Entry No.01f

IT Writers Awards

Stuart Kennedy

Space launch long shots

31 July 2000

Information Week

Submitted for Best Feature category

Commercial spaceports are threatening to sprout across Australia, but weaker than expected demand in the satellite market and a squeeze on space-related venture capital could mean a case of too many launchers chasing too few launches.

From Christmas Island, off the continent’s north west tip, through the old cold war missile testing range at Woomera, South Australia, and on to Hummock Island near Gladstone, Queensland, rocket entrepreneurs are attempting to rig an antipodean space launch industry that will chase a chunk of the $US235 billion global satellite market.

But when the US$5 billion, 66 satellite Iridium constellation went bankrupt and met a fiery end earlier this year it put a big dampener on the low earth orbit (LEO) satellite launch market that at least three of the four Australian spaceport ventures are aiming at. Launchers were suddenly denied the opportunity of pitching for replacement and maintenance launches for the Iridium constellation and the second generation of Iridium satellites that were due to go up. The end of Iridium dramatically capped a string of bad news stories for prospective launchers that included wireless satellite Internet communications hopeful ICO filing for bankruptcy protection in August, 1999 and funding struggles for Globalstar, a competing satellite voice and data service backed by space giant Loral Space & Communications.

However, a merger in May and a rush of new capital in July, helped settle the growing panic. In May, telephony icon Craig McCaw’s satellite outfit Teledesic completed its merger with the struggling ICO to form ICO-Teledesic. In July, the merged company scooped funding commitments of around US$1 billion, including US$100 million stumped up by Microsoft founder Bill Gates. Meanwhile, Globalstar announced that it had opened up a US$250 million credit line, that, with operating costs of US$125 million a quarter, was expected to keep the company afloat until next year.

With a $10 billion, 288 satellite constellation set to fly before 2004, the Teledesic business is a launcher’s dream, but Australian space industry consultant Bruce Middleton says the project is still too iffy to be safely included in a spaceport business plan. “I wouldn’t be prepared to put Teledesic in a mission model,” says Middleton who spent six years heading up the Federal Government’s Australian Space Office before branching out into his consultancy business, Asia Pacific Aerospace Consultants.

The problems with Iridium, ICO and Globalstar have also spooked the venture capital (VC) market. “The VCs are very nervous about putting anything into space projects,” said a space industry observer.

In its 2000 Commercial Space Transportation Forecasts paper, the US Federal Aviation Administration (FAA) said its projection for low and geostationary orbit launches was down 20 percent on the previous year.  In 1999 the FAA forecast an average 51 launches per year out to 2010, while in 2000 it forecast an average of 41.4 launches, broken down into 23.5 launches of medium to heavy satellites to geostationary orbits, 7.5 launches of medium to heavy vehicles to LEO or non-geostationery orbits (NGSO) and 10.4 launches of small vehicles to LEO.

“This downturn in expectations is the result of difficulties encountered by NGSO systems over the last year, including Iridium’s failure,” said the FAA.

Pitching in to this uncertain terrain are the four local spaceport ventures. The cheapest and potentially quickest to market of these is the Spacelift operation that would use a launch pad and solid fuel rocket package developed from Russian porta-nuke technology, a mobile ICBM system called START developed by the Moscow Institute for Heat Technology. “It requires little infrastructure because it was designed as an intercontinental ballistic missile for rapid deployment in any location,” says Spacelift chief executive Yuri Sokol, who made his mark in the construction industry before turning to rockets. 

Spacelift will be able to push small 600Kg to 1000Kg payloads into low earth orbit, which is a market predicted by the FAA to require just over ten launches a year. 

“We will be addressing a niche in the market that will increasingly be smaller payloads,” says Sokol.

Spacelift will nest in Woomera, because Australia is one of the few places in the world where Russia is prepared to export its ICBM-based rocket technology (due to arms control concerns) and the US, which dominates satellite manufacture, is prepared to allow a broad range of export sensitive satellites to be mated to a Russian launcher. 

Sokol says he can break even on one launch a year but hopes for half a dozen a year. Spacelift has so far spent around $2 million and is chasing $50 million to take the project to first launch stage. Sokol would not reveal how much of the $50 million was locked in, saying only that funding was “very far advanced.” Spacelift could be operational as early as the first quarter of 2001. 

Spacelift has a neighbor at Woomera in the form of the ambitious US$1 billion Kistler Aerospace K1 reusable launch vehicle project. Already 18 months behind schedule and short of the US$500 million it needs to progress its K1 reusable spacecraft to the test flight stage, Kistler is also chasing a piece of the LEO market. Kistler gave a presentation at the 6th Australian Space Development Conference in July where it said that the K1 would be ready for its first test flight 11 months after the company finds fresh capital. Quoting $17 million a launch, Kistler claims it will be the world’s cheapest launch service provider and will plow $45 million into building its spaceport at Woomera.

Also chasing money is the Christmas Island Asia Pacific Space Centre (APSC) run by Korean born David Kwon, who ran a tiling business in Sydney before switching to spaceport development. Kwon is after US$440 million to build his spaceport and says he has Asian, US, Russian and Australian backing, although he declined to name APSC’s partners. Using a Russian built rocket called the Aurora that can lift up to 4.5 tonnes, APSC, will go after the medium to heavy GEO market.  “The market is changing compared to four years ago,” said Kwon. “The LEO market is disappearing, but the GEO market is steadily growing.” 

Kwon said the Christmas Island project has passed its environmental impact study and a band of around 50 mainly Australian and Russian employees were already working on the site with a target of April 2003 for the first launch. Kwon said a “pretty significant” proportion of the US$440 had been secured but refused to quantify how much backing APSC had to date.

Like Kistler, ULSI is also behind deadline on its proposed spaceport for Hummock Island, Gladstone. Work was scheduled to begin mid last year. The company estimates it will cost US$350 million to develop the spaceport and the Russian built Unity lifter that will 

be capable of launching three tonnes into a low earth 

orbit. ULSI is 90 percent  owned by International Space Development of Bermuda, which in turn is majority owned by Thai Satellite Telecommunications Company of Bangkok. The remainder is owned by Projects International Australia. ULSI is after the rapid replacement launch market and believes its system will have launch turnaround times far shorter than current benchmarks.  Despite repeated requests for an interview, ULSI chief John Thomas declined to talk to InformationWeek.

While rocket money may be scarce at the moment and the LEO launch market thinner than expected, all four projects are betting that major bandwidth demand worldwide will drive a plethora of so far unseen telecommunications satellite projects into orbit. 

With luck, their spaceport gambles may turn from long shots to sure bets. 

Stuart Kennedy





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