Small-sats on a Roll
Market Booms; Orbital Picks Up Fairchild
As demand for information and telecommunications services intensifies, the market for small satellites is burgeoning. There are about three times as many small-sat launches worldwide today compared with the five to six launches per year before 1993.
That's uplifting news for the Washington, D.C., region, which has the largest concentration of small-satellite makers in the world. A recent acquisition announcement illustrates the industry's rapid expansion into the communications market.
In order to help fill a large backlog of orders for small communications satellites, Sterling, Va.-based Orbital Sciences Corp. plans to purchase Fairchild Space and Defense Corp. for $95 million. Orbital builds small satellites and the rockets to launch them, while Germantown, Md.-based Fairchild Space makes satellites and electronics systems for military aircraft. The acquisition, expected to close in about a month, will nearly double the number of Orbital's employees to about 2,000 people.
"One of Orbital's major goals for the mid-1990s is to achieve the same level of success in small satellites that we have in small launch vehicles. The incorporation of Fairchild's spacecraft experience and capabilities will better position us to meet that challenge," said David Thompson, Orbital's president and CEO.
Orbital, which is used to putting up about three or four satellites a year, plans to launch a constellation of 26 OrbComm satellites by the end of 1995 that will allow two-way, wireless communication worldwide. The OrbComm project will benefit from Fairchild's spacecraft skills, said Thompson.
Five years ago Fairchild Space was bought by France's Matra Hachette Group, but in the last few years revenues have been dropping as the U.S. defense budget has decreased. There have also been reports of problems with the U.S. government over concern that U.S. technology secrets would be leaked to France.
With Fairchild Space, Orbital will have the flexibility to move into higher rates of production and into larger spacecraft, observed Michael Miller, general manger for Virginia's Center for Innovative Technology. Given the ability to move into new areas of the spacecraft market, Orbital could pick up NASA business, he said.
NASA's much-touted "cheaper, faster, better" strategy holds possibilities for the small satellite industry, but it is the telecommunications market that is spending money on small sats now. Mobile satellite systems, including geostationary and non-geostationary systems, will create markets valued at $11 billion for satellites, launches and user terminals, and yearly services revenues of $9 billion, by the year 2001, according to a Leslie Taylor Associates study released on May 26.
Currently, most small satellites are used to test advanced technologies and for scientific missions, Washington, D.C.'s International Small Satellite Organization Vice President Jill Stern said. But increasingly it is the communications market which represents the future growth of the small-sat industry, she said. Miller, of Virginia's Center for Innovative Technology, said that in addition to the wireless service market, remote-sensing satellites hold the greatest potential for the small satellite industry.
Industry experts agree the global market demand for wireless communications services will probably sustain about two or three big low-earth orbit, or LEO, systems and several little LEO systems. Little LEOs transmit in a different part of the spectrum and provide only data services; big LEOs can provide more services, most significantly voice. Orbital's acquisition of Fairchild Space will actually allow the company to become a player in both LEO markets. Orbital's OrbComm system of satellites is a little LEO system; but Fairchild Space has been a major player in the ELLIPSO big LEO project. Thus, the Fairchild Space purchase allows Orbital to "play both games," explained Richard Fleeter, ISSO president.
Since most agree there will be a limited number of winners in the LEO marketplace, speed in getting into orbit will be crucial. Alan Parker, president of Orbital Science's OrbComm subsidiary, said recently that "first has never counted for more" than in getting the LEOs up.
With the acquisition, Orbital seems to be making the commitment to get its satellites into space ahead of the pack.