Scramble to the Launching Pad

By Stephen Koepp.

European space officials watched nervously last week as a gleaming white Ariane 3 rocket awaited the final seconds of countdown on its jungle-ringed launching pad in French Guiana. While the Ariane program has generally been a success, three of its 16 missions since 1979 have ended in costly accidents. This time the European Space Agency's unmanned craft carried a payload of two satellites worth a total of $200 million: G-Star II, owned by the U.S. communications company GTE, and Brasilsat S2, a Brazilian counterpart. The countdown ran smoothly until just 4.9 seconds before ignition, but then a sudden computer foul-up scrubbed the mission. Ariane officials hope to try again this week.

The breakdown temporarily frustrated the eleven-country European consortium's continuing effort to demonstrate its rocket's reliability and clinch an even larger share of the lucrative satellite-launching business. Ariane has been the free world's only active satellite carrier since the explosion of the space shuttle Challenger on Jan. 28, which put the U.S. program out of commission for a year or more. The shuttle's hiatus leaves a big opening in the launching market, a business worth at least $500 million a year. Between now and 1990, an estimated 60 commercial satellites will need a lift into orbit. While the National Aeronautics and Space Administration struggled last month to find out the cause of the shuttle disaster, an Ariane launch successfully put two satellites into orbit. Before the accident, the shuttle held two-thirds of the market and Ariane had the rest.

Several entrepreneurs in the U.S., along with government-run rocket . programs in Japan and China, now aim to give Ariane a run for its money. NASA, which previously tried to protect its turf by discouraging U.S. satellite- launching entrepreneurs, earlier this month came out in favor of private rocket services to take up the slack left by the shuttle's interrupted schedule. Reason: Congress is worried that U.S. companies will become dependent on foreign satellite-launching services.

Until January's accident, the space shuttle had been scheduled to carry aloft seven satellites this year and 19 in 1987. That total included two commercial satellites in 1986 and six next year, at a launching fee of up to $40 million each. Since NASA has scrapped that plan, several customers have started shopping around. Western Union was forced to postpone the June trip of its Westar VI, a 24-channel communications satellite designed to replace an older, twelve-channel model. GTE Spacenet had planned to send up its G-Star III, which would relay telephone and television signals, on the shuttle in November. Says C.J. Waylan, the company's president: "We're not abandoning the shuttle, but we're not going to wait inactively either. We have customers to satisfy."

Yet the only alternative at the moment is Ariane. The consortium has been so profitable, posting earnings of $24.3 million in 1985 on revenues of $200 million, that it plans to make a public stock offering by 1988. The agency has just completed a second, $140 million launching pad on South America's northeast coast that will double Ariane's annual capacity from five missions to ten.

Several satellite-launching entrepreneurs in the U.S. hope to get their first commercial flights off the ground within two years. Houston's Space Services, headed by former Astronaut Donald ("Deke") Slayton, will charge about $15 million for a launch when it begins payload-carrying flights on its Conestoga II rocket, which will be able to handle light-weight satellites up to 1,800 lbs. Another company, Maryland's Transpace Carriers, plans to launch larger satellites on Delta rockets and hopes for 13 missions by the end of 1989.

The shuttle's hiatus has prompted investors to start thinking more favorably about space ventures. Says George Koopman, president of California's American Rocket, another satellite-booster developer: "A number of them have come running over to talk to me. Now there's serious interest in us."

The need for alternatives to the shuttle may bring a windfall for the + makers of heavy-duty, conventional rockets that not long ago were considered almost obsolete. Later this year Martin Marietta will begin building ten Titan rockets (total cost: $2.1 billion) for the Air Force. General Dynamics is assembling the last two of the big Atlas-Centaur rockets that it had planned to produce, but the company calculates that it could build more of them from scratch in about 21 months.

The American satellite launchers will face new competition from foreign countries. China, which has been putting its own payloads in space since 1975, has signed an agreement to launch a Swedish satellite with its Long March II booster for $4 million. Japan, meanwhile, is experimenting with a rocket that could launch satellites by the early 1990s.

American rocket launchers will also have to confront insurance problems. Because several satellites have been lost in accidents, costs have zoomed to the ionosphere. Premiums rose from about 3% of a payload's value three years ago to as much as 33% today. The insurance costs could eventually depress the satellite business by prompting communications companies to switch to cheaper, earthbound transmission devices like fiber-optic cables.

But for the next few years, aerospace analysts expect the demand for communications satellites to grow at a heady 30% annual pace. That should provide a lucrative business opportunity for whoever can successfully lift a rocket off the launch pad.

With reporting by Thomas McCarroll/New York and Adam Zagorin/Paris