PARIS (Reuters) - Demand for commercial satellites, launches and related services is booming and looks set to continue despite uncertainties in the newly created market for low (LEO) and medium earth (MEO) constellation satellites.
Analysts say demand for large geostationary (GEO) satellites continues to dominate the market which remains strong ahead of the scheduled December 10 first commercial launch of Europe's new generation Ariane-5 rocket.
Ariane-5 is designed to launch the largest GEO satellites that are planned for operation in the next century.
"The U.S. domestic market represents a huge almost captive market for American satellite manufacturers -- the number of satellites they launch is incredible,'' said Phillip Balaam of the Arianespace rocket launch company.
"In the U.S. market, it doesn't matter how many satellites they launch, they always fill them up. Demand tends to follow supply,'' he told a space transportation conference.
As for Europe, he said: "Virtually all the satellites are full and this is a trend we see continuing in the near future.''
The Asia-Pacific market remains difficult, he added. Financing for satellite projects is returning, confidence is returning but the pace is slow.
"Thank God there is India and Japan. They are the driving force (behind) demand in the region at the moment,'' Balaam said.
Turbulent period
The last 18 months have been turbulent for LEO and MEO satellite constellations for global mobile telephone and data services.
After launching more than 70 satellites into orbit, the satellite phone company Iridium filed for protection from creditors in August under chapter 11 of the U.S. bankruptcy code.
Another company, ICO Global Communications, went bankrupt the same month but won new investment in November from telecommunications pioneer Craig McCaw.
A third company, Globalstar, does not have its telephones ready yet.
"One has to ask the question for the first generation of constellations, 'are they at the right place at the right time?''' Balaam said. "All of the analysts on Wall Street are waiting to see results.''
Internet to drive future
Analysts see strong latent demand for Internet services in the Asia-Pacific region that should boost the opportunities for new satellite projects that currently can't find financing.
The number of Internet users worldwide will surpass 300 million by the end of next year, analysts say. In the Asia-Pacific region there are currently only 15 million users, 10 million of whom are in Japan.
The latent demand for Internet services is slated to emerge when those areas get back the disposable income lost in the Asian financial crisis.
"We don't necessarily know the name of the satellite system that will be launched in 2007 over India or Asia,'' said Rachel Villain, economist for the Euroconsult space consultancy.
"What we do know and try to estimate is the number of transponders (circuits) needed and we see a tripling of the number of satellites to be launched in the next decade,'' she said.
While the number of LEO and MEO satellites will increase in number and mass over the next decade, large geostationary satellites will continue to dominate the market, she said.
In 1998 alone the launch of satellites into GEO was worth an estimated $45 billion dollars -- 58 percent of the market value of all commercial launches.
Commercial satellites dominate
The demand for commercial satellites means they are starting to crowd out the orbits that military and government satellites traditionally use.
For years geostationary satellites dominated the commercial market while governments, particularly the military, launched satellites into other orbits for communications and spying.
Now, Euroconsult estimates, the geostationary orbit is 78 percent commercial, while the military's share is down to 11 percent, the same as that of civilian governments.
In low orbit altitudes, the market is now 70 percent commercial, 23 percent civilian government and seven percent military.
Even the medium-level orbits, long the bastion of Cold War spy satellites, have given way to business clients, with 59 percent of this class of satellite now commercial and the military share down to 36 percent.
"These orbits are now considered by commercial operators as a competitive offering to operate commercial services,'' Villain said.
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