Satellite Communications Industry
1993Executive Research ProjectLflDISO0CONMISatellite CommunicationsIndustryCommanderMark S. MoranvilleU. S. NavyFacultyResearchAdvisorLieutenant Colonel Cecilia C. Albert, USAFThe Industrial College of the Armed ForcesNational Defense UniversityFort McNair, Washington, D.C. 20319-600094-0773394DIC QUALTITY94 310S?&D8 170
UnclassifiedSECURITY CLASSIFICATION OF THIS PAGEREPORT DOCUMENTATION PAGEla. REPORT SECURITY CLASSIFICATIONlb. RESTRICTIVE MARKINGSUnclassified2a. SECURITY CLASSIFICATION AUTHORITY3 DISTRIBUTION/ AVAILABILITY OF REPORTN/ADistribution Statement A: Approved for public2b. DECLASSIFICATIONI DOWNGRADING SCHEDULErelease;distribution isunlimited.N/A4. PERFORMING ORGANIZATION REPORT NUMBER(S)S. MONITORING ORGANIZATION REPORT NUMBER(S)NDU-ICAF-93-D -y 5Same6a. NAME OF PERFORMING ORGANIZATION6b OFFICE SYMBOL7a. NAME OF MONITORING ORGANIZATION(f applicable)Industrial College of theArmed ForcesICAF-FAPI6c. ADDRESS (Cry, Stat*, and ZIP Code)National Defense University7b. ADDRESS (City, State, an" ZIP Code)Fort Lesley J. McNairWashington, D.C.20319-6000Ba. NAME OF FUNDING/SPONSORINGFort Lesley J. McNairWashington, D.C.20319-60008b. OFFICE SYMBOLORGANIZATION9. PROCUREMENT INSTRUMENT IDENTIFICATION NUMBER(if applicable)Sr- ADDRESS (City, State, and ZIP Code)10. SOURCE OF FUNDING NUMBERSPROGRAMPROJECTTASKELEMENT NO.NO.WORK UNITNO.ACCESSION NO.11. TITLE (Include Security Classification)12. PERSONAL AUTHOR(S)13a. TYPE OF REPORTResearch413b. TIME COVERED14. DATE OF REPORT (Year, Month, Day)April 1993FROM Aug 92 TOApr 9315. PAGE COUNTI16. SUPPLEMENTARY NOTATION17.FIELDCOSATI CODESGROUPSUB-GROUP18. SUBJECT TERMS (Continue on reverse if necessary and identify by block number)19. ABSTRACT (Continue on reverse if necessary and identify by block number)SEE ATTACHED20. DISTRIBUTION/AVAILABILITY OF ABSTRACTEl SAME AS RPT.IMUNCLASSIFIED/UNLIMITED22a. NAME OF RESPONSIBLE INDIVIDUALJudy ClarkDD FORM 1473,84 MARODTIC USERS21. ABSTRACT SECURITY CLASSIFICATIONUnclassified22b. TELEPHONE (Include Am.,t Code) 22c. OFFICE SYMBOL(202)475-188983 APR edition may be used until exhausted.ICAF-FAPSECURITY CLASSIFICATION OF THIS PAGEAll other editions are obsolete.UNCLASSIFIED
AbstractSatellite Communications IndustrybyCDR Mark S.MoranvilleThis paper documents a baseline assessment of the SatelliteCommunications Industry which isdefined as companies that:1.Build communications satellites.2.Build communications satellite earth terminals.3. Provide satellite communications services.The assessment uses the standard analysis tools of Structure,Conduct,industry,and Performance to evaluate the current health of theand includes a discussion of the outlook for theindustry, the industry's strategy for survival,policy recommendations.and government
1993Executive Research ProjectDISSatellite CommunicationsIndustryccesion ForNTISCRA dDTIC TABUtannouncedJustificationCommanderMark S. MoranvilleU. S. NavyBy.Disti i u tonAvailability CodesDist -Avail and /orSpecialFacultyResearchAdvisor ALieutenant Colonel Cecilia C. Albert, USAFThe Industrial College of the Armed ForcesNational Defense UniversityFort McNair, Washington, D.C. 20319-6000
DISCLAIMERThis research report represents the views of the author and does not necessarilyreflect the official opinion of the Industrial College of the Armed Forces, the NationalDefense University, or the Department of Defense.This document is the property of the United States Government and is not to bereproduced in whole or in part for distribution outside the federal executive branchwithout permission of the Director of Research and Publications, Industrial Collegeof the Armed Forces, Fort Lesley J. McNair, Washington, D.C. 20319-6000.
Satellite Comuniications IndustryAn Assessment"For 30 years the United States has enjoyed a positive globalbalance of trade as well as the undisputed titleof heavy-weighttechnology and reliability champion in the international businessof commercial, military, and government communications satellitemanufacturing."IThe question is; Are the 30 years of UnitedStates communications satellite manufacturing dominancethreatened?Before answering this question I should explain two things:-Why the Department of Defense(DOD) should care about thehealth of the U.S. Satellite Communications Industry and-What constitutes a Threat to a Defense Industry?Why the Department of Defense(DOD)of the U.S.should care about the healthSatellite Coamications IndustryCommunications are essential in any military operation. Rapid,reliable, and secure communications represent a dramatic forcemultiplier, and recent conflicts in Grenada, Panama, and thePersian Gulf have highlighted our successes,this critical area.mobility of forces isand failures, inDue to the nature of modern warfare,the key to success, and world wide mobilecommunications are best provided via satellite.belaboring the point, for military operations,1Withoutsatellite
communications will become more and more critical to nationaldefense in the future.Given the criticality of satellite communications,itfollowsthat in order to maintain our current position of militarytechnological leadership in this area, we must have a healthySatellite Communications Industry.A healthy industry providesDOD with quality production and services with reasonable cost,technological sophistication, and the ability to surge neededproducts and services.DOD gains immeasurably when the privatesector is a large competitive commercial marketplace which drivesinnovation.For example, DOD Research and Development (R&D)funding in the early days of the computer revolution may havebeen a driving force behind technology advancement however, therecent technological advances experienced in the micro-processorindustry have occurred because of the large competitivecommercial marketplace for micro-processors.As a result, DODhas been able to incorporate advanced micro-processors into newweapons without continued large investments in basic research.Market forces are just starting in the Satellite CommunicationsIndustry, and there is potential for great commercial activitywhich would ensure a healthy industry.This is especiallyimportant during the currently planned military drawdown, becauseincreases in defense spending for satellite communications areunlikely.2
What constitutes a Threat to a Defense Industry?A U.S. Defense Industry can be threatened in two ways.is when there is no commercial market for it'sThe firstproduct (such astanks) and DOD does not buy in sufficient quantities to maintainThe second (and the one that might applyproduction capability.to the U.S. Satellite Communications Industry) is when acommercial market exists, but foreign manufacturers gain acompetitive advantage which could drive U.S.commercial market.Industry out of theThis would cause a loss of efficientproduction capability, and might lead to a complete loss ofThe significance of the loss of domesticproduction capability.commercial production capability must be viewed with DOD's goalof "achieving the best "value" for the lowest cost in mind.Value in this case isdefined according to three criteria,peacetime production efficiency, technological competitiveness,and surge and mobilization flexibility"2 .Foreign suppliers canefficiently produce technically competitive products.However,foreign source dependence may reduce the U.S. Military'stechnological lead and control, and surge and mobilizationcapabilities are obviously degraded.are the 30 years of United States conunications satellitemanufacturina dominance threatened?The short answer is that the early signs of a loss of dominanceare starting to appear and ifwill eventually lose it'scurrent trends continue the U.S.dominant position. In order to reach3
was necessary to conduct a baseline assessmentthis conclusion itof the industry.The purpose of this report is to document thebaseline assessment using the standard analysis tools ofStructure, Conduct,and Performance, followed by a discussion ofthe outlook for the industry, the industry's strategy forsurvival, and finally government policy recommendations which ifimplemented would help maintain the industry's position ofdominance into the 21st century.Definition of the Satellite Comunications IndustryAlthough most people have an intuitive sense of what satellitecommunications are, a clear definition of the industry is inorder.The Satellite Communications Industry consists ofcompanies that:1. Build communication satellites.2. Build communication satellite earth terminals(i.e.antennas and radios).3. Provide satellite communications services (i.e. companiesthat own and operate satellites).Satellite communicationsservices consist of international telephone services,cable TVtransmission services, mobile radio services, private satellitenetworks, and international maritime telephone services.Due to the nature of this industry Standard Industry Codes (SICs)do not correlate to the industry directly.Satellite servicesfall within SICs 4812,4813,4822 and production of satellites and4
earth terminals fall within SIC 36631.38.numbers,Further the types, andof companies building satellites are entirely differentfrom those building earth terminals.these differences whenever itI will try to illuminateis relevant to a clearerunderstanding of the industry.Historical Overview of an Industry in TransitionThe commercial Satellite Communications Industry can trace it'sroots back to 1962, when President Kennedy proposed the creationof a global commercial satellite system.From then until 1984virtually all international satellite communications wasconducted through the International Telecommunications SatelliteOrganization (INTELSAT),or the International Maritime SatelliteOrganization (INMARSAT).These organizations are characterizedby international consortiums, government bureaucracies,government regulated monopolies.orThey provide universal accessto satellite communications for all member nations (INTELSAT hasapproximately 119 members).The Communications Satellite Corp.(COMSAT) was formed by Congress as a private company to act asthe U.S. participant in the global system, and today itis thelargest owner and user of the INTELSAT and INMARSAT satellitecommunications networks.In 1984,President Reagan determined that internationalcommunications satellite systems separate from INTELSAT/INMARSATwould be allowed, ifthey were not attached to the Public5
Switched Telephone Network (PSN),and foreign authorities agreedto allow them (on a country by country basis).This decisioneffectively opened up international satellite communications forcommercial development,(PANAMSAT),and the Pan American Satellite systemthe first international commercial communicationssatellite system separate from INTELSAT/INMARSAT,shortly thereafter.was establishedThis first separate system has been acommercial success, and other separate systems are currently invarious stages of development.In April,1992 the federalgovernment decided to allow separate satellite systems to connectto the PSN thus taking annther step toward deregulation andincreased competition in the industry.In addition to the regulatory changes taking place there arenumerous technological changes taking place.Micro electronicsare enabling dramatic reductions in size, weight, and cost ofboth satellites and earth terminals; thus opening up numerous newapplications for satellite communications.These includecellular telephone to satellite communications,satellite communications,airplane toand direct broadcast audio (i.e.commercial radio via satellite) and video (i.e. commercialbroadcast TV via satellite).The U.S. became the dominant force in the world in SatelliteCommunications because of large capital investments by DOD andthe National Aeronautics and Space Administration (NASA) which6
were a direct result of the "Cold War" and the "Space Race".This gigantic effort started in October of 1957 following thelaunching of Sputnik 1, and continued until the recent collapseof the Soviet Union.The spin off from this effort put U.S.companies years ahead technically and gave them a tremendouscompetitive advantage in the commercial market place.Thequestion is, in an environment where DOD and NASA are notinvesting in Satellite Communications at an ever increasing ratecan U.S. satellite companies successfully adapt and maintaintheir position of dominance.In summary, the Satellite Communications Industry istransitioning from expensive technology to less expensivetechnology, from limited commercial applications to unlimitedcommercial applications, from a highly regulated industry to aless regulated more competitive industry, and from an industrywhere technical advances are driven by DOD and NASA to anindustry where technical advances are driven by the commercialmarket place.Structu eNumber of Sellers-SatellitesThere are three major companies that build commercialcommunications satellites in the U.S., they are GeneralMotors'(GM) subsidiary MHughes Electronics, Space7
Systems/Loral, a subsidiary of New York's Loral Corp, and GEAerospace which has recently been sold to Martin Marietta.addition to these three companies,there are companies,Lockheed Missiles and Space Group, and Rockwell,only build satellites for DOD.Insuch asthat currentlyAs shown in appendix A, U.S.firms have contracts to build approximately 60% of the commercialsatellites on order world-wide as of November 1992.three U.S.The topfirms have contracts for 98% of these, which meansthis segment of the industry is highly concentrated.There are 11 foreign companies that build satellites however, asshown in appendix A, virtually all satellites built by thesecompanies are sold to their own government.In fact, U.S.companies are the only ones that have successfully marketedsatellites outside their own national region to any large degree(i.e. the U.S. has sold satellites to Japan, and the Europeancommunity, but not vice versa).The U.S. companies are subsidiaries of larger diversifiedelectronics firms.As a typical example of size, GE Aerospacehas 37,000 employees, had 1992 revenues of 5.2 billion, netprofit of 420 million, and does a diversified business in radar,sonar, Navy Battle Management computers, weather satellites, NASAspacecraft, and Star Wars research,communications satellites.8in addition to commercial
Number of Sellers-SatelliteCommications Service.There are currently six major commercial firms that operatesystems incommercial communications satelliteHughes Communications Inc(HCI),American Communications IncCommunications Satellite(GE Americom),Corp.currently planned launches,Alascom Inc,the U.S.,they areGTE Spacenet,AT&T,(COMSAT General).GEandBased onthis number will grow to thirteenwithin the next few years.TvDpeof Buyers-SatellitesBuyers of satellites include various departments of the U.S.government (i.e DOD, NASA, etc),foreign governments,andcommercial satellite services companies in the U.S. and abroad.Exact figures on sales to DOD are unknown however, based on thetelecommunications industry as a whole at least 501,and perhapsas high as 75t, of the total sales of the three largest satelliteproducers are to DOD.sales.This includes satellite and non-satelliteAs an example, 54% ( 6.2 billion) of GM HughesElectronics total sales in 1991 was to DOD.The unclassified DODcommunications satellite business for fiscal years 1990 to 1992is shown in table 1, which indicates a steady increase inprocurement of satellites, earth terminals, and Research andDevelopment (R&D).This trend will probably level out, however,because of the increased need for accurate intelligence in futuremilitary operations it will probably not go down.9In terms of
satellite sales (not counting classified satellite R&D andprocurement) about 20% of the industry output is sold to DOD, and75t of DOD expenditures are for R&D.The number of U.S.companies that own, or are in the process of buying, commercialsatellites is increasing from 6 to 13 as plans for new mobilesatellite services and direct-to-home satellite broadcasts areimplemented.Tyoes of Buyers - Satellite Communications ServicesThere is a wide and growing number of buyers of satellitecommunications services. They include telephone companies (localand long distance),trucking companies (2,000 trucks wereequipped with satellite transceivers in the U.S.in 1991),shipping companies and private vessel owners (there areapproximately 14,000 earth terminals installed on*vessels),private businesses such as United Parcel Service, and DOD(INMARSAT earth terminals have been installed on over 100 U.S.Navy ships and usage has increased to from 24,974 voice minutesin 1989,to approximately 730,878 voice minutes in 1992).10
Unclassified DOD Co mnicationsSatellite BusineS83(InMillions)909192procurement 48.2 257.4 83.4Procurement136.7496.5597.2Total tes-EarthTerminalsProcurementR&DTotalTABLE 1Barriers to Zntxy-Satellit2sBuilding satellites requires a high degree of technical expertiseand specialized facilities such as climate controlled assembly11
rooms.As a result, most companies that enter the commercialmarket do so only after they have had satellite developmentcontracts with NASA, or DOD.However,there are companies thatcurrently only build satellites for the government,such asRockwell (which built the GPS satellite system)-and LockheedMissiles and Space Group, that have the capability of enteringthe commercial market as prime contractors, or in teamingarrangements.Barriers to Entry - Satellite Communications ServicesThe primary barrier to entry is the capital cost of building newsatellite networks.For example, Motorola isin the process ofacquiring a license from the Federal Communications Commission(FCC) for a new system called IRIDIUM, which would include about77 satellites. The estimated cost of this system is over 3.0billion, and finding that much venture capital is not expected tobe easy.Another example of the high cost of entry is GM HughesElectronics investment of 500 million to launch a 150-channelsatellite TV network in 1993.Another barrier to entry isthe regulatory environment. A companymust get government approval to operate and both the U.S. andforeign governments have been reluctant to approve systemsseparate from the international systems (See governmentregulation-satellite communications services for furtherdetails).12
Acquiring launch services can also be a barrier to entryespecially for companies that do not produce launch vehiclesbecause of the expense and long lead times involved in thescheduling process.ConductPricing Poliaies-SatellitesHistorically, most satellite sales have been to governmentorganizations,and the INTELSAT treaty guarantees openprocurement on government owned systems to all suppliers.However, the number of suppliers was relatively small so priceswere basically set by the manufacturers.changed.This situation hasMarket forces are becoming more and more important insetting prices for two reasons.manufacturers,First, the number ofespecially overseas is increasing and second, thenumber of domestic and international buyers is increasing.Thishas resulted in a reasonably free world market with market basedprices.DOD acquisition policies have had a major impact on the industrybecause of the historically large percentage of sales to DOD.For example, Hughes builds all it'ssatellites, commercial andmilitary, to the same Military Specification (MIL SPEC)requirements,and according to at least one industry analyst"this approach has enabled Hughes to cut costs by establishing13
stable and long-term relationships with suppliers and componentmanufacturers; these reductions have more than offset increasedcosts associated with the company's gold-plated approach to allprocurement."4Itis not clear how long a gold-plated approachto building commercial satellites will w
Communications Industry which is defined as companies that: 1. Build communications satellites. 2. Build communications satellite earth terminals. 3. Provide satellite communications services. The assessment uses the standard analysis tools of Structure, Conduct, and Performance to evaluate the current health of the .
Satellite Communications Overview Satellite earth stations form the ground segment of satellite communications. They contain one or more satellite antennas tuned to various frequency bands. Satellites are used for telephony, data, backhaul, broadcast, community antenna television (CATV), in
the satellite output power to the maximum level, additional noise is introduced into the link from satellite to hub. Therefore, an accurate calculation of the SNR for the entire RTN link must consider: 1. the SNR of the terminal-to-satellite link 2. the SNR of the satellite-to-hub link When the output power of the satellite is at a maximum, SNR .
c. Satellite: Internet access provided through satellites orbiting the Earth. Satellite service requires a satellite Internet subscription from an Internet satellite service provider and a satellite dish. Carriers that provide satellite Internet service are DIRECTV, Dish Network, HughesNet, and Wildblue. d.
The first satellite was the Moon, of course, but the idea of communications satellites came from Sir Arthur C. Clark in 1945. The Soviets launched the first manmade satellite, Sputnik I, in 1957. The first communications satellite
DEFINITION OF A SATELLITE DISH A radio communications or satellite dish is defined as a circular dish antenna used to send and receive radio frequency communications. A radio communications dish includes a dish for satellite TV reception. HOW DO I KNOW IF I NEED A PERMIT? The following will act as a guide for deciding if you require a Planning .
In a communications satellite, the equipment which provides the connecting link between the satellite's transmit and receive antennas is referred to as the transponder. The transponder forms one of the main sections of the payload, the other being the antenna subsystems. Communications data passes through a satellite using a signal path
or a tutorial contribution. Our Members are involved as Editors of international journals and magazines: IEEE Wireless Communications Magazine, "Scanning the . in satellite communications, software-radio in space. ETS-VIII Japan's first 3-ton-class geostationary satellite, ETS-VIII (Engineering Test Satellite), will be
Trustee Joy Harris Jane Gardener Simon Hebditch Trustee Sarah Howell- Davies Jill Batty Cartriona Sutherland treasurer Verity Mosenthal Jenny Thoma Steve Mattingly Trustee Anne Sharpley Lynn Whyte Katy Shaw Trustee Sandra Tait Tina Thorpe Judith Lempriere The position of chair is contested so there will be an election for this post Supporting Statements David Beamish Standing for Chair I .
