Editorial

The Hare and the Tortoise

by Jon Fairall

Building a commercial space imagery business still demands time and commitment. Recent events in the US show that despite the protestations of vendors, a commercially sustainable industry is still a long way off.

Remember the fable of the hare and the tortoise? Aesop tells us that the race belongs not to the fastest, but to the most persistent. Plodding wins.

A cynic would say it's obvious Aesop was never introduced to Cathy Freeman. Not so cynically, it's clear that John Copple, the now ex-chief executive of satellite imagery provider Space Imaging, hasn't absorbed the message either. He resigned last month, denying that he took a dim view of the future of the business.

We shouldn't be too hard on Copple. Aesop never went to management school, but I have long suspected that the race for market share in the imagery business was dominated by Aesop, not by market gurus. The winner will need to be persistent.

The thing that struck most market observers was that Copple chose to resign one week after the Pentagon's National Imagery and Mapping Agency announced that Space Imaging, along with competitor DigitalGlobe, would share half a billion dollars -probably the biggest single mapping contract ever given. The project is called ClearView, and the money will be doled out over five years. If Orbital Sciences can get its OrbView satellite up during that period it will also benefit from the US taxpayers' largesse.

The size of the contract reflects the fact that the military establishment has decided that a commercial remote sensing industry is a national security asset. It also signals that industry insiders now understand that a non-military industry is not possible, at least not yet.

This matters in the Australian satellite imagery industry too, because it seems that those who derided the potential of commercial remote sensing are still pretty much right. As ever, commercial remote sensing will happen tomorrow.

Even with a government bail-out in the name of security, all the US satellite companies are in a dire position financially. Orbital Sciences is struggling to fund the launch of OrbView-4 while beating off creditors. Space Imaging has declined to announce a follow-on satellite to Ikonos-2, which indicates that the company will be reliant on one bird for some time into the future. In fact, without their military clients, they would all be broke tomorrow.

The other operators of high-resolution satellite systems, the Europeans, Israelis and Indians, have never pretended that their systems had a commercial justification. To be sure, if they can make some money, that's nice, but the primary justification of such systems is military. Truly commercial proposals, such as the Australian ARIES hyperspectral initiative, never stood a chance of getting off the ground without a government sponsor.

In this context, it is pleasing to note that the Department of Defence recently advertised a tender for a contractor to undertake a study of the potential of satellites to provide surveillance platforms to cover northern Australia.

Such a program makes obvious sense, especially if some of the cost could be defrayed by the high-resolution imaging requirements of the civilian sector both in Australia and overseas.

Australian purveyors of satellite systems, such as those at the Co-operative Research Centre for Satellite Systems, should not hold their breath, however. History suggests that if the DoD wants a satellite it will almost certainly insist on a US provider.

All this begs a question: will it ever change? By all accounts, early attempts to market high-resolution data were remarkable as much for their optimism as for their naivety. A severe dose of reality resulted in a number of companies exiting the market very quickly. But they have been replaced. Prices have dropped, as have, no doubt, growth expectations. The ever onward march of technology is making it easier to manipulate the imagery.

Still, one needs to ask, is it enough? In an interview in the US recently, Copple noted that Space Imaging had anticipated a hefty revenue stream from the media, especially newspapers and TV news. But his company had been totally underwhelmed by the potential of imaging from space. The vagaries of remote sensing, such as orbits, weather and dwell time, just do not gel with the demands of the media for a reliable source of information and imagery.

Other industries which are often touted as potential customers also find the case for space imaging less compelling than it should be. It's of interest to farmers, but only if it comes at a very low price. In fact, much useful resource management can be done from Landsat-style imagery for much less money. Aerial, rather than satellite, companies seem to have a compelling case with the utility companies; utilities most often need to monitor linear features with very high resolution images. It's easy to do from an aircraft or helicopter, harder from a satellite. Even the best satellite imagery is at lower resolution than most local government sites would like.

None of these problems is a red light for satellite imagery, but together they do suggest that it needs to be considerably cheaper than aircraft imagery before it will achieve market share.

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(This page last modified on 28 March 2003)