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DFI International Washington, DC

Prepared for. Next-Generation Space Transportation: Six (Hopefully) Interesting Thoughts in 60 Seconds. May 17, 2001 Lori Garver Director, Space Programs. DFI International Washington, DC. Thought #1: It is neither the best of times nor the worst of times. Satellites are going up ….

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DFI International Washington, DC

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  1. Prepared for Next-Generation Space Transportation: Six (Hopefully) Interesting Thoughts in 60 Seconds May 17, 2001 Lori Garver Director, Space Programs DFI International Washington, DC

  2. Thought #1: It is neither the best of times nor the worst of times Satellites are going up … Global Satellite Launches (1997-2002) Global Launches Revenues (1997-2002) … generating revenue for the industry 12000 180 Government/Civil Commercial non-GEO 160 Commercial GEO 10000 140 8000 120 100 $ millions # Satellites Launched 6000 80 4000 60 40 2000 20 0 0 1997 1998 1999 2000 2001(E) 2002(E) 1997 1998 1999 2000 2001(E) 2002(E) Source: DFI International Source: Merrill Lynch However, future dynamism in the industry is still almost entirely dependent on deployment of commercial constellations

  3. Thought #2: It is all relative LAUNCH REVENUES FROM IRIDIUM, ORBCOMM, GLOBALSTAR TERRESTRIAL FIBER DEPLOYMENT COSTS Capex To Years to Company Light (Millions) Complete $900,000,000 360 Networks $ 31,360 39 AT&T 23,296 9 Iridium Sprint 13,440 8 $630,000,000 Globalstar Worldcom 16,128 7 Qwest 39,424 25 Global Crossing 16,128 24 Genuity 19,712 41 Williams 105,728 123 Broadwing 82,432 785 Level 3 (Internal) 7,168 3 Level 3 (Dark Fiber) 152,320 76 $ 507,136 38 Over $1.5 billion for the launch industry alone Satellite is no longer the black sheep of the family Source: Level 3, DFI International Estimates

  4. Thought #3: Pioneers show us the way TELECOM GRAVEYARD ? RIP RIP DBC ? RIP Winstar RIP TERRESTRIAL ? RIP RIP SPACE RIP Aduronet ? RIP RIP … but are, in many cases, essential to the development of robust markets Industry failures are not only to be expected …

  5. Thought #4: Hey, look down, I see demand Global Network Demand (2000-2004) Key Commercial Satellite Applications Broadband Multicasting – $14 billion market by 2005 by some accounts; leverages unique one-to many ability of satellites 10000 3500 875 Digital Cinema – specific multicast application; can provide dynamic improvement in global distribution of major films 1000 175 Terabits/sec 100 Route Pioneer – providing services in emerging markets until demand warrants terrestrial buildout 17.5 10 Universal Service – providing service to those areas where market economics will never support terrestrial buildout 1.75 2000 2001 2002 2003 2004 Demand for connectivity is expected to be explosive … … and although terrestrial solutions will dominate, satellites will play a significant role Source: RHK, DFI International Estimates

  6. Thought #5: Next-gen launchers need to be three things … reliable, reliable, and more reliable Not only is reliability the key decision criteria for satellite operators … … but increasing reliability is also the easiest way to reduce cost to orbit – by continuing to drive down insurance premiums “The five leading factors that we consider in selecting launch vehicles are reliability, reliability, reliability, reliability, and reliability” -- Commercial satellite manufacturing executive Satellite Launch Insurance Premiums (1989-1999) “[We are] willing to trade price for other factors such as reliability” -- Commercial LEO constellation executive “Reliability is of the utmost importance … a launcher must have a proven track record” -- Commercial LEO constellation executive “Reliability is too important to trade off … [but] capacity could be sacrificed” -- International Space Agency Program Director Source: JH Marsh & McLennan

  7. Thought #6: Government can be a successful enabler The Interstate Highway System cost $329 billion… … resulting in $1 trillion in economic cost savings

  8. Conclusions NASA should focus on its core mission… • Space transportation remains an exciting industry with steady growth • Pioneering projects are, by definition, costly and time consuming • Satellites are increasingly viewed as a key component of global telecommunications infrastructure • Shakeouts in the satellite and launch markets, like in terrestrial telecom markets, lead to a “flight to quality” • Government has a key role as enabler

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