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A New Bubble for the Space Launch Industry?

Iridium boosts SpaceX, but will the industry repeat the boom-and-bust of the 1990s?
June 17, 2010

Fresh off its successful Falcon 9 test flight, Space X has announced a $492 million contract with Iridium Communications to launch Iridium’s next generation of communications satellites.

Caption: An engineering diagram of one of the 72 satellites Iridium plans to start launching in 2015.
Credit: Iridium Communications.

These satellites allows customers to make calls from anywhere in the world. Iridium plans to launch 72 satellites between 2015 and 2017 (66 operational satellites and 6 on-orbit spares), although exactly how many SpaceX will be launching is unknown as Iridium will also be contracting with one or two other launch service providers.

The contract is seen as a huge vote of confidence in newcomer SpaceX, and it is hoped may provide a shot in the arm to the space launch industry in general, which has seen formerly high flyers like Sea Launch fall on hard times.

However, there is a feeling of deja-vu about this. Back in the 1990s, when Iridium was launching its first constellation, it was hoped that a number of competing satellite phone businesses would provide a large customer base that would fuel growth and, thanks to economies of scale, drive down the cost of launching satellites into orbit. It was not to be – the original company that built the current Iridium constellation, which launched in an incredibly short time of 12 months during 1997 and 1998, quickly went bankrupt. The current owners were able to buy the constellation for a fraction of what it cost to build. Competitors, like GlobalStar, also experienced severe financial problems. In part, the problem was that by the time the talk-anywhere satellites had been financed, designed, built, and orbited, an inexpensive terrestrial cell phone network had expanded, tower by tower, over much of the places humans lived, including places where no-one expected cell-phone networks to flourish, like Africa.

The rosy growth predictions for the satellite launch industry evaporated, leading to years of stagnation. Still, Iridium and GlobalStar have managed to establish viable businesses for travelers either going to truly out of the way places and those who can’t or don’t want to deal with hooking up to the local cell phone network. Hopefully history will not repeat itself and more stable pattern of growth for the launch industry will emerge this time around, finally helping to drive down the price tag of getting to orbit.

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