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SpaceX launch explosion jolts global satellite and telecom industries
NEW YORK: The explosion of a SpaceX rocket Thursday will have an impact across the space industry, far beyond the losses on the launchpad at Cape Canaveral, Florida.
NEW YORK: The explosion of a SpaceX rocket Thursday will have an impact across the space industry, far beyond the losses on the launchpad at Cape Canaveral, Florida.
Planned launches of communications satellites that support international mobile phone service and digital television are delayed and put in doubt. NASA’s cargo deliveries to the International Space Station will probably be disrupted.
All of them are customers of Space Exploration Technologies Corp, or SpaceX, whose rocket exploded in Florida. The private space launch company, led by entrepreneur Elon Musk, has a generally solid safety record.
But last week’s setback and a failed launch last year, when its rocket carrying NASA cargo fell apart in flight, are raising questions about SpaceX, a company that has risen rapidly by offering lower costs and promising accelerated launch schedules.
At this stage, there are more questions than answers. The key for SpaceX will be how quickly it can satisfy federal investigators, rebuild the damaged launchpad at Cape Canaveral and resume sending satellites into space. For commercial telecommunications customers, getting a satellite manufactured is time-consuming and expensive, taking two years or more and costing $200 million to $400 million each.
The launch itself is a high-risk step, but once in orbit the satellites are money spinners. The upfront investment is paid back in a few years, and they then generate hefty profits for the remainder of their useful life, which could be as much as a decade.
So once a satellite is ready to go, time on the ground — and delay — are financially painful. Among the commercial satellite operators lined up for SpaceX launches this year are Iridium Communications, SES of Luxembourg, EchoStar and KT Corp. of South Korea.
“No doubt SpaceX will fix the problems, but if you’re a customer time is money,” said Scott Pace, director of the Space Policy Institute at George Washington University and a former NASA administrator. “This will get customers looking at alternatives. It may give competitors an opening and slow down SpaceX.”
In the market for launching communications satellites, the main SpaceX rival is Arianespace, a French multinational. And there are others, notably International Launch Services, a US-Russian joint venture, which launches Russian-designed Proton rockets .
But Aria ne space, which has an excellent safety record, is considerably more expensive than SpaceX, whose launch cost are 50% lower. And the safety and performance record of the Proton rockets lags that of the SpaceX workhorse, the Falcon 9.
SpaceX has achieved that efficiency by streamlining production techniques, designing a stripped-down launchpad and stepping up the pace of launches.
Each innovation adds risk, said Phil Smith, an analyst for the Tauri Group. But SpaceX, he added, has been approved by NASA for cargo missions and certified by the US Air Force, both of which have high safety and performance standards. The Florida accident is also rippling through the insurance market. Insuring the risk of getting a satellite into space comes in two stages. The preflight insurance is intended to mainly cover the risk of damage to the rocket and satellite on their way to the launchpad. Premiums are a fraction of a percent.
Launch policies, which take effect when the rocket is fired up, are costly, ranging from 5-15% historically.But the Falcon 9 exploded during a pre-launch test. So launch policies did not kick in. And the insurance payout will fall on the roughly two dozen preflight insurers.
One business casualty of the explosion is the $285 million sale of Space Communications, an Israeli satellite operator, to a unit of a Chinese company, Xinwei Technology Group. That deal hinged on the launch of Spacecom’s Amos-6 satellite, an Israeli design.
