Shakeout in Rocket Glut Expected

The downturn in low earth orbit commercial satellite market is having serious repercussions on the space launcher business and is likely to lead to some systems' failing to survive, according to Jim Albough, president and CEO of Boeing Space and Communications.

The company itself has multiple players in the launcher market, with its Delta family of rockets and its participation in the Sea Launch venture.

"I do envision there will be a shakeout, there will be consolidation," Albough says. The critical discriminator will be system reliability and low cost. Suppliers that can't cut it "will fall by the wayside," he says.

There is a noticeable glut in the market. Launcher overcapacity is about double what the 2002 satellite market can support.

The abundance of launchers is a direct result of unrealized expectations in the growth of the satellite business, particularly the LEO markets. The financial collapse of LEO voice telecommunications providers, such as the original Iridium, ICO and Globalstar, have weakened the entire business area.

Albough, who also oversees large satellite production operations, notes that he is "not very bullish on the LEO market," largely because those constellations require a lot of satellites for global coverage and complex software to allow seamless operations. He says the market is better for medium earth orbit and geostationary systems, deeming them less financially and technically risky.

Boeing is applying some of the lessons of the LEO market to its own satellite service plans. That is noticeable particularly on Connexion, the company's attempt to provide airline passengers with broadband information at their seats. Rather than build a constellation of satellites to support the project, Albough says Boeing will initially rely on leased transponders. New satellites will be put up when and if the demand increases.

One issue is how to bring down the costs of delivering the service to each seat. Extensive aircraft modifications could make the service unaffordable.

The in-travel satellite link is another area where Boeing and Airbus are showing a philosophical difference of opinion. While Boeing is pursuing a high-bandwidth approach to provide entertainment, as well as e-mail access, Airbus is betting that market demand is mainly for e-mail. It is therefore pursuing a smaller bandwidth approach. But Albough believes that Connexion eventually might allow an airline to do away with its current on-board entertainment system, relying instead entirely on the Boeing product.