Communications Satellite Constellations
Massachusetts Institute of
Technology
Overview
Version 1.1,
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Technical Success
and Economic Failure Architectural Design
Space Exploration Impact of Technology Infusion
and Policy Decisions Real Options and Staged
Deployment |
Summary
In the early 1990's there was
a considerable amount of enthusiasm about expanding opportunities in the global
telecommunications market. Within that industry there were optimistic
projections for mobile satellite services (MSS) in general and global satellite
telephony in particular. The idea of having telephones that could operate
wirelessly almost anywhere on Earth, without ever being "out of
range", was revolutionary at that time. Early market research suggested a
substantial market for low bandwidth voice and data transmission services for
international business travelers, offshore oil rig workers and field geologists,
among others. This led to the conception, design and launch of a number of
communications satellite constellations such as Iridium (66 satellites) and
Globalstar (48 satellites).
Each of these constellations
broke new ground in terms of technologies such as handheld satellite terminals
and intersatellite links, as well as bulk manufacturing, launch and
simultaneous operations of large numbers of spacecraft. System design was
conducted during 1991-1997 and Federal Communications Commission (FCC)
licensing of these systems occurred in 1995. The total capital investment ($5.7
billion for Iridium and $3.3 billion for Globalstar) was secured through a mix
of partner companies, public offerings and debt financing.
After launch and initial
checkout of the constellations, commercial service started in November 1998
(Iridium) and March 2000 (Globalstar). Very quickly it became apparent that the
earlier market predictions had been overly optimistic and that the actual
subscriber base was much smaller than originally expected. Only a small
fraction of system capacity was used and, consequently, revenues were
insufficient to generate a profit or to service debt payments. Iridium filed
for bankruptcy protection in August 1999, Globalstar followed in February 2002.
Both constellations continued to operate in 2003, with moderate success, in a
post-bankruptcy mode. Ironically, the events in the aftermath of
This industry systems study takes
a holistic view of constellations of communications satellites as a prime
example of complex engineering systems. In order to understand such systems one
must jointly consider the technological, architectural, economic and policy
aspects that ultimately determine system success and failure. The study uses a
combination of readings, data files, computer simulations and assignments to
explore the history, challenges and decision making in the context of satellite
constellations. The pedagogy decomposes the subject into four units of
increasing complexity and subtlety.
Our hope is that the lessons
learned from Iridium and Globalstar will serve to better architect future space
systems as well as other engineering systems that share similar
characteristics: high technical and social complexity, large investment
required, new technologies and paradigm shifts, multiple time scales and
sources of uncertainty.
Technical Success and
Economic Failure
This unit takes us back to
1987, when the idea of global communication satellite constellations for mobile
users was first conceived. The summary of unit 1 recounts the history of
Iridium and Globalstar from 1987 to 2002. The technical case discusses the
technical foundations of satellite constellations: space and ground segment
architecture, spot beams, multiple access and intersatellite links. The
business case includes market forecasting, lifecycle cost analysis, financing
and pricing strategies. Various articles serve as optional background reading
material. The fundamental question addressed is: "How can it be that these
complex engineering systems were so successful technically, but ultimately ended
up as business failures?"
Architectural Design
Space Exploration
When designing complex
systems, like satellite constellations, particular attention must be paid to
the chosen architecture. Each of the systems that were actually built (Iridium,
Globalstar) each represent one of dozens of architectures and thousands of
potential designs that could have been chosen. This unit therefore introduces
the notion of design space exploration. A computer simulation captures the
important elements of the satellite constellation design problem. In this
process high level design decisions such as the orbital altitude of the
constellation or the transmitter power aboard the satellites are mapped to
system performance, lifecycle cost and capacity. Iridium and Globalstar are
used to benchmark the simulation. Those architectures that are non-dominated
and approximate the Pareto frontier are of particular interest.
Impact of Technology
Infusion and Policy Decisions
In real life, system
designers and architects have to make a number of difficult decisions and also
cope with the consequences of decisions that are made by others. An example of
the first kind is the incorporation of new technologies in
complex systems like satellite constellations. The effects of
technology infusion are quantitatively modeled by their impact on the design
space and the Pareto architectures in particular. Examples of technologies are large
scale deployable reflectors or the use of optical intersatellite links. Policy
decisions are an example of exogenous inputs that generally lie outside the
sphere of influence of system designers. The effect of policy decisions, such
as technology export or launch vehicle selection restrictions can also be
captured in a similar fashion.
Real Options and Staged
Deployment
One of the lessons learned
from Iridium and Globalstar is that market uncertainty must be considered
during conceptual design. Rather than designing such systems for a fixed
capacity one should consider a "staged deployment" approach. By
embedding real options in the design (e.g. carry extra propellant for maneuvering)
one gives managers the flexibility to grow system capacity in stages if market demand
warrants it. This unit shows how demand uncertainty can be modeled and how Real
Options Analysis can be used to identify system evolution
paths that can reduce economic risks of deploying large
capital intensive systems. Staged deployment of satellite constellations will also
require some amount of on-orbit reconfiguration. This approach marks a
significant departure from traditional engineering practice and is also
applicable to other types of engineering systems.
Disclaimer Statement: The
material in this industry systems study was created for educational purposes
only. In no way do the statements made in this study express official positions
of the Massachusetts Institute of Technology. The material may not be used for
any purpose other than classroom or distance learning instruction. Copyright ©
2003 M.I.T.- Engineering Systems Learning Center.
Author Information: Prof. Olivier de Weck (deweck@mit.edu),
Room 33-410, Prof. Richard de Neufville (ardent@mit.edu) , Room E40-245,
Darren Chang (darrenz@mit.edu) ,
Mathieu Chaize (chaize@mit.edu),
Massachusetts Institute of Technology,