Satellite Industry Seeing Global Growth, Though Industry Employment Continues to Contract, Says SIA Annual Report

Satellite services hit $113.5 billion worldwide, a 5 percent increase over 2011, with the biggest numbers coming from satellite TV, at $88.4 billion, the report said (http://bit.ly/10qYN89). In contrast, satellite radio had just $3.4 billion revenue. Mobile satellite voice revenue was flat, while mobile satellite data revenue grew 5 percent. Satellite ground equipment revenue was $54.8 billion in 2012 worldwide, a 4 percent increase over 2011, SIA said. Satellite manufacturing increased by 23 percent worldwide to $14.6 billion. It was up 30 percent in the U.S. to $8.2 billion. Satellite launch industry revenue grew 35 percent worldwide last year, with U.S. revenue increasing from $1.4 billion to $2.2 billion.

"These are very positive numbers for the sector and also for the economic context,” SIA President Patricia Cooper said in an interview. The fact that all four sectors of the industry grew “shows, I think, a balance of health underlying the industry,” she said. “Because there was growth across four very interlocked sectors, but with very different drivers, that shows a pretty strong, resilient base for the industry’s performance.”

Cooper said the satellite sector trailed the telecom sector primarily because of the rapid growth in smartphones and the rising cost of wireless bills as Americans embrace wireless broadband. She noted that history shows satellite growth tends to lag behind overall economic growth following a general contraction of the U.S. economy, but that hasn’t happened in the most recent downturn. “The growth may have slowed, but the sector certainly didn’t contract,” she said.

Asked what the satellite sector needs from federal regulators, Cooper said certainty is key. “Because the investment cycle is much longer, it’s a very large, upfront fixed investment for a satellite and then the investment is for a 15-year asset, with very little course correction in the middle,” she said. The industry is watching closely as the FCC completes a rulemaking launched last year aimed at streamlining and eliminating requirements for earth and space station licensing under Part 25 of the agency’s rules (CD Oct 1 p10), she said. Spectrum is also critical as it is for any “wireless” industry, Cooper said. SIA is concerned with “not so much the acquisition of new spectrum but the assurance that space systems can continue to operate as they're designed to do in the spectrum that’s been allocated to them,” she said. “We share all the time, but we want to make sure that that interference calculation is robustly analyzed because our transmitters are often 22,000 miles from the Earth’s surface."

SIA is watching overall employment figures closely, Cooper said. The numbers include company employment only, not government or the not-for-profit sector, she said. “Those numbers continue to contract. That’s not unusual in the overall economic sense, but it is something I think that’s concerning” as far as “space capabilities."

The U.S. fared well in winning bids for commercial GEO satellites in 2012, the report said. With 18 orders placed, 12 were won by U.S. manufacturers. “This represents the largest share of announced orders won by U.S. manufacturers in over a decade,” the report said. There were 52 satellite launches in 2012, compared to 56 in 2011, but revenue was up because satellites launched were “larger and more expensive,” the report said. Government customers accounted for 64 percent of launches, compared to 59 percent in 2011. Also, orders were placed to launch 25 commercial payloads in 2012, with the U.S. winning eight, compared to three in 2011. But that’s down sharply from the 31 won by the U.S. sector in 2008 and 20 in 2010.