SOAPBOX
The Myth of Commercial Satellite Remote Sensing
Mark Eustis

   Aself-sustaining commercial market for high-resolution satellite imaging does not exist. Granted, there may well be commercial customers for these data, but there’s less revenue in the open market than is required to support even a single satellite operator . . . or three, for that matter.

   The current state of the satellite imaging business can be compared to Motorola’s Iridium constellation (Figure 1), with an important caveat: Iridium was a truly commercial venture that failed. Commercial remote sensing is effectively a subsidized industry, and must remain so to continue.

   Iridium was designed to serve remote and lesser-developed areas of the world where phone and paging services were either primitive or non-existent. But terrestrial cellular systems came online and drove market prices down before the system launched; once operational, high payback costs forced Iridium into bankruptcy. The multi-billion-dollar constellation sold for a few million, and lives on as a niche service popular with far-flung reporters, aid workers, ocean sailors, and the military.

   As for commercialized remote sensing, a multiplicity of contenders has spent billions in pursuit of a market worth millions (Figures 2, 3 and 4). With significant investment required years before revenue can flow back into the venture, debt service often starts before cash flow. In fact, every company active in the market today has either restructured or found some form of relief by extraordinary means, such as insurance after launch failures, etc. These companies are caught in an age-old dilemma: what they have to sell costs more to make than the market will pay. And no matter how you look at it, you can’t make up that difference in volume.

   Just as Iridium competed with conventional cellular, satellite remote sensing struggles against aerial technologies that are more competitive than pre-launch market predictions had assumed. Although it’s a remarkably conservative trade, leaders in the aerial business are investing heavily in new all-digital technologies . . . and spending hundreds of thousands to advance their technology, not millions. So despite an occasional well-touted win in the commercial markets, satellite companies will continue to find their only meaningful revenue in “subsidy” contracts from the U.S. military and global intelligence communities. Which is fair enough—in the end it’s a lot less expensive to prop up the trade with subsidy contracts than to build anew. Because without assistance, purely commercial providers are likely to forgo follow-on programs just as the intelligence community strengthens its reliance on these systems.

   The National Geospatial-Intelligence Agency (NGA) understands the danger, and is paying for new-generation satellites (WorldView/NextView) to address the situation. More than this, the agency should also substantially increase the minimum amounts guaranteed in yearly data purchase contracts. Survivor companies can then focus on improving services to support their largest and most important customer. As for other federal agencies charged with domestic mapping and security preparedness, they should combine efforts and provide earmarked funds for semi-annual or yearly aerial surveys of the cities, counties, states, and utilities that are the bulk of the “commercial” imaging users. This core segment of the market has decades of experience using aerial services, and has come to expect photogrammetric products and services that cannot be met by satellites.

   No matter how you look at it, we are unlikely to see another high-resolution satellite provider launched any time soon, if ever. Instead, we’re most likely to see the failure and/or sale or merger of those that remain. Frankly, a single operator that combines the spaceborne assets of all three companies is probably the industry’s best chance for future success.

   Regardless of its present or future situation, the aerospace community that pursues these programs has served a

valuable purpose by spending so lavishly in developing a commercial imaging market. The largesse has made investment in new-generation all-digital aerial imagers, computing farms, and automated processing software appear rather more sensible in comparison.

About the Author

   Mark Eustis is a marketing professional with almost twenty years of experience across the geospatial industry. He was part of the original EOSAT commercialization team, has held senior marketing and sales positions at leading GPS manufacturers, helped roll out first-generation Web mapping software, developed automated vehicle location solutions, and introduced an all-digital automated photogrammetric processing system to the U.S. market. Mr. Eustis resides in the Mid-Atlantic area and consults to various geospatial, natural resources, land engineering, and marine-market clients. He can be reached at  [email protected].  

The opinions expressed herein are those of the author and do not necessarily reflect the beliefs of the staff of GITC America. If you wish to comment on this article, please write to [email protected]

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