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GLOBAL SPACE SECTOR MARKET TRENDS and DRIVERS Table of Contents

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GLOBAL SPACE SECTOR MARKET TRENDS and DRIVERS Table of Contents foreword MISSION OF THE CANADIAN SPACE AGENCY I am very pleased to release the latest edition of our Global Space Market Trends and Drivers 2002. Developed by the External Relations Directorate of the Canadian Space The Canadian Space Agency is committed to leading Agency and now in its fourth year of publication, it provides an in-depth analysis the development and application of space knowledge of the principal market and regulatory trends in key areas of the Canadian Space for the benefit of Canadians and humanity. Program, namely: satellite communications; remote sensing; robotics, navigation and space science. The External Relations Directorate The External Relations Directorate manages the Over the past year, as President of the Canadian Space Agency, I have benefited from strategic relationships between the Canadian Space numerous exchanges and consultations with all partners in the Canadian Space Sector Agency and its domestic and international partners. and have developed a profound appreciation of both the multitude of challenges con- Key mandates include the development and imple- fronting us and the great opportunities which lie in our future. mentation of policies and strategies relating to cooperation partnerships with domestic stakeholders I note with pride that the Canadian Space Sector remains internationally competitive, (Federal and Provincial governments, industry and export-oriented and is recognized as a major contributor to Canada’s goal of becoming academia) and international agencies and industries, the best knowledge-based economy in the world. For example, the results of a recent as well as support to the commercial initiatives round of consultations with our federal departments and agencies underscored the very of Canadian space companies on world markets. tangible ways in which space applications already provide knowledge-oriented solutions In connection with the latter, the Directorate that benefit Canadians, while revealing a host of potential future opportunities. provides strategic and timely information to industry and other stakeholders. In order to remain competitive, the Canadian Space Sector must stay abreast of key changes in the global marketplace and be ever aware of the trends and forces that Contact: influence the vitality and commercial success of our industry. As part of the Canadian Michel Giroux Space Agency’s ongoing commitment to promoting a highly competitive space industry, Director, External Relations Global Trends 2002 captures the major market changes which occurred over the past 6767 route de l’ Aéroport year, updates the forecasts for growth opportunities and provides a discussion of the St-Hubert, Québec market conditions and international trends that government and industry partners J3Y 8Y9 need to be aware of. I trust you will find this information beneficial and relevant to Tel: 450-926-4360 your organization’s strategic planning. Fax: 450-926-4362 CSA Web Site: www.space.gc.ca Her Majesty the Queen in right of Canada 2003. ©All rights reserved. Marc Garneau President Canadian Space Agency table of contents SATELLITE COMMUNICATIONS SYSTEMS 6 Executive Summary 8 Market Characteristics and Major Events of 2000 and Early 2001 8 Market Trends 16 What to Expect in the Next Few Years 26 Conclusions 28 EARTH OBSERVATION 30 Executive Summary 32 Market Characteristics 32 Major Events of 2001-2002 42 This document has been Market Trends 48 prepared to provide What to Expect in the Next Few Years 55 general information to Conclusions 58 the reader about major Appendices 60 trends affecting the various sectors. The SPACE ROBOTICS AND AUTOMATION 64 Canadian Space Agency Executive Summary 66 does not guarantee the Market Characteristics 67 accuracy of the infor- Major Canadian Events of 2001 and Early 2002 71 mation contained Market Trends 74 herein, and assumes no What to Expect in the Next Few Years 80 responsibility for any Conclusions 83 course of action taken as a result thereof. GLOBAL SPACE SECTOR MARKET TRENDS AND DRIVERS table of contents SATELLITE NAVIGATION 88 Introduction 90 Market Characteristics 90 Major Events of 2001 and early 2002 99 Market Trends and Opportunities 105 What to Expect in the Next Few Years 119 SPACE SCIENCE 122 Executive Summary 124 Market Characteristics and Major Events of the Recent Past 125 Market Trends 129 What to Expect in the Next Few Years 132 Conclusions 133 References and Key Connections 135 Appendix - Canadian Industry Profile 136 Global Space Sector Market Trends And Drivers 5 table of contents EXECUTIVE SUMMARY 8 MARKET CHARACTERISTICS AND MAJOR EVENTS OF 2000 AND EARLY 2001 8 MARKET TRENDS 16 WHAT TO EXPECT IN THE NEXT FEW YEARS 26 Prepared by: CONCLUSIONS 28 Stéphane Lessard External Relations SATELLITE COMMUNICATIONS SYSTEMS MARKET CHARACTERISTICS EXECUTIVE SUMMARY AND MAJOR EVENTS 1 For example, EXECUTIVE SUMMARY •The lifetime of GEO satellites will continue investor confidence in general. Now, and for the These problems in the commercial satellite communi- 4 Insurance capacity to increase. next 1-2 years at least, would-be lenders are espe- cations industry affect all satellite prime contractors, 360Networks, Global The past year has been a difficult one for the global fell to US$970 M in •US prime contractors will continue to dominate cially stringent in their requirements for new loans and by extension their suppliers in Canada and Crossing and WorldCom telecommunications sector, and the space component 2001, compared to the market. (attempting to eliminate or transfer most risks), elsewhere. US prime contractors, however, enjoy an filed for Chapter 11 in of this sector has been no exception. Large projects US$1.1 B in 2000, and • Consolidation and vertical integration will continue and the stock markets are inhospitable to new public edge because of their access to large and increasing the US in June 2001, have faltered, and some operators have gone under. is expected to sink among satellite operators. offerings. Less financing means fewer projects, and military programs (such as those related to GPS January 2002 and July This has had a significant negative impact on the to US$700 M in 2002 •Manufacturing overcapacity in US and Europe will fewer opportunities for Canadian space companies. Modernization, or Homeland Security). European 2002, respectively. Canadian satellite communications industry. Several and further in 2003. remain a problem. prime contractors do not enjoy this benefit, since In July 2002, Alcatel suppliers have seen their order books shrink as a Among the most •ITARs will remain an irritant in dealing with Compounding the industry’s problems, 2001 was a Europe has no supra-national military space program reported a US$1.4 B result of reduced demand from large global prime affected projects will US manufacturers. bad year for the satellite insurance industry3. Several of significance, and national programs are few and loss, and had previously contractors, leading to a reduced turnover and some be the large 4-5 metric •The financing outlook will improve for some design errors were behind a string of failures that far between. It is generally difficult for Canadian announced plans to lay job losses. However, an examination of prevailing ton communications satellite communications operators. could raise the total claims against insurers to space suppliers to access defense space contracts off 30% of its work force. trends provides cause for optimism for a rebound satellites and the new US$1.5 B for 2001, suggesting total payouts could in the US and other foreign countries, although in the near future. We expect this cyclical downturn heavy lift boosters surpass the record levels set in 1998-2000. This there are exceptions. 2 In May 2002, BCE Inc. to be over in 1-2 years, and for the Canadian industry required to launch MARKET CHARACTERISTICS vastly surpasses the premiums collected (for instance, announced it was to continue to reap the benefits of past and on-going them. See “Worsening AND MAJOR EVENTS OF 2001-2002 total premiums amounted to US$490 M in 2001), In the US, the effects of the 1999 transfer of export reviewing its funding investments in technological excellence. This will Insurance Crunch Worries aggravating an insurance capacity crunch, which licensing authority for commercial satellites from commitments to require a continuation of the strategic partnership Space Industry”, AWST, appeared in 20004, and forcing key insurers to raise the Commerce to the State Department and the Teleglobe and the between the industry and the Canadian government. OVERALL SITUATION May 20, 2002, p. 47. possibility of premium prices5. Insurers have also demanded that applications of the International Traffic in Arms In late 2000 and 2001, the “.com” stock market renegotiating or satellite manufacturers strengthen their quality Regulations (ITARs) continued to be felt in 2001 5 Rates for launch and Over the next few years, the main global trends bubble burst, and the telecommunications sector restructuring its debt. control mechanisms, including greater scrutiny over and 2002. Even though during this period the 1 year of operations will be: in general suffered a meltdown, with the difficulties sub-contractors. This may lead to a greater reluctance US government and US companies beefed up their coverage are already •North America will continue to lead world of several high profile companies gracing the front 3 See “Worsening on the part of prime contractors to change esta- licensing staff and some regulations were stream- 50% higher than in demand for communications services. pages1, including in Canada2. The telecommunications Insurance Crunch blished designs, making it more difficult for Canadian lined, and even though the Canadian government 1999, when in-orbit •The US market for telecommunications services sector’s difficulties were due to a significant over- Worries Space Industry”, and other suppliers to sell new technologies. This was successful in getting the previous Canadian coverage often extended and equipment will remain predominant. capacity in terrestrial networks as well as bad Aviation Week and means that the role of the Canadian Space Agency ITARs exemption partially restored, satellites (even to 5 years.
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