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Weather: The winds of change are coming

Weather: The winds of change are coming

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Published by Ian Fichtenbaum
Discussion about the role of commercial ventures in offering satellite weather data and the potential benefits of commercialisation
Discussion about the role of commercial ventures in offering satellite weather data and the potential benefits of commercialisation

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Published by: Ian Fichtenbaum on Apr 24, 2013
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04/24/2013

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SPECIALISTS IN SATELLITE, TELECOM AND AEROSPACE INVESTMENT BANKING
Weather: The winds of change are coming 
The first era of commercial satellite imaging is now behind us. Itsend was signified by the merger earlier this year of GeoEye intoDigitalGlobe to become one large provider of high-resolutionsatellite imagery to governments, militaries, intelligence agencies,private businesses and your occasional search engine portal.However jostling the journey, it can at least be said that this sectionof the commercial satellite imaging industry has finally reachedsome maturity. With a market cap hovering around $2 billion, adiverse set of clients and stable revenue base, only 50% of which isfrom the U.S. government, DigitalGlobe has at least shown onemodel of how it is possible to transition a function once thoughtintrinsic to government over to the private sector. All it took was adecade of inconsistent market growth, a few corporaterestructurings and re-brandings, some launch failures, two globalrecessions, two major U.S. military engagements and three major governmental support programs. As with most things in life, no onesaid it would be easy. All chiding aside, we are glad to see yet another satellite industry togo from where government is the owner, operator and solecustomer to where it is ‘just’ another, albeit large, customer andshareholders own the owner/operators. It happened in the fixedtelecom services business and the high resolution imagery marketis starting to look that way too, even if the process ended withconsolidation down to one firm. But no rest for the weary - thesecond era of commercial satellite imaging already has no shortageof challengers to the champion. For instance, Astrium’s recentlylaunched Pleiades satellites offer DigitalGlobe-level high resolutionimagery. Moreover, in the mid 1 to 5 meter resolution range, newer players such as Skybox Imaging, Cosmogia and Blackbridge’sRapidEye constellation should provide competition on temporal aswell as spatial resolution, betting that hordes of cheap smallsatellites can provide greater value from frequent revisits and videothan the value sacrificed by using lower resolution. In the case of the first two, both Silicon Valley firms backed by venture capital, itwill be a chance to see how hacker entrepreneurialism can take onthe traditional satellite industry. We do think that they can give bigaerospace a run for its money on cost, but we’re particularly eager to see how an open source attitude to data analytics can open upimagery to large new commercial markets while enabling newDigitalGlobe has shown onemodel of how it ispossible totransition afunction oncethought intrinsic togovernment over to the privatesector 
 
In the case of the Silicon Valleyfirms it will be achance to see howhacker entrepreneurialismcan take on thetraditional satelliteindustry
 
 
 
SPECIALISTS IN SATELLITE, TELECOM AND AEROSPACE INVESTMENT BANKING
capabilities for government users. It fits right into the military’s newprocurement mantra “Innovation, Resiliency, Affordability.”Outside of simple imagery, we already see more commercialcooperation with government in specialized areas like hyperspectralimagery and synthetic aperture radar (SAR) data. Both Astrium andMacDonald Dettwiler are partnered with the German and Canadiangovernments respectively on SAR systems. Most of this data tendsto be needed primarily by governments for land use surveys,botanical monitoring, coastal surveillance and border security sogovernments are the funders and the primary customers of thesesystems. But, even in these cases the private operator shares riskand profit by building, launching and operating the systems whileproviding services to their anchor government customer. Thisarrangement has allowed governments to keep a lid on costs whileallowing commercial demand to emerge.In most cases, the arrangement works well enough that onewonders what other similar tasks can be implemented with creativepublic private partnerships in the satellite sector. While the mostadvanced spy satellites will always be too sensitive and mostscientific craft too specialized in their mission and GPS/navigationtoo important as a universal free service, we do think there is onearea that could benefit from a move into greater commercialinvolvement. One that huge swaths of the American and worldeconomy depend on for accuracy and responsiveness, oneeveryone talks about but, as is often said, nobody does anythingabout. We refer specifically to weather.Weather satellites are in many ways the antithesis of new in thesatellite industry. The first successful weather satellite, TIROS-1,was launched in April 1960, more than two years before Telstar, thefirst communications satellite. Today, weather satellites are analmost ubiquitous interface between satellite technology and thepopulation as a whole, providing maps and forecasts right to thenewspapers, the local news and to the computer screen.In the United States, the business of weather monitoring andforecasting is handled by NOAA’s National Weather Service(NWS), a sprawling nationwide network of dozens of forecastingoffices staffed with five thousand employees. Founded in 1870 asthe Weather Bureau, it runs radar stations, deploys weather balloons and analyses weather satellite data in cooperation withNOAA’s National Environmental Satellite, Data, and Informationone wonderswhat other similar tasks can beimplemented withcreative publicprivatepartnerships in thesatellite sector.
 
 As much as 40%of the U.S.economy isaffected byweather 
 
 
 
SPECIALISTS IN SATELLITE, TELECOM AND AEROSPACE INVESTMENT BANKING
Service (NESDIS). NESDIS, for its part, operates the satellites,specifically a mix of 9 polar orbiting and geostationary spacecraftfrom which it generates, among others, most of those ubiquitousforecast maps.For the most part, the NWS does its job well and, aside from theusual grumbling about missed forecasts, usually does not catch theire of the public. Even the most hardcore of small governmentconservatives would concede that weather forecasting is a criticalrole of the government, at a very minimum for national security. Butweather forecasting is important, darn it, often too important to beleft just to a free government monopoly. As much as 40%
1
of theU.S. economy is affected by weather; from financial services,logistics and utilities to transportation, agriculture and recreation.More specifically, it is believed as much as 3.4% of U.S. GDP canbe swung by variability in weather patterns
2
. That’s over a half atrillion dollars of productivity. For this reason, a few privateenterprises, such as the famous AccuWeather (www.accuweather.com) and slightly less famous WSI(www.wsi.com) and MDA Information Systems (www.mdaus.com), have formed over the years to make use of their own techniques,systems and networks of observations to augment the NWS. Theyprovide a critical alternative set of products that are valued (andmore notably, paid for) by financial organizations, largecorporations and media organization nation and world-wide.But while the forecasting and analysis side of weather has a matureand thriving commercial sector, the actual business and operationsof collecting raw data from the sky is still government dominated.We think this is somewhat a shame for, as much as the NOAANESDIS fleet has shown to have done a fine job until now, there isalso so much more that it can do to leverage new technologies andinnovative new means of collecting weather data. Openingthemselves up to public private partnerships to development andoperate their next generation satellites is something we would likethem to consider, but so far the organization has been adamantlyopposed to pursuing in practice. That is why we cheered when wesaw the recent news of a startup called GeoMetWatch(www.geometwatch.com) announcing a $185 million developmentand hosting deal with telecom satellite operator AsiaSat.
1
Dutton, J. A., 2002: Opportunities and priorities in a new era for weather and climate services. Bull. Amer.Meteor. Soc., 83, 1303–1311.
2
Lazo, Jeffrey K., Megan Lawson, Peter H. Larsen, Donald M. Waldman, 2011: U.S. Economic Sensitivity toWeather Variability. Bull. Amer. Meteor. Soc., 92, 709–720.
 
while theforecasting andanalysis side of weather has amature andthrivingcommercial sector,the actualbusiness andoperations of collecting raw datafrom the sky is stillgovernmentdominated
 

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