A report in the London Times says that the high cost of satellite launches are making communication companies "flinch" at investing in new satellites. New, larger satellites are required to handle the increasing volume of mobile traffic especially in Asia and India.
The report says that the new generation of communication satellites (which cost $650 million and up) weigh up to 8 tons, and only the Ariane 5 rocket is currently commercially available to carry the satellites up into high orbit. With a virtual stranglehold on the market, Ariane is demanding $120 million per launch.
There is concern that the high launch and development costs will begin to slow down the introduction of new or upgraded communication services. Satellite makers like at least two launch suppliers, and until there is a competitor to Ariane, they are reluctant to move ahead.
As explained in the report by Jean-Marie Robert, the head of telecom satellites at Thales Alenia Space, â''The way this industry works is that we build the satellite and the buyer then chooses the launcher they want based on price and reliability. But we need at least two launchers to have a competitive industry and to avoid expensive launches."
The high costs involved may also force space insurance rates to rise, further increasing the reluctance of communication companies to send up new satellites. Insurance costs have been rising, and the recent loss of the $150 million AMC -14 satellite which was to deliver television services to the US won't help.