Space

September 15, 2003
Commercial prospects for ISRO's GSLV

Bharadwaj Ramesh

The development of a geostationary launch vehicle (GSLV) by the Indian Space Research Organization (ISRO) is a significant technological milestone in India's continuous endeavor for self-reliance in its space program. However, successful commercialisation will face challenging technical, market and international regulatory environments.

The "launch services market" is defined as the market for building, marketing and launching rockets that carry satellites into their proper orbits in space. The primary companies involved in this activity are Ariane Space (Ariane) of France; International Launch Services (ILS) - a joint venture between the American defense and aerospace giant Lockheed Martin and the Russian organisations Khrunichev State Research and Production Space Center and RSC Energia; the American Delta family of launch vehicles developed by Boeing; and Zenit Sea Launch, a joint venture between Boeing, RSC-Energia, Kvaerner of Norway and SDO Yuzhnoye/PO Yuzhmash of Ukraine. Other players include the Chinese who have developed the Long March rockets and the Japanese, with their H-IIA launch vehicle.

With the launch of India's first GSLV rocket in April 2001, India joined the select group of countries with the ability to launch a satellite into the geosynchronous orbit. Satellites in a geostationary orbit, 36,000km above the earth on the equator, appear to remain fixed over a particular part of the world as they move at the same speed and direction as the earth's rotation. This makes geostationary orbit the ideal parking spot for communication satellites as they can provide continuous coverage from this location. The current version of the GSLV can carry up to 2,000kg into the geostationary orbit.

GSLV to play pivotal role
With India's communication needs increasing rapidly, the GSLV will play a pivotal role in placing ISRO's satellites in orbit. A GSLV launch is cheaper by 40 percent to 50 percent as compared to the estimated $60 million launch fee that ISRO pays Ariane to launch the two-ton INSAT satellites. This will save valuable foreign exchange. GSLV will also enable ISRO to exercise full control over its satellite development and launch schedules without having to be on the 'waiting list' of a launch vehicle provider or be negatively impacted by a launch failure occurring in a rocket model similar to one booked for its satellite launch.

Strategically, satellites also play an important role in national defense during times of war (and peace). It is important for India to have its own independent access to space without having to depend on foreign countries. Assured, independent access to space is the reason why, despite the glut of launch vehicles in the market, the US Air Force funded the development of two new classes of launch vehicles (Atlas V by Lockheed Martin and Delta IV by Boeing) to the tune of a billion dollars.

Commercially, the most lucrative and constant piece of business has been the satellite operators' demand for launch services to lob their communication satellites into the geostationary orbit. India now has the chance to penetrate this market with a relatively low-cost vehicle, priced at least 25 percent lower than other launchers. Getting into this market will secure a source of revenues that can fund ISRO's future R&D efforts, apart from aligning it more closely with the international trends.

Promising market potential
According to Frost & Sullivan, the market potential for a low cost launcher is promising. Launch and its associated costs traditionally comprise about half of the total cost of a satellite in-orbit. With excess capacity and declining prices for satellite transponders, operators are looking at ways to reduce costs. Besides, a low-cost launcher will enable the operators to go in for smaller, cheaper satellites instead of the larger, more expensive ones because the break-even levels are lower.

The major western launchers are betting on heavy-lift vehicles, a development that presents ISRO with an opportunity to launch satellites weighing less than 2,500kg. A low-cost Asian option will encourage the developing Asian countries that need to launch satellites. ISRO can also leverage its expertise in satellite manufacturing to package a satellite plus launch contract that will significantly expand the market for its products and services. In addition, similar to the current arrangement with Ariane for launching micro satellites, ISRO's GSLV can complement Ariane's heavy-lift capabilities.

Challenges before GSLV
Time to market will be the first issue, according to Frost & Sullivan. GSLV will launch its first communications satellite payload only in 2003-2004 (the INSAT-3D). Technically, the rockets cannot be called 'fully indigenous' as they use the Russian cryogenic engines (the very same engines over whose import the US raised objections fearing transfer of technology issues). ISRO will introduce its own cryogenic engine only by 2004. Several more successful launches will be required to demonstrate the reliability of the launch vehicle. Till a launch vehicle attains reliability, insurers do not provide launch insurance for the satellites.

This will impact demand negatively as operators will be unwilling to take the financial and business risk of launching uninsured satellites on an unproven vehicle.

The second issue will be its ability to lift heavier payloads. The commercial market for the present version of the GSLV has shifted. The average mass of a commercial geostationary communications satellite launched in 2002 is approximately 3,800kg. The present version of the GSLV is capable of lifting only 2,000kg into orbit. Frost and Sullivan believes that the market for satellites weighing below 2,500kg will be limited, and satellites weighing between 3,500kg to 4,500kg will form the backbone of the commercial communications satellite business - a market that Atlas V, Delta IV and Ariane 5 will dominate. These launchers can lift payloads of over 6,000kg today. In contrast, the GSLV is likely to increase its payload mass to 4,000kg only by 2008.

Ironically, this may result in a situation between now and 2008 when ISRO's satellites get larger and heavier to keep pace with the increasing Indian demand for communications. ISRO may still end up using a foreign provider due to the GSLV's payload constraints.

The third issue will be that the price advantages of an ISRO launch may actually prove to be not very significant by the time the vehicle is ready for commercial deployment. Due to the glut of launch vehicles in the market, prices for satellite launches are already declining. With Ariane offering co-launches, prices have come down even further. This, coupled with competition from the Chinese rockets, will make it difficult to bank completely on low prices to secure new launch orders.

However, the biggest obstacle to the commercial prospects of the GSLV according to Frost & Sullivan will be the American sanctions on export of satellites that are built in the United States or include components that are made in the US. The major manufacturers of commercial satellites are Americans and Europeans (even European satellites use American sub-components). These sanctions pretty much shut the door for non-western entrants into the launch service marketplace, as the satellite customer needs to secure US regulatory approval to ship the satellite out of its country of manufacture.

The Chinese Long March rockets' commercial prospects have already been crippled by the US export sanctions. Recently, South Korea shifted two rocket launches to Russia, bowing to American pressure against using Indian and Chinese rockets due to technology transfer concerns. There are remote chances of these regulations being waived or relaxed, despite the lobbying by the US space industry.

Kicking into high gear
According to Frost & Sullivan, the successful launch of the GSLV was a major shot in the arm for ISRO and embellished its reputation internationally as a very talented and dedicated organization. By 2005, we can expect to see the GSLV program kicking into high gear and paying for itself over the years by launching ISRO's satellites. Commercial success in the international marketplace will depend upon the ability to lift heavier payloads, demonstrating a record of reliability, a marketing alliance with a western launch service provider, integrating ISRO's satellite manufacturing and launch service activities, the changing nature of ties with the United States and a close alignment of effective lobbying with the interests of the Indian government's foreign policy initiatives.

(The author is an industry analyst, Satellite Communications, at Frost
& Sullivan, Chennai.)

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