Seven years ago, British Aerospace Space Systems, GEC's Marconi Space Systems (MSS) and France's Matra Defense & Espace were competing against each other on some projects, but working together on others. It therefore came as no surprise when, in 1990, MSS and Matra Espace merged as Matra Marconi Space (MMS). BAe Space Systems came on board four years later, along with another UK company, Ferranti. The latest move is a tie-up with Daimler-Benz Aerospace's space division.
As a result of these mergers, MMS is now Europe's Ìrst and only fully integrated space company. It employs more than 4,700 staff at six locations in France and the UK and had a turnover of more than $1.56 billion in 1996.
The largest sectors of its customer base are the European Space Agency (28%), the French ministry of defence (15%), the UK Ministry of Defence (11%) and the French space agency (6%). The majority of the remaining 40% of business is for civil commercial communications-satellite companies.
Commercial logic
Nick Franks, deputy chief executive and managing director of MMS, based at Stevenage, spent 20 years with GEC, including a post as marketing director of GEC-Marconi, working extensively in the Far East. He has been credited with turning MMS into a highly efficient manufacturing unit, largely by changing its operating philosophy.
"We are a production- and performance-led company, not project-led any more," he says. "MMS is capable of doing everything itself [Earth observation, science, communications, military, transportation and manned systems] and has also become more selective in the business it goes for," Franks adds.
The original Matra-Marconi merger in 1990 was driven by commercial logic. "There was a need to combine assets to meet the demands of the marketplace," says Franks. "That is the principal reason why this business has been successful. It was not a political need to tidy up the industry, but was market driven. Others, such as Ferranti, which came along later, were the result of the same commercial logic, which also applied to the merger with BAe Space Systems. The market was simply not sufficiently robust to support two businesses in the UK," he adds.
The MMS business is built around its customer base and the marketplace, and organised around "-product lines for different parts of that market, such as commercial satellites, the military, the ground segment and so on, rather than individual, almost autonomous, projects as was often the case in the past", says Franks.
MMS was one of the first and prime examples of the rationalisation of the European industry. "Continued rationalisation is inevitable," says Franks, "because the market will demand it. There is not room for all these players. It is MMS' intention to be at the heart of that. It is quite a dynamic situation." The USA is extremely powerful and "very good competition", Franks says, and "-we in Europe have to get ourselves sorted out".
The "real competition" for the MMS civil-communications-satellite business comes from the USA - from Hughes Space and Communications, Lockheed Martin Astro Space and Space Systems/Loral. Aerospatiale, also in the same business, "-is not quite the same arrangement as MMS, it works with Deutsche Aerospace and, I believe, some 40% of the Spacebus is made in Germany. Aerospatiale is not a payload supplier and it is not an integrated business like MMS," says Franks. Nonetheless, Aerospatiale and MMS are almost neck-and-neck in the number of large communications-satellite contracts which they handle.
Hughes has so many HS601 satellites on order that it has turned its production into an off-the-shelf affair. "We have the capability to do the same, but Hughes has much more business. We are getting there, though," says Franks. "There's plenty of activity and plenty of opportunity out there."
What are the key factors in getting the business against that US competition? Contrary to what the success of the HS601 may imply, "-it's never down to the spacecraft bus itself", says Franks. "It's a combination of factors, and one of the tricks is to see where your competitive advantage may lie in a particular contract, because it's different for each customer".
If the customer is providing a commercial operation, the revenue of which is derived from giving a telecommunications service direct to households, then "-obviously, he is very keen on getting into space as soon as possible, so the schedule is extremely important, whereas if you are offering the latest whizzbang, wonderful, bit of technology, and the customer can wait a year, then he'd probably choose you". Other markets may require something different - for example, "-a more customised system, where technology would be the key factor", Franks says.
While future communications-satellite business will still be dominated by spacecraft in geostationary orbit (GEO), "-we do expect that classic GEO direct-to-home applications will tail off", Franks says, to be replaced increasingly by "bandwidth-on-demand" spacecraft. These will require transponders operating on the new, higher-frequency, Ka-band.
As a result, "-there will be more complexity on the bird. A lot of the processing or cleverness will be on the satellite rather than on the ground. It will be a complex beast. It may be slightly more expensive, but it will be much more flexible." Ultimately, satellites will become more transparent to the user. "You can see a situation where the user doesn't actually realise what medium is carrying his information - the system will decide," says Franks.
An example of this changing trend is the way that MMS' latest "in-house" ventures are developing. The company expects to announce partners for its $1 billion Euro-African Satellite Telecommunications (EAST) system within the next few months. A consortium of - as yet unnamed - investors from southern Africa, the Middle East and Europe is being set up to operate the system.
The prime satellite, an MMS Eurostar 3000, operated with Ku-band and L-band transponders, with a 13.5m-diameter reflector, will be launched around 2000 to enable national operators to offer traditional high-quality fixed- and mobile-telecommunications services.
MMS, which will be an investor in the EAST project, is meanwhile lining up potential investors for another venture, called the Wide-band European Satellite Telecommunications (WEST) system. This will provide a range of bandwidth-on-demand multi-media services to home, business and professional users.
One GEO and nine medium-Earth-orbit Ka-band satellites will be deployed progressively, providing wideband-on-demand services globally from 2001. The craft will be based on the Eurostar 3000 bus, which will employ much more on-board processing and will therefore be more flexible operationally.
Towards on-board processing
That transition to on-board processing has already begun. Today, most processing is performed on the ground and the satellite provides the loop, but now companies - such as Orion - are starting the transformation with the ability to use spot beams and antennas with considerable operating flexibility, but there is still no on-board processing as such until the introduction of the WEST system, which will have on-board processing, completes the transformation.
The potential of the commercial market for low-Earth-orbit (LEO) satellite systems has been exaggerated, according to analysts. Whether this market takes off will depend largely on the success of several mobile-communications-satellite systems, such as the Iridium and Globalstar, which may then be followed by other systems. MMS believes that it should be in a position to provide spacecraft for this market, and has introduced the Leostar 500 bus, but is not extending itself at the moment, taking a more conservative view of the potential of the LEO market (see P21).
"I am not so sure that that side of the market is as robust as they say it is, or will be. For example, for mobile communications, you are competing with the GSM [global system for mobiles] market and it will be very difficult to do that totally with a satellite system," Franks says.
"There may be niches in the market, for specialist applications - such as environmental monitoring, remote sensing and communications - but I don't believe that it will be anything like big enough to support the investment people are talking of."
The Leostar satellite is being marketed for what MMS believes will be niches in the remote-sensing area. In markets such as cartography, "-the cost of delivering the product is paid for elsewhere because the satellite is doing other things", says Franks, citing as an example the European Remote Sensing satellite, which is government funded and its images freely available. He believes, however, that there will be a need for more specific agricultural or geological-based satellite systems with customised-wavelength images, specific resolution capabilities and coverage timing.
"The key to the future of remote sensing will be to get the information in a timely fashion, but it also has to be a value-added product and that part takes time. So you have to get the system sorted out so you can deliver the products quickly - and that can be expensive," says Franks. There is an increasing demand for rapid satellite-revisit times, he says. "We have every-Thursday-at-2pm sort of customers. There is a market for that, but whether they can afford the price to support the infrastructure required I don't yet know."
The assessment and development of new satellite technologies will be an important market driver, particularly in communications, where satellites will increasingly need more power. "We need more-efficient solar arrays and more on-board processing on the spacecraft. We will have to get our digital processing techniques sorted out and also make the maximum use of the antenna, applying new materials technologies. That's something that exercises me. I want to be sure we keep abreast with new-materials developments that we can make use of," says Franks.
Optimum configuration
All these factors are inter-related - for example, antennas are the key because they determine the efficiency of the communications function and, "-if you do that properly, you use less power. If you get it wrong, you use more. If you put a lot of processing on the spacecraft, you need more power. So what is the optimum configuration? Better-used means less power, but more on-board processing means more power, so that's the conundrum," Franks says.
One way to cut the cost of the satellite system will be to reduce the expense of launching it. It costs about $80 million to launch a GEO satellite on an Ariane rocket. It has always been an expensive part of the equation and it seems that it will be for a long time to come. "If we could get really cheap access to space, the market would grow. The market will be driven by the cost of getting into space and the prime need is cheap access. There has to be a revolution, and we have to find a new way of doing it," Franks says.
Source: Flight International
