5/20/2024 - Written By Caleb Henry Yesterday, May 19, Starlink announced market approval from the government of Indonesia to provide satellite internet across the world’s largest archipelago. Comprising ~17,000 islands, Indonesia is the fourth most populous country after India, China, and the United States. The island nation has a growing economy – the 16th largest gross domestic product in the world – and has aggressively invested in connectivity infrastructure to bring its population online. In our Starlink report and financial model, Quilty Space identified Indonesia as a future “needle mover” for Starlink subscriber growth. Here’s why: -          A growing middle class. In just 30 years, 80% of Indonesia’s poor rose out of poverty, according to the World Bank. The country now counts 115 million people in its middle class, of which the World Bank classifies 52 million as “ economically secure .” This presents a large addressable market for Starlink, as internet connectivity is a frequent early investment for newly minted middle-class households. -          Treacherous terrain. As the world’s largest island nation, Indonesia is notoriously difficult to connect via traditional terrestrial infrastructure, like fiber and cell towers. Connecting the islands, especially smaller and more rural ones on the country’s eastern half, can be prohibitively expensive. For this reason, satellite operators have flocked to Indonesia as installing satellite antennas is easier and simpler. -          USO familiarity. BAKTI, an arm of Indonesia’s Ministry of Communication and Information, has invested heavily in commercial satcom for Universal Service Obligation (USO) programs to bring internet to far-flung corners of the country. The most prominent example is BAKTI’s backing of the SATRIA-1 GEO satellite with local operator PSN, and the purchase of half the capacity on PSN’s Nusantara Lima satellite. BAKTI continues to issue tenders for satcom and fiber projects (including one just two days ago ). We expect Starlink will soon be involved in Indonesian USO programs, through BAKTI or other avenues. More than half of Starlink’s ~2.7M subscribers are in the United States, but that number has been ticking down as more countries and territories authorize the service. On May 19, Starlink said it also received authorization in Fiji, bringing the number of countries, territories, and markets that can access the service to 99 (note: how Starlink defines territories and markets is unclear, as eight weeks ago, the company said it had 72 countries approved) . Indonesia could be the country that tips Starlink’s international subscribers over the 50% mark. Already Starlink has a deal with the Indonesian government to improve connectivity for health and education sectors. The nation’s fledgling middle class presents a target-rich market for consumer connectivity. And, with Indonesia’s proximity to the five busiest cargo harbors in the world (four in China, one in Singapore), it's a key market for maritime connectivity, a sector where Starlink has swiftly gained market share. With Indonesian market access secured, the last big needle-moving country awaiting authorization is India, the world’s most populous country . Starlink is reportedly close to gaining the last required Indian government approval, completing a lengthy and famously difficult process for foreign satellite operators.  SOURCE: https://apnews.com/article/indonesia-bali-elon-musk-starlink-internet-service-8444ca8b5da4f4a9973a66f8fd1d3e0f

5/15/2024 - Written By Caleb Henry What Quilty Space identified as a risk for Amazon’s Project Kuiper two years ago is now a concern the U.S. military shares: can new rockets scale in time to meet program schedules? Frank Calvelli, Assistant Secretary of the Air Force, who leads space acquisition and integration, wrote a letter to United Launch Alliance’s co-owners, Boeing and Lockheed Martin, expressing concern that their joint venture won’t be able to launch 25 missions the DoD needs by 2027. Calvelli’s letter, submitted May 10, was discovered by the press May 13. Quilty’s Take: we say Calvelli’s concerns are justified by looking at the early launch cadence of four flagship rockets: Europe’s Ariane 5, Rocket Lab’s Electron, SpaceX’s Falcon 9, and ULA’s own Atlas 5. History shows these rockets averaged less than three launches a year during their first five years, regardless of rocket size, financing, or experience with previous vehicles. ULA needs to triple that historical launch rate for DoD alone, not counting the 38 Vulcan launches the company has for Amazon. Can ULA clear this hurdle? It will be tough, but there’s reason to believe the answer is yes. In support of Project Kuiper, ULA is doubling its launch infrastructure at Cape Canaveral. The company says it has “nearly 30 launch vehicles” in production right now (how many are the last ~17 Atlas 5s is unclear). ULA said in 2022 it was also adding a second robotic assembly line for Centaur-5 upper stages. Plus, the Centaur-5’s upgraded RL10C-X twin engines feature a marked increase in 3D-printed components , which should accelerate production. That said, concerns persist around the ability of ULA’s first-stage engine supplier, Blue Origin to deliver a steady stream of BE-4s, a key gating factor for the Vulcan program for years. While Vulcan’s debut flight in January was a “ perfect mission ,” per ULA CEO Tory Bruno, Blue Origin and ULA will need to ramp production rapidly if they hope to meet customer timing needs. Throwback: Subscribers curious about our original analysis titled “Quilty Industry Brief - $5+ Billion Reasons Why Amazon Kuiper is Real,” published Wednesday April 6, 2022 can email us for review. SOURCE: https://www.washingtonpost.com/technology/2024/05/13/pentagon-worried-ula-vulcan-development/?pwapi_token=eyJ0eXAiOiJKV1QiLCJhbGciOiJIUzI1NiJ9.eyJyZWFzb24iOiJnaWZ0IiwibmJmIjoxNzE1NTcyODAwLCJpc3MiOiJzdWJzY3JpcHRpb25zIiwiZXhwIjoxNzE2OTU1MTk5LCJpYXQiOjE3MTU1NzI4MDAsImp0aSI6IjU3MTUyMzg0LTA0OGMtNGI3OC1hMDQ3LTdkMWViMjYwZDcwOCIsInVybCI6Imh0dHBzOi8vd3d3Lndhc2hpbmd0b25wb3N0LmNvbS90ZWNobm9sb2d5LzIwMjQvMDUvMTMvcGVudGFnb24td29ycmllZC11bGEtdnVsY2FuLWRldmVsb3BtZW50LyJ9.e1uqlwNZY2foBluJcdD8kJ26crolsdygHG5VtjZgz8I

5/8/2024 - Written By Chris Quilty Very high-resolution (VHR) satellite imagery, defined as 50cm or better resolution, has historically been a rare and prized resource. Before the launch of two Maxar Legion satellites on May 2, 2024, there were only 14 commercially operated VHR satellites on orbit. Six of these satellites are operating beyond their design life (by an average of ~8 years!), while another five have less than three years of remaining design life. Meanwhile, demand for VHR imagery has arguably never been higher due to roiling global conflicts and the emergence of new AI/ML tools that can extract even greater value from imagery. And, better data (i.e., better resolution) results in better analysis. As profiled in our EO Sector Spotlight VHR report published in 3Q 2022, the twin Legion satellites launched last week represent the vanguard of 100+ VHR satellites that could be launched over the next four years. This total includes large constellations like Planet’s Pelican (32 satellites) and Airbus's renewed commitment, unveiling its Pléiades Neo Next program on April 29 with one satellite already in production and subsequent plans to deliver “new satellite assets and capabilities.” For now, Maxar will remain king of the VHR hill, with four more Legions ready for launch and potentially two more in early construction. Only Airbus (Pléiades Neo 3&4) and ISI (EROS C3) have similar 30cm capability. Despite the recent Legion launch and the big industry plans for new VHR capacity, near-term VHR supply is more likely to contract than expand. Six of today's VHR satellites are operating beyond their design life and will soon run out of fuel. Airbus is 2 to 3 years out from adding capacity. BlackSky will launch its first 35 cm Gen 3 satellite in late 2024, with an uncertain (cash-dependent) launch rate thereafter. Satrec Initiative launches its 30 cm SpaceEye-T early in 2025 but has limited commercial reach. Beyond that, Pelican will need at least a half dozen satellites in orbit to dent the market. Maybe late-2025? Importantly, Maxar has 100% commercial access to the Legion fleet. That is, until WorldView 1 & 2 (launched in 2007 and 2009) finally tap out, and Legion capacity is needed for EOCL commitments. The degree to which Maxar can successfully grow the market vs. simply stealing share from the HR market could weigh heavily in sustained investment in large VHR constellations. SOURCE: https://www.maxar.com/press-releases/first-two-worldview-legion-spacecraft-performing-well-after-launch

5/7/2024 - Written By Caleb Henry In years past, small countries often financed geostationary satellites under the auspices of national sovereignty. Commercial satellite operators found themselves competing with new state players for whom a commercial business case seemed irrelevant, leading to the term “ PrideSats ,” as national pride seemed to be the biggest motivator (think Bangabandhu-1 for Bangladesh, or Tupak Katari 1 for Bolivia). In 2024, will Low Earth Orbit (LEO) constellations become the new PrideSats? A bellwether for this behavior is Taiwan, which has longstanding trust issues with Elon Musk over his opinions on and connections to China, and has consequently rejected Starlink. The island of 23 million people is now actively contemplating a domestic LEO constellation. If Taiwan pushes forward with a constellation, it could encourage other countries to follow suit. To date it’s been the typical suspects deploying or planning government LEO broadband constellations – The U.S., the EU, Russia and China. Can smaller nations follow suit? We find this will be challenging for the following reasons: • Coverage physics.  LEO constellations inherently require dozens to hundreds of satellites to ensure consistent coverage. Nations that build LEO networks need a global, or at the very least, a large regional use case as justification, otherwise they will spend large amounts for capacity that won’t get used.   • Limited orbital real estate.  LEO stretches from 200-2,000km, but many of the ideal orbits are already claimed or populated by Starlink, Amazon, SDA, OneWeb and Telesat. What’s left is mainly either vLEO, where atmospheric ablation becomes an issue, orbits between Starlink and SDA, where large debris is a threat, or above OneWeb, where radiation levels climb. Put simply, there is not enough room in LEO for dozens of proliferated constellations (unless operators become extremely adept at avoiding collisions and/or trust each other enough to allow for orbits closer than what operators, and perhaps regulators, tolerate today).   • High cost barriers.  While GEO PrideSats were expensive, $200-300M could get a satellite built, launched and operated. For LEO constellations, that funding is the starting point. Unless nations are prepared to spend billions, potentially on a recurring basis, the fiscal requirements will be too much.   These high barriers could benefit existing commercial LEO operators. Already Taiwan is using OneWeb for emergency communications, and South Korea, through Hanwha’s investment in OneWeb, has obtained a degree of sovereign LEO capability. Israel’s Ministry of Communications said May 7 it is buying Starlink services and testing OneWeb with domestic GEO operator Spacecom. Quilty Space won’t be surprised to see a handful of nations attempt sovereign LEO constellations, but the more likely outcome is nations banding together (like the E.U.’s IRIS2), buying into existing LEOs (Hanwha/OneWeb), or accepting that sovereign connectivity can come from higher orbits like MEO or GEO. SOURCE: https://edition.cnn.com/2024/05/04/asia/taiwan-starlink-intl-hnk/index.html

5/1/2024 - Written By Caleb Henry In a year marked by budget atrophy at NASA, NOAA-OSC, and the Space Force, the Defense Innovation Unit (DIU) was a notable outlier. The organization, tasked by the Pentagon to accelerate commercial tech adoption across the U.S. military, received a 9x FY24 budget increase from $104M to $946M. DIU has six core focus areas , one of which is space. In a recent Q&A, DIU Space Portfolio Director Steve “Bucky” Butow emphasized a greater need for scalable commercial solutions and less “exquisite” hardware. DIU has helped to foster tech that went into the Space Development Agency’s pLEO constellation, and has a strong interest in projects that already have private backing. We suspect that a meaningful portion of DIU’s newfound funding will go towards bolstering existing areas of interest. Some key areas to watch include: • OTV and fuel depots.  Three companies (Blue Origin, Northrop Grumman, and SpaceBilt, formerly Skycorp),  received DIU contracts  in March to advance Orbital Transfer Vehicles (OTVs) and in-space refueling technologies that can serve commercial and military customers. Notably, DIU expressed a desire for an orbiting fuel depot with chemical and/or electric propellant that was apparently not awarded in that round. We would not be surprised to see a fuel depot program follow these three orders. • Hypersonic test platforms.  Rocket Lab, in partnership with Australian startup Hypersonix, and Fenix Space, a California startup, are developing low-cost hypersonic test platforms for DIU’s Hypersonic and High-Cadence Airborne Testing Capabilities ( HyCAT ) program. Last year DIU  expanded HyCAT  to include experimental cruise flight systems from Hermeus and Innoveering, a GE Aerospace company. Given DoD concern about a paucity of U.S. hypersonics capabilities, this area is likely to see increased attention. • Responsive launch.  In February, Firefly completed DIU’s Victus Nox mission by launching a Millennium Space satellite within 24 hours’ notice. DIU’s next responsive space mission,  Victus Haze , sets up a more audacious test of rendezvous and proximity operations by Rocket Lab and True Anomaly. With a larger budget, will DIU go for a hat trick? • Satcom networking.  DoD already uses a lot of connectivity, but much of the gear is specialized, requiring lots of disparate radios and hardware. DIU has been striving to advance a connected battlespace, where comms are  seamless across systems  (government and commercial). Tighter integration between these networks, and between orbits, is a probable focus of continued investment. SOURCE: https://spacenews.com/diu-helps-orchestrate-pentagon-innovation-enterprise/

4/25/2024 - Written By Chris Quilty Defense News officially confirmed a long-circulating industry rumor. Raytheon is done chasing SDA prime contracts. This represents a reversal from the company’s recent acquisition strategy, taking Raytheon off the table as Terran Orbital’s White Knight. In November 2020, only 20 months after the formation of the Space Development Agency (SDA), and with prospective billion-dollar smallsat contracts hanging in the balance, Raytheon acquired Blue Canyon Technology (BCT) for $350 million. BCT, a 12-year-old startup founded by former Ball engineers to build star trackers, was EBITDA profitable with revenues of $50-100M. At the time, BCT was viewed as one of the early success stories of the (2010s) newspace revolution. A year later, Raytheon acquired SEAKR Engineering, a Colorado-based satellite component manufacturer (RF, processing, storage, space electronics, and subsystems, but no buses), for an estimated 2-3x the purchase price of BCT. SEAKR also brought along highly coveted digital payload technology. So why is Raytheon abandoning its pursuit of SDA prime contracts following a $250M award , 7-satellite award, and three-and-a-half years after spending more than $1B for two platform companies to pursue business? Was it merely the fact that BCT specialized in cubesats, with less heritage on microsatellite class platforms, and SDA was looking for ESPA-Grande's (i.e., up to 700 kg vs. ~25 kg for a 16U cubesat)? To chase an SDA contract, Raytheon would need to mature the design for an all-new bus and compete against two dozen other vendors to win a coveted SDA contract. More likely, Raytheon concluded that there is a better risk-adjusted return from selling picks-and-shovels (i.e., components and systems) than full-blown satellites. Both BCT and SEAKR have promising merchant component opportunities, but if Raytheon becomes a prime, many of BCT/SEAKR’s customers will come to perceive them (Raytheon) as a competitor. Better to just sell parts. And BCT continues to offer its cubesat/mircrosat product line. It's the right call. We just hope Raytheon didn’t base its original acquisition strategy on the assumption of an SDA win. If they did, it’ll be a long road to generate an attractive return on Raytheon’s original investment. Another way to engineer a save would be to double down on the components business through M&A with the aim of attaining proprietary capabilities or scale advantage, especially in a world with fewer tier-twos than ever. SOURCE: https://www.defenseone.com/business/2024/04/rtx-moves-away-competing-prime-space-contracts/396016/

4/18/2024 - Written By Caleb Henry What started as a binary battle between DTD spectrum approaches is increasingly looking like an “and” rather than an “or” outcome. One year ago, the battles lines were drawn between MSS operators pushing the adoption of specialized DTD chips into phones (Apple/Globalstar and Qualcomm/Iridium) and Mobile Network Operators repurposing cellular spectrum for use from space (T-Mobile/Starlink and AT&T/AST SpaceMobile). Now, both approaches appear to be progressing along parallel paths to serve different roles and markets. Android Authority, a respected outlet for green-bubble smartphone news, reported April 14 that Google’s next phone, the Pixel 9, will include Samsung’s Exynos Modem 5400 for satellite-enabled messaging. Samsung already confirmed in 2023 that its next flagship phones will have satellite messaging, also based on its modems. And several Chinese smartphones like the Oppo Find X7 and the ZTE Axon 60 Ultra have satellite connectivity (ZTE’s phone uses China Satcom’s regional Tiantong MSS system in GEO). Smartphone OEMs are finding it increasingly important to have satellite SOS as a selling feature, but these services rely on narrowband connectivity, meaning the signal is strong but the data rates are low. That’s great for emergencies, but a fuller DTD experience with data and video requires more bandwidth, like the approach AST, SpaceX and others are pursuing. This bifurcation has long existed in satcom, with companies like Globalstar, Iridium, Thuraya, and Viasat providing indispensable safety services from L- and S-band (narrowband) spectrum to planes, boats and warfighters. Satellite operators using higher bandwidth frequencies (C-, Ku-, Ka-) provide more robust internet services, but lack the resiliency required for emergency services. Both coexist. Similarly, DTD for SOS and high-bandwidth applications are moving in tandem. SpaceX launched six prototype DTD satellites in January, followed by six operational DTD satellites April 6. AST SpaceMobile received $155 million in strategic investments from AT&T, Google and Vodafone in January as the company works through supply chain issues to launch five satellites later this year. How DTD solutions will be adopted is still evolving, but the emerging pattern in 2024 is that the inevitable industry shakeout should see at least two winners. SOURCE: https://arstechnica.com/gadgets/2024/04/the-pixel-9-reportedly-gears-up-for-satellite-sos-support/

4/12/2024 - Written By Caleb Henry After watching startups launch dozens to hundreds of small imaging satellites in Low Earth Orbit, the U.S. National Reconnaissance Office is getting in on the action. The spy agency has six launches planned this year for a proliferated LEO constellation, marking a shift from demonstrations to operations. Specifics about the constellation, like how many satellites, their size, resolution and sensor suite remain unknown. NRO is a large consumer of optical imagery, mainly through the 10-year Electro-Optical Commercial Layer (EOCL) program that split billions of dollars of contracts between BlackSky, Maxar and Planet. The agency has also doled out a series of smaller study contracts across the industry for radar, hyperspectral, and RF mapping data. So why build a government-run constellation, and is it a threat to industry? Probably not. If anything, the NRO constellation is an endorsement of the commercial sector’s approach to EO. The agency is already the largest customer of BlackSky, Planet and Maxar, because it has a large appetite for responsive, high resolution/VHR imagery. What the NRO constellation proves is that the commercial sector has demonstrated a capability with such strong utility that the agency wants even more than what’s available. DoD’s latest Commercial Space Integration Strategy , released April 2, categorizes Information, Surveillance and Reconnaissance (ISR) as a “hybrid mission area,” meaning some functions will be government-led, while others performed by commercial players. We've seen rapid growth in the commercial sector’s ability to field ISR sensors. It's only natural NRO would do the same. Assuming NRO is holding to its oft stated M.O. “buy what we can, build what we must,” then this constellation will enable capabilities that can’t be bought commercially. We're speculating here, but NRO may not have to make the typical industry tradeoff of many lower-resolution satellites (Planet) or a few high-resolution sensors (Maxar). Absent market forces, the agency may have the wherewithal to field a large constellation of powerful satellites too expensive for commercial operators to deploy. Or it could deploy satellites with multiple sensors (optical, SAR, hyperspectral, RF mapping) on the same platform. The point is, NRO can have its cake and eat it, too. SOURCE: https://www.c4isrnet.com/battlefield-tech/space/2024/04/09/spy-agency-eyes-may-launch-of-first-proliferated-constellation/

4/8/2024 - Written By Caleb Henry Sierra Space on April 5 announced a trio of satellite platforms meant to meet the needs of any orbit. The news follows three months after the company won a marquee contract to provide 18 LEO missile-warning satellites for the U.S. Space Development Agency, signaling a return to high-volume manufacturing after more than a decade (Orbcomm Gen 2). The new Eclipse platforms (Velocity on the small end, Horizon for middleweights, and the self-described Titan at the heavy end), mark two notable changes: a shift away from an intense focus on Medium Earth Orbit, and an increased appetite for commercial sales. • Less MEO, more everything else.  Less than four years ago, Sierra Space (then Sierra Nevada Corp.) released satellite platform duo mainly  geared towards MEO . That’s not a huge market – just GPS, the rare communications network, and some military sensors – and there was little to show for the effort. Sierra Space’s new line up appears to be a shift towards greater versatility with options for all orbits. Eclipse Titan, the largest platform, bears strong visual similarity to Sierra’s older  SN-1000 , including a heavy emphasis on an ESPA ring core.  • Implications for industry.  Sierra Space is experiencing a rebirth in satellite sales and is expanding from defense into commercial (and potentially civil space), a move that could transform the company into an emerging competitor for many smallsat manufacturers. Comparing the company’s 2020 platforms announcement to today’s, Sierra Space used the word “commercial”  eight times  in its April 5 announcement, compared to  only twice  during the 2020 news (and both were in the company description blurb). Satellite manufacturers often seek to smooth out lumpy business through diversifying customer sets. For Sierra Space to do so, that means more competition among small satellite providers like York, Airbus (FKA the AOS JV), and Rocket Lab. In the commercial small GEO space, that could also mean competition with Astranis, Swissto12, and Terran Orbital.  • Lingering MEO opportunity?  Larger aperture notwithstanding, Sierra Space is likely still eyeing opportunities in MEO, especially since the Space Force  wants new missile tracking satellites  there. That puts the company in the ring with L3Harris, Millenium, and RTX. The Space Force is also studying  smaller, cheaper GPS satellites , which could present another opportunity should it transition to a proliferated architecture in future years.   SOURCE: https://www.sierraspace.com/newsroom/press-releases/sierra-space-unveils-the-revolutionary-eclipse-satellite-bus-line-introducing-velocity-horizon-and-titan/

4/1/2024 - Written By Caleb Henry Companies are often reluctant to name-drop their competitors, but it’s no secret that virtually every satellite communications operator is squaring up against Starlink. Telesat CEO Dan Goldberg didn’t mince words on the company’s March 28 earnings call, saying the Canadian operator is facing Starlink “everywhere,” most acutely in competition for maritime vessels. The acknowledgement is notable, because a longstanding argument employed by Goldberg and other Telesat executives was that Lightspeed, the company’s future LEO constellation of 156-198 satellites, is designed for markets that Starlink isn’t. By painting Starlink as a consumer-first network, Telesat can emphasize Lightspeed’s differentiation for the enterprise and mobility-networks. Other satellite operators have done the same, but it’s increasingly apparent they will all face direct competition with Starlink, if they aren’t already. Goldberg’s discussion of Telesat’s competition with Starlink is an important bellwether for the industry as to where Starlink is most aggressive today, and where it will be in the future. Those areas include: Intense competition: Maritime, particularly cruise ships . Goldberg said Telesat is seeing intense competition here, and he’s not alone. Maritime competition with Starlink has been most strongly felt by SES, whose O3b constellation in Medium Earth Orbit (MEO) serves many of the world’s largest cruise lines. Even amongst smaller ships, Starlink has cemented its presence since activating maritime service in 2022, as evidenced by Starlink reseller strategies adopted by KVH, Marlink, and Speedcast. Medium competition: cellular backhaul. While GEO excels in providing five-nines reliability (a critical MNO requirement), LEO networks have an advantage in providing lower latency (<100 ms vs 600-800 ms for GEO). Goldberg indicated that Telesat is seeing Starlink going for “backhaul requirements on certain networks.” That said, until Starlink can provide sufficient reliability, we expect the nod will continue to go to GEO. Once fully deployed, Starlink’s DTD service could represent a different type of competition for the cellular backhaul market. Light competition: corporate networks. Goldberg described corporate business customers as a less affected vertical in Telesat’s business. This may be thanks to Telesat’s entrenched position with customers who have relied on the company for years of remote connectivity across Canada and other geographies. Starlink has a business connectivity offering, but it is admittedly less attention grabbing, perhaps because it has fewer marquee deals announced compared to other enterprise and mobility segments. Starlink is also active in government, inflight connectivity (IFC), and of course, consumer internet. As the company deepens its presence beyond consumer markets, traditional satellite operators will need to craft strategies to compete with a well-capitalized, agile alternative. Telesat expects to even the playing field with the launch of its first Lightspeed satellites in June 2026, with service following by the end of 2027. Will Lightspeed tip the scales back in Telesat’s favor? SOURCE: https://seekingalpha.com/article/4681081-telesat-corporation-tsat-q4-2023-earnings-call-transcript

3/29/2024 - Written By Justin Cadman SpaceX is eyeing another segment of the space economy for disruption. Last week, speaking at a panel at the Satellite 2024 event, SpaceX President Gwynne Shotwell unveiled a new optical communications terminal (OCT) product offering, which SpaceX calls “Plug and Plaser.” Acknowledging the new foray into product sales, Shotwell said, "We generally don't sell components, so this is a little bit of a new thing for us." With its track record of rapid innovation, efficiency, and rock-bottom costs, SpaceX could rapidly become a formidable competitor in the emerging OCT market. OCTs, enabling optical inter-satellite links (O-ISLs), are mission-critical to proliferated defense constellations (e.g., SDA PWSA) and to future commercial LEO broadband constellations alike. And in some ways, SpaceX has an early lead in OCTs, ramping from on-orbit testing in 2021 to wide-scale deployment by early 2024, boasting 9,000 “space lasers” (OCTs) on-orbit pushing over 42 Petabytes/day of data. Does Shotwell’s announcement signify a paradigm shift at SpaceX – i.e., is the company poised to become a merchant supplier of high-volume, low-cost spacecraft components, leveraging its enormous Starlink production scale to drive lucrative new product revenue streams? Recent OCT merchant supplier prices are ~$300K per LEO OCT, suggesting BOM plus AIT costs of maybe $125-150K, but SpaceX’s internal OCT costs are significantly lower. It could garner market share quickly. The entry of SpaceX as a merchant supplier, first into OCTs and later into other component arenas, would have profound implications for the space industrial base. As it turns out, this is not SpaceX’s likely intent. The size and the nature of the components opportunity makesmerchant supply a very unlikely priority for the company on a standalone basis. Presentations by Mynaric, a pure-play OCT leader, suggest that the laser comms market will reach ~$1 billion in size around ~2026. While not a pittance (and quite attractive for companies like Mynaric), this is hardly a game-changing motivator for SpaceX to shift its highly successful business model. We believe that (1) driving interoperability standards and (2) introducing a powerful new Starlink “on-ramp” are the real motivations behind SpaceX’s recent surprise announcement. A clue to the interoperability driver is Space-BACN, DARPA’s attempt to create an “internet” of LEO satellites, enabling seamless communication between military/government and commercial/civil satellite constellations that currently are unable to talk with each other. A number of leading companies (including SpaceX) are involved in the Space-BACN program. SpaceX success in pushing its space laser approach commercially could help put SpaceX into the driver’s seat for future OCT/O-ISL standards. Regardless of whether it becomes the ultimate technical standard-bearer industry-wide, SpaceX surely sees a lucrative opportunity to drive network traffic onto Starlink via integration of its OCTs onto others’ spacecraft. Other commercial and military customers can leverage SpaceX OCTs to backhaul their traffic via the Starlink network, creating both a stronger Starlink ecosystem and an attractive potential new revenue source for the company (at the same time potentially boosting other SpaceX initiatives, like Starshield). Spacecraft component companies, including OCT vendors, can breathe a sigh of relief for now. SpaceX isn’t barging into your front door with its latest announcement, but it looks like it may be trying to sneak in the back. SOURCE: https://www.reuters.com/technology/space/spacex-says-plans-sell-satellite-laser-links-commercially-2024-03-19/

3/26/2024 - Written By Kimberly Siversen Burke Netherlands-based IoT innovator, previously known as Magnitude Space, rebranded to "Hiber" in 2017, drawing inspiration from the idea of its modems entering a dormant state akin to “ hibernating bears ” between signal transmissions. This foreshadowed a period of dormancy during which the company was honing its strength. Today, Hiber’s renaming looks more like a self-fulfilling prophecy. Awakening to a Sharpened Focus & Renewed Mission It’s no surprise that the once-promising AWS Commercial Startup Winner of 2018 slept right through COVID after its first four cubesats failed. But the company’s recent acquisition of Parisian-based IoT hardware provider Srett Industrie is what caught us off guard. Many had written off the Dutch IoT hopeful after it scrapped its constellation plans in 2021, and its merger with Swiss smallsat operator Astrocast tanked the following year. But Hiber’s history of starts and stops is marked by a few pivots toward profitability along the way: • In late 2020, Hiber partnered with  WTS Energy  to develop and launch a subscription-based IoT solution for remote monitoring of oil & gas wells and pipelines. Designed for off-grid (no cellular connectivity, so limited availability to deploy NB-IoT), the “HiberHilo” platform is an out-of-the-box, plug-and-play solution. It includes compact, low-power, battery-operated sensors connected to wellheads. The sensors route data via LoRaWAN (long-range, frequency-hopping, and unregulated sub-GHz spectrum) to the  Hiberband  gateway, which then uplinks to third-party satellites, including  Inmarsat’s.  End users access the data on Hiber’s remote dashboard. HiberHilo is scalable to ~500 sensors per oil platform, and because the equipment is leased, there is no capex investment. • Shell Oil tapped Hiber in  2021  for global well integrity monitoring, deploying HiberHilo at about  250  remote and offshore wellheads. • In 2022, HiberHilo won a  Digital Innovation of the Year Award . • Hiber earned the financial backing of  Finch Capital  subsidiary FC Space in 2023. • In the March 18, 2024,  announcement  of Hiber’s acquisition of Srett to expand its R&D and manufacturing capabilities, the combined company is reportedly already serving “eight of the 10 global oil & gas and hydrogen majors in all continents.” As a private company, details about Hiber’s claims of “profitability” are impossible to quantify. But the bear’s emergence from a dark cave of $33M + in losses to a scalable IoT solutions provider serves as a reminder to startups: sometimes the path to success is not through relentless hustle… but rather a thoughtful hibernation followed by a strategic wake-up call. SOURCE: https://quilty.globalspaceexchange.com/dashboard/Hiber%20Acquires%20Srett%20Industrie%20to%20Accelerate%20the%20Roll-Out%20of%20Environmental%20and%20Integrity%20Solutions

3/25/2024 - Written By Caleb Henry Among the dozens of meetings the Quilty team conducted at Satellite 2024 in Washington DC last week, one topic emerged more than any other: direct-to-device communications. The industry still views DTD as a huge opportunity, but some stubborn questions persist, namely 1) which model will win, cellular spectrum reuse or dedicated satcom spectrum; 2) how quickly the market will take root, and 3) how big is the market opportunity? Case and point, two examples from Satellite 2024 – AT&T’s DTD pricing strategy and Qualcomm’s view of smartphone sales. AT&T doesn’t know how to price DTD. The mobile network operator has long known Abel Avellan, founder of AST SpaceMobile, and has worked with him to bring the SpaceMobile constellation to reality. But per Chris Sambar, president of network at AT&T, the MNO is only at the beginning of figuring out what customers will pay for it. At Satellite 2024, he said: “on monetization models, we’ve thrown some around over the years, but we’ve really just started that work in earnest in AT&T with our product teams, understanding what customers want specifically and what they’re willing to pay for.” Qualcomm links rising iPhone sales to DTD. Qualcomm ended a 2023 partnership with Iridium due to a lack of interest from Android smartphone manufacturers in incorporating their specialized satcom DTD chipset, but Qualcomm has concluded that DTD does create competitive advantage, pointing to Apple’s market share gains since the release of Apple’s iPhone 14 using Globalstar for limited text messaging capability. That may be a stretch (correlation ≠ causation) given the fact that Apple is offering the service for free until September 2025 . We're skeptical that a strong direct link exists, but Qualcomm has a separate partnership with Apple for 5G chipsets , so it has a vested interest in seeing the iPhone succeed as well. Our takeaway : DTD is an area that will require patient investors. While Quilty strongly believes DTD will eventually be a mainstay of telecom, as everything is moving towards ubiquitous networks, the path to that end has considerable opacity. We expect more trial and error as operators (not unlike they did with inflight Wi-Fi) test out various customer models before landing on one or more sustainable approaches. SOURCE: https://interactive.satellitetoday.com/via/satellite-2024-show-daily-day-4/executives-unpack-the-practical-challenges-of-the-satellite-and-cellular-convergence/

3/14/2024 - Written By Raven Otero-Symphony On March 12, Japan’s cabinet approved a 10-year fund of $6.7 USD billion (1 trillion yen) to promote satellites, space exploration, and transportation. Historically, the nation’s flagship Japan Aerospace Exploration Agency (JAXA) hovers around a $1 USD billion budget plus supplemental funding , meaning this is creating a sizeable annual windfall for Japanese space players. The funds are earmarked to support private and academic partnerships as JAXA intensifies initiatives to further the Japanese space ecosystem. Around half of the 50 commercial Japanese companies that Quilty tracks have been active since 2010. Emerging New Space players — which include companies such as Astroscale, Axelspace, GITAI, and Pale Blue — will welcome the funds, but from our perspective, only a handful of major players are likely to be key beneficiaries. The Strategic Space Fund emphasizes areas where traditional Japanese space contractors have thrived: (1) satellites, (2) space science/exploration, and (3) space transportation. Since 2015, JAXA satellite manufacturing spend is shared across only three entities: the NEC Corporation, Mitsubishi Electric, and Mitsubishi Heavy Industries (MHI). On the launch side, JAXA has historically (and continues to) pin its hopes almost exclusively on Mitsubishi Heavy Industries. Admittedly, there are no other domestic options for heavy launch, with IHI Aerospace’s Epsilon launcher only supporting payloads to LEO <1400 kg . Small launch vehicle startups Interstellar Technologies and Space One have launched demo missions but so far have yet to reach orbit. It seems Mitsubishi Heavy Industries is best positioned to capitalize on the new space fund, given their dominant position in satellite manufacturing and launch. The large sum, however, is likely to draw attention from other established Japanese firms: MHI sister firm Mitsubishi Electric (MELCO) operates a thriving satellite manufacturing business beyond their JAXA contracts, while another MHI sister firm, Mitsubishi Corporation, operates Japan Space Imaging and recently made investments into satellite servicing start-up Astroscale . Meanwhile, Mitsui & Co. is pushing ahead with ambitious human spaceflight plans and partnerships after their short-lived stint in launch services with Spaceflight Industries. NEC Corporation, Canon, IHI, and Toshiba are among the other Japanese conglomerates with interests in space. Auto manufacturers in Japan are also eyeing the growing Japanese space industry as another economic stronghold. Only a few months ago, Toyota demonstrated Lunar lander prototypes at the Japan Mobility Show, one of the world’s “big five” auto conferences. This could set a precedent for an upcoming trend of auto manufacturers joining the space sector. Quilty QuickTake: The $6.7B dedicated space fund over the next 10 years, plus JAXA’s growing annual supplemental funding, clearly shows the Japanese government’s ambition to achieve space superiority. Established firms will likely receive the bulk of funding as Japan looks to shore up its strategic space assets. Whether NewSpace, Old Space, Automaker, or Conglomerate, one thing is clear: now is a great time to be a Japanese space company. SOURCE: https://spacenews.com/japan-creates-multibillion-dollar-space-strategic-fund-to-boost-space-industry/

3/13/2024 - Written By Caleb Henry On March 1, NASA terminated a $2 billion program to create a refueling satellite, the On-orbit Servicing, Assembly, and Manufacturing 1 (OSAM-1). The nine-year effort, previously called Restore-L, is the second satellite servicer program Maxar backed out of, following DARPA’s RSGS in 2019 . In a scathing report , NASA’s Office of the Inspector General (OIG) put the blame for OSAM-1 squarely on Maxar, referring to “poor” contractor performance no less than 13 times. At first glance, the blame seems sound, but an equally critical take from an OSAM-1 subcontractor tells another story. Tethers Unlimited (an AMERGINT company) was building MakerSat , an attachment to OSAM-1 intended to manufacture a carbon fiber composite beam in space. Former CEO Rob Hoyt took to LinkedIn to call out what he views as a “fundamental problem with NASA's approach to the ‘Public/Private Partnership’ method.” Per Hoyt, NASA’s definition of a “partner” looks much more like a traditional “customer.” Instead of working together, NASA often changes mission scope, increasing costs while expecting the partner/contractor to pay for it. Quilty’s QuickTake: • There’s equal blame to go around.  Hoyt’s story gives credence to NASA being the root cause of some issues with OSAM-1, more so than the OIG report would imply. Maxar, on the other hand, appears to be stumbling over the same challenges it had with other space missions. Flight software glitches, which  delayed Maxar’s own WorldView Legion  constellation, were also negatively impacting OSAM-1. • Industry moves too fast to tolerate lengthy delays.  When OSAM-1 started, the idea of refueling large, old satellites held a lot of promise. But annual commercial GEO orders have been cut in half since 2015 and many of the new orders have electric propulsion, meaning they won’t run out of fuel for decades (nor can they use the hydrazine OSAM-1 was to deliver). Low Earth Orbit constellations of redundant and/or disposable satellites have become the norm, crimping demand for refuelers. NASA apparently concluded that, even once transferred to a commercial operator, OSAM-1 wasn’t well positioned for emerging sustained maneuvering/maneuver without regret initiatives from DoD.  • Realism was in short supply.  NASA awarded Maxar the Restore-L contract in 2016, with an expected delivery in 2018 and a launch in June 2020. That would be reasonable if Restore-L, and now OSAM-1, wasn’t packed with new, unproven technologies. While a traditional large satellite takes around three years to build, new, complex satellites always take longer (see ViaSat-3, Eutelsat Quantum, and PRISMA as examples). NASA described Restore-L as nearing Technology Readiness Level 6 (out of 9) back in 2019 – a far cry from the kind of mature tech that could hold to a tight schedule. Congress provided ample funding, but the schedule for the program showed unrealistic expectations.  • Commercial partners need a profit motive.  Maxar made clear to NASA that OSAM-1 was no longer a profitable effort. Unsurprisingly, it went the same way as RSGS, which Maxar also ended over unprofitability. NASA has the two-pronged challenge of wisely stewarding taxpayer dollars while also ensuring a profitable outcome for its commercial partner. Contractors, in turn, need to be sure that they can handle the work they agree to, including changes in scope that require additional expenditures.   SOURCE: https://arstechnica.com/space/2024/03/nasa-cancels-a-multibillion-dollar-satellite-servicing-demo-mission/

3/8/2024 - Written By Caleb Henry India has established itself as a global space power primarily through launch vehicles, navigation, and communications satellites. Now the country could do the same with remote sensing.  Gen. Anil Chauhan, the head of India’s military, called for a “indigenous constellation of intelligence, surveillance and reconnaissance satellites equipped with optical and hyperspectral sensors,” per Defense News.   India’s government plans to spend 250 billion rupees (~$3 billion) on space contracts over the next few years, Chauhan said. How much of that will go towards a domestically sourced Earth observation constellation is unclear, since more robust PNT, comms, space situational awareness and responsive launch are also priorities he mentioned. But the impact of a new EO constellation could be significant. International commercial operators that could be affected by this development include:  • Maxar Technologies.  Last year Maxar  described itself  as “possibly the only space company to have a local entity in India.” Naturally that statement comes with myriad caveats, as other space companies do have presences in India (Hughes and SES for example), but Maxar’s large footprint means the company could find itself competing with the government in a few years’ time.  • Planet Labs.  Indian press reported in 2017 that Planet was preparing to open  an office there , but the company’s website and 10-K report make  no mention  of offices outside the U.S. and Europe. That said, Planet has highlighted  business in India,  and even created an  India-specific webpage.   Several unknowns persist, such as to what extent India’s government, if it does build an EO constellation, will divert geospatial funds to “indigenous” programs, but it’s a development to watch.   India has a growing number of startups that have emerged since the country authorized private space ventures  in 2020 . Assuming India’s upward momentum in commercial space continues, domestic companies could benefit from national insourcing of EO data and services, notably:   • Pixxel.  The Bengaluru-based startup, is building a constellation of 24 hyperspectral satellites for global Earth imaging. The company’s Technology Demonstrator-2 satellite, launched in April 2022, had the double milestone of being the company’s first satellite and India’s first commercial satellite (TD-1 was delayed until November). Last year Pixxel received a  multi-crore rupee grant  from the Indian MoD’s Innovations for Defence Excellence (iDEX) program to build satellites for the Indian Air Force.  • Galaxy Eye Space.  Also based in Bengaluru, the startup  raised $3.5M in 2022  for a multi-sensor satellite constellation. The company has been maturing technologies with the Indian space agency ISRO, India’s Defence Research and Development Organisation (DRDO) and Indian drone company ideaForge.   • Berlin Space Technologies.  An early cubesat pioneer, BST has largely disappeared from the public radar screen in recent years. Behind the scenes, however, the company established an EO satellite manufacturing powerhouse in Ahmedabad, India partnering with Azista Industries Pvt. Ltd. Opened in June 2023, the 50,000 square-foot factory has the ability to manufacture  two satellites per week  and launched its  first EO satellite  the same month on Transporter-8. • Satellogic.  After scuttling plans for a Netherlands factory, Satellogic teamed in November with Tata Advanced Systems to  build a satellite manufacturing plant  in Karnataka, India. The companies are collaborating on satellites geared towards government and commercial Indian customers. SOURCE: https://www.defensenews.com/space/2024/03/06/india-plans-to-spend-3-billion-on-space-can-it-catch-up-to-china/

2/29/2024 - Written By Caleb Henry If “space is hard” is the industry’s favorite adage, the runner up cliche is that we have a “do nothing Congress.” Dysfunction on the Hill has resulted in a series of rolling Continuing Resolutions, or CRs, that keep the government funded but only temporarily and at the same funding level as the prior year.  Yesterday’s CR  – the fourth this year – punts a government shutdown until March 22, giving the government another month to pass a budget for a fiscal year that was supposed to begin last October.   For military leaders, the threat of a year-long CR has emerged as a worrisome possibility, giving flashbacks to 2013 when sequestration hamstrung new programs. The space industry is acutely affected by CR funding levels because several transformational programs have been shifting into high gear. But, without commensurate funds, failure to launch is assured. Key risks include:  • Pausing seven launches . The Space Force planned to purchase 10 launches in FY24, but until the budget passes, there is only funding for three. Per Frank Calvelli, Space Force acquisition chief, that means satellites sitting on the ground accumulating storage fees.   • Not buying 28 PWSA satellites . Since forming in 2019, the Space Development Agency (SDA) has defied expectations by maintaining a 30-month cadence between “spirals.” Until now. SDA announced that it is pausing the solicitation for 20 T2TL Gamma communications satellites and eight “FOO Fighter” missile defense satellites. The ensuing delays will inevitably flow to subsequent spirals and present challenges for constellation planning.  • Tranche 1 delay risk.  Satellites in the SDA’s Tranche 1 program that were already ordered need to go through assembly, integration and testing that comes with “large milestone payments,” according to agency director Derek Tournear. The agency may not have funds to pay vendors to complete satellites it already bought, introducing delay risks.   The Space Force could see a 17% hit to most programs, according to DoD leadership. The implication for space companies is that their most stable customer is becoming unstable. The U.S. government is relied upon as a buyer that consistently pays its bills, smoothing out cyclical buying patterns from commercial companies and offsetting erratic startup contracts. That uncertainty has a sweeping impact, from making defense primes nervous about their core business to unsettling investors in space startups with DoD as an anchor customer. Turns out the only force that has more influence on space than gravity is politics.   SOURCE: https://breakingdefense.com/2024/02/with-a-year-long-cr-a-real-possibility-the-service-under-secretaries-sound-the-alarm/

2/26/2024 - Written By Caleb Henry Countries that spend heavily on defense almost always, by extension, are space powers, given the high number of dual-use technologies (propulsion, telecom, reconnaissance sensors). Japan ranked ninth globally for defense spending in 2022, per the Stockholm International Peace Research Institute (SIPRI), but lags behind its peers in space influence. France, Germany and Ukraine have similar defense spending levels and are known for their space exports – France and Germany for satellite hardware, Ukraine for propulsion. In a notable first, Japan’s Defense Ministry took to the conference floor at an international airshow last week in Singapore, bringing along a roster of 14 companies seeking to export defense products and services. At least four of those companies – Japan Radio Co., Kawasaki Heavy Industries, NEC Corporation and Sky Perfect JSAT – all have space as a partial or core focus. Of the companies attending, only Sky Perfect JSAT has a meaningful international presence in space. NEC Corp. builds imaging satellites, but its exports are rare. Kawasaki builds payload fairings for the H3 rocket, and Japan Radio sells maritime satcom terminals. International sales of all these product sets are common for American and/or European suppliers. Japan’s push into defense-related space sales is likely to be slow but could be transformative. Notable startups such as Astroscale, Synspective and Warpspace have improved the country’s visibility as a commercial space power. Large Japanese corporations and defense primes, however, have been heavily focused on the country’s companies to domestic programs. If the Japanese MoD continues to support companies in making overseas sales, Japan could shake free from decades of inertia in the global space market. SOURCE: https://breakingdefense.com/2024/02/japanese-mod-makes-first-appearance-at-foreign-airshow-seeking-arms-exports/

2/23/2024 - Written By Caleb Henry It goes without saying that most of the industry’s regional satellite operators are too small to field their own large LEO or MEO constellations, yet all feel the pressure to expand beyond purely GEO-based connectivity. Increasingly the trend is partnership, and British operator Avanti’s tie up with Telesat is the latest example. Avanti and Telesat announced Feb. 21 a memorandum of understanding whereby Avanti will sell LEO services from Telesat’s forthcoming Lightspeed constellation of 156 satellites. Once Lightspeed starts service in 2027, Avanti will be positioned to offer LEO connectivity alongside its GEO fleet, which currently consists of four satellites. Avanti’s partnership comes a month after Malaysian GEO operator Measat initiated a partnership with Starlink to become a value-added reseller of the LEO service. And in November, Japan’s Sky Perfect JSAT joined a consortium with Amazon Kuiper to provide LEO connectivity across the country. Regional operators have been slow to execute multi-orbit strategies in the nine years since LEO satcom became a global discussion, but now that constellations are becoming real, so has the pressure. As LEO and MEO constellations gain market access in regional operator home countries, they find themselves with less time – they can partner or compete, but they can’t be indecisive. One large open question is whether regional operators will band together to support LEO/MEO constellations of their own. The European Commission is effectively facilitating this in Europe, where Hispasat of Spain, Eutelsat of France and SES of Luxembourg are all collaborating on the IRIS2 network. In Asia, South Korean operator KT Sat, has proposed a “ LEO Alliance ” of local operators that would band together to support their own constellation (KT Sat also invested in MEO/HEO startup Mangata in 2022). Regional constellations come with a heavy bureaucratic burden, but aren’t without precedent. Two of today’s largest satellite operators, Intelsat and Inmarsat (now part of Viasat) were established decades ago through international consortiums. SOURCE: https://www.telesat.com/press/press-releases/avanti-communications-signs-stategic-collaboration-agreement-with-telesat-as-part-of-new-multi-orbit-strategy/

2/23/2024 - Written By Caleb Henry At least six commercial space station efforts are under way to replace the International Space Station by 2031. NASA and other space agencies (but mostly NASA) have spent more than $150 billion on the ISS, the oldest parts of which have been in space for 25 years . A key trend has emerged among commercial space station hopefuls, one amplified by Sierra Space’s recent graphic showing three different space station sizes – two of which have more volume than the entire 43-part ISS . One reason for the ISS’s high costs is the use of NASA’s Space Shuttle, which had a 4.6-meter-wide payload bay. That contributed to the need for multiple launches to build out the station. Proposed commercial space stations have larger diameters – 7 meters for Sierra Space’s Life 2.0, 7.6 meters for Gravitics’ Starmax, and 8 meters for Starlab from Airbus/Voyager. With these large diameters, space station hopefuls aim to deploy systems that offer one-third or more of the ISS’s pressurized volume ( 900 cubic meters ) in a single launch. Starlab targets ~33% of the ISS’s volume with one module , Gravitics targets 40%, and Sierra Space ranges from ~30% to 600% depending on Life module variants. Axiom and Vast also have plans for a large space stations, though sizes haven’t been disclosed. And SpaceX’s Starship, already a large vehicle, could double as a voluminous space station itself. These future space stations largely depend on heavy lift vehicles with big payload fairings (Starship and maybe New Glenn), showing how these vehicles could usher in a new era of lower cost space stations. Of course, Congress and NASA need to commit reasonable funding to ensure the viability of one or more stations. The agency spends ~$3 billion a year on the ISS, but only $224 million was allocated in FY23 for Commercial LEO Destinations (CLD), the space station replacement program. Emerging commercial space stations stand to be much cheaper than the ISS, but their success at this stage of development hinges on NASA as both an anchor customer and financial backer. SOURCE: https://twitter.com/SierraSpaceCo/status/1759956031155671078

2/15/2024 - Written By Chris Quilty If the big fear among satellite services providers is Starlink capsizing their traditional business models, one such business model is taking on water. Longtime maritime connectivity provider KVH announced Feb. 13 that it is shutting down its antenna manufacturing business and laying off 20% of employees after experiencing eight straight quarters of revenue declines and five consecutive quarters of negative product margins. The proximate cause – Starlink. With the shutdown, KVH will exit both its TracVision TV receive-only antennas (winner of 26 consecutive NMEA awards) and its TracPhone VSAT product line that the company long-claimed as a key advantage over competitors like Inmarsat, Marlink and Speedcast. Now, like its peers, KVH will now be dependent on third-party VSAT antennas. Competitors, including Speedcast, began offering Starlink service a year earlier , but KVH waited until September 2023 to begin offering the service. KVH originally intended to offer Starlink only as a bundled service (Starlink+KVH), but was quickly forced to abandon this strategy when customers balked at shelling out ~$10,000 for KVH’s least-expensive VSAT antenna. KVH just finished an upgrade of its VSAT network using Ku-band capacity from Intelsat and SKY Perfect JSAT to support 7,000 vessels. But now that every major maritime connectivity provider is offering Starlink, will VSAT become the new L-band of the high seas? SOURCE: https://ir.kvh.com/news-releases/news-release-details/kvh-announces-transformative-initiatives

2/9/2024 - Written By Caleb Henry Companies are often coy about when they want to do acquisitions, but not Rocket Lab. The space hardware and launch provider raised $355 million through issuance of convertible senior notes Feb. 7 , with the motive of “potential M&A and other strategic growth and scaling investments.” Predictably, the stock slid 17% on the news to $4.02, as the market accepted the risk of dilution if the notes, due in 2029, convert to shares (carrying a conversion price of $5.13/share). Rocket Lab easily secured the funding, in fact upsizing the offering, but with $288 million in cash and short-term investments at September 30, why do it in the first place? Part of the rationale may be explained by the cliché “raise money when you can, not when you need to,” buoyed by the positive news of their recent Space Development Agency (SDA) T2TL – Beta contract award. But we believe enhanced vertical integration on satellite manufacturing is Rocket Lab’s core motivation for the capital raise. Satellite manufacturing is typically a low-margin business, with profitability on fixed-price contracts influenced by the amount of non-recurring engineering (NRE) and unexpected challenges that a program incurs. Rocket Lab CEO Peter Beck, on the company’s last earnings call, described both of Rocket Lab’s marquee constellation contracts as difficult, suggesting higher than anticipated NRE. Globalstar’s 17 to 26 satellites are, in Beck’s words, a “very deeply complicated mission in a horrible radiation environment, and the SDA’s 18 satellites are “not an easy build” either. Rocket Lab has organically built upon the satellite and systems integration capabilities that arose from the acquisitions of Sinclair Interplanetary (March 2020), flight software company Advanced Solutions, Inc. (October 2021), and solar array provider SolAero (January 2022). This diversified Rocket Lab’s revenue away from launch, adding stability to revenue but also introducing new gaps (and new costs). To digest hard satellite programs, and take on more of them, Rocket Lab may need to invest more resources, requiring new (inorganically acquired) capabilities, leading to the raise. We think it is likely that we will see Rocket Lab subsume additional spacecraft systems and engineering capabilities over the next year. Rocket Lab could instead deploy the proceeds for launch-related M&A, but we find the odds of this to be low. Last May Rocket Lab obtained Virgin Orbit’s Long Beach, California, launcher factory at a fire sale price of $16.1M. Beck described the factory as “gold plated,” punching above its weight for Rocket Lab’s Archimedes engine production needs. Though capital intensive, Neutron, Rocket Lab’s next-gen, medium-lift rocket, appears supported by the company’s existing facilities and resources. Spending on hypersonics expertise is a third possibility, with slightly greater odds than launch. Rocket Lab converted Electron into a low-cost hypersonic test platform and quickly gained customer interest, with the U.S. Defense Department booking seven missions after a demonstration last year. DoD has given heightened interest to hypersonic capabilities ( mostly offensive , but also defensive) over the past few years. It's possible there are classified programs Rocket Lab is competing for that could require skillsets currently outside the company. SOURCE: https://investors.rocketlabusa.com/news/news-details/2024/Rocket-Lab-Announces-Closing-of-Upsized-Offering-of-355-Million-Convertible-Senior-Notes/default.aspx

2/2/2024 - Written By Caleb Henry Since at least 2018, China has had two or more purported LEO constellations in the works. And, with each announcement, industry attention shifted to the next “what if” network (Commsat, GalaxySpace, Geely, Hongyan, Xingyun Lucky Star, Xinwei, and probably more). Since Chinese space companies are overwhelmingly constrained to their domestic market (through U.S. trade laws), they have limited impact on the global space economy, and correspondingly, Quilty Space does not have them as a focus. But LEO constellations are intrinsically global, so if a Chinese constellation goes forward, it will almost certainly play a role on the world stage. For this reason, we turn our attention to this week’s news of one new 10,000+ satellite constellation from Huawei and $933M in funding raised for G60, China’s 12,000+ satellite copycat of Starlink.   News of Huawei’s constellation comes from a company presentation about an all-optical network first given in November that didn’t gain wider attention until this week . The phone-maker's stated applications are high-quality network services for connecting metropolitan areas, smart homes, and serving as an internet backbone. Meanwhile, the G60 Starlink constellation aims to launch 12,000 satellites, starting with an initial 108 this year.   So what’s changed? The Huawei and G60 Starlink constellations have backers that appear more serious than those of years past. Huawei will generate ~$100B in revenue for 2023 – about the same as Verizon – and though U.S. sanctions have chipped at the company, it remains formidable. Last year, Huawei began a D2D service using a GEO satellite and has created a standalone operating platform for phones to end reliance on Android. With this and an established worldwide footprint of customers and base stations, Huawei would have an easier time going global with a LEO constellation than other Chinese companies.   As for G60 Starlink, the $933M raised is the most we’ve seen to date for a Chinese megaconstellation, and its backing by the Shanghai government is nothing to sneeze at. Shanghai is the most populous city in China (~27 million people), and the biggest seaport in the world. The city has a growing space sector and a government committed to keeping it that way. Plus, Shanghai’s influence is truly global through maritime trade. A LEO network from Shanghai could grow into a regional power on the back of maritime connectivity, serving as a springboard for global reach.   Past Chinese constellations have had factories built , notable sponsors, and a handful of satellites launched, only to go mysteriously quiet. The lack of free press in China makes it hard to know how constellations are really proceeding. To truly judge most systems, seeing is believing.   SOURCE: https://chinaspacemonitor.substack.com/p/huawei-enters-the-constellation-game?utm_source=profile&utm_medium=reader2

1/29/2024 - Written By Caleb Henry OneWeb, now part of Eutelsat, is 12 years old, but is still paying for a common startup mistake: forgetting the ground segment . Eutelsat disclosed Jan. 29 that OneWeb, despite having all its 630+ satellites in orbit for months, is behind schedule , reflecting “delays in the availability of the ground network.” Eutelsat lowered the midpoint of its revenue guidance for its fiscal 2023-24 year by 7% to €1.28 billion ($1.38 billion) and EBITDA by 14.2% to €665 million, and suspended guidance for the following year. Global OneWeb service, initially anticipated by the end of the calendar year , was not given a date. Instead, Eutelsat targeted having 90% of OneWeb’s ground network completed no later than June 30, 2024. Also impacting Eutelsat’s guidance is a revenue mix from OneWeb that leans more toward user terminal sales than capacity and network services. OneWeb’s constellation depends on approximately 44 Hughes gateways spread out worldwide, each typically hosting around one or two dozen dishes. In contrast to SpaceX’s Starlink and Amazon’s soon-to-launch Kuiper network, OneWeb’s satellites do not have laser crosslinks, meaning until OneWeb’s gateways are all done, the network has dead zones. How did OneWeb get here? The company launched its first satellites in 2019, but gateway rollouts weren’t pressed with urgency. In March 2020, just prior to OneWeb’s Chapter 11, the company reportedly had just three gateways commissioned . The Covid-19 pandemic and OneWeb’s eight months in Chapter 11 understandably delayed gateway construction, but satellite launches, which were also paused, resumed much faster. Gateways are just as much a real-estate challenge as a satcom project. They require land with good visibility to the horizon and limited radiofrequency interference – features that typically put them in remote places – yet they also need robust fiber links, electricity, easy logistics, and security (cyber and sometimes physical). They are the perfect setting for delays with myriad causes only offset with ample prep time, something OneWeb didn’t always allocate. In a Jan. 29 conference call, Eutelsat CEO Eva Berneke said OneWeb has “just below 30” gateways completed. For example, Berneke said gateways in India and Saudi Arabia are nearly finished, while sites in Thailand and Turkey are awaiting regulatory approval for completion. Eutelsat is waiting for gateway rollouts to finish to bill customers whose take-or-pay contracts cannot be executed. Per Berneke, OneWeb’s backlog is growing at a healthy clip and has now surpassed €1.1 billion (inclusive of a €275M Eutelsat deal), with contracts typically of five-year durations. OneWeb’s second-generation constellation is widely expected to have laser crosslinks, making network improvements far easier. Berneke said Eutelsat and OneWeb are working through “co-engineering” with consortia teams from Request for Proposal bids that concluded last fall, and expects to choose a winner in the next month or two. Aiding that decision was today’s other major announcement that Airbus purchased Airbus-OneWeb Satellites joint venture for an undisclosed amount. Given the friction that grew between Airbus and OneWeb over the years, the dissolution of their shared company was a long time coming. Plus, the pressure on Eutelsat to select a European site for manufacturing OneWeb Gen-2 essentially strands the JV in Florida.  SOURCE: https://www.eutelsat.com/files/PR_0124_TRADING%20UPDATE%20Final.pdf

1/24/2024 - Written By Chris Quilty Heavy equipment OEMs, including Caterpillar, Komatsu, and Hitachi, were some of the earliest adopters of satellite IoT services. Remote locations. Expensive Assets. Global coverage. Mobile tracking. Satellite IoT checks all of the boxes. CAT began reselling Orbcomm “M2M” services in the early 2000s, and by the early 2010s, most of the world’s heavy equipment OEMs were offering satellite-enabled telematics services as a standard feature.  But not John Deere. Until now. In September 2022, Deere stunned the satellite industry when it issued an RFP for satellite services that could make Deere “the single largest buyer of satcom in the world excluding government entities,” according to a Deere official. Bigger than customers in the cruise, IFC, and enterprise markets? That’s saying something. Why so large? Deere currently has 1.5 million assets it would like to track, only 500,000 of which are currently connected (100% cellular). Capturing 50% of those 1 million assets at $30 per month would pencil out to $180 million/year for Starlink. Don’t like our numbers? Pick your own. Whether they grow to a low, mid, or high nine-figure opportunity, Deere undoubtedly has the potential to become one of the industry’s single largest customers.  Not surprisingly, Deere’s 2023 industry day attracted more than 60 participants, including (presumably) every major GEO satellite operator and OneWeb. So, how did SpaceX outmuscle the competition? 1. • Timing. Bidders were required to demonstrate their network capability during 2023, with an ability to begin full commercial deployments in 2024. That deadline was undoubtedly a problem for every operator not named SpaceX that is currently waiting for new capacity to come online, including SES (mPower), Intelsat (four SD satellites), and OneWeb (still not fully operational). • Latency. Yeah, not really. According to Deere officials, the ~1-second latency associated with GEO was not a deal-breaker, given the requirement for a five-second refresh rate. In fact, Deere officials indicated that they would prefer a hybrid (LEO/GEO) solution for redundancy. • Terminals. SpaceX must still develop a ruggedized version of its flat panel antenna (FPA) suitable for Deere’s operating environment, which Competitive FPAs from Intellian, Kymeta, Hughes, etc., start at the high four figures and into the low five figures. • Bandwidth. Unlike traditional narrowband OEM telematics service offered by CAT, Komatsu, and others, Deere demands multi-Mbps uplink/downlink speeds capable of streaming live video from a vehicle. Traditional satellite IoT services from Iridium/Inmarsat typically top out at ~1 Mbps, and most are optimized for message-based IoT rather than streaming, while most GEO satellites were not designed to support a large number of direct users. • Global coverage. Deere will initially deploy the service in North America and Brazil, expanding globally by the end of the decade. While many GEO and LEO operators can fulfill the global coverage requirements, several will struggle to meet regional demand requirements with current capacity (e.g., 50,000 terminals in Brazil at ~5 Mbps). Meanwhile, regional Brazilian operators, Embratel Star One, Hispasat, and Telebras lack sufficient capacity to serve North America. According to the Wall Street Journal, SpaceX’s strongest competing contender was Intelsat, which operates the world’s largest fleet of Ku-band satellites (the same frequency used by SpaceX) and already resells competitive services from OneWeb. This, theoretically, would position Intelsat to become the world’s preeminent hybrid Ku-band systems integrator, offering an Intelsat-supplied GEO overlay coupled with LEO services from Starlink/OneWeb.  Only two problems. Why would SpaceX agree to sell capacity to Intelsat at anything other than the zero-margin markup currently offered to every other reseller? Would Intelsat take it? The second problem – Intelsat is a wholesaler, not a systems integrator. Yeah, they bought the Gogo commercial aviation business, but it’s not (yet) in their DNA elsewhere. Where does the plow go from here? It might be tempting to assume other heavy equipment OEMs will piggyback on Deere’s solution, but there is a wide gap between the $5-20/month that most OEMs pay today and the likely ~$100/month pricing that would be offered for customers not named John Deere. While we expect most heavy equipment vendors will choose to stick with their current solution, we can think of other examples where this type of service might have applicability. Tesla, anyone? SOURCE: https://www.deere.com/en/news/all-news/john-deere-partnership-with-spacex/

1/17/2024 - Written By Caleb Henry Amid all the new entries into LEO small satellite manufacturing, there has been one prominent legacy manufacturer that seemed focused on chasing other dreams .  Until yesterday, Sierra Nevada Corporation subsidiary Sierra Space’s last public LEO constellation order occurred in 2008 when Orbcomm ordered 18 “OG2” spacecraft to replace its Gen-1 Internet-of-Things constellation. Sierra Space opened a new 9,300 square-meter factory with the intent of building OG2 plus hundreds of small satellites for future customers. But the Orbcomm satellites didn’t work all that well ( six of 18 failed ), and Sierra Space withdrew from the commercial smallsat market.   Sierra Space’s Jan. 16 announcement of a $740 million contract to build 18 missile warning satellites for the Space Development Agency’s Proliferated Warfighter Space Architecture (PWSA) shows that the company’s years of quiet defense work were working toward something. The company developed a series of demonstration missions for the Air Force, including LEO satellites for the since-shuttered Operationally Responsive Space (ORS) office and a MEO satellite for the Demonstration and Science Experiment program.   Sierra Space may have also benefited from work on airborne ISR platforms – an area where the company is an industry leader. Before Sierra Nevada siloed its space activities into Sierra Space in 2021, the larger company worked on intelligence platforms such as the Army’s Airborne Reconnaissance Low-Enhanced ( ARL-E ) program. Sierra Space has studied ways to adapt terrestrial sensors to space applications, but Lightridge will supply the payload for Sierra’s current SDA award. Nonetheless, the company’s familiarity with integrating multiple sensors onto a platform could prove beneficial from a program management standpoint.   Another Sierra Space rebound is in cost. At $41.4M per satellite, Sierra Space is appreciably cheaper than fellow Tranche 2 Tracking Layer awardees L3Harris ($51M per satellite) and Lockheed Martin/Terran Orbital ($49.4M per satellite). That’s a noticeable turnaround for a company that in 2022 paid $10M to settle U.S. Attorney’s Office allegations of overcharging federal agencies for defense work. Like with York Space Systems, SDA’s awards to low-cost new entrants provides a check against incumbents whose “exquisite” (read: expensive) military satellites drove DoD towards LEO constellations as a means to reduce per-satellite costs.  SOURCE: https://www.sierraspace.com/newsroom/press-releases/sierra-space-awarded-740m-prime-contract-by-space-development-agency-for-national-security/

1/16/2024 - Written By Caleb Henry For two years, space startups and other high-tech, early-stage companies sought mergers with Special Purpose Acquisition Companies (SPACs) as a quick way to amass the equivalent of three to four traditional capital raises. But, in late 2022, the tides began to recede from the SPAC tsunami as investors grew distrustful of meteoric (read: unrealistic) revenue projections, leading many to withdraw pre-committed funds. Two companies – weather startup Tomorrow.io and in-space logistics venture D-Orbit – caught in the churn, chose to cancel their SPACs and raise another private funding round. D-Orbit’s SPAC investors redeemed 59% of their shares , which would have left D-Orbit with just $49.3M in proceeds. It took another year, but D-Orbit’s patience paid off in the form of a $110M Series C round announced Jan. 11. Tomorrow.io was similarly fortunate. The company pulled the plug on its SPAC in March 2022, before redemptions were announced, citing market conditions (peer space SPACs Virgin Orbit and Terran Orbital saw redemption rates exceeding 80%). Rather than risk the same fate, Tomorrow.io returned to private markets and successfully raised $87M last June . Companies that hung through with their SPACs, high redemption rates and all, have found it more trying to raise additional capital due to severely eroded share prices. If 2023 was a trying year for de-SPAC’d companies, 2024 will be a year of reckoning. Companies that felt they missed out on the SPAC wave may be thankful for their choices going into 2024.  SOURCE: https://spacenews.com/d-orbit-raises-110-million-to-expand-space-logistics-services/

1/15/2024 - Written By Chris Quilty The Qatar Satellite Company, Es’hailSat, just announced an expanded agreement with Viasat Energy Services for VSAT connectivity across the MENA (Middle East and North Africa) region. The deal will use Es’hail-1 satellite capacity designed to serve the government, maritime, and oil & gas sectors. Why would Viasat, bringing on 1 Tbps of capacity with each ViaSat-3 satellite, pay for expensive third-party capacity? Most obviously, because ViaSat-3 F2 is still in ground storage instead of orbit. It’s also worth noting that this contract derives from Viasat Energy Services (the former RigNet), which has historically purchased capacity on more than three dozen satellites. So, while Viasat would love to internalize this capacity over the long term until ViaSat-3 capacity comes online, they might be forced to remain a net buyer of satellite capacity. That’s a cruel irony for a company that foot-stomped its IFC competitors over the past two years, creating a need for significant future capacity. Consequently, ongoing delays to the ViaSat-3 F2 launch will impair the near-term profitability of these contracts, as Viasat is forced to purchase expensive spot capacity to meet its deployment timelines. But it is better to take the hit than launch F2 prematurely. SOURCE: https://www.satellitetoday.com/connectivity/2024/01/09/viasat-and-eshailsat-sign-capacity-agreement-in-middle-east/

1/10/2024 - Written By Chris Quilty In 2018, Swedish network operator Ovzon ordered one of the first small GEO satellites (1,000-2,000kg), expecting a typical three years to build and launch. Maxar was to build the satellite, with SpaceX providing a Falcon Heavy launch  in 2021 . Unfortunately for Ovzon, its schedule was overly optimistic. Getting to orbit took five years, requiring  regulatory extensions  and more than  $40 million in added expenses . For buyers of satellites and launch services, Ovzon’s experience is illustrative of pitfalls to avoid, notably: • Setting aggressive timetables for new satellite designs.  Novel, first-of-their-kind satellites take, on average, two to three years longer to build than heritage designs. They can also take on unexpected changes (in Ovzon’s case, a 20% mass increase to 1,800 kg). History has borne this out repeatedly (see chart). Operators should budget a large fudge factor or plan on renegotiating partner agreements (customers, financiers, regulators, etc.) when inevitable delays stack up. • Overemphasizing launcher schedules.  Because novel satellite designs are prone to schedule slips, operators shouldn’t put the onus of schedule surety on launch providers. Ovzon switched from Falcon Heavy to Arianespace’s Ariane 5, describing it as a “ better deal in cost and time. ” Then COVID manufacturing delays cost Ovzon its launch slot on the final Ariane 5 launch, back to SpaceX, which performed a flawless launch  Jan. 4, 2024 , on an appropriately sized Falcon 9. Then again, since Ovzon jumped ship, the Heavy has knocked out a respectable six launches. Probably should have started with a Falcon 9. Launch saga aside, Ovzon 3 now serves as the next proving ground for small GEO satellites, albeit at the heavier end of that category. Last year was the first time in Quilty records dating back to 2000 that micro- and small-GEO  unit  sales exceeded classic, multi-ton GEOs. But, the failure of Astranis’ first satellite  in July  deprived the industry of a chance to evaluate how these satellites work. If small GEOs are to be successful, they’ll need to gain flight heritage, and Maxar/Ovzon are now at the forefront of that journey.  SOURCE: https://wWw.ovzon.com/en/successful-launch-of-ovzon-3/

1/3/2024 - Written By Chris Quilty It might not come as a surprise that 70% (*1) of all maiden orbital launch attempts have been a total bust. The real shock is what comes next. Apart from Rocket Lab’s impressive 90% (37 of 41) success rate for Electron, all other small launch vehicles since Electron’s 2017 debut pale in comparison with a dismal success rate of only 33% (10 of 30). Combine that staggering stat with an air launcher bankruptcy (Virgin Orbit) and the fact that nearly half of those small launch companies suffered from multiple failures, and it’s safe to say that we just penned the first chapter of a cautionary tale. Firefly’s Dec. 22, 2023, launch failure is emblematic of this trend. Par for the course, the company’s maiden launch in 2021 failed. And while it aced the highly acclaimed Victus Nox responsive launch mission in September 2023, two other launch attempts ended in partial failures. I get it. Space is hard. And as Elon Musk says, “If you’re not failing, you’re not innovating enough.” But the small launch industry's steep and costly learning curve has burned many VC investors, costing them hundreds of millions of dollars. That’s a lot of coin, but the stakes are arguably an order of magnitude higher for the forthcoming crop of heavy-lift launch vehicles, including Ariane 6, New Glenn, and Vulcan. Applying the small launch track record to these rockets would have disastrous ramifications for the entire space industry ecosystem, delaying civil, military, and commercial programs while boosting program costs. So, as we look ahead to the maiden launches of 2024, let’s all hope for Falcon-esque flight success. 1. Includes the first launch of all western-accessible orbital launch vehicles since 2000. SOURCE: www.quiltyspace.com

1/2/2024 - Written By Justin Cadman The past year has been a roller-coaster ride in the financial markets and an unusual one for transaction activity. Pitchbook recently stated, “More than a year and a half into the VC industry downturn, there are signs that valuations have hit bottom… [but] VCs are still not eager to bargain hunt, and dealmaking continues to be subdued.” And M&A volumes aren’t faring much better: the global M&A deal count fell by ~22% in 2023. Yet the count of space ecosystem M&A and minority equity deals fell by less than you might expect, down just 5% year-over-year. This is a much better showing than the market at large. And many publicly traded satellite & space names followed the recent equity market rally, driving our core public satellite & space index up 7% for the full year. Is space bucking the macro trend? Yes, but not for the reasons you might imagine: the space sector’s relative strength is evidence of its immaturity along the industry growth curve rather than some kind of Superman resilience. And under the surface, the picture gets a lot muddier. Equity financing from sources as diverse as traditional venture capital, alternative investors and CVCs, and the public markets (including SPACs) was the fuel that propelled the development of the space sector in recent years. A geyser of funding was unleashed in 2021 but a shift in risk appetite and higher rates sent space deal volumes plunging 41% in 2022. Last year (2023), investment deal volumes held relatively steady, posting a 3% decline versus 2022. The voracious capital needs of the space industry were not satisfied. For startups, life is all about cash runway, and in 2023, the funding spigot was significantly tighter, just as the capital needs for constellation deployment and launch vehicle development were poised to grow sector-wide. With funding more scarce and more expensive, and with investors behaving much more cautiously, the average time between early-stage financing rounds (e.g., Seed → Series A, Series A → Series B) was over two years across all industries, elongating ~20-30% over the prior year, according to Carta. The proof: belt-tightening, layoffs, downscaled plans, and a slow but steady increase in distressed startups. While not a perfect proxy, our frontier index of earlier-stage public space companies nonetheless illustrates this phenomenon, with that index falling by more than 40% in 2023. Interest rates appear to be on the cusp of receding, but the shift in equity investor sentiment will be more enduring: the space funding environment will not return to the 2021 go-go days. As some companies’ 2021-2022 cash runway is burned down, we expect the number of distressed space companies to increase over the next twelve months, triggering distressed M&A deals, flameouts, and a new breed of “zombie” space companies. The survivors, including many new and disruptive companies, will have a compelling shot at long-term success. Startups must plan on longer fundraising cycles, and they should prioritize de-risking and proving product-market fit over chest-thumping and over-exercising go-big ambitions. At the same time, new investment opportunities are emerging in venture space for companies that can help to manage an increasingly complex and threat-laden space environment or that can exploit the growing deluge of space-based data. We anticipate strong investor appetite for well-positioned, capital-efficient early-stage companies in these arenas. Parallel themes are present in space ecosystem M&A. Over the last three years, M&A transactions as varied as Maxar’s buyout by Advent (EO), Viasat’s merger with Inmarsat (Satcom), and Eutelsat’s merger with OneWeb (Satcom) now promises to reshape the satellite operator landscape. And in the space hardware arena, M&A has likewise been fervent, albeit arguably with fewer headline-grabbing deals (BAE/Ball Aerospace, L3Harris/Aerojet). We expect a downshift in “paradigm-changing” M&A deals in 2024. We attribute this to a shorter supply of needle-moving M&A targets (with a few exceptions, e.g., ULA), a more costly debt financing environment, and an increasingly hostile regulator antitrust stance. We have entered a year of large-deal digestion, with fewer targets on the block and with fewer buyers actively and aggressively shopping. L3Harris is an extreme example of this shift, with the company stating in December that it would pause M&A indefinitely to focus on bolstering its bottom line following the Aerojet acquisition. Despite fewer mega-deals, we expect overall deal counts to remain reasonably stable as large, game-changing deals are supplanted by (1) small tuck-in technology acquisitions, (2) consolidation of smaller players in emerging market segments, and (3) opportunistic M&A. Tuck-in acquisition activity will be driven by capability-building to support key sector growth opportunities (e.g., in defense). Some fragmented, high-potential market segments, such as space situational awareness (SSA) and software, will see their first major wave of consolidation. And given today’s difficult fundraising climate, we expect to see an uptick in opportunistic M&A involving cash-starved targets. The new year promises to be a complex one, with shifting currents in the investment climate and uncertain political/ geopolitical dynamics. In the face of these complexities, space is fortunate to be exposed to the dual tailwinds of ongoing growth and high relevancy. Conservative financing approaches and disciplined investment strategies will be key to unlocking these opportunities in the new year. SOURCE: www.quiltyspace.com

12/31/2023 - Written By Kimberly Siversen Burke On  Dec. 12 , news of the FCC’s final decision to reject Starlink’s appeal to qualify for $886M in federal subsidies to connect rural and unserved communities caused an uproar within the space sector and sparked  heated  political  debate . Like all large government subsidy programs, the devil’s in the details. Tweets and headlines bemoaning Starlink’s exclusion from the Rural Opportunity Development Fund (RDOF) sidestep how it was among $3B of early defaults and clawbacks. So before the indignation flames out and gives way to the next controversy, the industry should channel that energy to convince the FCC and National Telecommunications and Information Administration  (NTIA)  that satcom can play an integral role in bridging the digital divide. Simply put, federal subsidy programs like RDOF and  BEAD  are optimized for laying fiber despite empty promises of tech neutrality. Something that satcom operators and groups like the Satellite Industry Association (SIA) have  pointed out  for years. Technology is Advancing Too Fast to Ignore The competitive landscape is evolving at a whiplash-inducing clip. Third-generation HTS satellites from Viasat and Hughes offer 100Mbps plans, while SpaceX and Amazon aspire to connect tens of millions of households globally with high-throughput, low-latency broadband. Emerging direct-to-device (DTD) services from AST SpaceMobile and Starlink could soon provide voice and broadband connectivity to isolated areas where fiber isn’t even an option. RDOF can either be a tribal war or a battle call. But first, we need to understand how we got here. What is the Rural Opportunity Development Fund (RDOF)? In  January 2020 , the FCC adopted a $20.4B Rural Opportunity Development Fund (RDOF) reverse auction to deliver rural, high-speed broadband to unserved areas throughout the United States. Building off the FCC’s previous 2018 CAF II Auction (a free Quilty Space report outlines the history of CAF  here ), the two-phase, 10-year program: • Initially allocated $9.2B (later revised to  $6B ) of an available  $16.1B  in Phase 1 funding to bring high-speed broadband to 5.2M unserved homes and businesses across 49 states and the Commonwealth of the Northern Mariana Islands. • Required a minimum supported speed increase from 10/1 Mbps to 25/3 Mbps. • Included areas that lacked an unsubsidized provider of 25/3 Mbps broadband. • Implemented a framework (weighting system) that prioritized bids with faster broadband speeds and lower latency. • Set aside all remaining funds – no less than $4.4B – for the Phase II auction to address areas not addressed by Phase I. Under Scrutiny from Day One RDOF was launched shortly before the now-former  Chairman, Ajit Pai , departed from his post at the FCC. The program received full support from Commissioners  Michael O’Rielly  and  Brendan Carr  and partial approval from  Jessica Rosenworcel  and  Geoffrey Starks.  As Pai’s successor, Chairwoman Rosenworcel’s  dissent  is especially important to revisit as her concerns at the onset foreshadow her actions later on. Among them: • Inaccurate service maps* that needed to be updated and fixed before allocating $16B based on flawed census data. • Cost as a barrier to adoption: “The FCC could have asked funding recipients to offer a low-cost service for consumers when they are receiving billions in support from the government. But if you comb through the text of this decision, you’ll find we took a pass. That’s unfortunate…we need to recognize that price is a barrier for many people.” And while the dissent initially fell along party lines within the FCC, on  Jan. 19, 2021 , U.S. Rep. Tim Walberg (R-MI) led a bipartisan effort with 159 other representatives and senators, urging “transparency and accountability” in a  letter  addressed to Chairman Pai. “We ask that the FCC redouble its efforts to review the long-form applications. We urge the FCC to validate that each provider, in fact, has the technical, financial, managerial, operational skills, capabilities, and resources to deliver the services that they have pledged…” How Did it Work? RDOF’s  Auction 904  kicked off with a short-form application. In it, bidders provided a program overview and selected one of four performance tiers that were reviewed as the first step to winning  provisional awards  that would be granted only  after  the FCC evaluated a more detailed long form that applicants submitted if qualified. Regardless of which performance tier was chosen, all  long-form applicants  needed to: 1. Obtain Eligible Telecommunications Carrier (ETC) certifications. 2. Submit detailed technology, system and spectrum access descriptions. 3. Provide proof of project funding. 4. Basically show the FCC  how  they would meet their goals  and  still be solvent through 2032. Determination of whether an applicant was qualified to receive RDOF support was based upon the info provided in that long-form application (i.e., the short-form application didn’t obligate any funds). Enter Starlink: RDOF’s only LEO Satellite Broadband Applicant Despite failing to meet certain  short-form criteria  (including two years of providing voice or broadband services), and having only  700 satellites  on orbit that were still in beta testing and not yet commercially deployed, Starlink bid on the “Above Baseline” and “Low Latency” performance tier across multiple census areas,  requiring  them to: • Provide broadband satellite service to  642,925  rural homes and businesses across 35 states. • Meet or exceed requirements of 100/20 Mbps speed, with an 80/80 availability, monthly usage allowance of 2TB per location, and ≤100ms latency. • Offer at least one broadband and voice service at rates that are reasonably comparable to rates for similar services in urban areas. Image Credit: FCC Short-Lived Triumph for Starlink Disregarding the possibly biased  research  published by fiber broadband lobbyists that challenged Starlink’s RDOF inclusion, Starlink’s most vocal opponent was actually another satcom operator. On April 5, 2021, Viasat filed with the FCC a 43-page  technical analysis , challenging SpaceX’s ability to provide “Above Baseline” service in the  areas  awarded to Starlink in Auction 904. Viasat argued that even  if  Starlink could meet the speed and latency requirements for its RDOF areas with more powerful satellites or a bigger constellation, it would violate equivalent power flux density (EPFD) limits by doing so. Any satellite emitting RF energy towards Earth must comply with power limits set by the ITU, and Starlink is forced to use NCO=1 (only one co-frequency beam on a single cell). What does all that mean? Basically, the bandwidth available to SpaceX in each geographic area — and thus the speeds Starlink can achieve for a given number of subscribers in that area — is ultimately constrained by its NGSO license. Viasat filed at least four letters with the FCC using third-party data to substantiate Starlink’s shortcomings, including one in  June 2022  that stated SpaceX never actually disputed any of its technical findings, including how it would remain EPFD compliant. SpaceX’s mind-your-own-business  rebuttals  were mostly written in the spirit of “Hey Viasat, you’re just jealous because  Ookla  says we are faster than you.” Viasat did not pursue RDOF funding. Starlink Not the Only One In July 2021, Chairwoman Rosenworcel sent  dozens of letters  asking preliminary RDOF awardees to doublecheck their census blocks and give up portions of their funding based on the determination that those areas were already being served by one or more service providers offering at least 25/3 Mpbs broadband service. Starlink was  asked to surrender  about six percent of the 113,900 census blocks where they tentatively won RDOF grants.  Research  by consumer-advocacy group Free Press was one of the catalysts that led to that auction cleanup effort. The group found that "nearly 13% of the money awarded to Starlink — $111 million — is to provide service in urban areas,” including "the Jersey City Target store.” Starlink never modified its bid. FCC Claws Back Nearly $2.2B in Phase 1 Funding In  August 2022 , the FCC announced they were rejecting the long-form applications of fixed wireless provider LTD Broadband and Starlink, citing inadequate responses to follow-up questions and failure to demonstrate they could deliver the promised service. For its part, LTD Broadband neglected to obtain eligible telecommunications carrier (ETC) status in seven of 15 states. Further FCC review concluded that LTD could not deploy a network of the scope, scale, and size required for its $1.3B winning bid. Regarding Starlink, Chairwoman Rosenworcel said the company’s offering held promise. “But the question before us was whether to publicly subsidize its still developing technology for consumer broadband — which requires that users purchase a $600 dish — with nearly $900 million in universal service funds until 2032.” Starlink  appealed  the decision. Was Starlink’s Exclusion Justified? While it makes for salacious Tweets, political bias against SpaceX is a bit of a stretch. Elon Musk’s company has inked $9.4B in  deals  with the USG – with $2.5B awarded in 2023 alone. Starlink’s  long-form application  for Auction 904, now marked “incomplete” on the FCC website, is only partially public. We can see that Starlink only obtained ETC status in 23 of its 35 states. The technical concerns publicly filed with the FCC by Viasat and others arguably contributed to the FCC’s hesitance in committing to an award that accounted for 10% of its entire Phase I outlay. There is no way of knowing if the outcome would have differed had Starlink bid on a lower performance level or fewer locations. Or if they had offered discounts for RDOF recipients to make Starlink more “affordable.” We do know that  Hughes  won $1.3M in RDOF funding to provide broadband and voice services in Rhode Island in two performance tiers – “Low Latency Baseline” and “High Latency.” Commissioner Carr’s impassioned  statement  that Starlink was under no obligation to achieve its performance milestones until 2025 is technically correct. But that assumes the burden of convincing the Commission that it  could  was already met. As far as leaving rural communities on “the other side of the digital divide,” a few other rural broadband funding programs are poised to fill that void. The NTIA Broadband Access Equity and Deployment (BEAD) program has  $42.5B  available for rural broadband funding, and the areas for which SpaceX has been rejected could be eligible for BEAD funding. It is worth noting that the NTIA considers areas “unserved” if they  “rely on satellite technologies to deliver service.” Which brings us to the crux of the matter. A New Year’s Resolution for Satcom Starlink’s inability to remain in the RDOF game makes sense when you see how the rules were designed for a different player. Satcom operators and the industry at large should use Starlink’s exclusion from RDOF as a catalyst to pressure federal agencies like the FCC and NTIA to revisit the structure of broadband funding programs, many of which were modeled after the nearly century-old  Rural Electrification Act of 1936 . The U.S. is long overdue for developing a satellite-specific broadband subsidy. Terrestrial telcos and their supporters have sidelined satellite for years. Soon, they will find it impossible to blacklist space-based connectivity as Amazon, OneWeb, and DTD providers expand their reach. So, with $14B in RDOF subsidies left to ponder and lingering rage from a Starlink snub, 2024 might just be the perfect time to speed up that conversation. *RDOF Phase II will not occur until the Broadband Data Collection (BDC) and new broadband map can be used as a guide to navigate Phase II eligibility. Phase II is meant to cover locations in census blocks that are partially served, as well as locations not funded in Phase I. As of now, the FCC does not have an update as to when this next auction will occur.  SOURCE: https://www.fcc.gov/document/fcc-reaffirms-rejection-nearly-900-million-subsidy-starlink

12/14/2023 - Written By Kimberly Siversen Burke After declaring 100% success of all priority systems and subsystems aboard Project Kuiper’s first two prototypes launched Oct. 6 , Amazon just dropped the mic . On Dec. 14, the Starlink rival announced that KuiperSat-1 & 2 had successfully completed and maintained optical communication links of 100Gbps between the two spacecraft over a distance of 1,000km for the entire test window of at least an hour. The outcome of these trials greenlights Amazon’s ability to scale the production of Optical Communications Terminals (OCTs) for its entire 3,236-satellite fleet. This makes Kuiper the first optically connected constellation right out of the gate. Not even OneWeb or Starlink can make this claim. Explain it to me like I’m five Free-space optical communications, lasercoms, or space lasers are the backbone of all future space architecture. Why? There are several reasons. The first -- without getting too mathy -- is that optical wavelengths are much shorter (measured in nanometers versus centimeters | millimeters), enabling data transmission rates that are orders of magnitude greater than traditional RF systems while requiring less transmission power.  Optical intersatellite links (OISLs) also reduce the ground infrastructure needed for constellations, as data is passed like a baton from satellite to satellite over areas that might not have ground stations (e.g., oceans). This is critical for providing full global service and traffic optimization. For LEO mega-constellations to reach their full potential, OISLs are not just on the holiday wishlist – they are a must-have. Unlike RF, optical is cowboy spectrum – unregulated. So, Kuiper satellites can laser-link data throughout their entire interconnected network without needing ITU spectrum licensing or regulatory approvals until the point at which the data gets sent to the ground via RF links (optical space-to-ground exists but is rare because optical beams are impacted by clouds, fog, smoke, etc. in the atmosphere). Ground stations can also be bypassed entirely, reducing latency and improving security. And because of their tighter, narrower beam, optical comms are almost completely immune from signal intercept and jamming. That’s why defense constellations, including the Space Development Agency’s (SDA) PWSA, are now designed with OCTs. In fact, the SDA has implemented interoperability standards for all OCT vendors to uphold. An Amazon representative clarified in an email to our team this week that Kuiper’s OCTs are not currently SDA-compliant. This underscores how Kuiper, like Starlink, is less focused on interoperability with defense satellite networks. At least for now. It’s also not a surprise, considering that completing the required SDA testing at the Naval Research Laboratory would cost Kuiper time it can't afford to spare. But this doesn’t preclude some Kuiper satellites from serving as “translators” for the SDA’s transport layer in the future. As for how many OCTs will be on each spacecraft and who is manufacturing the Kuiper terminals themselves – we can only confirm that the OCTs are designed in-house and that Amazon has recruited a team of engineers specializing in optical communications. But at the production levels needed to scale in time for a 2024 service start and hit its FCC milestones , there is a non-zero possibility the terminals could be outsourced to a major EMS house, A&D contractor, or OCT vendor. Big Whoop. Doesn’t Starlink Already Have Space Lasers? After years of conflicting references to Starlink’s “space lasers,” they have gained a somewhat mythical status at this point. Starlink is still in “testing” per its own web page and has provided no evidence that its OCTs are fully operational. This despite ongoing mentions of testing that stretch as far back as 2020 , announcements of “first” laser deployments in 2021 , promises of lasers becoming “operational by the end of the year” (in 2022 ), and reveals of next-generation lasers as recently as September . The reality is that we have scant documentation of successful LEO-to-LEO intersatellite links consistently working at all in the wild. Other than the NFIRE-to-TerraSAR-X demo in 2008 that transferred just 5.626Gbps between satellites, the only other publicly disclosed on-orbit OCT validation we have is the quietly shuttered DARPA Project Blackjack initiative that in 2022 marked the successful closing and maintaining of an optical communications link between two satellites at a range of 114 km with 280Gb of total data transferred during a 40-minute test. After launching another four “Blackjack-Aces” in June 2023 , DARPA canceled the previously planned 20-satellite constellation, and is yet to share details about the current Blackjacks’ CACI-equipped OCT on-orbit performance. Likewise, we are still awaiting the test results of the SDA’s Tranche 0 Transport satellites that launched in April and September and are outfitted with TESAT OCTs. Why is a decades-old tech still fumbling around to establish a reliable space footing? Try telling a squirmy toddler to stay still for a photo. Only the toddler is 1,000km away and moving at about 28,000km per hour. While you are moving, too. Christmas may have come early this year for Amazon Kuiper with this groundbreaking achievement of linking two satellites in LEO. But it's worth remembering they still have 3,234 more to go... SOURCE: https://www.cnbc.com/2023/12/14/amazon-to-connect-kuiper-internet-satellites-with-laser-links.html

12/8/2023 - Written By Caleb Henry Barring any late-stage contracts, 2023 will conclude with 12 commercial GEO satellite orders, seven of which were micro GEOs (>1,000 kg).   This year continues the trend of GEO operators staying extremely conservative when buying satellites. Of the five classic large GEOs, four are replacements (Dish’s EchoStar-25, Yahsat’s Al Yah 4 and 5, and Thaicom’s unnamed satellite). The only new classic GEO satellite is for the Mongolian government, which is a new operator and appears mainly driven by sovereign connectivity goals, not market forces.  In contrast, all seven micro GEOs ordered in 2023 are intended to grow or establish new markets. Inmarsat (now Viasat) ordered three micro GEO satellites from newcomer Swissto12 to add resiliency and flexibility to its L-band network. However, one of three will now be needed as a replacement following the August failure of Inmarsat-6 F2. Astranis won the other four micro GEOs, which it will build and operate for Mexican internet services provider Apco Networks and Orbits Corp in the Philippines.  Nine years after Starlink and OneWeb emerged on the scene, a slowdown in classic GEO orders reflects several concerns, including:  1. The technical/manufacturing readiness of next-generation software-defined (SD) GEO satellites.  2. Continued weakness in television broadcast markets.  3. A growing acceptance of micro (>1,000kg) and small (1,000 to 2,000kg) GEOs.  4. The ongoing chilling effect of LEO & MEO competition.   Can large GEOs make a comeback? The outlook is not good. The industry’s chief proponent of “big iron” broadband satellites, Viasat, canceled its ViaSat-4 program after a ~$200M, three-year development program. Meanwhile, the GEO industry’s shift to SD satellites isn’t going smoothly. Airbus’s 2- to 3-year delay on OneSat development appears to have discouraged additional SD satellite orders across the industry, regardless of manufacturer. The 2023 market saw only one SD GEO satellite order (Thaicom’s Airbus OneSat), compared to five last year (all Thales Alenia Space Inspire platforms).   In October, the Space Force issued an RFI to explore commercially available micro-GEO platforms. Will this help further incentivize operators to continue the micro-GEO surge we saw in 2023? Quilty Space will be watching in 2024 to see if it’s a blip on the screen or a trend with staying power.   Stay tuned.  SOURCE: https://www.satellitetoday.com/broadband/2023/11/17/philippines-orders-another-satellite-from-astranis/

12/4/2023 - Written By Caleb Henry Three years since entering service, SpaceX’s Starlink internet is now available in 80 markets*, according to a Dec. 1 FCC filing. Dozens more are expected in 2024, mainly in Africa, Latin America, and Southeast Asia.   With Starlink available across North America, Europe, Brazil, Japan, and Australia, it’s safe to say the company has exhausted most countries and markets where initiating a satellite service is relatively straightforward. Going forward, gaining access to additional markets will be more challenging and likely slower.   Countries that are more difficult to access can be grouped into the following buckets:  1. Newcomers to space regulation.  Countries that lack familiarity with licensing satellite systems may need to create entirely new regulations in order to authorize Starlink (or any LEO broadband provider). Small countries outside of Europe are more likely to fall into this category. While space agencies have become more common worldwide, space is not always a top priority in some countries. For example, countries that rely heavily on tourism may be less tech-savvy and unaware of how space could improve their economies. Plus, if a local telco has a monopoly on service, they may be disinclined to change. 2. Countries with local ownership/presence requirements.  Some nations require locals to own a percentage of the company requesting a market access license. They may also (or alternatively) require a local presence of some sort. Countries like India and Indonesia – two places yet to approve Starlink – are well known in the satellite industry for the complexity of their local requirements, often precluding a large foreign presence. Getting through this can require significant local investments, such as offices and gateway sites. Sometimes, policy winds blow in favor of foreign companies, as was the case in the Philippines,  where an easing of restrictions on foreign businesses  paved the way for Starlink.  3. Untouchables.  These are the usual suspects: China, Russia, Venezuela, Iran, and any country deemed hostile to the United States. Barring massive regime changes, these countries will remain inaccessible. Countries with geopolitical instability may also find themselves in the “untouchables” category. In Senegal, the government shut down the internet three times this year, making it of little surprise that it has  not authorized Starlink .   Fortunately for SpaceX, its momentum around the world has put pressure on regulators to authorize the service or look like Luddites. South Africa has been in the spotlight as  the regional odd duck  for blocking Starlink over local ownership laws. With internet access growing in importance, that pressure is likely to grow.   *One big caveat: While market access typically refers to the process of getting nations to authorize satellite services within their borders, Starlink doesn’t use the words “markets” and “countries” synonymously. In a September Instagram post, Starlink said it was available in “all 7 continents, in over 60 countries and many more markets.” The company’s FCC filing says SpaceX “has been able to provide connectivity for millions of customers in more than eighty markets worldwide,” with no specific mention of countries. The filing later mentions service availability in several U.S. tribal lands, suggesting these are counted among the 80 “markets.” SOURCE: https://www.fcc.gov/ecfs/document/1201354824567/1

11/28/2023 - Written By Caleb Henry After this month’s launch of the second-ever Starship vehicle, SpaceX founder Elon Musk posted a picture of four more Starships described as “the last of V1.” What’s interesting here, besides the coming shift to a Gen-2 design, is that SpaceX is tackling two problems at once: (1) making something new and (2) producing it at scale.   Normally, most companies attack these problems in series, but given the complexity and time scale required to build a launch vehicle, the “series approach” has historically resulted in a multi-year scaling up process that yields less than three launches per year over the first five years of operation.  SpaceX learned about this challenge in 2017, when demand (then for GEO launches) outstripped supply of Falcon 9 rockets. Musk has repeatedly stated that production is the hard part , both with rockets and at his electric car company, Tesla.   This concern is apparently why Starship development looks nothing like other rockets. Rather than producing a single prototype and then scaling production, SpaceX is stamping out copies of new vehicles without pause.   With this approach, Starship could skip the production strain that often slows new vehicles, as has been seen with Rocket Lab’s Electron and Firefly’s Alpha rockets. Add in reusability, and Starship could leapfrog traditional early launch rates, easily doubling the normative cadence of new rockets, if not more.   Of course, linking production and prototyping introduces new production risks. If a serial technical flaw is found, multiple rockets would need to be reworked. But if successful, Starship could scale at a pace that eclipses its peers, and makes Musk’s vision of daily launches that much more feasible.   SOURCE: https://t.co/Nj6KXbc5GI

11/20/2023 - Written By Caleb Henry U.S. DoD officials recently met with Indonesia’s leadership, the world’s fourth most populous country , to discuss defense cooperation, with space as one of the first areas of collaboration. Defense Secretary Lloyd Austin broached the subject of space collaboration with Indonesia but kept the discussion at a high level. The U.S. has obvious reasons for wanting Indonesia as a partner. Geographically, the country sits at China’s doorstep, and economically it carries weight, with a GDP of $1.4 trillion , putting it just below Mexico in global rankings. As the world’s largest archipelago, Indonesia is no stranger to space – it has more domestic GEO satellite operators than any other country after the U.S. (PSN, Ooredoo,Telkom Indonesia, and even a bank, Bank Raykat Indonesia). Still, partnering at a defense level will be a new experience for both countries. Indonesia is at odds with U.S. policymakers on the two biggest conflicts in recent history. It has avoided condemning Russia’s invasion of Ukraine but swiftly spoke out against Israel’s war in Gaza. In the Asia-Pacific, Indonesia is a beachhead for China’s Belt and Road Initiative and a frequent recipient of Chinese investments. Close economic ties between Indonesia and China “dissuade Jakarta from siding exclusively with the United States,” per the Carnegie Endowment for International Peace . So, how will the U.S. and Indonesia partner on space? Indonesia does not own any military satellites and only three Earth observation satellites, both optical and AIS. One obvious area of cooperation could be maritime domain awareness and the detection of illegal fishing vessels, as Indonesia has concerns about Chinese boats near its exclusive economic zone surrounding the Natuna Islands. Indonesia could also serve as a forward location for U.S. teleport and/or Space Situational Awareness (SSA) sites, but until Indonesia develops a more fulsome national security-oriented space effort, the U.S. may simply need to focus on technology exchanges to prevent Indonesia from slipping into China's orbit.  SOURCE: https://www.defenseone.com/defense-systems/2023/11/us-indonesia-expand-defense-cooperation-starting-cyber-and-space/392104/

11/20/2023 - Written By Raven Otero-Symphony A newfound ability to detect emissions from copper mines could revive demand for hosted payloads. Multispectral sensors onboard the ESA’s TROPOspheric Monitoring Instrument (TROPOMI) are now tracking these emissions daily from low Earth orbit, but a recent study from NCAR says such data should be captured hourly instead, since daily measurements limit our understanding of air quality patterns over time. While most Earth observation (EO) missions take place from LEO, these types of environmental payloads may be better suited to the persistent coverage available from GEO. The Central African Copper Belt produces around two-thirds of the world’s copper and cobalt to create everything from mobile phones to commercial aviation engines, and even satellite parts. Nitrogen oxide is the main greenhouse gas emission being released from the Copperbelt and causes poor health outcomes for both people and the environment – currently there is little ability to track its proliferation, even via satellite. Exacerbating the situation further, Africa, South America, and Oceania are estimated to lose more than 31.5% - 52.4% of combined GDP repairing this climate-driven consequence over the next 25 years, despite contributing the least to global greenhouse gas emissions since 1981. Hosted payloads—modules that attach to a satellite and share its power supply—can be a cost-efficient and quicker solution. Development of low form-factor hyperspectral sensors (which can map mineral signatures from space), are further paving the way for a resurgence, assuming they can prove a viable solution for health services and disaster prevention across the Global South through active climate monitoring. While many nations in the Global South face geographic and economic hurdles, a geostationary solution for hourly data may be the most affordable option. NASA broke ground this year with its Tropospheric Emissions: Monitoring of Pollution (TEMPO) mission, whose GEO vantage point enables hourly EO collection in North America. From GEO, just three hosted payloads for any emissions-focused program can enable global coverage – no LEO constellation required. Are GEO-hosted payloads poised to take over the limelight again? Or is this need already met by NASA/ESA data sharing without putting the cost burden on these countries? SOURCE: https://news.ucar.edu/132918/monitoring-african-copper-and-cobalt-mining-emissions-space

11/14/2023 - Written By Chris Quilty Ever since Tsiolkovsky published the rocket equation in 1904, bold inventors and theorists have endeavored to break the equation. Balloons Horizontal launch. Space elevators. We get it. The engineering required for a satellite to survive three minutes on a high-G shaker table doesn’t come cheap. Horizontal launch from an aircraft at 35,000 feet enables a satellite to avoid 75% of the Earth’s atmosphere, while Zero 2 Infinity intends to launch from an altitude of 30 kilometers (above 99% of Earth’s atmosphere) using a balloon for primary assent. Orbital Sciences tried and failed. The company’s Pegasus air-launched rocket conducted 48 missions over 32 years, but even the government’s largess (~80% of Pegasus missions) was insufficient to achieve commercial viability. Virgin Orbit followed the same fate, just quicker due to the Falcon 9 buzzsaw. Virgin Galactic, with its focus on human-rated spaceflight, is largely insulated from the competition that killed its wayward offspring. However, the company’s Unity spacecraft: (1) flies too infrequently, (2) carries too few passengers, and (3) has operating costs that are too high. For Virgin’s Delta vehicle to be any different, it will need to reverse these three problems and do so before the company drains its bank account. Virgin Galactic is forecasting the Delta spacecraft to generate a 12x revenue increase over Unity. That’s pretty impressive, but is it enough to overcome the curse of horizontal launch? SOURCE: https://spacenews.com/virgin-galactic-to-halt-unity-suborbital-flights-by-mid-2024/

11/14/2023 - Written By Caleb Henry In January 2023, Iridium and Qualcomm introduced the  Snapdragon Satellite  chipset with plans to jointly pursue mass-market direct-to-device (DTD) communications. Shares of IRDM surged 30% over three months as DTD enthusiasm reached a fever pitch. But, in an abrupt about-face, Qualcomm terminated the partnership Nov. 9, driving shares of IRDM 30%  below  their pre-Qualcomm trading levels.    What went wrong? Iridium is one of the most respected companies in the satellite industry and Qualcomm is one of the world's leading semiconductor manufacturers. If they can’t pull it off, what chance does anyone else stand? Well, pretty good, maybe. Anyway, this isn’t a Lehman Brothers moment. The Iridium/Qualcomm approach-to-market was actually quite novel, but they totally misjudged the customers’ willingness to pay. That doesn't mean that other DTD technical or spectrum approaches can’t work.  With that said, our key takeaways from the industry’s first major birthing pain:  • Demand at what price?  Will consumers pay for an emergency satellite service? Probably not. In which case, the service becomes an unburdened cost. Apple is presently the only smartphone with DTD emergency services, which it offers as a free service – for now. If Apple proves successful in: (1) charging for the service, or (2) attracting/retaining subscribers, it is a foregone conclusion that every smartphone will need DTD emergency services.  • What does this mean for Iridium?  Stating the obvious, Iridium now needs a new partner to tackle the DTD market, most likely a chipset vendor or handset manufacturer. If Qualcomm couldn’t pull it off, however, other vendors are likely to remain gun shy until there are signs of market traction, as indicated above.   • What does this mean for the DTD industry?  While it’s early to draw conclusions, Qualcomm’s withdrawal adds to a small but growing body of evidence that suggests the approach of using mobile satellite services (MSS) spectrum for DTD will be a harder climb than first anticipated. Iridium DTD competitor Globalstar, even with Apple as its partner, has  echoed concerns  similar to Iridium CEO Matt Desch about slow adoption. Other companies that could pursue an MSS-based DTD strategy (mainly EchoStar and Viasat) have yet to articulate any clear plans. We have not observed this level of reticence among DTD companies whose spectrum strategies involve reusing cellular spectrum (AST, Lynk and SpaceX).   With the U.S. Federal Communications Commission promoting its “ Single Network Future ” at home and  abroad , it is clear policy makers want DTD to succeed. And while it’s nice to have regulators and industry working together, we’re waiting to see if the satellite industry can retain the necessary partners – builders of chipsets, smartphones, mobile network operators, and investors – to make sure DTD doesn’t get stuck in R&D.   SOURCE: https://www.cnbc.com/2023/11/09/iridium-announces-end-of-qualcomm-satellite-to-phone-partnership.html

11/7/2023 - Written By Caleb Henry France, Germany, and Italy – the European pillars of launch expertise – have agreed to Earth-shattering policy changes that will redefine space access throughout Europe. The European Space Agency (ESA) member nations are, for the first time, sanctioning the sale of launch services from Avio (Italian builder of the Vega rocket) separately from Arianespace. And perhaps most encouragingly, ESA is organizing an open launch competition, the “Launcher Challenge,” that will be unbound from the longstanding policy of “geographic return.” The implications for Arianespace are huge. Europe has long federated government demand and private-sector launch activity under the company, with the output being sovereign access to space for the 22-nation ESA members. But that foundation grew increasingly shaky amid Italy’s belief that Arianespace wasn’t prioritizing Vega and Germany’s belief that its launch startups – most notably Isar Aerospace and RFA Space – should get a chance to compete unconstrained by regional politics. ESA has long thwarted attacks on geo-return because it’s central to how the agency operates: nations contribute funds to ESA programs, which are then built in their respective lands. This policy, among other things, obliged European government satellites to launch on Arianespace rockets, which are built mainly across France, Germany, and Italy, with small contributions from other ESA member states. If future launch contracts openly compete, and the policy of geo-return is set aside, new European launch companies could position themselves to unseat Arianespace as the de facto launcher for the continent. Such a change won’t happen anytime soon. European ministers, in the same breath, pledged to spend up to €340M annually to subsidize Ariane 6 from 2026-2029. After spending more than €4B on development, ESA will naturally seek to extract value from its hefty investment, but the looming fracture of the European launch market may just enable innovative companies to challenge the Ariane 6. SOURCE: https://europeanspaceflight.com/arianegroup-to-receive-e340m-per-year-to-operate-ariane-6/

11/2/2023 - Written By Caleb Henry SES moved up its Q3 financial results by two days after Boeing disclosed a $315M satellite charge that investors immediately attributed to SES. Power-related issues on mPower 1-4 are worse than originally thought, meaning the satellites may not reach their 10-year design life. For SES, that means impaired 2024 revenues and EBITDA by 5%. The company’s primary remediation plan is to launch two additional Boeing-funded satellites, but curiously, SES is also moving forward with the launch of mPower 5-6. Two satellites that the company presumably knows suffer from the same power glitch as the first four mPower satellites. Typically, “impaired” satellites are returned to the factory for remediation, a process that would likely delay their launch by a year or more. Could OneWeb’s rebirth , Amazon’s first satellite success , and the potential funding of a new competitor be the motivation for valuing speed-to-market over profit maximization? Boeing’s move to pay for two more satellites (bringing the total fleet to 13 mPower satellites) is also highly unusual, notwithstanding Boeing’s marketing agreement to sell mPower services to the U.S. government. Satellite operators typically deal with manufacturer shortcomings through insurance, especially for defects that surface within the first year after launch. This is the second instance in 12 months of satellite operators requiring concessions from manufacturers that fall short of contractual expectations. The first occurred in November 2022 when EchoStar, frustrated by two years of delays with its Jupiter-3 satellite, imposed a series of penalty payments upon Maxar Technologies amounting to $10M for every additional month of delay . While production delays are not uncommon, and spacecraft anomalies are a known risk of the space business, satellite operators are becoming savvier about implementing penalties for manufacturing mistakes and costly delays. They remain extremely calculating in their decisions to buy new satellites these days, with the rapid pace of technological innovation creating a heightened risk of faster obsolescence for even the most cutting-edge spacecraft. There is no guarantee that a satellite will be economically useful at the end of a 10- or 15-year design life today, a shift that has upended the precedent. With long-term revenue projections obfuscated, operators may turn to manufacturers to pay up when clearer, near-term revenues are sacrificed by their blunders. SOURCE: https://spacenews.com/ses-says-o3b-mpower-electrical-issues-are-worse-than-thought/

10/27/2023 - Written By Caleb Henry U.S. lawmakers have been fretting since 2018 (when Northrop Grumman bought Orbital ATK) that the national supply base for solid rocket motors was becoming too concentrated. Those concerns  torpedoed  Lockheed Martin’s attempted acquisition of Aerojet Rocketdyne last year and  raised hackles  on Capital Hill when L3Harris jumped in to play white knight. The U.S. government has  expressed concern  that limited competition could stifle innovation and raise prices for solid rocket motors used in missiles, rocket, and space launch. The industry is apparently listening, as evidenced by the groundswell of solid rocket development efforts currently underway, including: • Lockheed Martin , spurned by regulators’ dismissal of its attempt at buying Aerojet, says it’s in late-stage negotiations to create a “ third source ” of solid rocket motors. Lockheed’s ambitions have centered chiefly around defense applications like its Guided Multiple Launch Rocket System (GMLRS), but as a veteran space company, Lockheed could easily push into the booster business for launch vehicles. NASA’s Space Launch System and ULA’s Vulcan rely on booster tech from Northrop and L3Harris. Meanwhile, Lockheed is an investor in  Rocket Lab  and  ABL Space Systems . Who's to say Lockheed couldn’t become a supplier to other launch companies?  • Ursa Major Technologies  is best known for its work creating liquid propulsion systems, but the company is currently seeking to hire a  solid rocket motor engineer.  It’s a natural expansion for the company, which has increasingly sought hypersonics and defense business alongside its core space focus. We wouldn’t be surprised to see the company announce a solid rocket motor product in the next 12 months. • X-Bow Systems , which traces its roots to the  ORS-4 program  and the now-defunct Super Strypi (solid) launch vehicle, has recently emerged as a contender in the solid rocket motor (SRM) business, supported by a $64M DoD hypersonics contract and a new high-volume manufacturing facility in Luling, Texas. X-Bow is currently targeting the missile and rocket market dominated by  L3Harris and Northrop , but the company may eventually pivot back to the launch market. Then again, the DoD needs a lot of Javelins, Stingers, GMLRS, and Standard missiles nowadays.  • Anduril , the hard-charging defense startup hellbent on keeping incumbent defense contractors up at night, purchased Adranos, a small supplier of solid rocket motors, in June. Next up is scaling Adranos and “ going after everything ” the DoD asks for in that market. Anduril founder Palmer Luckey has space on his list of target markets, first with software, later with hardware. • Kratos  teamed with Australian startup Hypersonix to bring its solid rocket tech to the U.S. While the  first application is hypersonic platforms , orbital and suborbital space transport are also on the drawing board. • And, honorable mention to  Firehawk Aerospace , which is creating hybrid rocket engines (these sit right in the middle between solid and liquid-fueled motors). Raytheon backed the company last year with an  investment of undisclosed size,  giving it a path to scale in defense and space programs. Left off this list are the various firms that have received Small Business Innovation Research grants for solid rocket technologies. Not all of them will become scaled products, but NASA and the DoD have seeded the field for even more companies to grow. And, even though the main focus of the solid rocket push is defense, these assets are well understood as dual use. The proliferation of solid rocket companies could shape the domestic launch landscape, especially as small launch startups seek to increase their payload capacity. SOURCE: https://www.defenseone.com/business/2023/10/how-x-bow-plans-break-northrop-aerojet-duopoly-rocket-motor-production/391492/

10/25/2023 - Written By Chris Quilty Incorporating Optical Communications Terminals (OCTs) has become a baseline assumption for nearly every megaconstellation operator (i.e., Starlink, Kuiper, OneWeb Gen2, Lightspeed, PWSA, Rivada, and the EU’s IRIS2) due to their critical role in network capacity, latency, cybersecurity, and ground network costs. But the reality is that aside from scant details from SpaceX about its " space lasers ," this is a terra incognita for the space sector right now. Only a handful of operational OCTs have ever been flown in space, and the ability to build terminals at scale and cost is still unproven. Hence, the SDA’s recent announcement that its planned optical comms interoperability testing will be delayed until at least next spring evoked groans throughout the industry. Several operators, including Rivada, Telesat, and IRIS2 will be forced to commit to terminals before the hardware is space validated. While the SDA’s efforts to standardize OCT interoperability have mesmerized the industry for the past year, Aalyria's announcement that it is partnering with an investment group to deploy 200 OCTs on maritime vessels deserves a mention. While space and maritime are very different operating environments, Aalyria’s “coherent” Tightbeam terminal was specifically engineered to operate from terrestrial to deep space. Aalyria, which acquired the core IP from Google’s unsuccessful connectivity experiments (i.e., Loon, HAPS), has demonstrated its terminal in land, maritime, and aviation environments but has not yet developed a space-qualified OCT. Nonetheless, the company’s focus on space is evident in agreements with Intelsat , Rivada , DIU , and SDA to study or use the company’s massively scalable (thanks, Google) network orchestration software, Spacetime. Operating at a minimum throughput of 100 Gbps, Tightbeam promises to be competitive in the space-OCT domain, but Aalyria’s maritime agreement should also sound alarms for the already beleaguered maritime sector. According to the company’s press release , “Aalyria aims to outfit thousands of marine vessels with Tightbeam terminals, enabling a large mesh network that will extend high-speed, ground-based connectivity far into the open ocean without relying on satellites.” This is an interesting concept for a space startup. SOURCE: https://www.satellitetoday.com/technology/2023/10/24/aalyria-and-hico-plan-to-deploy-laser-communications-on-commercial-ships/

10/19/2023 - Written By Caleb Henry This year Mongolia made two moves that will bring satellite connectivity to the landlocked country and could signal the beginning of sovereign communications unimpeded by authoritarian neighbors. Mongolia is a large country of 3 million people sandwiched between China and Russia. From a telecommunications standpoint, network security could not be more challenging.  All of the country’s fiber  enters through those neighbors, meaning internet access is essentially controlled beyond its borders. This is what makes Mongolia’s recent overtures to space powers the United States and France so interesting.   • U.S. bringing Starlink .  In July, Mongolia's Communications Regulatory Commission authorized Starlink to provide satellite internet in the country, noting that the service will “provide greater access to hard-to-reach areas of the country.” The approval was foreshadowed by the U.S. ambassador to Mongolia, Richard Buangan, who in  a June speech , said “Mongolia and the United States are working together to bring infrastructure options not bound by cables or wires to urban and rural Mongolia. These new digital infrastructures—vast satellite networks, for example—are democratic in nature, offering access to all in the fullest sense.” Unsurprisingly, Starlink's authorization drew criticism from within China as a threat to the country’s “Great Firewall.”   • France bringing a GEO satellite .  Mongolian President Ukhnaa Khurelsukh visited France this month on a four-day trip that included purchasing a Ku-band GEO satellite from Franco-Italian manufacturer Thales Alenia Space. The 10 Gbps satellite, named  Chinggis Sat  after Mongolia’s national hero Chinggis Khan, provides another method of establishing sovereign communications. Paperwork for the satellite is expected to be finalized in November. The deal follows the first-ever visit by a French president this May, when Emmanuel Macron travelled to the capitol city of Ulaanbaatar.   Why it matters:    Mongolia had considered a national satellite program with Japan’s KDDI Foundation in  2012 , but the program fizzled out. Since then, Mongolia’s online activity has surged, with 84% of its population online compared to just 12% at the time of the Japanese satellite inquiry. The need for connectivity is much stronger now.   Satellites can be important tools for reinforcing national sovereignty, with Mongolia representing an especially compelling case. Geographically huge but politically small, Mongolia has no option but to play nice with its neighbors, who surely have offered to supply satellites of their own. China buys  around 90%  of Mongolia’s exports, and continues to  promote trilateral cooperation  between Russia, Mongolia and China. Days after his visit to France, Mongolian President Ukhnaa Khurelsukh was shaking hands with Chinese President Xi Jinping in Beijing. As the old saying goes,  you can’t chose your neighbors .  Mongolia calls China and Russia its “eternal neighbors,” but has been looking for a metaphorical “third neighbor” to promote economic freedom and further other sovereign goals. Traction by the U.S. and France in Mongolia will be closely watched as these countries could fill that role. And, with greater internet access, Mongolia could increase its connectivity with the rest of the world, evolving from a regional player to a global actor.  SOURCE: https://thediplomat.com/2023/07/mongolia-signs-agreement-with-spacex-to-utilize-starlink/

10/16/2023 - Written By Kimberly Siversen Burke As the players in NASA’s International Space Station (ISS) transition program approach the second half of their  Commercial LEO Destinations Program (CLDP)  plans, one of the first-round draft picks just got traded to another team. Northrop Grumman announced on  Oct. 4  that it’s sidelining efforts to develop its own commercial space station and instead will be joining Voyager Space’s Starlab consortium. Too many acronyms; just break it down NASA hatched its half-billion-dollar CLDP initiative in 2021 to inspire replacement ideas for the retiring ISS. The goal is to deorbit the station by 2030 and flip the international partnership of space agencies managing the station to a commercially operated venture. Northrop was among four commercial players initially chosen by NASA to advance space station concepts that would eventually count NASA as a customer. Now, Northrop will instead leverage its  $125.6M  CLDP contract to provide cargo resupply services to the Starlab space station designed by Voyager Space. You’d expect a deeper bench with a program of this importance. There are only four(ish) teams. But the lineup is stacked. And the Starlab collab just got stronger with the Northrop jump. The current ISS successor roster: 1. Starlab • Initially funded by a  $160M  award and a Space Act Agreement from NASA. • Team Starlab is led by Voyager Space, Nanoracks ( majority-owned  by Voyager Space),  Airbus  (which superseded Lockheed Martin due to a Starlab module design change), Northrop Grumman, and Zin Technologies ( acquired  by Voyager Space). • Starlab is planning a single launch in 2028 (and will most likely be dependent upon Starship due to its size). • It could be a 5-Starlab, as  Hilton  is designing the suites on this four-astronaut space station. 2. Orbital Reef • Initially funded by a  $130M  award and Space Act Agreement from NASA. • Team Orbital Reef is led by Blue Origin, Sierra Space, Redwire, Boeing, Amazon, and Genesis Engineering Solutions. • Sierra Space – which will provide the Large Integrated Flexible Environment (LIFE) modules and  Dream Chaser  spaceplane for Orbital Reef’s crew and cargo – just raised  $300M  in September. The company is now valued at  ~$5.3B . • The 10-astronaut “mixed-use business park” is largely dependent upon the operation of Blue’s  New Glenn  launch system, as Starship is most likely not a realistic option considering the Musk-Bezos dynamic, and SLS would have to be heavily subsidized by NASA to be economically feasible. • Like a celebrity couple ducking divorce rumors,  Blue Origin  and  Sierra Space  took to Twitter X this month to affirm their commitment to the Orbital Reef project (planned operational date:  2027 ). 3. AxStation • While Axiom Space  did not submit  a CLDP proposal, the company won a  $140M  NASA contract in 2020 to attach a habitable module to the ISS that will launch in 2026 and serve as a precursor to its AxStation space station. • Thales Alenia Space is building the primary structures for Axiom’s  modules  (2024-2027) and eventual space station (2028). • Axiom closed a $350M funding round in  August  and is estimated to be valued at >$1B, which might be why the company is now bringing  Prada  and  Philippe Starck  onto the payroll. 4. Vast Haven • Funded primarily by its  crypto billionaire  founder, Jed McCaleb, Vast emerged from stealth in 2022 with plans to launch its first artificial-gravity space station Haven (NET 2025) on a SpaceX Falcon 9, followed by a Crew Dragon mission called Vast-1. • Vast’s long-term plans center on a  large, spinning space station  launched on SpaceX’s Starship. Much like legendary QB Tom Brady, the ISS has had an impressive run. But it is well past its prime. It’s time for its successors in the private sector to pen a new playbook that shows the world how cutting-edge science, research, and innovation can co-exist in a microgravity environment with profit. And Prada. SOURCE: https://www.prnewswire.com/news-releases/voyager-space-announces-teaming-agreement-with-northrop-grumman-for-the-starlab-space-station-301947600.html

10/13/2023 - Written By Caleb Henry Earlier this month the remote South Atlantic island of St Helena got access to fiber, ending its long-standing reliance on GEO satellites for internet access. The results? An instant tenfold increase in broadband usage. The obvious lesson? More bandwidth equals more usage and happier customers. In fairness, St Helena was served by an aging wideband Intelsat GEO satellite, not a modern HTS system like Eutelsat Konnect or a software-defined GEO satellite. Furthermore, new LEO broadband systems like Starlink, have proven their ability to compete with terrestrial systems on bandwidth and latency . It is clear that past adoption of satellite-based internet does not provide a precedent for future uptake when new systems can offer order of magnitude increases in capacity. As a former Cloudflare engineer pointed out , St. Helena’s subsea cable showed overnight how induced demand (more supply + lower price = higher consumption) plays out in telecom. If satellite operators can meaningfully improve on capacity and price, demand has proven to be elastic. Amusingly, St. Helena has crossovers with OneWeb and Starlink , though neither is apparently authorized by the local telco monopoly, Sure, South Atlantic . OneWeb has a gateway located on St. Helena to support traffic regional coverage but no clear landing rights. Meanwhile, unlicensed Starlink terminals have found their way to the island to the consternation of Sure which has threatened to confiscate the contraband equipment.  SOURCE: https://www.kentik.com/blog/ending-saint-helenas-exile-from-the-internet/

10/10/2023 - Written By Chris Quilty Over the past decade, venture capital (VC) has emerged as a critical source of funding for space startups, with total investment surging more than tenfold, from $0.3B in 2014 to $3.2B in 2022 (note: excludes megaconstellation funding). Similarly, the number of funded space startups grew from <10 in 2011 to well over 400 by last year — boom time for space startups. Unfortunately, a higher rate environment has changed that dynamic. Triggered in part by the Fed’s battle with inflation, the 2022-2023 Fed funds target rate has ratcheted from ~0% to >5.25%, and the FOMC has reversed to “quantitative tightening,” these shifts in turn driving a sea-change in the investment climate. A key so-called “risk-free” rate benchmark, the 10-year U.S. treasury note, has seen its effective yield increase from 0.9% at the start of 2021 to ~4.7% today. With investors now able to fetch 5% returns on a risk-free basis, the market environment has shifted considerably: 1. A flight of investors has occurred from higher-risk investments (a la 2021) to “safer” yield investments. 2. Companies that don’t generate returns (i.e., cash flow/profits) for years to come – which includes most venture-stage companies – are worth significantly less (a higher discount rate applies). 3. As a consequence of these factors, it costs much more for companies to raise equity or to borrow. These effects have tanked not only the public equities but also private markets – particularly venture. For the VC industry, exits have become more difficult (i.e., closed IPO market), while VC returns and fundraising have fallen to a decadal low. While there are some early indications that the industry may have hit bottom, there is at least one indicator that suggests the industry has more medicine to take. More specifically, the ratio of down-round financings. In a “healthy” venture capital market environment, down rounds, where venture-stage companies raise their next financing round at a lower valuation than their prior financing round, are pretty rare According to the latest data from Pitchbook, less than ~11% of venture-funded companies were forced to price a “down round” year-to-date, which represents a two-year high but just a fraction of damage experienced in previous financial crises, including the 2008 housing crisis (~35%) and the dot-com bubble (~60%). While not a perfect proxy, space SPACs are down 60-90% since their public debut. Compounding the cash flow/liquidity challenges already faced by some venture and de-SPAC companies, the growing threat of a downround will take the capex foot off the gas for many capital-intensive companies, including early-stage constellation operators. It would be hard to imagine that many private companies that priced a round during the 2021-2022 hype cycle aren’t also due for a haircut. SOURCE: https://pitchbook.com/news/articles/down-rounds-venture-fundraising-VC-deals-recession

10/3/2023 - Written By Caleb Henry It’s rare that satellite operators, especially those not publicly traded, give granular details about the reasons for their programmatic delays. Sometimes, however, regulators require these disclosures, particularly when operators ask for extensions on milestones.  Such was the case for Space Norway, a state-run operator that ordered two satellites from Northrop Grumman in June 2019, with the expectation that they would launch by the end of March 2023. The satellites form the Arctic Satellite Broadband Mission (ASBM) and are part of a rare triple-operator satellite system – each satellite carries one communications payload apiece for Space Norway, Viasat/Inmarsat, and the U.S. Space Force.   Northrop Grumman won’t finish building the pair of satellites until this November, a delay that bumped Space Norway’s SpaceX Falcon 9 mission to a window stretching from Oct. 1, 2023, to Jan. 31, 2024. In requesting more time to meet an FCC milestone, Space Norway attributed the delay to the following reasons:  • Northrop Grumman shifting resources internally to build four C-band satellites for Intelsat and SES (two apiece), deprioritizing the ASBM satellites.   • COVID-19 outbreaks across Northrop Grumman’s assembly, integration, and test teams.   • An “industry alert” on reaction wheels from an unnamed supplier that paused manufacturing for a time (hint – it was Honeywell).  • And 19 subcontractors terminating their contracts with Northrop Grumman between 2020 and 2022, citing COVID-19.  Key takeaways from this news:   • Even though manufacturers hate to say it, they can have too much of a good thing. Northrop Grumman was, according to Space Norway, unable or unwilling to prioritize its satellites when faced with orders from  Intelsat and SES , two operators chasing billions of dollars for a spectrum program that was far less tolerant of delays.   • And while COVID-19 feels like a distant memory, the satellite industry is still dealing with its aftereffects on multiyear programs, compounded by supply chain stresses that acutely impacted component suppliers.   • Lastly, domestic government customers are a top priority. Northrop Grumman does not appear to have suffered many delays with the Space Force payloads it built. Those  were completed  in June and November of last year.   Of course, in a three-legged race, no one can cross the finish line until everyone does, so all three tenants are now stuck in the same holding pattern. Fortunately, the FCC granted Space Norway an extension, but the operator will owe a $5.7-million surety bond should it fail to launch by Nov. 3, 2024.  SOURCE: https://docs.fcc.gov/public/attachments/DA-23-922A1.pdf

10/2/2023 - Written By Chris Quilty Viasat refinanced its Inmarsat bridge facility on Sept. 21, issuing $733M of Senior Notes to retire the unsecured bridge loan facility that Viasat entered into on May 30 pursuant to the Inmarsat acquisition close. The Notes, which mature in 2031, were issued at par with a 7.5% annual interest rate. Not bad for Viasat. But not so much for the banks, which evidently agreed to price the Notes before Viasat suffered anomalies on two satellites (ViaSat-3 and I-6 F2) valued at a combined $1.3B. When the banks marketed the notes to investors, the “clearing price” was 65% of par, implying a $257M loss for the banks and junk status for Viasat’s unsecured debt at an effective yield of ~15%. Viasat will need to come back to the market in about a year to refinance the $700 million principal amount of 2025 Senior Notes that were issued in 2017 and carry an interest rate of 5.625%. The gap between those two goalposts measures ~$70M of annual interest costs. SOURCE: https://investors.viasat.com/news-releases/news-release-details/viasat-announces-pricing-7334-million-senior-notes