Created: 12/31/1987

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Spice Launch Services: Tbe Competilive Scene]

nanescace, several private USibe USSR, and Chios aie all corapetieiaunch tbeUriehacaJjf ofmxe MOtosatellites ihai developed fcfiowing ibe failwa af shuttle and Free World expendable launch vehidea (ELVij. Wc believe ihai Ariaaeapace and US private companies will emerge as ibe major competitors. For tbe USSR and China, Ihe picture is not bright: Soviet success depends on the relaxation of COCOM and US export controls; China bas Uttk experience, limited payload capabilities, and uncertain bunch nice. Over tbe longer term, as the current backlog of commercial payioads dwindles,xpect that launch capacity vill greatly exceed the likely commercial demand of onlyoayioads annually, la tftna eavooaroeat. US ELVby tbe US Government demand for defense and other satellitehave an inherent advantage over Ariaaeapace, which is heavily dependent on demand from tbe civil sector.

Spare Launch Camms-cial Demand

US and Wen European apace bunch system were rockedenei of failures56 that crippled ihc Free World's spaceesult, both dvU/ccnnaercial and miliury/ national security payioads face launch dcuyi. The launch rsilurea. the recent high demandelay of two years In sunup of US ELV production lines, and the US decision to Uhe the shuttle out of tbe commercial market hu led lot large backlog of satellites awaiting launch.|

We estimateatellite* -primarily for tekccenmunications and scientificcurrently waiuag to be launched Most haveor contracts with at least one launch service: Ariane baa contracts to launchS ELVs already have reservations for at leastayioads;ecause of me or foreign policyprobably will be launched as planned by the

A willing Launch

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shuttle, eight Japanese payioads will be launched on Japanese launchers; and iwo satellites have rcscrvs-lions wiih China

After the current backlog bas bees bunched, market analyses by government itcnocs and privateindicate that demand (or commercial satellites j


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Cn-merrtal Space Imci Capacity

allpprcuumalclyoern ike ibe largest exponent of ibe commercialurkef. ccmce uuoe (ram optical fibers, higher capacity and longer lived lauUUce, higher cons, and anused capacity on MielLtes already jn orbit ill combine to rennet launch demand. Satellite opvaton akorob-Jembtaining insui ancecommercial Japaneae launchwill not he availablee beheve that Una prohferatioe of launch rarncaa could rtauJt ba surphuj launch capacity after the cerrent cccnesereuJ backlog ii lauacbcd. We estimate, for example, thai commercial ipaee launch capacityad JO aaidlitca annuity during the neat few yean without the lhuiile. The Soviet capacity may not be available for Weatern use. however, becauae current US regulations forbid the delivery of telrxommunicaiione utellitea to tbe Soviet Union for launch. Tbe United States and ita allies, througho eonirol export of other Western-built satellites.

Western Europe, the Soviet Union (despite US policy on export connd China are aggressively mar-kedng their apace launch tervicea. Anpace, which baa tbe moat signed cootrncta. Ii aucmpting to keep iu preaent customer! and to win new one* by dressing

poet, insurance availability, and iu equatorial launch lite. Moscow hat been stressing Soviet technical achicvenienu and reliability, offering low-coal launches and emphaainng tecority arrangemenu de-signed to overcome Weaternhina hopes to establish itselfhird World leader in apace technology and to earn bard currency with launch sales. Although Japan could eater tbe Uonch market for small pay loads in thend forsatellites in the, caution over the uncertain launch market continues to hold down an

launchotential Obsteele

Because of ihe many failures, launch insurance It virtually impossible to obtain as most Insurers have stopped issuing new policies, tbose still in thran requiring premiums in excess af JO percent of Ih* launch and pay load value Recensty. tomehave been launched without insurance, but thisifficult option for customers who may havebsorb lossesillion

Oo tbe basilaouroe

reporting, wchat tbe West European and US launch services will capture tee am jor part of th* commercial space launch market through the:

Assuming that Arianespace's technical andproblems arc solved, it scores quite well oo tbe other factors influencing customers, includingflexibility, price, equatorial launch, and the ability lo supply affordable insurance The West European service ahw bat aa advantage over tbe Soviet Union and China in that customers do cot have to worry that export licenses for satellites with US technology may be turned down.

We expect that US firms will capture the majority of the uncommitted poyloads; two US companies have sufficient production runs based on defense orders to keep prices competitive; US companies have obtained early launch reservations; and Ariane it heavily booked,'

For their part, wc expect that tbe Soviet Union and China mayew launch contracts, primarily from tbe Third World. In-addition. China'a cutrate prices will attract financially troubled US companies As long at US policy on satellite technology eiport controli holdt arm, however, Soviet take will bo limited Chinese success is dependent onreliability. Nonetheless, prestige factors, the


For iu pen. Anameipaee isew insurance scheme which Is subsidiied by the FrenchAlthough the company is supposed to absorb the losses If there Is more than one failure Inrench Halt-owned insurance company will pay any claims fo* Ihe next two failures. The Insurance Is for iha launch phase only. For the first .batch of Ii launches, premiums are II percentelaunch is bought on Arianeercent If another launcher is used Foe the next batch of IS launches, premiums are projected lo9 percentelaunch is boughi on Ariane4 percent If another launcher is usedl

The Soviel Union is providing Insurance but.remium ofercent of ihe launch and payload value. Ihe rates are no belter than those ofinsurers. Initial Chinese offersree relaunch tn case of failure bul no payment foe the lost tatel/ue. Recent offers have Included the involvement of the Peoples Insurance Company so insure the launch up to separation from the rocket and attempts to stars an insurance pool for coveraget-percent discount from Western premiums. Chinese pressindicate that conventional insurance will be provided as part of ihe recent contract to launch the Pacific Star]

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