DFI InternationalWashington, DC

Next-Generation Space Transportation:Six (Hopefully) Interesting Thoughts in 60 Seconds

May 17, 2001

Lori GarverDirector, Space Programs

Prepared for

D F I I N T E R N A T I O N A LNext-Generation Space Transportation

… generating revenue for the industry

Thought #1: It is neither the best of times nor the worst of times

However, future dynamism in the industry is still almost entirely dependent on deployment of commercial constellations

0

2000

4000

6000

8000

10000

12000

1997 1998 1999 2000 2001(E) 2002(E)

$ m

illio

ns

0

20

40

60

80

100

120

140

160

180

1997 1998 1999 2000 2001(E) 2002(E)

# S

atel

lites

Lau

nch

ed

Government/CivilCommercial non-GEOCommercial GEO

Global Satellite Launches (1997-2002) Global Launches Revenues (1997-2002)

Satellites are going up …

Source: DFI International Source: Merrill Lynch

D F I I N T E R N A T I O N A LNext-Generation Space Transportation

Thought #2: It is all relative

CompanyCapex To

Light (Millions) Years to

Complete

360 Networks 31,360$ 39AT&T 23,296 9Sprint 13,440 8Worldcom 16,128 7Qwest 39,424 25Global Crossing 16,128 24Genuity 19,712 41Williams 105,728 123Broadwing 82,432 785Level 3 (Internal) 7,168 3Level 3 (Dark Fiber) 152,320 76

507,136$ 38

TERRESTRIAL FIBER DEPLOYMENT COSTS

Satellite is no longer the black sheep of the

family

$900,000,000

$630,000,000

Iridium

Globalstar

LAUNCH REVENUES FROM IRIDIUM, ORBCOMM, GLOBALSTAR

Source: Level 3, DFI International Estimates

Over $1.5 billion for the launch industry alone

D F I I N T E R N A T I O N A LNext-Generation Space Transportation

Thought #3: Pioneers show us the way

TERRESTRIAL

SPACE

TELECOM GRAVEYARD

RIPRIP

RIPRIP

??

RIP

Industry failures are not only to be expected …

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RIPRIP

RIP

DBC

RIP

DBCRIP

Winstar

RIP

Winstar

RIPRIP

RIP

Aduronet

RIP

AduronetRIP

RIP

??

… but are, in many cases, essential to the development of robust

markets

D F I I N T E R N A T I O N A LNext-Generation Space Transportation

Thought #4: Hey, look down, I see demand

Source: RHK, DFI International Estimates

10

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2000 2001 2002 2003 2004

Ter

abits

/sec

1.75

17.5

175

875

3500

Broadband Multicasting – $14 billion market by 2005 by some accounts; leverages unique one-to many ability of satellites

Digital Cinema – specific multicast application; can provide dynamic improvement in global distribution of major films

Universal Service – providing service to those areas where market economics will never support terrestrial buildout

Route Pioneer – providing services in emerging markets until demand warrants terrestrial buildout

Global Network Demand (2000-2004) Key Commercial Satellite Applications

Demand for connectivity is expected to be

explosive …

… and although terrestrial solutions will dominate, satellites will play a significant role

D F I I N T E R N A T I O N A LNext-Generation Space Transportation

Thought #5: Next-gen launchers need to be three things … reliable, reliable, and more reliable

“Reliability is too important to trade off … [but] capacity could be sacrificed”

-- International Space Agency Program Director

“Reliability is of the utmost importance … a launcher must have a proven track record”

-- Commercial LEO constellation executive

“[We are] willing to trade price for other factors such as reliability”

-- Commercial LEO constellation executive

“The five leading factors that we consider in selecting launch vehicles are reliability, reliability, reliability, reliability, and reliability”

-- Commercial satellite manufacturing executive

… but increasing reliability is also the easiest way to reduce cost to orbit – by

continuing to drive down insurance premiums

Not only is reliability the key decision criteria for satellite operators …

0%

5%

10%

15%

20%

25%

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Satellite Launch Insurance Premiums(1989-1999)

Source: JH Marsh & McLennan

D F I I N T E R N A T I O N A LNext-Generation Space Transportation

Thought #6: Government can be a successful enabler

The Interstate Highway System

cost $329 billion…

… resulting in $1 trillion in economic cost savings

D F I I N T E R N A T I O N A LNext-Generation Space Transportation

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