For Tech's Sake: High-flying niches

Gary Arlen, president of Arlen Communications Inc.

WaveStream Corp. sent 25 percent of its staff to the Satellite 2003 conference in Washington a few weeks ago. The three executives from the Southern California satellite technology start-up company were intent on calling attention to their "grid amplifier," a high-power, solid-state millimeter wave amplifier.

Through guerilla marketing and some pre-arranged appointments with prospective customers, analysts and editors, the WaveStream corps hoped to generate attention for their transmitter-on-a-chip, which they claim has "five times as much output power as conventional chips."

As it turns out, WaveStream (www.wavestreamcorp.com) - launched in August 2001 by five Caltech engineers - has some other products in its pipeline.

The company is already working with the Navy on an uplink device that is being tested for shipboard data transmissions. WaveStream claims that its patented "Spatial Power Combining" system can transmit at higher data rates than existing technologies. But its secret sauce is all about power: specifically about 20 times the output of current chips. Most of today's solid-state amplifiers in the 70 gigahertz range put out a maximum 50 milliwatts of signal power. WaveStream's single-chip technology generates 1 watt.

It sounds small, but the Navy envisions such transmission power can be used for efficient links to low earth orbiting satellites, to unmanned aerial vehicles and even to other ships within a battle group that are beyond the horizon. Other military units are looking at it for secretive transmissions where they need small antennae or mobility.

WaveStream's assault on the satellite communications industry - as well as radar and terrestrial communications markets - comes at a time when the satellite industry itself is in a quandary - as evidence by the palpable malaise at the Satellite 2003 event. The young company's frisky approach stood out at the lethargic trade show, which reflected how the satellite sector - for all its space-age bravura - has become a commodity-service business, dominated by a handful of consolidated giants.

Investment and employment has plummeted. In barely 25 years, satellite connectivity has gone from "gee-whiz" to "so-what?", triggered in large part by the emergence of efficient fiber optics competition.

Niche-Picking

Products such as WaveStream's Grid Amplifier may pump more life into the satellite business, which needs specific niches to exploit its high-flying capabilities.

Imagery tops the big niche list, for security, environmental as well as military purposes. A Frost & Sullivan report a couple weeks ago envisioned a billion-dollar imagery opportunity. F&S Aerospace and Defense Analyst Ron Stearns described the U.S. government's promise - through the National Imagery and Mapping Agency's "ClearView" project to buy commercial imagery services.

Similarly, a new Army Corp of Engineers project is using Geostationary Operational Environmental Satellites to monitor water levels in the New England regions' major rivers. The current project is tracking input from 90 data collection platforms, including information about the depth of the recent snow cover, air temperatures and other factors used by Corps hydrologists to regulate dams in real-time, thus minimizing downstream flood conditions.

And of course, satellites figure heavily in new projects such as the Federal Aviation Administration's satellite navigation process. Lockheed Martin Corp.'s Air Traffic Management unit has a new contract for wide-area augmentation satellite services to be used in that project. And ITT Industries early this month picked up a Navy Department contract to provide hardware and software for management and control of six military satellite communications system teleports.

All this comes at a time when U.S. aerospace industry employment has hit a 50-year low, according to the Bureau of Labor Statistics. Obviously most of those jobs are not in the satellite sector, for which specific data is not tallied. Nonetheless, the shifting fates of satellite companies - and start-up specialists such as WaveStream - demonstrate the need to find new opportunities as market needs change.

Satellite operators themselves are struggling to find these routes, but not without some finger-pointing.

At the Washington convention, PanAmSat Chief Executive Officer Joseph Wright challenged the federal government's process for awarding contracts. He alleged that "there has been a tradition" of using "established relationships" to award contracts. Wright didn't name names - but it was clear that on behalf of his beleaguered company, he's looking for more of those satellite niches.

"The government is going to be an increasing part of our business, and they are going to require us to meet their demands," Wright said. He went on to plead that the government is "going to have to tell us what their plans are."

That's the kind of awkward relationship that defines the satellite industry's current relationship to government - and even to commercial - competition today. Satellite services - with all their technical nuances and over-capacity - aren't just another transmission format. They need to find the niches that exploit their high-flying capabilities, which is harder to do in today's economic and security climate.

Gary Arlen (GaryArlen@columnist.com) is president of Arlen Communications Inc., a Bethesda, Md., research firm.

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