Amy SvitakLondon, Paris and Naples, Italy Bradley PerrettBeijing

In Europe, where economic turmoil has kept space spending flat or declining among most of the European Space Agency's (ESA's) 20 member states, public funding for next-generation telecommunications satellites is helping finance two cutting-edge hardware developments aimed at keeping European industry competitive.

Approved in November 2012, support for the projects is based in part on the success of past public-private partnerships, through which ESA has co-financed new telecom technologies with potential for recurring exploitation in the commercial market.

“More than ever we have to support the industry with the introduction of the right solutions, and the right timing as well,” says Magali Vaissiere, ESA director of Telecommunications and Integrated Applications, adding that Europe's 35% share of the global satcom market is the result of continuous improvements to technologies. “We cannot take this position for granted.”

With the U.S. spending less on government satellite procurement, and with new rules relaxing exports of some U.S. satellite technologies, American manufacturers—chiefly Boeing and Lockheed Martin—are hungrily looking abroad for more work. In Beijing, China Great Wall Industry Corp. is offering space-based telecom solutions with its DFH-4 satellite bus and Long March family of rockets—sometimes in exchange for oil and other raw materials, but more often paired with financing through Chinese export-credit banks. And in Japan, an amendment to the nation's space law a few years back prompted Mitsubishi Electric Co. to move from the institutional arena to the commercial market, where the company recently won a two-satellite telecom deal with Turkish operator Turksat against stiff competition from European and U.S. industry.

To keep European satellite operators and manufacturers competitive, Vaissiere says public-private financing plans enable ESA to share the cost of innovative developments that can eventually be spun-off into the market. “Otherwise the operators would not be able to take enough technology risk to enable these new solutions,” she says.

ESA initiated its first public-private venture in 2006 with the Hylas-1 broadband telecommunications satellite. Launched in 2010, the €120-million ($156-million hybrid Ka and Ku-band satellite built for London-based operator Avanti Communications included €34 miliion in ESA financing. The arrangement included a satellite bus furnished via Antrix, the commercial arm of the Indian Space Research Organization, while Astrium Satellites provided the electronics payload, which includes a subsystem built with ESA funding that permits Avanti to adjust Hylas-1's power and broadcast frequencies over different regions to meet demand.