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Roger Rusch
President
TelAstra, Inc.
In the past 10 years, promoters have announced dozens of new
satellite communications projects. Based on the predicted market size, cost, schedule, and
capability the business cases look good. Investors have been impressed by the potential
profit of these projects, but the financial analyses are no better than the assumptions.
Some propositions are based on untested, high-risk concepts. Some of these initiatives
have excellent prospects, while others have little to no profit potential.
The purpose of this workshop is to provide tools and techniques for
evaluating satellite business plans. The presentation has been prepared for a wide range
of professions in the satellite communications industry including financial analysts,
program managers, systems engineers, suppliers of components and Earth terminals and other
investors in satellite communications projects. The briefing will begin with a brief
overview of the types of communications satellite services which are being proposed and
developed. Next, there will be a short review of some of the most significant risk issues
in satellite communications, including the use of non-geostationary satellites, elliptical
orbits, time delay (latency), service quality, link margins, rain fading, elevation
angles, onboard processing, passive inter-modulation problems, and inter-satellite links.
This workshop will primarily examine the practical elements of a business case. The talk
provides tools and techniques for testing the validity or credibility of each element of
the pro forma and is designed to examine the defining elements of the program. Examples
will be taken from current programs and references will be provided for further study.
Areas to be reviewed:
- Market demand predictions. Why have some estimates been highly inaccurate? What methods
provide better estimates?
- Computation of satellite capacity. How can you determine capacity? Capital cost
estimates for satellites, launch vehicles, and insurance. What tools are available to
estimate costs and anticipate overruns? Program development schedules. How long will it
really take to build the system?
- Operational cost for satellite systems. What does it cost to operate satellites? How
many satellites will need to be replaced due to failures? Service provider costs. What
cost does the service provider have? How much of the retail revenue goes to the service
provider and how much to the satellite operator?
- Expenses for equity and debt. What return on equity do partners expect? What interest
rates are paid for project debt financing?
- Revenue ramp up. How rapidly will customers adopt the service? Earth terminal costs.
What factors determine the terminals cost and acceptability?
- Regulatory issues. What rules or laws could limit profit potential?
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