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February 14, 2014
Emerging Space Programs Pursue Earth Observation Investment Strategies

By Adam Keith, director of Space and Earth Observation, Euroconsult (www.euroconsult-ec.com), Montreal, Canada.

From 2003–2012, 164 Earth observation (EO) satellites, including those for meteorology purposes, were launched by civil government and commercial entities from 32 countries. This number is expected to expand to 360 satellites from 2013–2022, generating $35.8 billion in manufacturing revenues. New government and commercial entrants also are anticipated, with 42 countries expected to launch at least a first-generation EO satellite by 2022.

EO satellites by operator type. Meteorology satellites not included. Source: Satellite-Based Earth Observation Market Prospects to 2022, Euroconsult 2013

Overall civil government investment in EO totaled $7.7 billion in 2012, representing four years of continued investment growth. Absolute figures show that $5.5 billion (71 percent) of total investment in 2012 was attributed to North America and Europe. However, budget pressure through austerity measures has been felt across both continents.

For example, the European Space Agency received a budget lower than requested for its EO program during the 2012 Ministerial Council, and questions still remain over the long-term funding commitments of Copernicus—formerly the Global Monitoring for Environment and Security (GMES) initiative. National Oceanic and Atmospheric Administration (NOAA) spending on its next-generation systems also is under scrutiny and has given rise to propositions from the private sector to support meteorology and environmental monitoring data collection. NASA already cancelled two of its “Tier 1” missions in 2011 due to budget constraints.

Conversely, other regions and EO programs are growing significantly. Investments in Russia, the Commonwealth of Independent States (CIS), the Middle East, Africa and Asia have been growing more strongly than the global average. Russia, India and China have ramped up their spending to support ambitious programs spanning myriad application areas. Their goal is to support national policy interests, such as autonomy in space-based applications and the continued development of a national industrial base.

In addition, emerging EO programs continue to develop as first-generation satellites advance to more capable second-generation systems, requiring increasing investment. These budget patterns will alter the EO investment landscape while vastly increasing global data supplies.

Why Invest in EO?

Space technology development often accelerates a country’s social development, with benefits for user populations, various industry sectors, education and research. Most emerging space programs have integrated the inception of their EO/space program with a wider national plan for science and technology aimed at developing a country’s high-tech industries, science and innovation, rather than aiming only at space infrastructure.

Assessing the benefits of EO requires governments to analyze national and international markets, which can help them determine system specifications. At the national level, a complete review of user requirements is essential to meet user needs and determine secure conditions for future use. Projects pushed by a government or space agency without consulting a system’s users can fail to meet those users’ needs.

Countries often begin an EO program to test and demonstrate technology. Following such initial missions, countries such as Thailand, Malaysia and Algeria seek to develop next-generation satellites with operational data supply, meaning data are collected with end users in mind who return for services. By supporting other government departments, EO satellites benefit wider policy objectives within a country, such as monitoring natural resources, supporting infrastructures and strengthening defense.

Engaging end users isn’t an easy task, especially given the cost of space technology. In addition, no single EO satellite can support all sector requirements. For example, defense users have a strong requirement for high accuracy and ground resolution, whereas
resource-monitoring users focus more on wider image swath and greater spectral attributes. In all cases, end users who aren’t accustomed to using EO data require a cost-benefit analysis to ascertain the data’s value.

Ongoing Commercialization

As EO programs become more developed, data commercialization promises a return on investment. The global EO data market continues to grow, reaching a market value of $1.5 billion in 2012.

However, most revenues associated with commercial data relate to high-resolution, high-accuracy systems from companies such as Astrium and DigitalGlobe, which primarily serve government defense needs. Nonetheless, data demand also is increasing for natural resource monitoring applications, which require fewer constraints on data parameters and can be provided at a lower cost.

For example, Thailand’s Geo-Informatics and Space Technology Development Agency commercializes data collected by THEOS-1, and the agency is expected to commercialize THEOS-2 data. Chile intends to sell some SSOT-1 imagery, and Astrium will commercialize data from two Kazakhstan EO satellites. Although the return isn’t the same as the revenues generated by the commercial operators, revenues can provide support to next-generation systems or service development.

Technology Transfer

Another important benefit of an EO program is more affordable access to space capabilities than that of other space applications. Launching a communications payload or supporting a space science program comes at a much greater cost, which poses a dilemma in procuring an EO satellite. The lowest-cost solution is to purchase a satellite built on an established low-cost platform and payload. However, direct procurement doesn’t allow local industry to participate in development. Therefore, countries may wish to pay a higher price or use technology transfer or technology localization as a bargaining tool within the program.

South Korea is a good example of such a process. Surrey Satellite Technology contributed to the country’s Satrec Initiative by developing, jointly with Korean engineers, the Kitsat-1 satellite. The Satrec Initiative now exports to countries willing to develop their own satellites through technology transfer, such as Malaysia and the United Arab Emirates. In addition, Turkey has created its Satellite Assembly, Integration and Test Center, following earlier technology transfer with Surrey to develop Bilsat in 2003. Other countries, such as Nigeria, Algeria and Malaysia, also are moving closer to autonomous satellite manufacturing.

Additional domestic capabilities will grow in the coming decade as countries develop satellite missions. Ultimately, new industry players will take their experiences and compete internationally for satellite manufacturing. A skilled workforce often leads to an autonomous high-tech manufacturing capability and potentially the development of a space program.

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