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Satellite Communications Business Plan

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Blue Sky Satellite Communications

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.

Introduction

Blue Sky Satellite Communications CC (Blue Sky) is a communications solutions and satellite service provider in Africa with its operations base in South Africa. The company provides both satellite phones and terminals plus airtime packages customized to the client’s needs.

By focusing on its strengths, its key customers, and the underlying values they need, and the introduction of broadband technology, Blue Sky Satellite Communications will meet the following goals: increase sales to more than $20 million in three years, improving the gross margin on sales to greater than 30%, and improve inventory turnover to eight turns by Year 3.

This business plan leads the way. It renews our vision and strategic focus of adding value to our target market segments: the corporate business and high-end home office users, in our horizontal market. It also provides the step-by-step plan for improving our sales, gross margin, and profitability.

The Company

In 1996, Pedro M G Camacho started “Hyper Parts Com Division” after purchasing a satellite phone from COMSAT. He was so impressed with its abilities and potential that he decided to start his own satellite communications company. In 1998, the firm changed its name to Blue Sky Satellite Communications. It has since had two good years of legal trade, with the prospect of enormous growth. As Pedro saw Inmarsat as a niche market and reacted well to it, the same outlook has been given to VSAT, as it is the next logical step in the development of the satellite communications industry.

Blue Sky Satellite Communications is built on the assumption that the management of satellite technology and the development of broadband services will be the most important step in communication since the invention of the telephone. As a service provider for Inmarsat and VSAT services, we have placed our selves at the forefront of  the most unconnected continent in the world, Africa. Our goal is to create as many links in Africa in the shortest space of time. This is to be achieved by partnering up with local telecommunication companies, be they private or government run.

In order to implement our goals we will focus on the following keys to success; increase Inmarsat airtime usage, develop the VSAT market, increase marketing in Africa, outsource quality services, introduce better value-added services to end user, and maintain and increase customer services.

Blue Sky Satellite Communications is located in Bedfordview,South Africa. It is only 15 minutes from the Johanessburg International Airport, and 15 minutes from Sandton, a suburb of Johanessburg.

The firm presently consists of 4 employees under 1 director. In the near future, the company plans to increase the company size by at least 20 people. The main additions will be in sales personnel, in-house customer support which would run constantly (24-7), and a technical support department. Marketing and promotions are outsourced to specialized firms.

We source our product from different Land Earth Stations and various equipment manufactures. In most cases, we deal directly with the manufacturer and service supplier.

The growth in the use of the Internet for sending messages and other information has made our products and services one of the most sought after commodities around. With the advent of broadband, we expect the growth to be exponential, more and more people and corporations will invest in faster and better communications systems to make them more productive and to show a better bottom line.

The satellite services market is worth an estimated $12 billion in Year 1 for the African and Middle east markets, and there is a projected growth of 20% per year. Blue Sky aims to tap into this market, and expects to be able to capture a 10-20% market share.

The projected market growth for the Telecom’s industry has been one of the most highlighted aspects of new business in the marketplace today. With the coming of age of the new broadband services and the privatization of many Telecom companies (which were previously run by the government), we see that growth is going to far surpass any projection that has been made in the past.

We shall provide our customers with systems that allow them to become more productive through offering two types of hardware. Inmarsat products, such as the Mini-M Sat Phone and the M4 Global Area Network terminal, are poised to maintain a growth pattern over the next 24 months. The re-launch of the Iridium product will also impact the market, and we are in good position to take advantage of this opportunity. The VSAT market has just appeared last year, and the sentiment is that it will grow even further in Year 1 and Year 2.

Blue Sky has a number of local competitors. They provide us with the ongoing determination for the provision of better customer relations. We learn from their mistakes, and have kept a good relationship with them.These companies are : African Satellite Corporation, Pertec International, Grintek Telecom, and Station Africa. In order to successfully compete with these companies Blue Sky has focused on the future trends in the industry to position itself to become the dominate company in this industry. Some of the most important trends are:

To maintain the recurring monthly income in top form, all customers will require maximum attention through strong customer service . The customer service center and the Internet interactive chat will account for many of the solutions offered to customers for fast service.

The most obvious and important trend in the market is declining prices . This has been true for years, but the trend seems to be accelerating. We see the major manufacturers and suppliers putting systems together with amazing specs–more power, more speed, and more bandwidth.   

Another trend is ever-greater connectivity . Everybody wants to get onto the Internet, and every small office wants a LAN. A lot of small offices want their LAN connected to the Internet. It will be the challenge of Blue Sky to offer customized service packages with all the desired features at a competitive price.

The company is focusing on the small and large businesses that need a wide variety of services packages that have lower costs per airtime than other competitors.

Strategy and Implementation

• We aim to emphasize service and support. Blue Sky does not just sell the service to the client and leave it at that. We will communicate with the client on an ongoing basis with important information about the product or service which has been delivered.
• We aim to build a long-term relationship with the customer. As recurring income is the aim of this business, we need to maintain as many clients as is possible. This means that we have to have constant contact with our clients. This is achieved by sending out newsletters and emails so that they are kept up-to-date with all that is happening in the marketplace.
• Focus on target markets. Having a goal and focus on a certain market segment will make Blue Sky successful. As we have been in the business for many years, we understand the constant changes in requirements, and, due to a lean management structure, we are able to make the required decisions on new markets rather quickly and efficiently. This then lends itself to have the necessary focus on the market segment as its’ needs change.

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• Differentiate and fulfill the promise. We aim to be different from other service providers. We want to be the household name in Africa when it comes to satellite services of any sort. We want to provide pre-paid services and rural telephony and get involved in the education of the users and sub-users of our products. We want to meet all our promises and go the extra mile for those who need it most.

Financial Projections

The company expects to earn $62.2 million by year three with a gross margin of 31.7%. Controlled SG&A costs will create a very strong net margin. Over the next three years, the company will be investing $6.2 million in further long-term assets in order to achieve a regional presence in Africa.

1.1 Mission

Blue Sky Satellite Communications is built on the assumption that the management of satellite technology and the development of broadband services will be the most important step in communication since the invention of the telephone. As a service provider for Inmarsat and VSAT services, we have placed our selves at the forefront of  the most unconnected continent in the world, Africa. Our goal is to create as many links in Africa in the shortest space of time. This is to be achieved by partnering up with local telecommunication companies, be they private or government run. In so doing, we can offer all our customers the most legal route to high quality communication wherever they are.

Blue Sky Satellite Communications, bringing satellite communications down to earth.

1.2 Keys to Success

• Increase Inmarsat airtime usage.
• Develop the VSAT market.
• Increase marketing in Africa.
• Outsource quality services.
• Introduce better value-added services to end user.
• Maintain and increase customer services.

1.3 Objectives

• Sales increasing to more than $20 million by the third year.
• Bring gross margin up to above 30%, and maintain that level.
• Sell $4 million of service, support, and training by Year 2.
• Improve inventory turnover to six turns next year, seven in Year 2, and eight in Year 3.

Company Summary company overview ) is an overview of the most important points about your company—your history, management team, location, mission statement and legal structure.">

Blue Sky is an Inmarsat-based company with a new focus for the broadband market and is well position so to be able to fulfill this objective. By means of marketing during the previous two years, Blue Sky was able to expand its market share by 20%. We plan on improving on this figure in Year 1.

2.1 Company Ownership

Blue Sky was legally registered in 1998 when it became apparent that it had grown too much to continue to be overlooked by the authorities. It was the foresight of Pedro M G Camacho, the sole owner and only member of the corporation, to start offering Inmarsat services in 1996.

2.2 Company History

In 1996, Pedro M G Camacho contacted COMSAT in the USA for the purchase of a satellite phone, via the Internet. The said phone was sent and two weeks later he was contacted by COMSAT. It was then that “Hyper Parts Com Division” came into being. In 1998, it changed its name to Blue Sky Satellite Communications. It has since had two good years of legal trade, with the prospect of enormous growth. As Pedro saw Inmarsat as a niche market and reacted well to it, the same outlook has been given to VSAT, it is the next logical step in the equation. The Year 1 will indeed be an odyssey.

2.3 Company Locations and Facilities

Products and services.

• Inmarsat Services ( Telenor, France Telecom, Stratos, Singapore Telecom, Comsat).
• VSAT services (Red Wing, ACC).
• Lease procurement.
• Logistical services.
• Thrane & Thrane
• Paradise Data Modems

3.1 Competitive Comparison

Blue Sky does have competitors. They provide us with the ongoing determination for the provision of better customer relations. We learn from their mistakes, and have kept a good relationship with them.

These companies are called: African Satellite Corporation, Pertec International, Grintek Telecom, and Station Africa. These are the local companies that also provide satellite communications.

3.2 Fulfillment

We source our product from different Land Earth Stations and various equipment manufactures. These have all been mentioned already. In most cases, we deal directly with the manufacturer and service supplier.

3.3 Technology

3.4 future products and services.

The future of Global Mobile Personal Communications via Satellite (GMPCS) has to be hand-held units. Although these have been plagued by some failures, the new Iridium company may just be what the industry needs. The new Gallium Nitride (GaN) terminal from Inmarsat that will deliver 128Kbps and the new broadband services from Inmarsat in 2004 will see the VSAT of today shrink in size and price.

Service in the future will be the most important aspect of the business. To maintain the recurring monthly income in top form, all customers will require maximum attention. The customer service center and the Internet interactive chat will account for many of the solutions offered to customers for fast service.

Market Analysis Summary how to do a market analysis for your business plan.">

The satellite services market is worth an estimated $12 billion in 2001 for the African and Middle east markets, and there is a projected growth of 20% per year. Blue Sky aims to tap into this market, and expects to be able to capture a 10-20% market share.

Inmarsat products, such as the Mini-M Sat Phone and the M4 Global Area Network terminal, are poised to maintain a growth pattern over the next 24 months. The re-launch of the Iridium product will also impact the market, and we are in good position to take advantage of this opportunity. 

The VSAT market has just appeared in 2000, and the sentiment is that it will grow even further in 2001 and 2002. We already have a number of proposals in the market which should materialize in the new year.   

4.1 Market Segmentation

In the satellite hardware industry we find that Inmarsat products are currently the entry-level equipment. The sales in this type of product have historically been very good. However, these will taper off as new and smaller phones from Global Star and New Iridium hit the market. VSAT is an expensive product and is proprietory to a satellite, as is Inmarsat and Iridium. Although the sales in this VSAT market are fewer, the margins are large enough to justify the time and effort, the monthly recurring income is there, and most of the time, part of the usage is pre-paid for several years in advance.

Airtime customers are those that we take away from other service providers by offering lower rates on their current airtime. At times we will sell at cost just to keep up the volume so we make the profit from the discount the networks give to us. 

4.2 Target Market Segment Strategy

Our choice of target markets is strategic. We assume that it reflects our strengths and weaknesses. We are not selling to the self-reliant users, because they buy equipment as appliances based on features and price. Instead, we are selling to the service-seeking users whose needs match our strengths and weaknesses.

Regarding the small business segment, we are looking for the types of small business that appreciate our value-added services enough to pay for them, but aren’t big enough to have experts in-house, on payroll or staff.

4.2.1 Market Trends

The most obvious and important trend in the market is declining prices. This has been true for years, but the trend seems to be accelerating. We see the major manufacturers and suppliers putting systems together with amazing specs–more power, more speed, and more bandwidth.

Another trend is ever-greater connectivity. Everybody wants to get onto the Internet, and every small office wants a LAN. A lot of small offices want their LAN connected to the Internet.

4.2.2 Market Growth

It must be seen as one of the fastest growing market segments in business today. The recent mergers and takeovers are a small taste of what is waiting to happen. 

4.2.3 Market Needs

Since our target market is the service seeker, the most important market needs are support, service, training, and installation, in that order. One of the key points of our strategy is the focus on target segments that know and understand these needs, and are willing to pay to have them filled.

Strategy and Implementation Summary

5.1 competitive edge.

Our competitive edge is our positioning as a strategic ally with our clients, who are clients more than customers. By building a business based on long-standing relationships with satisfied clients, we simultaneously build defenses against competition. The longer the relationship stands, the more we help our clients understand what we offer them and why they need it.

5.2 Sales Strategy

• We need to sell the company, not the product. We sell Blue Sky Satellite Communications, not Inmarsat, Iridium, Gilat, Thrane & Thrane, or Nera, or any of our airtime providers names.
• We have to sell our service and support. The hardware is like the razor, and the support, service, software services, training, and seminars are the razor blades. We need to serve our customers with what they really need.

5.2.1 Sales Forecast

The sales chart and table summarize our ambitious sales forecast–we expect sales to increase.

Management Summary management summary will include information about who's on your team and why they're the right people for the job, as well as your future hiring plans.">

Blue Sky is owned and operated by its founders. It is a small company with a minimum command hierarchy and a maximum of community spirit and cooperation. Despite the loose style, we are still organized by function, and the business is done with logic and order.

6.1 Organizational Structure

The team consists of 4 employees under 1 director.

Our main focus is on sales and efficient billing. Marketing and promotions are outsourced to specialized firms.

6.2 Personnel Plan

The plan with the personnel is to increase the company size at least 20 people. The main additions will be in sales personnel, in-house customer support which would run constantly (24-7), and a technical support department.

Financial Plan investor-ready personnel plan .">

The most important element of the financial plan is to have enough cash to be able to implement all the concepts of Blue Sky. This is not like any other conventional business, where stock turnover is the key factor. Here we look at selling as much hardware as possible to be able to increase the amount of airtime sold. The main revenue comes from the margins on the airtime.

7.1 Important Assumptions

The assumptions in the following table are thought to be key to the success of Blue Sky.

7.2 Key Financial Indicators

The chart below shows the benchmarks for the company.

7.3 Projected Profit and Loss

Blue Sky’s projected profit and loss statement is found in the table below. For a monthly projection, please see appendix.

7.4 Projected Cash Flow

The cash flow projections for Blue Sky are found in the chart and table below. We will use a $3,000,000 line of credit to finance inventory purchases.

7.5 Projected Balance Sheet

The table below shows Blue Sky’s balance sheet.

7.6 Business Ratios

The following table contains ratios from the communication services (4899) industry, as determined by the Standard Industry Classification (SIC) Index.

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The Business of Space

Business Plan Article #2: Satellite TV

An accidental victim of internet streaming services.

Concept Overview

Strategic factors, technical factors, tactical factors.

Satellite Television utilizes spacecraft to provide broadcast services to rural areas. The satellite design is driven by the comms link equation and the power generation required to broadcast, leading to a trend towards large, geostationary satellites providing coverage to broad swathes of the surface. It’s a declining market, with negative CAGR and entrenched and experienced incumbents. In general, it’s good to understand the tech and business, but it doesn’t seem to be particularly lucrative.

Satellites as a communications relay has driven much of the commercial space industry from its inception, and satellite television became the lynchiping driving launch in the 1990s. The ubiquitous satellite TV antennas are ever present, especially in areas far from existing communications infrastructure. Satellite TV effectively use satellites in geostationary orbit, which appear to be effectively ‘fixed’ in the sky as they orbit at the same rate as the Earth rotates. Sitting directly above us, they can broadcast radio waves to large swathes of territory below them. Customers utilize parabolic antennas pointed at a fixed location, closing the communications link and providing customers with a wide array of channels. Communication is ‘one-way’ in that encrypted data is sent from the satellite down to customers, but customers don’t transmit back to the satellite.

Satellite TV Dish and (2) DirectTV Boeing Satellite

Although satellite television is an ingenious way to distribute data, satellite TV is a declining industry. Substitutes in the form of cable television and broadband internet are eating into the market size, and the l ast television satellite may have already been launched. Even with this said, satellite television is one of the largest parts of the space economy and must be considered a lynchpin of our modern space era.

History and Facts

The first communications satellite was called Syncom II, and was launched in 1963, but it wasn’t until 1978 when it was first used to broadcast television. In the 1980s, cable and communications fiber was not as prevalent and direct to home satellite television was a very competitive technology. Originally, television signals were broadcast unencrypted, meaning anyone could watch for free.

The two primary competitors in the market emerged after the industry began to start to encrypt signals, leading to the subscription business model.  Direct TV was founded in 1994, and DISH network in 1996.

25 years later, satellite television is in direct competition with ground-based communications infrastructure and internet streaming services. It’s an industry that drove the launch market for 20 years, but has entered a decline.

Ultimately, customers are driven by a desire for the entertainment value of the data delivered by satellite television. The satellites and customer receivers are relatively undifferentiated, although there are some differences in quality and dish size. But content mix and availability often are the key business drivers, and the satellite and receivers are considered simply underlying infrastructure as opposed to a core capability.

Satellite television customers typically sign up for a monthly contract, which provides them a receiver dish with a decrypter to decipher the satellite television signal. Customers are typically individuals, although businesses and the government also make some purchases. Given the entertainment purpose and how undifferentiated the service is, sales is about marketing and consumer sales, as opposed to typical B2B operations.

The service value is significantly higher for customers in rural areas where cable infrastructure hasn’t been laid. Life Time Value (LTV) of customers can be considerable, with DirecTV generating about $3,000 on each customer. Pricing starts at about $70/month , although plans can go up significantly with additional services. Customers are in decline, with DirecTV losing 4.7 million customers between 2017 and 2019.

Total Addressable Market (TAM)

Satellite TV claims one of the largest total market sizes at $115B. With that said, current CAGR is -3.3%. 

Source: Grand View Research ( Link )  

Also of note is that most of that $115B is not paying for the space distribution services, but simply goes right out the door as COGS for the content distributed. This leads to an ‘adjusted’ market size of $34B of the value of providing the distribution by satellite.

Adjusted Space Market Size (for ‘space services’ performed)

Although satellite television is effectively simple wireless data distribution, there area some key additional factors to consider.

Content Resolution Quality - Signals have moved from analog to digital, and from standard definition (SD) to High Definition (HD) to Ultra High Definition (UHD). As customer television displays increase in resolution, providing high density data streams also becomes important

Customer Receiver Dishes - Large satellite television dishes allow lower power (and cheaper) transmissions, but they are also considered an eyesore

Geographical Distribution Per Satellite - Television satellites typically sit in geostationary orbit, effectively sitting over a spot on the equator.  Different geostationary spots have different population densities underneath. A satellite over the mid-Pacific has much less valuable territory than over Africa and Europe.

Content Packaging - Ultimately, content choice and selecting the right content mix is critical for customer adoption and retention. Exclusive deals and targeting channel selection to customer niche is nuanced but critical

Spectrum Licensing - Spectrum is a limited resource, and regulated tightly by the FCC in the USA and the ITU worldwide. Spectrum licenses are often dependent on delivering satellites to orbit on a timeline.

There are a host of complex factors which must be addressed by any organization operating a satellite television service, and jockeying in the market can be fierce given the relatively undifferentiated market.

Competitive landscape

In North America, satellite television companies have primarily consolidated into two competing brands

DirecTV - An El Segundo based company with 16 million customers with 12 geostationary satellites in orbit, ranging from the 95° to 119° orbital slots, providing heavy coverage of North America. DirecTV is a product of Hughes Electronics, which utilized new military satellite dish technology in 1994 and provided some of the first in-flight entertainment.

Dish Network - (an acronym for DIgital Sky Highway) A Denver based company with  6 leased geostationary satellites in orbit, ranging from 77° to 119° orbital slots. The company was formerly Echostar Communications Corporation.  They have 11 million customers, but are losing customers at a rapid rate.

This is effectively a duopoly fighting over a shrinking market. Oversupply and sophisticated techniques learned over 30 years will make this a very challenging market to enter into.

Substitutes

Satellite Television is content delivery, and we live in an age of ever expanding connectivity and an endless sea of content. Online streaming services have had a huge impact on the market, and effectively enabled any connected device to become a substitute to satellite television.

Cable - The historic substitute for satellite television was cable television. The high cost of laying cable prevented extension to many areas, but over the last few decades communications infrastructure has continued to expand

Broadband - The internet changed things, and cord cutters are eliminating television in favor of internet connectivity

Cellular - Terrestrial cellular has put a television in everyone’s pocket, often for a lower monthly cost than satellite television

Satellite Internet - Historic constellations such as O3B and Viasat provide internet to the most rural customers, and the new SpaceX and OneWeb constellations are expected to deliver high speed, low cost internet to even the most distributed locations, eliminating one of the key advantages of satellite television

Satellite TV is in a secular decline , primarily due to the rise of streaming services on broadband. Customer count peaked in the early 2010s, but just like the newspaper its on it’s way out.

Complements

Complements are limited, but the expansion of television adoption throughout the world provides more demand for satellite television. Without the television displays, the satellites don’t have a lot of value. In addition, as programming quality improves the value of the satellite television service also grows, although it’s debatable whether a supplier can also be a complement.

An almost ‘anti-complement’ are streaming services such as Netflix, Disney+, and HBO. These services are adding value to broadband in relation to static satellite television streaming.

Satellite television operators typically act as marketing and financing intermediators, pulling together the equipment and data they need to deliver to end customers.

Content Providers - The content on the delivered channels are provided by suppliers and owners of content such as HBO , ESPN , etc. This is typically the greatest cost and the primary cost of goods sold for providers.

Satellite Manufacturers - Ultimately, geostationary satellites are highly expensive, precise equipment. Satellite manufacturers are critical as a large cost driver (equipment cost) and quality impacts depreciation timelines. Examples include Astranis , Maxar, Lockheed Martin, and Airbus

Launch Providers - Getting the satellites into space is also a challenge, and geostationary orbit even harder. SpaceX is changing the game, but ULA , Arianespace , ISRO , and Chinese launchers are available

Moat / Barrier to Entry 

Satellite television providers have minimal moats, but the expense of launching and operating a  satellite, installing receivers at customer sites, and setting up programming contracts is already a daunting endeavor.

Switching Costs - Satellite television providers typically attempt to lock in customers with long term (year long) contracts.  In addition, installed equipment can be challenging to switch

Product Complexity - building and operating satellites is complex and building a team that can execute is challenging, leading to some barriers to entry

Regulatory - Spectrum licenses and Geostationary orbit slots are regulated and limited, and new entrants may need to wait years for spectrum licenses or slots

Ultimately, the lack of moats has led to two relatively undifferentiated providers who compete closely on price.

First of all, how does this technology and product actually work?

Satellite TV Diagram

Content is sourced and compiled into channels on servers at headquarters (1) then passed to a communications antenna (2) which passes the data to the geostationary satellites comms antenna (3). The satellite then relays that data out its broadcasting antenna, which broadcasts (4) the data out to customers with the corresponding satellite dishes (5).

Governing Equation: Communications Link

The communications link equation is the governing equation for satellite design. Specifically, the power requirements to broadcast from such a long distance drives satellite size and costs, and the size (and cost) of the satellite is reflected.

Equation 1. Comms Link Equation (fractional form)

Equation 2. Comms Link Equation (deciBel form)

Ptin dB = Eb /N0 -Gt-Gr+20log(4d/)-10log(sin2(Beta))+1-log(kTs)+10log(R)

This is a bit too complicated to explain in this article, but I’ll walk through an example in the attached workbook. See wikipedia for more of a deep dive. But ultimately, we can see some general trends as power below. With power as the underlying free variable,

Higher required signal to noise ratios require more power

Higher antenna transmitter gains require less power

Longer distances require more power

Higher frequencies require more power

Higher data rates require more power

Wider Bandwidth requires less power

On-Orbit Power Production

Electricity production is a primary driver for satellite size and cost. Power is produced via solar arrays, with wide wings extending and actuated to point towards the sun, maximizing power production.

Lockheed Martin 2100 Bus with extended Solar Arrays

Typical power production for different solar cell technologies is shown below.

Source: New SMAD 2018, James Wertz, David Everett, Jeffery Puschell, pg 648

Customer Receiver Dish

Customer receiver dishes are typically small (~0.5m) parabolic dishes which are located on a roof or on a pole near the house. They typically need to be installed by a technician, and need to have a clear line of site towards the geostationary satellite.

Example dishes outside the Bay Area

After reviewing the overall strategic landscape of commercial imaging and the technical factors which feed into developing the service, I want to review a few tactical challenges and emerging trends.

Challenges 

Geostationary slots - Each geostationary C-band satellite needs to be spaced 2° longitude from the next satellite to avoid interference; for Ku the spacing can be 1°. This means that there is an upper limit of 360/2 = 180 geostationary C-band satellites or 360/1 = 360 geostationary Ku-band satellites

Spectrum allocation - transmission spectrum is tightly controlled by the FCC and the ITU, leading to expensive licensing costs and limited availability.  Securing spectrum is a challenging and critical part of any space endeavor, but especially with satellite broadband.

Weather interference and atmospheric loss - different frequencies have different sensitivities to atmospheric conditions. Water content in the atmosphere can have a significant impact on broadcasts.

Market Trends 

There are a few key trends that are changing the satellite television market, and any endeavor should take them into account.

Changing consumer tastes - internet streaming services have become the primary competition, and pay-tv subscriptions are on the decline.

Emergence of LEO - lower costs and better electronics technology has allowed Low Earth Orbit constellations and phased array antennas to provide lower latency and high-throughput communications services to rural customers.

Increasing capabilities in satellites - As spacecraft technology advances, more capability can be fit onto spacecraft, allowing lower costs and higher throughput in the underlying equipment.

Satellite Television is not a static market, and new entrants may take advantage of the shifting landscape to gain an advantage.

With all the above data and notes, I’d like to walk through an example of a single satellite. This is a highly simplified example, and the economics are incredibly dependent on some very rough assumptions. This article will be supplied with a workbook , so that readers can explore parameter sensitivities and utilizing their own inputs.

Example: Build a single satellite to provide satellite data to Latin America (i.e. Brazil)

This is anchored in a DirecTV satellite utilizing the LM2100 bus .

I have a specific process to build out the model, as below.

Determine power required based off comms link budget assumptions

Estimate spacecraft mass

Use the spacecraft mass to determine equipment costs

Make estimates about customer count and pricing

Estimates COGS content costs

Estimate overhead

Estimate interest and depreciation from constellation costs

Produce a simplified income statement

The below sections are pulled from a workbook in google sheets here , which you are welcome to copy and modify.

Section 1. Determine Power Requirements 

This is a bit dense, but to walk through what’s going on here:

Estimate various parameters typical to satellite television broadcasting

Convert them into decibel terms and back up required broadcasting power

This allows us to determine the driving design parameter, which is power production.

Section 2. Estimate Spacecraft Mass

With required power production, we can calculate expected solar array size and mass. With this value, we can utilize typical mass fractions from New SMAD (the design guide for spacecraft), to estimate total spacecraft mass.

Section 3. Estimate Spacecraft Costs

With this mass value in hand, we can estimate the cost to build and launch the vehicle.

Section 4. Estimate Revenues

We calculated land coverage by the satellite broadcast in section 1, and now with some estimates we can determine steady-state customer count, pricing, and expected revenues.

Section 5. Estimate Cost of Goods Sold (COGS) 

The two primary COGS are the custom receiver dishes and the content costs. I estimate the content costs from DirecTVs annual 10ks, while the install cost of the dishes I estimated with some estimates around dish lifetime and cost to install.

Section 6. Estimate Overhead

Overhead for this operation includes typical satellite operations, but marketing and content sourcing is also a big part of the operation.  I tried to estimate customer acquisition costs and lifetime, then back out marketing costs to keep that steady-state customer count. There is also some expected annual insurance premiums that have a material cost.

Section 7. Estimate interest and depreciation costs

With satellite costs in place, we can estimate depreciation and interest. Geostationary satellites are typically built more conservatively, driving the 10 yr lifetime.

Section 8. Simplified Income Statement

With all that said, these estimates lead to a barely break-even model. Many of the parameters (LTV / CAC, content costs, etc.) are more consumer and IP focused and outside my area of expertise, but tentatively this looks like a challenging business.

Sensitivities

This business model is highly sensitive to 

Content Cost

Customer Density

Broadcast antenna design

Marketing costs

There are quite a few unknowns in this rollup, but hopefully this can provide a solid starting framework for anyone interested in this method of making money by putting things in space.

The intent of this article was to walk through a key part of the space market, and a driver of the launch industry for the 2000s and 2010s. That said, this is a declining market with powerful and established incumbents, and consumer tastes are shifting away from this technology. In short, satellite television is a dead-end business, although it will continue to provide value to its declining customer base for decades to come.

Ready for more?

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Satellite business models to grow your revenue

As a broadcaster, you must ensure that you reach all potential viewers consistently and generate revenue. A critical element to this is the strategy you choose to offer your services to your viewers - also known as the business model. Good business models help you gain more viewers and generate the most value from them, while bad business models are a liability that discourage customers and disrupt your cash-flow. A scary prospect - but something which can be rectified by partnering with the right company who knows how to help you. Eutelsat understands the issues that broadcasters face today and can guide you from ‘future worry’ to future-proof.

Distributing your Content via Satellite

The biggest advantage of satellite for broadcasters is its unique reach.  No matter how developed or underdeveloped the infrastructure is in a region, satellite distribution enables broadcasters to reach all audiences in their target market.

Direct-to-home (DTH) satellite broadcasting distributes satellite signals from high powered geostationary satellites to small dish antennas and satellite receivers in homes. Strictly speaking, this is one of the more direct modes of distribution when we refer to satellite TV.

However, satellite distribution also reaches huge audiences indirectly, by feeding cable and IPTV platforms. Indeed, cable and IPTV operators who offer linear TV channels to their subscribers often use satellite delivery to feed their network head-ends. For cable and IPTV operators, the cost of receiving satellite feeds is generally marginal, and it’s the quickest way to reach operators in a market where time-to-market is crucial.

There are three principal reception modes: pay-TV, free-to-view (FTV) and free-to-air (FTA). Pay-TV  and FTV content are encrypted and broadcast using a subscription model, for viewers to access and view using a set-top box with a smart card and conditional access system. Free-to-Air channels are unencrypted and available to anyone with a satellite dish pointed to the satellite and a set-top box.  

Satellite Business Models

Integrating pay-dth platforms  .

Pay-DTH channel platforms are digital multi-channel pay-tv platforms, like DSTv and Canal+.

The potential with integrating pay-DTH platforms continues to be immense. It is historically one of the most relied upon technologies with viewers fully understanding the advantages that come with paying for DTH - premium content, better quality, and a wide range of channel options. For broadcasters, this is an excellent opportunity to ensure they increase their channel’s visibility, find more viewers and gain more advertisers.

Integrating Multiplexes

Multiplexing is a means of sending multiple signals or streams of information over a communications link at the same time. This forms a single, complex signal used by networks to optimise bandwidth usage and costs for customers. About 87% of non-pay-DTH platforms are distributed through multiplexes - as such, they are already well-established. Multiplexing can thus enable broadcasters to offer their services at a lower rate thanks to the bandwidth savings, a great option for new broadcasters to access new markets.

Examples of available multiplexes to integrate include:

Digital terrestrial television (dtt).

In many developing countries, DTT is one of the primary means of distributing broadcast video content - as such, it should be considered when developing a digital broadcast strategy.

Channels are received at the network headend and redistributed to subscribers. For viewers in areas where head-ends are deployed, access is easy and there is a reliable stream of content.

Eutelsat Digital Platforms (EDPs)

For TV channels distributed individually, EDPs give broadcasters immediate reach to the large, established audiences available via satellite , without the need to invest in multiplexing facilities. These full turnkey services offer a cost-effective entry point to satellite networks, while enabling broadcasters to keep full control of their content.

As a broadcaster, investing in the integration of available multiplexes means investing in a wider reach and greater accessibility for your viewers.

Satellite Business Model Options to Drive Revenue

There are a few options to consider when it comes to driving revenue:

Advertising

Advertising is one of the key forms of revenue for FTA/ FTV broadcasters and Pay-TV operators. However, this can get tricky when you need a substantial audience in order for advertisers to invest. As such, technology and volume are the key points for broadcasters to leverage.

Satellite excels at reaching a wide range of audiences across various levels of challenging terrain.  In particular, local advertising costs tend to be higher than national advertising costs, which has probably allowed satellite operators to better leverage their national presence with more cost-effective national advertising.

Eutelsat’s Sat.tv is one such example of technology that assists Free-To-Air broadcasters with advertisers. It helps broadcasters get discovered by audiences by increasing their visibility with regionalised advertising, consistent channel presentation and more.

Subscriptions

Subscription broadcasting is a service where customers pay a recurring fee for their channels. The subscription service model is flexible. Pay-TV operators can tailor their offers according to audience usage or the TV channel content available.

Subscription advantages lie in viewer retention and an effective means of keeping track of customer needs and ROI. Moreover, the subscription option allows pay-TV operators to have consistent revenue.  

Effective Strategies for Satellite Business Models

By following the above business models, you can create an effective strategy that will generate more revenue and growth for your company. However, Eutelsat understands that you may not have the tools, time, or technology to do it yourself.

That is where we come in - as a leading satellite operator , Eutelsat is able to understand and anticipate your needs, and help you build a sustainable business model that will ensure a successful future for your business.

Satellite broadcasting is a tremendous opportunity for broadcasters to invest in a business model that will ensure long-term reach and revenue growth. Contact us today and we can help you discover which strategy would best suit your channel to help you grow faster and become more profitable.

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Economics and Financing of Communications Satellites

• Reference work entry
• Cite this reference work entry

• Henry R. Hertzfeld 4  

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The economics and financing of satellite communications is a very large and complex topic. It ranges from normal business planning, analysis, and investment financing, to issues of government policy, dual-use technologies, and national security and defense. Commercial satellite systems represent a special case of economic analysis since such systems are heavily dependent on a government market that is focused on political considerations of budgeting and regulation. Today, satellite telecommunications systems are critical to almost all nations of the world, and they are especially important in the approximately 60 nations that have domestic launch and/or satellite operations capabilities. This chapter will specifically focus on four topics: (1) a summary of the economic characteristics of the industry and a review of major trends in the industry, (2) a summary of the elements of a business plan for satellite telecommunications, (3) an analysis of issues in the manufacturing productivity for satellites and an analysis of commercial satellite manufacturing compared to government satellites, and (4) a brief discussion of future cost considerations including the increasing risk of space sustainability, insurance, and rules concerning disposal of satellites after their useful lifetime.

• Auction of spectrum
• Commercial satellite systems
• “Dual use” of satellite networks
• Investment financing
• Launch costs
• Manufacturing
• Market sectors
• Operating and capital costs of satellite networks
• Satellite services
• Size of markets
• Telecommunications
• Video services

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R.E. Bitten, D.A. Bearden, D.L. Emmons, A quantitative assessment of complexity, cost, and schedule: achieving a balanced approach for program success. Sixth IAA international conference on low-cost planetary missions, Kyoto, 11–13 Oct 2005

Google Scholar  

W.M. Brown, H. Kahn, in Long-Term Prospects for Developments in Space ( A Scenario Approach ) (Hudson Institute, New York, 1977). NASW-2924, 30 Oct 1977

T. Coonce, J. Hamaker, H. Hertzfeld, R. Bitten, NASA productivity. J. Cost Anal. Parametrics 3 (1), 59–73 (2010). Society of Cost Estimating and Analysia – International Society of Parametric Analysis

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Futron Corporation, 2010 Futron Corporation State of the Satellite Industry Report 2010, sponsored by the Satellite Industries Association, http://www.futron.com/resources.xml#tabs-4 . Accessed 29 May 2011

Futron Corporation, 2010 Futron forecast of global satellite services demand – overview, http://www.futron.com/resources.xml#tabs-4 . Accessed 29 May 2011

Futron Corporation, 2010 Telecommunications report, http://www.futron.com/resources.xml#tabs-4 . Accessed 29 May 2011

M.J. Mechanick, The Politics of the Establishment and the Eventual Privatization of the Three Major International Satellite Organizations , White & Case, LLP, February, 2011, (unpublished manuscript)

J.N. Pelton, P. Marshall, NASA’s Unsuccessful X-Projects, Space Exploration and Astronaut Safety (AIAA, Reston, 2006), pp. 149–178

Satellite Industries Association: Satellites 101, http://www.sia.org/satellites.html . Accessed 20 May 2011

Further Reading

R. Burkhart, in Economics of Satellite Communications. AIAA, Papers and Proceedings, 2000

D. Cavosa, Satellite Industries Association, COMSTAC presentation (2004), http://www.sia.org/present.html . Accessed 29 May 2011

European Satellite Operators Association, Economics of satellites, http://www.esoa.net/Economics_of_satellites.htm . Accessed June 2011

B. Henoch, Satellite technology basics, March (2007), http://www.sia.org/present.html . Accessed 29 May 2011

Z. Szajnfarber, M. Stringfellow, A. Weigel, The impact of customer–contractor interactions on spacecraft innovation: Insights from communication satellite history. Acta Astronom. 67, 1306–1317 (2010)

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Prof. Henry R. Hertzfeld

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Hertzfeld, H.R. (2013). Economics and Financing of Communications Satellites. In: Pelton, J.N., Madry, S., Camacho-Lara, S. (eds) Handbook of Satellite Applications. Springer, New York, NY. https://doi.org/10.1007/978-1-4419-7671-0_9

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The Bottom Line

Home > The Bottom Line > Turning the Satellite Business Model Upside-Down

Turning the Satellite Business Model Upside-Down

November 7, 2018

The traditional satcom industry can be argued to be entering its third transition phase, after the FSS video boom until 2010 and the HTS influenced pricing decline more recently. With languishing growth in 2018, alongside declining EBITDA margins and backlog, the operator industry remains uncertain on video, while debating on the merits of going fully downstream in the long term. Several factors such as high regional competition, video demand absorption through higher compression, supply-demand mismatch impact on pricing, pressure from OTT, and commoditization of capacity have driven the market to a stagnation point. However, no trend is bigger than the continuous manufacturing innovation to pack more Mbps per unit of million dollars cost. By pushing CAPEX per Gbps to ever more efficient levels, operators are able to undercut competitors on lease pricing, forcing many to sell at or below break-even profit margins, creating a zero-sum effect overall.

Industry’s 3 rd Transition

While, indeed, the innovation looks promising to take the satellite industry more mass market in the longer term, this transition has brought into the limelight two clear strategies that operators look to execute:

• Give Broadband to All – direct to home, via backhaul for village Wi-Fi, to air, sea and land mobility. Go mass market through service offerings, with extreme efficiencies both on capacity and modem/antenna
• Consolidate FSS via regional market positioning, increase margins, enter a limited HTS play specializing towards a vertical

At the heart of these strategies is the relative competitiveness of each player, where irrespective of the service offering, an ability to bottom out capacity pricing (at >15% IRR) remains key. This is achieved by having the lowest Break-even fleet wide pricing* (pricing at zero profit margin) in both FSS and HTS fleets – essentially packing more Gbps at the same cost, alongside reduced launch costs.

This constant decline of CAPEX cost has a significant rollover effect on the entire ecosystem, as older fleets can’t cope with pricing pressure from new/efficient fleets, consequently reducing planned 15-year IRR margins. This, in turn, reduces cash on hand for longer term replenishment, creating higher Net debt to EBITDA than anticipated and an indecisive 15-year outlook on pricing stability. Metaphorically, this is a circle of doom that many operators may not escape in the long term, even as service offerings stabilize the market in the short to medium term.

In addition, with supply exceeding 4-5x times that of demand in 2027 (in combination with potential LEO constellations), another race to the bottom for pricing is expected to ensue, rendering several individual satellite assets to under-perform. With C-band already affected, fixed data and video distribution applications look most stressed in the medium term, while pricing for backhaul and consumer verticals declines at low double-digits in a bid to go mass market.

Thus, as a must pivot, NSR believes the satcom industry will witness a renewed fleet innovation and business strategy to match CAPEX spend with long term sustainability. The Break-even metric indicates the risk of betting on a fixed vertical/geography for 15 years, when in the next 5 years – CAPEX per Gbps thresholds can be broken again, rendering the satellite asset toxic. Thus, as the CAPEX cycle ends between 2019-2021 for most operators, and free cash flow (FCF) increases, both HTS mass market and FSS consolidation strategy options will be on the table. But more importantly, operators will need to consider launching flexible payloads catering to most demand verticals and changing beams, frequencies, distribution channels and VAS on the go. Consequently, consolidation becomes key to succeed in such a strategy.

Secondly, reliance on high fill rates, 18% IRR margin, >75% EBITDA margin and 10% ROCE will shift to strategizing high ARPU, plug and play distribution partnerships and cross-vertical selling between operators or service providers. This divergence from a pure play lease model to a network and vertical agnostic user-oriented play can flip the 15-year satellite business plan as we witness today.

Bottom Line

From higher vertical specialization to unbundling, from pure play lease to bundling network, content and entertainment services and from commoditization to mass market flexibility – the industry is witnessing a key change: accurate prediction of IRR over a 15-year horizon is impossible. Under-performing assets are a liability in space due to tighter replenishment cycles, and without innovation towards fleet flexibility, capital investment in this industry could become riskier. Beam flexibility and a network + application agnostic platform demands plug and play distribution channels, that in turn force partnerships into mergers in the long term – producing clear winners and losers. Coupled with a shorter IRR horizon, the traditional satcom business model is surely transforming.

* Break-even pricing is a proprietary NSR metric introduced in Satellite Industry Financial Analysis, 8 th Edition , that ties in the entire value chain of the industry – from the effectiveness towards manufacturing and launch cost, SG&A in a business model of selling MHz, operator’s cost of finance and impact towards 15-year IRR, and eventually business model of selling Mbps through inclusion of ground system costs. Representative of zero-profit margin, Break-even pricing is calculated in terms of $/MHz/Month or $/Mbps/Month. This metric enables an industry entrant (per geography or application) to analyze the toughest possible competition in the short-to-medium term, and the consequent measures needed to reduce the cost for pricing lower than the competitor. The metric provides a unique way to future-proof the satellite operator business .

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Commercial Satellite Communications Solutions on Multiple Award Schedule (MAS)

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In general, you cannot buy satellite terminals under the COMSATCOM SINs unless equipment is included as part of the subscription services price. You can buy equipment under SIN 33411 , including equipment required to ensure compatibility and connectivity with a contractor's network.

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Home » 5G Magazine » Satellite Connectivity and NTN | 5G Magazine, Nov 2023 Edition » Satellite Constellations and the Design of Future Networks

Satellite Constellations and the Design of Future Networks

• 5G , 6G , Satellite & NTN
• By Hema Kadia, TeckNexus
• Last Updated: March 16, 2024

Reaching New Heights | An Introduction to Satellite Constellations

Satellite constellations represent an advanced network of satellites strategically distributed across different orbits to achieve comprehensive global coverage. They are designed to work together as an integrated system, overcome the limitations of single satellite networks, and play a crucial role in enhancing global communications. The structure of a satellite constellation depends primarily on the mission requirements, which may vary from Earth observation meteorological studies to telecommunications. In the context of telecommunications, they offer an important infrastructure that allows for high-speed data transfer, uninterrupted communication services, and extended connectivity.

Satellite constellations are generally classified into three categories based on their orbital altitude – Geostationary Earth Orbit (GEO), Medium Earth Orbit (MEO), and Low Earth Orbit (LEO). Each of these constellation types has specific characteristics that impact network design and performance, thereby playing a crucial role in meeting the diverse communication needs of our connected world.

Geostationary Earth Orbit (GEO) – GEO constellations are situated at an altitude of approximately 36,000 km above the Earth. Due to their high altitude, GEO satellites provide extensive coverage and are particularly beneficial for broadcast services. However, they suffer from high latency and do not cover the Polar Regions.

Medium Earth Orbit (MEO) – MEO constellations are positioned between 2,000 and 36,000 km above the Earth. Satellites in MEO offer a balance between coverage area and latency. They are commonly used for navigation systems like GPS.

Low Earth Orbit (LEO) – LEO constellations operate at altitudes below 2,000 km. Due to their close proximity to Earth, they offer lower latency and higher data transfer rates. This makes them ideal for providing broadband internet services, particularly in areas where terrestrial networks are not feasible or economical.

Design Principles of Satellite Constellations

The design of satellite constellations involves several critical considerations to optimize coverage, capacity, and latency. This process involves making informed decisions about the number of satellites, their orbits and altitudes, inclination, and spacing.

Number of Satellites – The number of satellites in a constellation is crucial in determining the coverage and capacity of the network. More satellites mean wider coverage and higher capacity, but it also increases the complexity and cost of the network.

Orbits and Altitudes – The choice of orbit and altitude significantly impacts the performance of the network. As discussed in the previous section, GEO, MEO, and LEO constellations each have their unique advantages and drawbacks concerning coverage, latency, and data rates.

Inclination – The inclination of the satellite orbits defines the latitude coverage of the constellation. For instance, a constellation with a higher inclination can cover higher latitudes, which is crucial for providing connectivity in Polar Regions.

Spacing – The spacing between the satellites in a constellation affects the network’s ability to handle traffic loads and maintain consistent service quality. Appropriate spacing is necessary to prevent signal interference between satellites and ensure seamless handover of signals.

While these design principles serve as a guide, it is also essential to acknowledge the trade-offs involved in these decisions. For instance, while increasing the number of satellites can enhance coverage and capacity, it can also lead to higher deployment and maintenance costs, increased signal interference, and more space debris. Therefore, achieving an optimal balance between these various factors is at the heart of effective satellite constellation design.

The Role of Satellite Constellations in Empowering 5G Networks

The dawn of the 5G era heralds a new phase for telecommunications, characterized by ultra-high-speed, low latency, and highly reliable connections. One of the key enablers of this transformative technology is satellite constellations, particularly those in Low Earth Orbit (LEO). LEO satellite constellations, due to their proximity to the Earth, are uniquely positioned to provide the low-latency and high-bandwidth connections that are integral to 5G. With round-trip times potentially as low as 10 milliseconds, these constellations can support real-time applications such as autonomous driving, remote surgery, and immersive augmented and virtual reality experiences. In addition to enabling high-performance connections, satellite constellations play a vital role in extending 5G coverage to underserved areas.

Terrestrial 5G networks, while capable of offering high data rates, are limited by geographical constraints. They struggle to deliver connectivity in remote, rural, and hard-to-reach locations, creating a digital divide. Satellite constellations can bridge this gap by delivering 5G services to these underserved regions, ensuring universal and inclusive connectivity. Moreover, satellite constellations enhance the resilience of 5G networks. In instances of terrestrial network failures due to natural disasters, cyberattacks, or other emergencies, satellite networks can provide a backup, ensuring the continuity of critical communication services. Finally, satellite constellations enable global Internet of Things (IoT) connectivity. In the era of 5G, where massive machine-type communications become a reality, satellite constellations facilitate the connection of billions of IoT devices across the globe. This is particularly relevant for applications that require wide-area coverage, such as asset tracking, environmental monitoring, and smart agriculture.

Trailblazers in the Sky | Case Studies of Innovative Satellite Constellations

The concept of satellite constellations has moved from theory to practice, with several companies planning or already deploying their networks. In this section, we will delve into the case studies of existing and planned satellite constellations, including SpaceX’s Starlink, Amazon’s Project Kuiper, and OneWeb.

SpaceX Starlink

Spearheaded by Elon Musk’s SpaceX, Starlink is one of the most ambitious LEO satellite constellations. As of July 2023, there are 4,519 Starlink satellites in orbit, of which 4,487 are operational. Starlink has said it eventually wants to send up to 42,000 satellites into space. The primary aim is to provide affordable, high-speed internet access to remote corners of the world. The constellation design and deployment strategy adopted by Starlink exemplifies the potential of LEO constellations in delivering 5G services.

Amazon Project Kuiper

Amazon’s Project Kuiper plans to deploy a constellation of 3,236 LEO satellites. Much like Starlink, the primary goal of Project Kuiper is to provide broadband internet connectivity to unserved and underserved communities around the world. Though still in the early stages, Project Kuiper represents a significant investment in satellite constellations and their role in expanding 5G networks.

OneWeb aims to establish a global broadband connectivity network through a constellation of 648 LEO satellites. After facing bankruptcy and a subsequent comeback, OneWeb has made significant strides in deploying its constellation. OneWeb’s efforts illustrate the potential of satellite constellations to contribute to the 5G ecosystem and the challenges associated with such ambitious projects.

These case studies offer valuable insights into the design, implementation, and performance of satellite constellations. They also underscore their potential in shaping the future of 5G networking, highlighting the transformative role these constellations could play in global connectivity.

Challenges and Opportunities in Satellite Constellation Network Design

Designing satellite constellation networks is a complex endeavor, marked by numerous technical and non-technical challenges. Among these are interference management, regulatory considerations, cost factors, and sustainability issues like space debris.

Interference Management – Interference management is a significant technical challenge, as the simultaneous operation of thousands of satellites can result in inter-satellite and satellite-to-ground communication interference. Advanced signal processing techniques and dynamic beamforming are necessary to manage this issue.

Regulations and Licensing Requirements – On the non-technical side, satellite operators face a complex web of international regulations and licensing requirements, which vary across jurisdictions. The high cost of deploying and maintaining a satellite network is another challenge, which often requires significant private investment and/or public funding.

Space Debris and Long-Term Sustainability – The rapid increase in the number of satellites in orbit raises concerns about space debris and the long-term sustainability of space activities. Measures to mitigate the creation of debris and to ensure the end-of-life deorbiting of satellites are essential considerations in constellation design.

Despite these challenges, satellite constellations present immense opportunities. They can expand global connectivity, particularly in remote and underserved areas. These constellations can enhance network resilience, acting as a backup in case of terrestrial network failures. Moreover, with 5G, they can support advanced applications requiring high bandwidth and low latency.

Emerging Trends and Technologies in Satellite Constellation Networks

The field of satellite constellation networks is ripe with emerging trends and technologies. A significant trend is the integration of satellite and terrestrial networks, enabling seamless global connectivity.

Miniaturization of Satellites – On the technological front, advances in satellite technology, such as the miniaturization of satellites (CubeSats and NanoSats), are making satellite constellations more economically viable. These technological advancements are making it possible to deploy large constellations of small, lightweight satellites, reducing launch costs.

Software-Defined Networking in Space – The advent of software-defined networking in space is revolutionizing how satellite constellations are managed. This enables dynamic allocation of resources, adaptive routing, and flexible payload configurations, thereby enhancing network performance and resilience.

Artificial Intelligence and Machine Learning – Artificial intelligence and machine learning are having a profound impact on network design and management. They are being used to optimize constellation design, predict and mitigate interference, manage traffic, and enhance cybersecurity.

A Bright Future for Satellite Constellation Networks

As we conclude this chapter, the key takeaway is the growing importance of satellite constellations in the era of 5G. Despite the technical and non-technical challenges, the potential benefits of these constellations are enormous. Moving forward, we can expect continued growth and innovation in this field. The integration of satellite and terrestrial networks will likely become more seamless, driven by advances in technology and standardization efforts. Meanwhile, trends like software-defined networking in space and the use of AI and machine learning will further enhance the capability and flexibility of satellite constellations. Beyond the technological advancements, the societal impacts and business opportunities are vast. Satellite constellations have the potential to bridge the digital divide, boost socio-economic development, enable new services, and create new markets. This makes it an exciting and rewarding field, both to study and to be a part of.

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Covering the business and politics of space

Boeing’s satellite business zeroes in on military opportunities

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WASHINGTON — Boeing is setting its sights on two upcoming big-ticket satellite procurements from the U.S. Space Force, leveraging its recent contracts for Wideband Global Satcom (WGS) satellites and its foothold in commercial spacecraft manufacturing. 

The Space Force is expected to seek bids this coming year for highly specialized, jam-resistant satellite systems that the military deems “no fail” assets, meaning that they must deliver secure communications even in the most contested environments.

“The government is looking for mature and low-risk technologies,” said Michelle Parker, vice president for space mission systems at Boeing Defense, Space & Security. 

The company is positioning to compete for these Space Force satellite procurements by adapting commercial technology for military use, Parker told SpaceNews in a recent interview. 

“It’s a really exciting time in military satcom,” she said. 

The first program on Boeing’s radar is the Protected Tactical Satcom, or PTS, a future constellation of encrypted communications satellites. The other is the Evolved Strategic Satcom program, also known as ESS, to develop a network of nuclear-survivable satellites to facilitate communications during a conflict.

The Space Force is evaluating two PTS prototype payload designs, one by Boeing and the other by Northrop Grumman, that could launch for in-orbit demonstrations in 2025. Boeing plans to launch its PTS prototype payload on the WGS-11 satellite it is producing under a $605 million contract awarded in 2019. Northrop Grumman’s PTS payload will fly on a dedicated spacecraft . 

After the demonstrations, the Space Force will seek bids for the production of PTS payloads. Congress approved $233 million for the program in fiscal year 2024, and the Pentagon requested $597 million for PTS in 2025. 

Strategic satellite communications

The second major satcom procurement planned by the Space Force is ESS, short for Evolved Strategic Satcom, a critical component of the U.S. military’s nuclear command, control, and communications (NC3) network that provides nuclear-survivable connectivity.

Boeing and Northrop Grumman were selected in 2020 to design ESS satellite prototypes. These satellites are intended to augment and eventually replace the Advanced Extremely High Frequency (AEHF) network of nuclear-hardened satellites made by Lockheed Martin.

Congress appropriated $505 million for ESS in 2024, and DoD is requesting $1 billion for the program in fiscal year 2025. The Space Force is expected to seek bids this year for further developed ESS prototypes .

In these military programs, Parker said, Boeing is leveraging its “integrated payload array” that was used for WGS-11, the recently awarded $439 million WGS-12 and the commercial O3b satellites built for global satcom operator SES. 

“It’s evolved a bit for military use, but it’s the same digitally engineered technology and the same investments that we’ve made on the technology as well as the manufacturing to automate the process,” she said. 

One benefit of the digital payload, Parker added, is that users can electronically and simultaneously steer thousands of individual beams so communications can be assured in contested environments. The beam technology used in military satellites, she noted, is designed to prevent jamming and interference.

Parker said  Boeing is currently developing the eighth generation of its integrated payload array. 

Sandra Erwin

Sandra Erwin writes about military space programs, policy, technology and the industry that supports this sector. She has covered the military, the Pentagon, Congress and the defense industry for nearly two decades as editor of NDIA’s National Defense... More by Sandra Erwin

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Moscow International Business Centre (MIBC)

The Moscow International Business Centre (MIBC) is an ambitious engineering project in the centre of Moscow. The site is

Estimated Investment

$12 billion

Construction Started

Moscow, Russia

Project Type

Business complex (city within a city)

CITY JSC, Moscow City Government

The Moscow International Business Centre (MIBC) is an ambitious engineering project in the centre of Moscow. The site is on an old urban area near the river embankment. The goal of the project is to create a new business district within the city.

The whole complex is to be built on a 100ha site (divided into 30 plots) designated for new development on the Krasnopresnenskaya embankment. The management company for the project is CITY Joint Stock Company (CITY JSC), a company first set up in 1992 as a collaboration between the Russian government and private investors.

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The project was first launched in the early 1990s but has been stalled for much of the last 10 years due to a lack of investment. In 2003 the project started to attract investment again and has been gaining momentum ever since.

PLOT 1: BAGRATION BRIDGE AND TOWER 2000 OFFICE COMPLEX

The first major building constructed in the MIBC project on Plot 1 was the Bagration Bridge (pedestrian bridge) and mall, completed in 1999. The second project was the Tower 2000 office complex, a multi-use business complex begun in 1996 and completed in 2001. The building is 106m high and has 30 storeys above ground and four storeys below. The total floor area of the complex is 60,000m².

The underground area contains parking garages, restaurants, retail areas and a fitness centre. Floors 3–15 and 17–26 are business offices while floors 8 and 27 have a media centre, large exhibition hall and piano bar.

The business areas are served by structured cable network, fibre optic cable, satellite broadcasting, Wi Fi and ADSL Internet access, automatic digital telephone exchange with integration of services, local broadcasting system, municipal broadcasting network, electric timing system, data collection and processing system, audio and video systems, simultaneous interpreting system, conference system, video projection system and security systems including biometric access control and a monitoring system.

The tower also has a central air conditioning system, auxiliary exhaust ventilation system, cooler and heat supply systems, Uninterruptible Power Supply system (UPS), automatic fire security system, automatic volumetric fire-fighting system, sprinkler system and automatic smoke removal system.

The general contractor for the tower was Promstroytechnologia-M Company Ltd. The facade of the tower, which is made of glass and structured concrete, was constructed by Transwall Technology. The tower is equipped with 17 computerised rapid elevators, supplied and installed by Schindler Aufzuege AG, and an outer panoramic elevator, supplied and installed by Kone Lifts. The exterior lighting equipment was supplied and installed by Thorn.

PLOTS 2 AND 3: MOSCOW WEDDING PALACE AND CITY SQUARE

The sites designated by plots 2 and 3 are now to be developed as the Moscow Wedding Palace and City Square. This will include a city square, an underground retail complex and a 14 storey multipurpose complex, which will include the Wedding Palace, banquet halls, restaurants, shops and a hotel.

The developer is Capital City Developments. The architect is Mosproject – 2. The construction started in 2005 and is scheduled to be complete by the end of 2007.

PLOT 4: AQUAPARK

The Aquapark leisure complex was started in 2002 and was completed in 2005. The site occupies a 1.74ha area adjacent to Krasnopresnenskaya embankment. It includes:

• Complex of swimming pools, water mountains and leisure attractions, restaurants and cafes and retail areas (24,352m²)
• Five-star, 30-storey hotel complex (54,640m²) built on a six-storey podium containing retail areas, restaurants and nightclubs
• Parking to accommodate 425 vehicles (13,050m²)
• The aqua park will be connected with a mooring on the Moscva River

The developer of the complex was Aqua-City Palas Company Ltd. The project required an estimated investment of $230 million. The general contractor was Liard Stroy Ltd and the designers were Mosproekt-2 of Russia and Tkhomesto Engineering of Finland.

PLOTS 6, 7 AND 8: UNDERGROUND MALL AND METRO STATIONS

A large underground complex containing the central core of the MIBC, an underground mall and two metro stations is located on these plots. Construction started in late 2001 on the 5.1ha site and was completed in mid-2004. The complex has a total floor area of 150,000m² and includes:

• 35,000m² shopping mall
• 20,000m² multi-purpose performance complex
• 10,000m² dancing complex
• 15,500m² sports and leisure complex
• 30,000m² ‘Wonderful World of Entertainment’ theme park
• 7,000m² restaurant complex
• 30,000m² hotel

The complex developer was CITY JSC and the designers were Mosproekt-2. The construction engineers were Bovis Europe and Jones Lang Lassale of the UK.

PLOT 9: CAPITAL CITY PROJECT

This project involves the construction of two connected tower blocks and a dome. The towers will be of 73 and 62 storeys high, with a 16-storey domed building containing an atrium. Connecting the buildings will be a podium building with three storeys above ground and 4–6 below ground.

The lower levels of each tower will be for office space (200,000m²), while the upper levels (above 80m) will be residential and the dome will be used as a retail area. The investment for the project is $250 million.

The developer is Capital Group; the construction engineers are Bouygues Construction and the architects are Erick van Egeraat Associated Architects of Holland. Construction has been underway since 2005 and the project is scheduled for completion in mid-2007.

PLOT 10: NABEREZHNAYA TOWER

This project involves the construction of a new office and apartment complex consisting of three A-Class buildings 16 (86m), 27 (135m) and 52 (250m) storeys high, with a total floor area of 220,000m². The construction began in mid-2003 on the 2.55ha site with the smallest of the three buildings.

The first building was completed in autumn 2004. Enka, a Turkish construction company , is carrying out the development and construction. Enka has invested a total of $150 million so far. Work is continuing on the other two buildings with completion expected in 2007.

PLOTS 11 AND 12: MIXED-USE TOWER BLOCK

The major project on these plots will be a 300m, 75-storey, mixed-use tower block with over 204,000m² of floor space. The facilities will include commercial and government offices, residential areas, retail space, leisure and health centres and a four-star hotel.

Offices will occupy the floors 4–45, while apartments are on floors 48–66. The building was designed as a two-tier skyscraper, 30 floors in the first tier and 37 in the second one. The second floor of the building will be occupied by a casino. The 47th floor will be occupied by a gymnasium.

The designers for the project are Swanke Hayden Connell Architects and the investors are Techinvest, who are investing $270 million. The contractors for the construction are Summa, a Turkish development company. Groundwork was carried out by Kaskatas. Construction on the building started in the third quarter of 2004 with completion scheduled for late 2006.

PLOT 13: FEDERATION OFFICE COMPLEX

The Federatsiya (Federation) office complex is to consist of two towers, one 57 storeys high and the other 87 storeys (345m), and a podium. The 87-storey tower will hold offices and the 57-storey tower will include residential apartments and a hotel. The total floor area of the complex will be 240,000m².

The podium will have three to five levels and 30,000m² of floor space and will contain retail areas, banking facilities, cafes, restaurants and leisure facilities. The complex will have 14 lifts built between the two towers, including four ‘Shuttle’ round-observation lifts.

Stroimontage and NIKoil Financial Group will invest more than $500 million in the project. The architects for the project are P Schweger, S Tchoban and A Asadov of Germany. Stroimontage is the general contractor for the project. Construction started in April 2004 and the complex is scheduled for completion by 2008.

PLOT 15: CITY HALL AND DUMAS

Plots 2 and 3 are owned by the Moscow City Government and original plans were for the new City Hall and Dumas (Parliament) buildings to be located there. However, these buildings will now occupy Plot 15.

The construction on Plot 15 consists of four 70-storey interconnected 308.4m buildings. The project started in November 2005 and will be finished by the end of 2007.

It is expected that all government administration will be accumulated in the new complex to provide better organisation, allowing the buildings currently in use to be sold.

The four skyscrapers will be connected by several two storey bridges between towers and eight storey bridges at the top. The highest bridges will be built in shape of letter ‘M’ for ‘Moscow’.

PLOT 16: RUSSIA TOWER

Plans for a 600m-tall tower to be built in Moscow to designs by British architect Sir Norman Foster were released in March 2006. ST Towers is the developer behind the project and is part of the ST Group.

The Russia Tower will be more than 50% higher than the Empire State Building and is to be built within the Moskva-City development on Plot 16 near the site’s border with the Third Ring Road. It will overshadow the 430m Federation Tower under construction at Moskva-City, which developers say will be the tallest building in Europe when it is completed in 2008.

The 420,000m² tower is a striking design comprising three blade-like structures arranged in a trefoil-like plan around a central core and tapering sharply toward the top, with part of the steel structure exposed on the outside like an exoskeleton.

Described by the architect as a vertical city, the tower is to house parking and retail space on nine underground levels, a public ice rink on the first floor under a spacious, pyramidal atrium, a hotel with serviced apartments above, 24 floors of office, high-end apartments on the top levels and a public observation deck at the very top. The resident population of the tower could be 25,000.

The Russia Tower is billed as an environmentally friendly project, maximizing natural ventilation and lighting, with solar cells, the collection of rainwater and snow to reduce water demand and the recycling of energy between areas with varying levels of demand. In addition, atria several floors high are to be spaced throughout the building’s central core and decorated with plants, providing the luxury apartments on the upper floors with private gardens in the sky.

The construction of the tower is expected to cost about $1.5 billion; of this about $150 million to $200 million would be supplied by ST Towers. Plans for the tower have been approved and it should be finished by about 2010. Construction has not yet started.

PLOT 17 AND 18: MULTI-PURPOSE OFFICE-HOTEL COMPLEX

The multipurpose complex will include two towers (80 and 78 floors), with a common underground space for parking. The high tower will contain office premises and the second tower will be a hotel.

The complex will also contain a roof-top restaurant with a panoramic view, cafes and bars, conference halls and billiard club. The architect is Skidmore, Owinds, and Merrill LLP. No dates have yet been announced.

PLOT 19: NORTHERN TOWERS

An office complex is being developed on this plot by ZAO Severnaya Bashnya. The Northern Towers will consist of three buildings – two 12-storey and one 29-storey. These will contain 135,000m² of floor space.

The architect is Project Institute 2 and the construction engineer is Bau Holding Strabag AG (Austria). Interior design in the building will be carried out by ABD Limited, and legal services with regard to lease documents are provided by PricewaterhouseCoopers.

The first phase of Northern Tower is scheduled for shell and core delivery by the fourth quarter of 2006. The marketing and leasing campaign has already started. Raiffeisenbank has agreed to become the first tenant of the complex.

Northern Tower will feature spectacular atriums, prime office premises and a multi-level parking for 688 cars. There will also be a multi-functional conference hall for up to 200 people, banking premises, restaurants and cafes, a fitness centre with a swimming pool operated by Reebok, a professional dental clinic and a beauty parlour.

POWER PLANT CONSTRUCTION

The power supply for the new MIBC has been a subject of much contention among foreign investors. The complex requires an efficient power distribution system operating at 20kV rather than the more typical 10kV.

CITY JSC and power supplier Mosenergo JSC put forward a proposal in 1999 to the Moscow City Government to develop a new power network for the MIBC, mini-metro, metro junction core, Eurostation and Sheremetyevo-Moscow Rapid Transit System.

The power and heat supply for the MIBC will be provided from three sources: the Mosenergo power station ‘SS-CITY-1’; the district heat and power station ‘Krasnya Prsnya’; and the MIBC power plant on Plot 7A, which entered its first phase of construction in 2002–2003 and is now well into its second phase with completion expected in 2006.

Having established the power supply sources, the next part of the project was the bulk power and distribution network to support the MIBC. Phase 1 of the MIBC power plant has seen the construction of a Gas Turbine Unit (GTU) and Heat and Power Plant (HPP) with a capacity of 50MW and a substation with two transformers for 110V from 20kV and 110V from 10kV and two 63MVA distribution units. The next phase will see an increase of capacity up to 100MW.

The developers of the power plant are CITY JSC and CITY-ENERGO Company Ltd. The contractors for the project are Liard-Stroy Ltd and the designers of the plant were Mosproekt-2 and VNIPI Energoprom.

TRANSPORTATION CONSTRUCTION

The Moscow–Sheremetyevo line is the first phase of the RTS to connect the three satellite airports to the centre of Moscow. This first line, 34.3km in length, will provide interconnectivity between the airport, regional centres and urban junctions and also interconnect with the existing municipal transport system. The project was started in 2001 and eight stations were planned. This stage is now complete.

The developer for the RTS is CITY JSC in collaboration with the City of Moscow; the designer is SNC Lavalin of Canada. The Phase 2 section of the project to extend the line to cover Vnukovo Airport was started in 2004 and is now nearing completion (scheduled to open in 2007).

The RTS development not only concerns rail links to the new commerical centre of Moscow but it is also a development in its own right. The Plot 11 development will include the construction of the new Moscow transport terminal uniting the RTS, three lines of the underground and the intercity bus terminal.

The complex will include transport stations with waiting rooms, boarding areas for VIPs, a hall of customs inspection, left-luggage offices, a 342 room hotel and ticket offices.

For this section of the development Citer Invest B.V. of the Netherlands is the developer, Behnish and Behnish Architekten of Germany are the architects. The investment is $200 million and construction is underway with an expected completion in 2007.

MINI-METRO LINE

A mini-metro line was also constructed to provide transportation within the MIBC and to connect with the historical centre of Moscow. There are three stations, one constructed in Phase 1 of the project and two in Phase 2. The three stations are Dorogomilovskaya, International and Moscow – City.

The length of the line is 5.85km. The engineering and transport contractors were Metrogiprotrans JSC. The line along with the International and Moscow – City stations came into operation in September 2005.

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AUPP team wins 2024 Faulkner Challenge

By FHSU University Communications

HAYS, Kan. - “Farmily,” an entrepreneurial business plan created by four students from the American University of Phnom Phen (AUPP), an FHSU partner university, won first place at the 2024 Faulkner Challenge for a Better Future at Fort Hays State University.

Four FHSU and four AUPP teams showcased their talents in the final round of the challenge on March 30.

“This groundbreaking event united students from multiple countries,” said Henry Schwaller, Department of Management instructor. “Their concepts and presentations stood out as some of the best in the event’s history.”

The business plan of the AUPP team, which is comprised of Meilang Hut, Seihareach Mam, Youhorng Kean, and Linda Hurng, centers on a mobile application to connect farmers and vegetable wholesalers. According to their business plan, most vegetables sold in Cambodia are imported from Vietnam and Thailand. A lack of an efficient platform for interaction between farmers and consumers leads to supply chain inefficiencies and reduced transparency.

The second-place award went to FHSU junior Sarah Manry, Larned, for her business plan “Green Life,” a subscription service for fruit/vegetable boxes for small spaces and home gardens.

Winning third place were Piseth Dy, Soun Somanith, Chea Ritheavatey, and Heang Sophea Vatey of AAUP. Their business plan, “Hobbies, Inc.” involves a calendar application designed for youth clubs and groups.

“The opportunity to engage with and to judge Faulkner Challenge student business plans was an exciting and rewarding experience for me as a FHSU faculty member,” said Ed Vengrouskie, FHSU Online management instructor. “The passion and dedication demonstrated by our FHSU and AUPP students in solving community, country, and global sustainability challenges (as outlined in the 17 U.N. Sustainability Goals) was nothing short of incredible.” 

“These were some of the best business plans that I have seen, created by entrepreneurial students who want to make a difference.”

The Faulkner Challenge is a business plan competition designed to develop entrepreneurial imagination and innovation in university students, regardless of major or interests. It is open to any new venture in the conceptual, seed, or startup stages and to students from any community college or university in Kansas. Teams are evaluated on their ability to identify a market opportunity, value proposition, and sustainable competitive advantage.

While all entries are welcome, proposals for innovations in or design of products, processes, systems, services, or businesses that are economically sustainable, with promise for social and environmental benefit, are of particular interest.

"This competition exemplifies FHSU’s commitment to ‘Forward Thinking. World Ready’ by uniting students from diverse cultural backgrounds,” Schwaller said. “Our main objective is for students to learn by doing, or Experiential Learning, and this experience enables them to witness the challenges others encounter and the innovative solutions they devise to overcome them.”

FHSU alum Kevin Faulkner established an endowed fund for the W.R. and Yvonne Robbins College of Business and Entrepreneurship business plan challenge that bears his name. He supports the challenge in many ways, including serving as a judge for the competition.

University Communications Fort Hays State University 600 Park Street Hays, KS 67601 785-628-4208

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SpaceX secures network operational permit in Indonesia, govt says

The US company is now in the process of applying for the ISP and VSAT licenses it needs to offer its satellite internet services to customers, according to the communications ministry.

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he Communications and Information Ministry says Elon Musk’s SpaceX has obtained the necessary permit to operate Starlink satellite internet service and is cleared to roll out test runs in Nusantara Capital City (IKN) in May.

"We are expecting the trial to use one ground station [...]," Wayan Toni Supriyanto, the ministry’s post and informatics management director general, said on Wednesday.

Starlink, a wholly owned subsidiary of United States aerospace firm SpaceX, obtained its operating permit after fulfilling the hub development requirement and device standards of the ministry’s Post and Informatics Resources and Facilities Directorate General.

Wayan added that Starlink was now in the process of applying for the licenses for internet service provider (ISP) and very small aperture terminal (VSAT), which it needed to offer direct-to-consumer services in the country.

“It is possible that the company has complied with the VSAT [requirements],” Wayan said, but underlined that it still needed to establish local cooperation on network access protection.

“Perhaps the cooperation agreement has not been finalized yet,” he said.

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Transportation | City proposes key change to O’Hare airport…

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Transportation | city proposes key change to o’hare airport rebuild, after months of negotiations with airlines.

After months of negotiations with airlines over the massive, delayed rebuild of O’Hare International Airport, city officials are proposing a path forward with a key change.

In a letter to airlines this week, the city proposed changing the sequencing of construction on a new Global Terminal and nearby satellite concourses, opting to “accelerate the completion of the Global Terminal,” which is set to replace aging Terminal 2, city Chief Operating Officer John Roberson told the Tribune. Initially, the plan was to build two satellite concourses first, which would have added gate space for airlines to use while Terminal 2 was torn down and replaced with the Global Terminal.

A change in the order of construction had been sought by airlines during months of contentious negotiations with the city over the rebuild, as they sought to ensure the new terminal wasn’t threatened by future budget issues. O’Hare’s two main carriers, American and United, had pushed back against rising construction costs at the airport , a key piece of the city’s economy and a hub in the nation’s air system.

The airlines signed off on an $8.5 billion overhaul of the airport in 2018. The main feature of the rebuild was the soaring, 2.2 million-square-foot Global Terminal, designed by a team led by architect Jeanne Gang, which would more than double the space of the current Terminal 2 and add additional gates, and allow travelers to move more seamlessly between domestic and international flights.

But costs, largely financed by city bonds backed by airline fees, ballooned, and the project fell significantly behind schedule.

The city would not provide a copy of the letter sent to the airlines this week, but Roberson said that under the latest proposal, the full project agreed upon in 2018, including both satellite concourses, will be built.

“It also provides the airport with the capacity for growth so that we can be competitive with our other airport peers around the world,” he said. “And it is absolutely critical that we move forward with the implementation of this so that we can remain competitive and make sure that we are positioning O’Hare to be a key driver of our economic development process locally.”

In a joint statement, United and American airlines said they were still reviewing the proposal.

“The City has indicated that they are looking at all options to get an on-budget (terminal project) moving forward, one being sequencing the project to deliver the most impactful elements the quickest. The Global Terminal has always been the centerpiece of this program and the most critical piece needed to ensure Chicago maintains its status as a global hub,” the carriers said.

Ald. Matt O’Shea, 19th, chair of the City Council’s Aviation Committee, praised the revised phasing plan as “great news.”

“This is about airlines and government collaborating, looking out for airline passengers and modernizing,” he said. “We want to make sure we get this right. That we’re keeping this under budget, we’re avoiding cost overruns, but we’re also remaining competitive.”

When asked if any parts of the project could be not built if development goes over budget, O’Shea said the Department of Aviation has committed to building all major parts of the project within its budget.

“I think we move forward,” he said. “Everyone wanted a Cadillac fully loaded. And it’s not going to be that, but we’re going to modernize it, we’re going to allow for growth and we’re going to stay competitive.”

In an op-ed in the Tribune last month, U.S. Sen. Dick Durbin called for both satellite terminals to be built along with the Global Terminal, writing that the satellites made up the bulk of the new gate capacity and accusing the airlines of wanting to “build only the part of the project that benefits them and doesn’t increase competition.”

“This means putting off the construction of both satellite terminals to focus on the Global Terminal,” he wrote. “For a price tag still in the billions of dollars, O’Hare would gain two new gates in 10 years.”

Durbin sent a letter Friday to U.S. Secretary of Transportation Pete Buttigieg urging Buttigieg to convene a meeting with the city, airlines and state Congressional delegation on the project. In the letter, shared with media after news of the city’s new proposal broke, Durbin highlighted the importance of adding the second satellite terminal to create significant new gate capacity.

“All parties urgently need the expert mediation that only the U.S. Department of Transportation can provide to ensure a deal that is both fair and beneficial to local taxpayers and all passengers who fly through O’Hare,” Durbin wrote.

O’Hare ’s cost per enplaned passenger, a metric tracked by airlines, is already among the nation’s highest, and more than twice that of airports in Detroit and Minneapolis-St. Paul, which are significant bases for Delta, Bloomberg News has reported.

High costs at the airport are a consideration for airlines, and can make the airport less appealing as a hub. They are a key factor for O’Hare, traditionally a major hub for American and United, as its recovery from the pandemic lagged in recent months.

Tribune reporter Gregory Royal Pratt contributed.

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