SpaceX launches a debate on monopolies
by Jeff Foust
|“Having such a dominant launch service provider is probably not healthy in general for the commercial prospects of the industry,” said Nidamaluri of SpaceX.
The store is just a few blocks from the hotel that hosted last week’s World Satellite Business Week conference, which brought together executives to talk about all aspects of the space industry. One of Elon Musk’s companies, SpaceX, was never far from those discussions, be it the company’s Starlink broadband constellation or its launch business.
In many areas, even competitors had to acknowledge the genius of SpaceX, whether disrupting the satellite communications business with Starlink or the launch business with Falcon and, soon, Starship. But, particularly when it came to launch, some worried that SpaceX ran the risk of also being a jerk based on its dominant position in the market.
During sessions of the conference, some people openly talked about SpaceX becoming a launch monopoly as the only western commercial launch provider today with near-term capacity for large payloads.
“Having such a dominant launch service provider is probably not healthy in general for the commercial prospects of the industry,” said Vikram Nidamaluri, managing director of the telecom, media, and entertainment group at investment banking firm Lazard, during one of the first panels at the conference last Monday. “No one wants a monopoly choking off one point of the value chain.”
The risk, he said, is that SpaceX could slow down competitors to Starlink by slowing down their ability to launch satellites. “If you need to pay the piper and go with SpaceX, and they tell you they can’t do anything until 2028,” he said, offering a hypothetical example, “how are you going to satisfy your customers?”
The theme of SpaceX as launch monopolist popped up again and again during the conference, both among big and small launch companies. “Let’s face it, SpaceX is probably the monopolist right now,” said Luca Rossettini, CEO of D-Orbit, a company that develops orbital transfer vehicles flown primarily on SpaceX Transporter rideshare missions. “Not because they wanted to, but because of many other situations that created this scenario.”
He spoke on a panel with several other companies building transfer vehicles, many of which also rely on Transporter launches from SpaceX. Another panelist, Momentus CEO John Rood, said he was more worried about what would happen to the industry if SpaceX suffered a launch failure. “A fleet-wide disruption to the Falcon 9 for an issue of some kind will have a big ripple effect through the community,” he said.
|“I think we’ve proven that we’re a launch company first. We’re here to provide launches,” said SpaceX’s Ochinero.
Despite the concerns about SpaceX having a launch monopoly, there was little evidence that the company was using that position in an anti-competitive manner. Rather than delaying competitors, as Nidamaluri suggested the company could do, it was signing launch contracts with them.
During that first day of the conference, Canadian operator Telesat announced it had signed a launch contract with SpaceX for 14 Falcon 9 launches. Those launches, slated for 2026 and 2027, will deploy Lightspeed, a broadband constellation that will compete against SpaceX’s Starlink.
“Given the dedication and professionalism of the SpaceX team, and their outstanding track record of reliability and demonstrated high launch cadence, I have the utmost confidence that they will be an outstanding partner in helping us bring Telesat Lightspeed into service in a timely and low-risk manner,” Dan Goldberg, CEO of Telesat, said in a statement announcing the contract.
Telesat is not the only constellation company competing against SpaceX’s Starlink that has also turned to SpaceX for launch. Globalstar announced last month it purchased launch services from SpaceX for a new generation of satellites that will refresh its constellation that provides phone and data services. Rivada Space Networks bought a dozen Falcon 9 launches earlier this year for a broadband constellation. And, last year, rival OneWeb turned to SpaceX to launch some of its remaining satellites after suspending its contract for Soyuz launches in response to Russia’s invasion of Ukraine.
“I think we’ve proven that we’re a launch company first. We’re here to provide launches,” said Tom Ochinero, vice president of commercial sales at SpaceX, during a panel of launch companies last Monday. Starlink is a large internal customer of launches, he explained, but those missions “will move out of the way as needed” to free up launches for other customers, including competitors.
One major constellation company that has—so far—avoided working with SpaceX is Amazon, which is developing the 3,236-satellite Project Kuiper system. Nearly a year and a half ago, it announced contracts for up to 83 launches with Arianespace, Blue Origin, and United Launch Alliance (see “A megaconstellation megadeal”, The Space Review, April 11, 2022).
The problem for Amazon is that none of the vehicles it signed contracts for, the Ariane 6, New Glenn, and Vulcan Centaur, have yet to fly. All three were once slated to begin launches in 2020, but have suffered years of development delays.
Those delays are particularly pressing for Amazon. Its FCC license for Kuiper requires that it launch half of the constellation, more than 1,600 satellites, by July 2026. The other half must be launched by July 2029.
At last week’s conference, executives of those three launch providers said they were making progress towards first launches, while also reiterating that they would be able to carry out its commitments to Amazon to launch those satellites by those license deadlines.
ULA CEO Tory Bruno said the company was making progress on getting the first Vulcan launched. That launch was scheduled for the spring but postponed after an anomaly during a test of a Centaur upper stage, when hydrogen leaked out the stage during a pressure test and ignited. The company said in June it would modify the Centaur, increasing the thickness of part of the stage to prevent leaks.
|“We’re not concerned about meeting the contractual requirements for Kuiper,” said Blue Origin’s Jones.
That work is nearly complete, Bruno said on the panel. “We’ll be shipping the vehicle out to the pad in November and I expect to fly the Vulcan in December,” he said. That launch was intended to carry among its payloads the first two prototype Kuiper satellites, but Amazon decided to move them to an Atlas 5, using one of nine of those rockets it previously ordered from ULA for initial launches of its constellation. That launch is planned for early October.
Ariane 6 is also making slow progress towards its inaugural launch. A week before the conference, officials from ESA, Arianespace, and prime contractor ArianeGroup touted progress like a successful static-fire test of the upper stage. They also conducted a short-duration static-fire test of the core stage on pad in French Guiana ahead of a full-duration test planned now for early October.
It was still premature, though, for them to estimate when the rocket will fly. Josef Aschbacher, director general of ESA, said at a briefing September 4 that would likely come after the full-duration next in October. “We will then be in a position to define a launch period for Ariane 6, which we will announce to you after these series of tests have been conducted,” he said.
That launch, ESA previously acknowledged, had slipped to 2024, but Aschbacher declined to be more specific when asked if the launch would take place in the first half of 2024. “I think the chances, if everything goes perfect, are pretty good that it’s not too late in the next year, but there are still a lot of unknowns ahead of us.”
“Things are progressing very well. We are very happy,” said Stéphane Israël, CEO of Arianespace, of Ariane 6 development on the conference panel, but again didn’t offer an estimated date for the first launch.
Jarrett Jones, senior vice president for New Glenn at Blue Origin, said the company is also targeting a 2024 first launch of that rocket, with plans for “multiple” launches that year. He did not offer a specific schedule for the first launch or the customer, but did emphasize that the company would “meet our contractual requirements in ’24.” Among the announced New Glenn customers is NASA, whose ESCAPADE smallsat mission to Mars is scheduled to launch in August 2024.
He said the company was building up flight hardware for New Glenn, including four boosters in various phases of production. “We’re not concerned about meeting the contractual requirements for Kuiper,” he said.
Arianespace’s Israël was similarly optimistic despite the Ariane 6 delays. Kuiper will not use the first two Ariane 6 launches, he said, but launches of Kuiper satellites will begin “as quick as possible” once the vehicle is in service, mixed in with institutional and other customers.
Bruno said ULA was taking several steps to keep Kuiper on schedule, from the use of Atlas 5 rockets for the initial satellites to stockpiling Vulcan vehicles. “When the Kuiper satellites come our way, we’ve already got whole rockets in inventory,” he said.
Amazon may be satisfied with those answers—a Kuiper official speaking at the conference later in the week expressed no reservations about meeting the FCC deadlines—but others are not. Last month, an Amazon shareholder, the Cleveland Bakers and Teamsters Pension Fund, filed suit against Amazon’s board of directors, alleging they failed to do proper due diligence when approving those multibillion-dollar launch contracts.
The suit claims that both the full board and one its committees “likely devoted barely an hour” before approving contracts to the three companies. The total value of the contracts, not released by Amazon, was redacted in the public version of the complaint. However, it noted that those contracts represented the second largest capital expenditure in Amazon’s history at the time, behind only the $13.7 billion the company spent to acquire grocer Whole Foods.
Of particular concern to the shareholders was that a large fraction—45%, the complaint estimates—goes to Blue Origin, either through its launch contract or through purchases of its BE-4 engines by ULA for Vulcan Centaur. That created “blatant conflicts of interest,” the suit argues, since Blue Origin is owned by Jeff Bezos, the founder and largest shareholder in Amazon.
|“When the Kuiper satellites come our way, we’ve already got whole rockets in inventory,” said ULA’s Bruno.
The suit added that there appeared to be no consideration of SpaceX for launching Kuiper satellites. “Despite being the launch provider with the most proven track record and the lowest prices in the industry, SpaceX was seemingly not considered by Amazon,” it states. “By excluding SpaceX, Bezos and his management team minimized bid competition for the launch agreements and likely committed Amazon to spending hundreds of millions of dollars more than it would have otherwise had to.”
An Amazon spokesperson said that the suit’s claims “are completely without merit” but did not go into further detail.
If Amazon wanted to switch to SpaceX for any reason, it would put to the test SpaceX’s claims that it is a launch provider open to all comers. The size of the constellation would create pressures on the Falcon launch manifest: SpaceX’s other constellations it is launching number in the dozens to hundreds of satellites, not thousands.
Any such deal would also have to overcome other factors, including the personal rivalry between Bezos and Musk that the shareholder suit claims was likely a factor in Amazon not considering SpaceX for a Kuiper launch contract. The suit outlined the years of sparring between the two billionaires online, as well as the protracted legal battle Blue Origin waged against SpaceX’s NASA award for an Artemis lunar lander.
The suit illustrated that with tweets from Musk over the years taunting Bezos. After all, one can be both a genius and a jerk.
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