A Setback, Palapa N1 Failure
The recent failure of a Long March-3B rocket carrying the Palapa-N1 satellite is a setback for the Chinese space industry, with this being the second launch failure in a month following the failure of a Long March-7A. However, the launch failure also represents a setback, and in some instances opportunities in the Indonesian satellite communications (satcom) market. A nation with huge needs for space-based connectivity now finds itself with ~10 Gbps of capacity less than was expected, a not insignificant hole in coverage over one of the world’s largest satcom markets.
Indonesia is perhaps not the first nation that comes to mind when it comes to pushing out the technological frontier, but in the satcom realm, the country has long been among the leaders. For a more complete history of the Indonesian satcom market, see WestEastSpace’s previous article here. The first Indonesian satellite was launched in 1976, with a Boeing-built Palapa-A1 launching on a Delta rocket. Palapa-A2 followed the next year, and Indonesia was connected by 24x C-band transponders for video broadcast and telecommunications services.
The Palapa-B series of satellites followed in the 1980s, with this including one of the truly astonishing engineering feats of human history, when the Palapa-B2 satellite failed to reach desired orbit, and was rescued in LEO by astronauts, returned to earth, refurbished, and re-launched as Palapa-B2R.
Throughout the 1990s and 2000s, Indonesia has seen even more satcom capacity coming into the market, and is one of the few countries in the world with several national satellite operators, namely Indosat Ooredoo, Pasifik Satelit Nusantara, and PT Telkom.
The advent of high throughput satellites over the past decade or so has seen a huge increase in the amount of available satellite capacity, and a subsequent decrease in costs for most satellite capacity. In Indonesia, a country of 270 million spread across more than 17,000 islands, this has meant a plethora of uses for this new HTS, and indeed, some of the biggest contracts in recent years in terms of volume of capacity have come from Indonesia.
This has included iForte buying all the Ku-band HTS capacity on a multi-year contract, as well as multiple C-band transponders for the lifetime of the satellite, on Telesat’s Telstar-18 Vantage. Another example is the 5-year, 1.3 GHz contract SES signed last year with Teleglobal to bring broadband to rural Indonesia.
If we assume a contention ratio of 2 bits per hertz, and a ridiculously conservative price of $100 per Mbps, this corresponds to more than $15M in total contract value (1.3 GHz X 2 bits per hertz = 2.6 Gbps = 2,600 Mbps X $100 per Mbps per month = $260,000 per month = $3.12M per year X 5 years = $15.6M). Despite the impressive size of these two deals, they are relatively small in comparison to the mother of all Indonesian satcom projects, the SATRIA satellite, a 150 Gbps dedicated HTS to be manufactured by Thales Alenia Space and operated by a consortium run by PSN. The total budget for the 15-year lifetime of the SATRIA satellite is $1.5B, with the satellite expected to connect 149,000 public buildings around the country, of which 87% will be schools, clinics, and government offices outside of the main island of Java. In short, satcom has been for some time a major part of the connectivity infrastructure in Indonesia, and in recent years, it has started to upgrade to the 4G/broadband age with a lot more capacity.
Which Takes us to Palapa-N1
The failure of Palapa-N1 will ultimately have a short-term impact on the Indonesian satcom market, but potentially a longer-term impact on China’s space exports. In the short-term, the 10 Gbps on Palapa-N1 would have been a huge amount of capacity in most countries, and indeed is not an insignificant amount in Indonesia by any means. However, compared to other markets, it is less significant in Indonesia, with the country home to many tens of Gbps of capacity today, and with several times that amount in a fairly serious pipeline. As such, the failure of Palapa-N1 will certainly be a negative impact on PSN, and may lead to tightness in supply in the short-term, but relative to other markets, 10 Gbps in Indonesia is less. As an aside, this is the second time in less than a year that a Chinese-built satellite with Indonesia capacity has failed to reach orbit, with last August’s ill-fated ChinaSat-18 having an admittedly much smaller, but still sizable Indonesia Ku-band beam (pictured).
These two failures in the context of Indonesia, however, are less critical. There is a lot of satellite capacity over Indonesia today, and a lot more on the way, with the above-mentioned SATRIA satellite (around 15x the size of Palapa-N1) planned for completion in 2022. Today, the country has the multiple above-mentioned HTS payloads (although they are partly leased), as well as additional HTS capacity on Kacific-1, Apstar-5C, and other non-HTS satellites. While several of these satellites are primarily addressing other markets (Kacific, for example, has done an impressive job of generating strong user interest in a variety of Pacific island nations that represent small numbers of people in absolute terms, but relatively large markets for satcom), there is spillover capacity over Indonesia that will undoubtedly become a slightly hotter commodity now.
Interestingly, at the time of the contract-signing for Palapa-N1 in 2017, there was also a non-binding agreement for a PSN-7 satellite that would aim to deliver 100 Gbps of capacity on 104 spot beams in Indonesia, Philippines, and broader Southeast Asia. Whether the failure of Palapa-N1 to reach orbit will increase the likelihood of a PSN-7 project being undertaken is unknown, however it is safe to say that since 2017, China has made reasonably decent strides in HTS technology, with the soon-to-launch Apstar-6D representing a several times increase in capacity over a satellite such as Palapa-N1, and with ChinaSat planning around 400 Gbps of total capacity by around 2023, with this coming primarily from 2–3 new/replacement satellites that would implicitly be manufactured by CAST. This may set us up for CGWIC trying to pitch a larger replacement satellite for the failed Palapa-N1, namely the PSN-7 satellite, with the major challenge at that point becoming one of financing and credibility.
So, Palapa-N1 is somewhere in the Pacific Ocean off the coast of Guam. From there, it’s unlikely to be able to connect too many Indonesians to the internet. This situation is slightly unusual for China. There have been times in the past where China has sold a large GEO comms satellite to a foreign customer, however this has predominantly been to foreign governments, or at a minimum, satellite operator companies that are wholly owned by foreign governments. The Nigcomsat-1 satellite failed shortly after launch in 2007, and China replaced it at no cost with Nigcomsat-1R. The Venezuelan national satellite Venesat-1, manufactured by China and launched in 2008, recently failed in orbit 12 years after launch, with replacement plans currently unclear.
In the case of Palapa-N1, the satellite represents arguably the only real commercial satellite sold by CGWIC that has reached the launch pad, with others such as a commercial contract with Thaicom in 2016 having been initially dubiously commercial, and having since seen limited progress (it was originally supposed to launch in 2019….we have not seen construction begin). As such, CGWIC will have significant incentive to “make things right” in whatever way is necessary in this context, especially given the importance of Indonesia in China’s Belt and Road Initiative, and the similarly significant importance of telecommunications infrastructure in China’s broader export strategy.
Moving forward, China’s traditional space industry will have a dented, although not diminished reputation. Multiple recent failures have raised eyebrows, though before such failures China’s reliability had been quite good. For example, the Long March-3B rocket had conducted 66 launches prior to the launch of Palapa-N1. The first launch, in 1996, was the infamous failure of Intelsat-708. Launches #2–66 involves 64 successes and two partial failures, with 26 consecutive successes prior to the Palapa-N1 failure. While the replacement plan for Palapa-N1 is not immediately clear, there is clearly significant demand for satcom capacity in the archipelago, and significant incentive for China to replace the Palapa-N1 satellite.
About The Author
Blaine Curcio, Founder at Orbital Gateway Consulting
Blaine Curcio has spent most of his career working in the satellite communications and commercial space industry, with experience at satellite operator SES, and with a multiple industry consulting and research firms. Blaine has spent his entire career in Asia, and is a recognized expert on several topics related to China. This has included giving lectures on the Belt and Road Initiative, China’s macroeconomy, and the Chinese space industry. He regularly attends conferences throughout Asia as a speaker and moderator, and is a contributor to SpaceWatch.Global, Talk Satellite, and the Satellite Executive Briefing, among other industry publications.
Originally published at https://westeastspace.com on April 11, 2020.