Space and Communications
"International Conference and Exhibition Keynote Address"
February 03, 2000
I hope you enjoyed the visual experience [video screening] we offered you this afternoon. We did it as a tribute to the satellite industry and to the folks like you who make it such an exciting and dynamic business to be in.
In the presentation we just saw, Leonardo da Vinci takes a brief look at how, over the centuries, advances in communications and transportation have gone hand-in-hand. In fact, one reason we chose Leonardo to narrate a video about communications was because of his early research into flight.
Since 1916, much of the business of The Boeing Company has been about putting people in touch in a physical way - by moving them from place to place. Allowing them to have face-to-face communications, to maintain relationships, to conduct business, to explore the world. As we move into the 21st Century, satellite communications is doing the same thing, but in a virtual way. Ubiquitous connectivity is the future and satellites will be a big part of it.
The point I think Leonardo makes in the video is that throughout history, communications has had an impact on transportation and vice versa. Years ago, if you wanted to communicate with someone far away, you had to go there yourself or send a messenger.
The telegraph and, later, long-distance telephones, made the messenger obsolete. But for these new technologies to be implemented, advances in transportation were required -- trains to string telegraph poles and special ships to lay underwater cable.
RF [radio frequency] communications followed and suddenly we could communicate with things that moved. But RF had limitations -- it couldn't provide global connectivity. Satellites could, but required a new method of transportation -- space launch vehicles. But enough about history...
What I want to talk about today is how I see the future of the satellite industry... how I see the market for information and communications services and related support infrastructure shaping up over the next 10 years... and where I think the real growth will occur.
One can envision a future in which we have the ability to be connected to people, resources and information -- whenever we want and wherever we are. That connectivity will be seamless and simple because the underlying complexity of required systems and infrastructure will be transparent to the user, connected by an invisible web of integrated systems.
In this fast-paced world of the future, our lives will be increasingly mobile and dynamic. Seamless connectivity will be required to enhance our personal and professional lives. I'm sure many of you know the numbers better than I do, but projections for the space-based Information and Communication market range from around $40 billion today to $120 billion or more per year by the end of the decade. (That's down significantly from prior forecasts but still huge growth).
Given that assumption, let's take a look at where the industry is today: First let's look at the market. We've all heard about the troubles in the industry. Last year's headlines sent a chill through the financial markets that remains today. But is the picture all bad? I don't believe so, especially in the GEO market.
In 1999, 25 commercial geostationary satellites totaling $3 billion were put on order. At the end of last year, there was a backlog of about 350 satellites - nearly half of them were medium- to large-sized GEOs. In fact, by some estimates, last year was the satellite industry's second most active year ever, second only to 1995, and up 10 percent from 1998.
True, there were definite signs of slowdown in 1999, particularly in Asia and Latin America. These regions that had been driving much of the industry's growth, ordered only two satellites last year.
But now even Asia and, to a lesser extent, Latin America, are showing signs of coming back. The fact is, satellite-based communications is an enduring need in these areas of the world and will be for a long time to come. So, despite some recent press reports to the contrary, in a lot of ways I think the future remains bright. But to a large extent, this depends on how well we can address, manage and meet customer expectations.
In a world of 10-10-321... 5 cents a minute... and 30-day money-back guarantees, our "offerings" -- whether products or services -- must be high-value, user-friendly and flexible to changing demands.
The real value to customers, and the real growth opportunity that I see, is in providing seamless services that integrate separate systems and provide customers hassle-free, transparent operations.
No customer today wants a voice system, a location system, a data system and an entertainment system, separately. Customers want -- and demand -- integrated solutions... an answer that can connect the dots. For instance, connect the dots between a GPS system, a communications satellite, a ground system and an airplane to provide an integrated air traffic management system -- allowing us to fly safer and put more planes in the sky.
At Boeing, when we talk about a network of separate systems operating together as a single unit, we call it "System of Systems." One example of that kind of system interoperability is called CSEL -- the Combat Survivor Evader Locator.
This product provides soldiers in the field with multiple satellite links for over-the-horizon communication, voice, global positioning, secure digital messaging and the full spectrum of radio and ground equipment interfaces. This is a complete systems solution in a package weighing about the same as a paperback novel. (Wouldn't it be great to have one of these things in your briefcase, just like we now carry cell phones?)
Tomorrow, the complex systems that allow CSEL to work will be imbedded in every form of service we use. The satellite and information technology industries will lead the way.
In fact, they already are.... We've all witnessed the explosion in demand for bandwidth over the past 10 years. And, while terrestrial systems are building out to address much of the demand, satellites will play a significant role in addressing this fundamental need.
Just look at all the programs in work if you want any indication of whether or not this is true: SpaceWay, Astrolink, Skybridge, Teledesic and CyberStar.
We also know this business isn't for the faint of heart. We are constantly on the cutting-edge of technology, working in areas of extreme environments. Much can go wrong and people do focus on our failures. But if you step back, your successes have been many.
Those of you who are sitting in this room today have changed our world in so many ways. You've brought us products and services such as: digital broadcast,VSATS, Earth observation and climate-monitoring satellites, GPS and related applications, national security and reconnaissance imaging, and near-instant connectivity around the world, anytime, anywhere, with no infrastructure required.
So what are the issues we, as an industry, face? What impediments must be addressed to grow this market and to satisfy customer needs?
I think there are two: performance and compliance. First, performance -- We must repair our quality image both in terms of launch vehicles and satellites. We must provide customers with reliable access-to-space and, once on orbit, high-quality, reliable service at a competitive price.
On the financial side -- We must live up to expectations and stop surprising Wall Street. Individual companies suffer from surprising analysts and our industry can't do that and expect to have investors' confidence.
In short, technically and financially, we must perform!
In the area of compliance -- The communications marketplace is a global one. Government regulators and we as an industry must address the issue of export control. Many of us in industry spend too much time complaining about export controls instead of facing up to the fact that we're part of the problem and doing something about it.
Certainly national security must be protected - Boeing clearly understands that - but we, like many, have not done a very good job in this area.
In my view, there are three things we [industry] must do collectively with the government:
- Redefine the critical technologies
- Streamline the existing licensing process
- Ensure that the government is properly staffed in this area So, those are some of the challenges we face, as well as some of the tremendous opportunities within our reach if we address them successfully. And just as if climbing a mountain, it's important to look back once in awhile and marvel at the terrific progress we've made along the way.
Today the satellite industry provides services hardly imagined 15 years ago. Far be it from me to say with certainty what the future will look like. I'll leave that to the likes of Leonardo, and to those of you in this room, to create the future.