESEARCH)

• Overview
• Biomedical
• Protein Crystal Growth
• Potential Cures for cancer, AIDs, flu, diabetes,
  etc
• Tissue re-growth, organ growth
• Genetics

14
FUTURISTIC COMMERCIAL OPPORTUNITIES (VACUUM
BASED MATERIAL PROCESSING)

• Summary
• Mass Production
• Semiconductors - Silicon, Gallium-Arsenide
• Fiber Optic Cables
• Materials
• New Processes

Space Fiber
Earth Fiber
15
FUTURISTIC COMMERCIAL OPPORTUNITIES (SPACE
TOURISM)

• Summary of Initiatives
• MirCorp
• Commercialization of Mir
• Utilize private funding
• First, futile effort
• Space Adventures
• X-Prize - 10 million dollar international
  competition
• Spacecraft must fly 3 people to (100 km) and back
• Fly twice within a two week period
• Privately financed and constructed
• 21 Teams have entered
• NASA -???

16
Conclusions

• The numerous commercial opportunities are
  futuristic
• Current projections indicate no growth over the
  next five years.
• Market structure is moving from oligopoly to
  perfect competition with over capacity and
  fierce price competition.
• There are many positive, negative, and neutral
  market forces.
• Long-term growth is tied to new technology and
  reduced payload-to-orbit launch costs to
  stimulate demand.

17
QUESTIONS