The commercial communications satellite market is no longer dominated by the companies that once were perennial favorites: Lockheed Martin and Boeing. Thales Alenia Space, EADS Astrium and Space Systems/Loral are now capturing big blocks of market share.

Boeing and Lockheed Martin are still atop the pyramid in the space industry overall but in the commercial satellite markets, these heavyweights have dropped off from previous years’ rankings.

Lockheed Martin and Boeing seem to bid on only a small handful of commercial programs annually and are content to court the military sector. Both of these U.S. manufacturers could return to the scene with a big splash, but this will require the Pentagon to wrap up several military satellite procurements, and soon. International orders also could crop up as the decline of the U.S. dollar versus the euro makes Boeing and Lockheed Martin attractive options for European operators such as Eutelsat and SES Global.

Meanwhile, other companies are emerging. Orbital Sciences Corp. (OSC) has come on strong in the past few years, benefiting from the trend among some operators to switch from large platforms to small- to medium-class satellites. Orbital has delivered more than 100 such spacecraft since it was founded in 1982, and the pace is quickening.

In 2007, the company received orders for five geosynchronous-orbit (GEO) commercial communications satellites; all will be based on the OSC STAR-2 platform. Two of the orders in 2007 came from SES Americom and two from Intelsat, highlighting an interesting trend among U.S.-based operators as they look to OSC to fill their needs. Orbital’s main competitor in the U.S. for this market and class of spacecraft is Space Systems/Loral.

Orders from customers outside Europe could be problematic, depending on the country, as International Traffic in Arms Regulations (ITAR) controls are eroding U.S. market share. The statistics are striking: Since 2000, just two years after satellites were returned to the State Dept.’s United States Munitions List, controlled under Section 38 of the Arms Export Control Act, the U.S. satellite manufacturing sector’s market share has eroded to about 40% from 61%.

In 2004, 75% of all the commercial communications satellites ordered globally went to three U.S. companies, while just three satellite orders went to non-U.S. manufacturers. In 2005, 63% went to U.S. manufacturers, with the remaining going to companies outside the U.S., including one to China. In 2006, just 40% went to U.S. manufacturers. Finally, in 2007, a mere 34% went to U.S. manufacturers. The remaining went to manufacturers outside the U.S., including another to China.

At a time when the demand for high-definition television services and mobile satellite services will serve to load the order books for commercial satellite manufacturers globally during the next 10 years, these are troubling statistics for U.S. satellite manufacturers. Adding to their woes, European Thales Alenia Space continues to offer satellites that have no components subject to ITAR restrictions.

European manufacturers, seeking leverage against their U.S. competition, also have entered partnerships with non-European, non-U.S. companies. Thales Alenia and the Russian company Reshetnev Scientific Production Assn. of Applied Mechanics (NPO-PM) are jointly developing and constructing a new satellite platform optimized for GEO and high-elliptical-orbit missions. This platform will enable both companies to position themselves for substantial market share in Russia.

Furthermore, Thales Alenia’s Spacebus series will continue to maintain a healthy share of the communications satellite market in the near term. The Spacebus 4000 platform, the largest of the Spacebus offerings, will earn the most significant portion.

Likewise, EADS Astrium has partnered with Antrix Corp. of India, the commercial entity that serves the Indian Space Research Organization. The linkup paid off in 2006 with two orders, but the joint venture won no contracts in 2007.

Commercial communications transponders are slowly showing signs of the long-awaited rebound in demand—especially in East Asia and Latin America—but some sectors are still navigating through a weak market. In East Asia, no consolidation has occurred; in fact, two new players have entered the arena, Protostar and Asia Broadcast Satellite. Both are proceeding with plans to use already constructed spacecraft to enter the services market.

In the military space arena, the U.S. enjoys an advantage. In Fiscal 2009 alone, the Pentagon expects to spend more than $10 billion to strengthen space-based capabilities, with $7.6 billion of this amount targeted for selected major space acquisitions. At the same time, however, the U.S. military’s space system acquisitions have experienced problems during the past several decades that have driven up costs, stretched schedules and increased performance risks.

Military satellite production scheduled for the next 10 years but not yet contracted, totals more than $5 billion. In addition, the massive GPS and Transformational Communications programs underway in the U.S. will keep domestic manufacturers such as Boeing, Lockheed Martin and Northrop Grumman busy, all but erasing their conspicuous absences on the commercial side.

Nations around the globe are walking the financial and technological tightropes brought on by attempting to integrate new and anticipated technologies with perceived future battlespace requirements, while simultaneously balancing these costly requirements with fiscal realities. Military transformation is an especially dominant theme in the U.S. and in terms of space systems, the sky is no longer the limit. That said, the U.S. military satellite market, dominated by Lockheed Martin and Boeing, will remain in contrast to Europe’s. The major unclassified European milsat efforts will come from France, Italy, Germany and the U.K. However, continued consolidation and international cooperation among the milsat programs will keep production numbers far below those in the U.S. The major production efforts in Europe, Israel and Japan are expected to account for eight military communications satellites, 16 military reconnaissance spacecraft (including electronic intelligence) and another three spacecraft in the global positioning category.

Civil and commercial remote-sensing spacecraft also are driving manufacturing numbers. Since the advent of remote-sensing satellites in the middle of the 20th century, governments have been the leading providers and consumers of satellite imagery data. Now, governments are no longer the premier providers of this product. They have been replaced by companies such as DigitalGlobe and GeoEye, which have become a critical link in the civil and commercial remote-sensing industry chain.

The U.S. commercial remote-sensing market is stabilizing now that the field has been narrowed from three companies to two: DigitalGlobe and GeoEye, since GeoEye acquired Space Imaging. That deal also takes a burden off the U.S. government, as ensuring adequate support to all three U.S. players had been problematic. Leaning on this government support, U.S. remote-sensing operators now seem content to court government business almost exclusively as there is much less emphasis on development of the commercial base.

A rebound toward the commercial side is probably in the cards, but not for at least another five years. The use of satellite-derived imagery by governments and the revenue it generates for the satellites’ operators have been by no means inadequate, but remote-sensing products will need to become a part of daily life in order to be as lucrative as anticipated. Therefore, the timing of this rebound is critical for companies such as GeoEye and DigitalGlobe.

It will be difficult to make long-term profits selling imagery back to governments. The reliance on government contracts in the U.S. to invigorate the commercial remote-sensing market could prove to be problematic for U.S. companies in the long run. While the supportive NextView contracts have enabled the procurement of second-generation satellites for DigitalGlobe and GeoEye, they now have approximately five years to balance their commercial and U.S. government markets. By then, these two companies will need third-generation satellites but, more importantly, they will most likely need nongovernment support sufficient for construction of these spacecraft.

Outside the U.S., significant civil satellite constellations are in development, and their production is largely responsible for the high near-term unit output levels. Some of these, such as Russia’s SMOTR, are single-nation programs. Others are being constructed under international agreements such as the Franco-Italian Cosmo-SkyMed/Pleiades program.

The landscape of the satellite manufacturing market is shifting somewhat. The hierarchy of the major contractors continues to evolve as do their customer bases. While some manufacturers are courting the commercial side, others are looking almost exclusively to military customers. But all the major industry players have found their respective niches in this market. The outlook for satellite manufacturing therefore is robust as more nations and corporations look to low Earth orbit and beyond to fulfill a multitude of essential tasks.