Commercial Earth Observation Satellite Business Model Jumps the Pond

by Matt Ball on September 28, 2010

UK-based Surrey Satellite Technology Limited (SSTL) has announced plans to build three imaging earth observation spacecraft to be launched by 2013, and to set up as a commercial earth observation company. The company, along with its data processing subsidiary DMCii, will invest £100m ($157M) on the project, with plans to recoup costs from government and commercial customers around the globe. The announcement was made yesterday at the International Astronautical Congress in Prague.

The imaging capabilities of the satellite constellation will be 1 meter/pixel panchromatic, 4 meter/pixel color, and will have the ability to map 600 kilometer broad-swaths at resolutions above 20 meters.

The company, which spun off of research efforts at the University of Surrey 25 years ago, makes small spacecraft using off-the-shelf consumer electronics components. They have been successful producing similar small satellites for different national governments, including the UK, China, Spain and Nigeria.

The low-cost small satellite approach, without major government funding, is an unusual business model in the commercial satellite imaging space. The major U.S.-based commercial satellite providers that pioneered this space, DigitalGlobe and GeoEye, both receive a bulk of their operating budgets from U.S. military customers. RapidEye is a similar small satellite constellation to the one planned by SSTL, and was largely built by SSTL as a subcontractor to MDA, but it  receives the benefit of a public-private partnership with the Space Agency of the German Aerospace Center (DLR).

With federal governments around the globe cutting back both military and space spending in the face of economic pressures, this private small satellite model just may be the future of commercial earth observation. The lower cost of building and launching smaller satellites puts less risk on the operations, but also means a shorter satellite lifespan and less image collection flexibility while airborne. At the very least, this new venture will fill in earth observation gaps, and will make earth observation a more affordable option for the developing world.

Both GeoEye and DigitalGlobe have proven that the commercial high-resolution earth observation space can be a lucrative business. Both companies are now solidly profitable, and the stock of both reached lifetime highs in early August when they each shared in a $7.5 billion 10-year contract with the U.S. military.

{ 1 comment… read it below or add one }

Dr. Edward Wallington September 29, 2010 at 1:59 am

I think there is space (pardon the pun) for both low-cost and ‘mainstream’ satellite deployments. They each serve a sector of the market and between them fill a necessary data collection service for the earth observation community – be it operational or research.

I would hope that the lower cost of development and deployment will hopefully also be realised with lower data costs for the consumer, and therefore wider use and capital invested back into the satellites.

As you allude, it will be interesting to see how this business model pans out in the coming years, but in the mean time, I look forward to these additional data sources.

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