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Next stage ignites in the rocket biz

You'd expect SpaceX's founder, Elon Musk, to be happy about winning a $492 million contract from Iridium to launch 72 of its next-generation telecommunication satellites, in what he called "the biggest commercial launch deal in history."

"We won a competition against the rest of the world," the rocket company's 38-year-old CEO said today during a teleconference with journalists.

But Matt Desch, Iridium's CEO, sounds just as happy with the deal. "This is a totally new price point that hasn't been available in our industry," he told me. "I think in a couple of years this is going to look like the deal of the century."

It's beginning to look as if the successful maiden flight of SpaceX's Falcon 9 rocket, just 12 days ago, marked the debut of more than just a launch vehicle: It may represent a dramatic turning point for the whole rocket business. Here are three indicators from the past few days:

• Congress has been skeptical about NASA's plan to give SpaceX and other commercial launch providers the lead role in resupplying the International Space Station after the shuttle fleet is retired - but in a letter sent to a colleague, influential Sen. Bill Nelson, D-Fla., outlined a budget plan that acknowledges "we will soon turn to commercial space companies to deliver astronauts to the ISS." Nowhere in the letter does Nelson talk about having NASA resume its own Ares 1 rocket development program.

• The Commercial Spaceflight Federation said Nevada-based Bigelow Aerospace, which has already put up two inflatable space modules and is planning to launch the world's first commercial space station within the next five years, was joining the group as an executive member. The company's billionaire founder, Robert Bigelow, said in today's statement that his company was working with the Boeing Co. to develop a crew capsule for NASA astronauts called the CST-100. Bigelow also gave a big shout-out to SpaceX: "The unprecedented success of the Falcon 9's inaugural launch clearly demonstrates that it's possible to dramatically reduce the cost of human spaceflight operations."

• SpaceX announced that its Falcon 1e rocket - a less powerful, lower-cost variant of the Falcon 9 - would launch an Earth-observing satellite for Taiwan as early as 2013 from a Pacific launch site on Omelek Island in Kwajalein Atoll.

SpaceX isn't the only company launching rockets these days, though one might think so based on the pace of announcements being made over the past 12 days. The California-based company is actually due to receive less money from NASA than another up-and-coming launch provider, Virginia-based Orbital Sciences, for delivering goods to the space station. And through their United Launch Alliance venture, Boeing and Lockheed Martin are still the heavyweights in the U.S. launch industry.

But the introduction of a new player appears to be shaking up business as usual in the rocket biz. "SpaceX's Falcon 9 is the vehicle of choice, not just for NASA but for the commercial sector," Musk said. The Iridium deal means that more than half of the launches on SpaceX's schedule will be for commercial rather than government clients, he said.

Exactly how many launches will Iridium need? Neither Musk nor Desch would say, citing concerns about professional courtesy (for Musk) or competitive factors (for Desch). Each launch would put multiple Iridium NEXT satellites into 485-mile-high (780-kilometer-high) near-polar orbits, replacing Iridium's current phone-and-data constellation. The Falcon 9 rockets would lift off from Vandenberg Air Force Base in California between 2015 and 2017.

SpaceX has said it offers fixed pricing of $49.5 to $56 million per Falcon 9 launch to low Earth orbit, which would work out to eight to 10 launches for Iridium. But Musk told me that financial formula might not necessarily hold true because of the multiple-satellite factor. How about nine launches with eight satellites each? "You're close," Desch told me, but not quite right. Hmm, maybe that's eight launches with nine satellites each?

Iridium

Iridium

An artist's conception shows an Iridium NEXT satellite.

The Iridium NEXT deal feels a bit like deja vu all over again. In the 1990s, space entrepreneurs assumed they would benefit from a satellite telecom boom. Iridium, plus Teledesic and Globalstar, were expected to require so many launches that new entrants would find an easy toehold in the launch market. But the market for satellite phone services wasn't as lucrative as the companies thought, in part because of the rapid deployment of cell phone networks. Iridium was forced into bankruptcy in 1999.

Today, the restructured company is on solid financial footing, Desch said. "We focused on the 93 percent of the world that didn't have cell phone service," he told me. Iridium NEXT is the company's strategy for moving seamlessly from the current 72-satellite constellation to an upgraded voice-data network with lower rates and higher speeds.

Desch said the three big pieces required for the $2.9 billion Iridium NEXT project are now in place: financing with credit guarantees from Coface, satellites from Thales Alenia Space, and launch reservations from SpaceX. Desch said the contracts with SpaceX were signed even before the Falcon 9 launch, and SpaceX already has received its first down payment on the deal. But every successful SpaceX launch will give Desch more confidence that he made the right decision. He's happy to be in the position of seeing SpaceX send 24 Falcon 9 rockets into space before it's Iridium's turn, and he was particularly happy to see the first Falcon hit a "bull's-eye" in orbit 12 days ago.

"We were cheering louder than anyone else," Desch told me.

More tidbits about SpaceX and the deal:

• Iridium expects to enter into a contract with at least one more launch provider, but Musk said that was "more in the mode of a backup or a secondary." Desch said SpaceX could well end up launching all 72 of the Iridium NEXT satellites.

• Musk said SpaceX has "already started work on Vandenberg from the standpoint of environmental assessment," and he expected the California launch site would be ready for use "probably two years from now," at a cost of $40 million to $50 million.

• The Dragon test article that was put into orbit during the maiden Falcon 9 launch should stay up there for a year or two, and would then burn up during atmospheric re-entry, Musk said. A report in Space News hinted that SpaceX had a client for the first launch, but when I asked whether there was a classified project on board the spacecraft, Musk laughed and said, "I can neither confirm nor deny." Later, space journalist Irene Klotz asked again if there was any sort of client for the first launch. After a long pause, Musk said, "Uh, no."

• Musk said his engineering team was looking into why the Falcon 9's upper stage went into a roll and has narrowed the problem down to "probably the actuator." He also said that the team wasn't certain why the first stage didn't survive re-entry, but he vowed to continue his drive toward full rocket reusability. "We will never give up. Never. Ever," he said.

• The next Falcon 9 mission is supposed to test a functional Dragon capsule in orbit, during the first official demonstration flight for NASA. Musk said that launch would occur "toward the end of summer." Space News has quoted NASA's Valin Thorn as saying the flight would be in late August.

• Musk declined to boil down the secret behind SpaceX's recent successes into a short sound bite - but he did say the company was striving to exemplify the "Silicon Valley operating system and DNA, as applied to space transport." Musk, who made his fortune in the dot-com industry, said he saw SpaceX as a departure from the rocket business as usual and "closer to an Intel, or Google, or Apple."

Is SpaceX's approach silicon-smart, or just plain lucky? For more perspectives on the SpaceX-Iridium deal, check out Clark Lindsey's RLV and Space Transport News. And as always, feel free to weigh in with your comments below.

Correction for 6 p.m. ET June 17: Orbital Sciences is based in Virginia, not Maryland. Sorry about getting that wrong...


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